The Evonomist

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It is refreshing to see that someone is in recognition of the interrelatedness and intricacies inherent in most of the subject matters and natural and not so natural phenomena and come up with an explanation and a brief summary of two otherwise incongruent subject matters of evolution and economics in an interrelated and more of a cause and effect correlation. It was not a long time ago that chemistry and physics were found to be two faces of a coin at the advent of the discovery of atomic and subatomic particles and the formulation of the laws of modern physics. May be from the outset nature and natural process were all along following and obeying the same fundamental and comprehensive rule .Or we were just busy in the per suet of individual part and pieces of the general rule governing the grand universal scheme of things we neglected to look at it in generalized ways and kept at it as deep till such time we are forced to look at the confluence of it with one or the other of fields of study to get to the crux of it all.

It was not a long time ago that I wrote an article about the relationship between the material self and the conscious self and come up with a conclusion that the conscious self is all about the preservation of the material self. Economics is about the preservation of the material self and evolution is the process as the author has explained it eloquently. " According to the economist Eric D.Bienhocker who published these calculations in his revelatory work 'The origin of Wealth' (Harvard Business school Press,2006), the explanation is to be found in complexity theory , Evolution and economics are not just analogous to each other ,but they are actually two forms of a larger phenomenon called complex adaptive systems, in which individual elements, parts or agents interact , then process information and adapt their behavior to changing conditions ,immune systems, ecosystems, Language, the Law and the Internet are all examples of complex adaptive systems." Evonomics by Michael Shemer, Scientific American magazine January 2008.

Here I can't pass without emphasizing the individual's individual act in response to the unique conditions and circumstances the individual finds himself in, never mind the dynamism and state of flux of the conditions beyond account due to the infinite number of variables acting and interacting at a particular point in time. It is not without reason that I wanted to emphasize on the indeterminable, it is rather to show why central economic planning failed and continues to fail. In an economy every individual is a player according to his/her individual unique and dynamic condition, unique and changing skill and individually unique talents in a uniquely individual place in time in the grand economic entity. In other word the grand economic entity is a grand sum total of these unique individuals whose unique circumstances are beyond determination by any grand central planner. There can be no greater lie than to claim to have a central plan that will account all the dynamic and flux needs and conditions of the individual elements of the entity than to let it flow according to the governing on the ground and instantaneous changing circumstances. I again remember a communist slogan that says "We will put nature under our control" only to be proved wrong many times over. We only know a piece of the totality of what nature has for us leave alone capture nature in its totality. This I hope will be just a little foot note to the Authors eloquent exposition of a grand topic as we all are individual footnotes to the totality of human knowledge and wisdom.

Your Place in the New US And World Economy

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What is next for the economy? The economy defines the boundaries within which all businesses must operate.

Like the lines on the edges of the road, cross at your own risk. All businesses - and therefore all jobs in the private sector - must operate within ("length" and "width") of these boundaries. Business failures occur when companies fall behind the times and are too far ahead of consumer demand. Likewise, most business sectors have a relatively narrow range of successful operations. It's hard to survive if you are either the most expensive or cheapest in your market.

The 2010 book from David Wiedemer, PhD, Robert Wiedemer, and Cindy Spitzer entitled "Aftershock" examines the events that created the financial meltdown. In this book and the previous book, "America's Bubble Economy" the authors make the case that the U.S. economy was an illusion, only the interaction of "bubbles".

A bubble is created when an asset temporarily booms. The former (pre-2008) U.S. economy was comprised of bubbles in real estate, personal loans, credit card debt, the stock market, and consumer spending. On their own, each bubble can rise independently. But in combination, the bubbles accelerate and reach unnatural levels!

The financial meltdown felt around the world is the consequence of these bubbles popping, or as the authors describe it, a "Bubblequake". The first stage of the financial meltdown included the fall of the real estate bubble, private debt bubble, stock market bubble, and discretionary spending bubble. On their own, each would have been significant. Combined, these popping bubbles lead to "The Great Recession".

Amidst the economic turmoil, the U.S. government tried to intervene. Bailouts of automakers and investment banks were designed to compensate for "toxic assets". Then the government pumped billions into the economy as "stimulus" to try to offset the funds lost to "money heaven" as bubbles popped and wealth simply evaporated.

Looking back, we now know that such efforts were ineffective. The results were a dramatically inflated money supply and a devalued dollar. The aftereffect was that the government soon reached the "National Debt Limit" as a result of spending nearly twice as much as incoming revenue.

The authors label this current stage as the "Aftershock", defined as the popping of the dollar bubble and the government debt bubble. Their conclusion is that current economic conditions do not simply represent a down market cycle or a typical recession. The difference is the multi-bubble economy, with these inter-linked bubbles ALL on the descent.

The authors also conclude that inflating these bubbles again is simply not possible.

Instead, they predict what is called the "triple double-digit" economy:

Double-digit unemploymentDouble-digit inflationDouble-digit interest rates

All in all, these make up some dire predictions. So what does this mean for you? How will you earn an income in the new, post-Aftershock economy.

The "Aftershock" authors predict:

1. Decreased demand for capital goods, including cars, construction equipment, and major industrial equipment. Lower demand means fewer viable firms and fewer available jobs.

2. Decreased levels of discretionary spending. This affects fine dining, entertainment, travel, fashion, jewelry, art and so on. Less total spending means fewer stores and fewer employees.

3. A decline (just not as drastic) in the "necessities" sector including health care, education, food, and government services. Even these areas will face some pressures to downsize because they are highly dependent on tax revenues. A smaller economy simply produces lower tax revenues. Some programs will simply need to shrink, regardless of the level of "necessity". Many jobs will be retained, however the wage growth and benefits will necessarily be constrained.

Conclusion: as many as 50% of businesses in some sectors may simply disappear. This means that job losses will be staggering after the dollar and government debt bubbles pop, and there will be a mad scramble for those jobs that haven't been destroyed. For most people it will be increasingly difficult to find a job - any job - regardless of your qualifications and experience. And for those lucky enough to be employed, keeping a job will mean putting up with less desirable working conditions, benefits, hours, and pay. In fact, as competition for jobs greatly increases, most wages will surely fall. After all the bubbles pop, people will accept wage cuts in most jobs for one simple reason: if they don't, somebody else will.

By necessity, the government will be forced to live within tax revenue limits. The world economy will not allow unlimited printing of "funny money" to allow for unlimited deficit spending. The quantity of currencies injected by numerous countries will have already added to inflation on a global scale. Too many dollars, yen, euros, etc. will be chasing a declining quantity of goods and services.

The OLD economy is gone; the NEW economy is here.

In 2011 the federal government is overspending revenue by 40%. Even a 10% decrease in the size and scope of the federal government would add hundreds of thousands of additional people to the unemployment roles (including government positions and supporting private suppliers and contractors.) This does not consider the same cascading effects facing state and local governments that have never had the ability to simply print money.

So one of the defining characteristics of the post-dollar bubble economy will be a shortage of jobs. Unemployment levels will be much higher, and people will remain unemployed for much longer. At the same time, businesses will be forced to reduce wages and benefits to remain competitive. Millions of Americans will accept cuts in pay.

Especially hard hit will be younger workers and older workers. Prospective employees under 30 will find it hard to compete against older, more experienced and proven workers. Likewise, workers over 50 will also face extremely high unemployment levels.

At the same time, loss of tax revenue will force the government to tax more and tax deeper. Remaining businesses and employees will be taxed harder! Most will rationalize that 50% taxation is better than not working at all!

Different people will look at the same facts and draw different conclusions. So what do you think? Do you believe the bubbles will miraculously re-inflate and good times are on the horizon? Or do you believe (as the authors of "Aftershock" have detailed) that the old bubble economy is gone and a newer, leaner economy is what we can expect?

I concur with the conclusion that we are now experiencing the "aftershock". I always knew that an economy based on 20% appreciation in housing values, pensions exceeding 100% of wages while working, whole shopping centers selling completely unnecessary novelties and decorations, and unbridled government deficit-spending had to "pop" eventually.

And yet I am also believe 100% in the viability of the free enterprise capitalist model. So I going to make some suggestions:

First, if you are under the age of 30 or over the age of 50 you are in danger of becoming a statistic. You either need to make yourself invaluable to your current employer or prepare yourself for the high possibility of a layoff.

Second, identify some necessary service or product that you can get excited about!

You have arrived at a "fork in the road". You have two choices, plus a combination. You can take the wide road and do whatever it takes (training, cross-training, adult education, apprenticeships, etc.) to become superbly trained for the job you have or would like to have. Remember, there are going to be too many people seeking each job. You are going to need be impressive in every way and probably over-qualified to get noticed.

The second option (the "road less traveled") is to design your own occupation. Now this can be a retail, service, or skilled occupation. Each has its attractions to certain people. My personal choice is to provide a product or service on a nationwide (or even global) basis. Again, these offerings should fall in the category of "necessities" rather than novelties. Luxuries offer a much smaller but profitable niche if you can cater to the affluent.

Even in tough times, fortunes can be made by satisfying needs. The time-proven formula for success is to identify a problem and provide a solution. In the post-bubble Aftershock economy, providing alternative income opportunities is one legitimate solution!

Now owning your own business includes the hassles of regulations and structure that you completely avoid if you stay in the employee category. But your own business also provides a degree of freedom not possible as an employee. The single biggest benefit is that you have no cap imposed on your income, especially if you are selling a product or service and not your efforts by the hour. Operating a business also allows you to deduct expenses before taxes. A higher potential income and tax advantages results in a win-win.

And then there is the combination of the two options, and this may be a viable option for the majority of Americans. If you have a steady job there is added security in building a part-time business on the side. You gain income and can offset a portion of your expenses that are now cutting into your after-tax personal income (such as a home office deduction, travel expenses for errands, office supplies, etc.) You also gain the security of a income cushion if your regular job evaporates or you face a cut in wages.

Of course, many small businesses eventually grow into large businesses. You then have the choice of making your part-time business a new full-time profession, hiring some employees to manage the extra work, or selling the business outright at a profit. Again, many advantages and few disadvantages (if designed with some forethought.)

The "road less traveled" provides increased potential rewards for assuming personal responsibility. At the same time, millions of Americans have learned that "job security" is a contradiction. We have entered the new age of job insecurity in an increasingly lean and competitive global economy.

So where do you start? Here are my recommendations for the ideal business:

1. Unlimited income potential. This is only possible if you are selling a product or service. If you are selling your time, you are limited by the number of hours you can work each day, week, and month. When you stop working you stop earning, and this is true even if you can bill your time at $200 per hour. Also, you want to have at least some products or services which generate repeat sales - unless what you are providing is incredibly profitable in the initial sale. Likewise, if your business allows you to leverage the efforts of others to provide additional streams of income, so much the better!

2. Time and location freedom. The ideal business will take advantage of current technologies and allow you to be located anywhere, and sell to anyone. These technologies will also allow your sales to recorded 24 hours per day, 7 days per week. Some products or services may have limitations which restrict the sales area to one location. But many products and services - especially digital products - allow sales to be made on a worldwide basis instantaneously!

3.Small initial investment. While many downsized employees have bought franchises and other fixed location business opportunities, I can not recommend this option. For one, the start-up costs can be very high, literally hundreds of thousands of dollars with no guarantees. Then you are faced with the reality that you have assumed the job of full-time personnel director and you spend all your time either managing employees or hiring their replacements. Instead, I would recommend an opportunity with a low start-up cost. This allows you to begin

part-time. It also means you won't have to qualify for financing, which may be next to impossible for a new business in the post-bubble economy.

In my opinion, network marketing fulfills all these criteria. There are literally thousands of products and services that are marketing by networking. Combined with the power of the Internet and social media, networking has entered the mainstream and is a viable option for a full-time or part-time business.

Millions of Americans have used network marketing to produce extra income. The company provides all the support functions, from billing and credit card processing to accounting for commissions. Networking includes the creation of a downline that produces additional income. And consumable products provide residual income, often from several generations of customers that you have never even met.

There are no restrictions based on age, experience, location, or net worth to join a networking company. People from all walks of life - including unemployed - have become successful in network marketing. In fact, many thousands of networkers are literally unemployable after experiencing the freedom and income potential of network marketing.

If you decide that networking is right for you, there are countless resources (both free and low cost) that are available to shorten your learning curve and help you succeed! There are also turnkey marketing systems designed to automate the process of locating customers and claiming your slice of the Internet!

Randy Reek writes articles about making money from a base of over 30 years of business success. Randy has been a top salesman in retail and wholesale sales; consumer and business-to-business settings. He has also operated his own successful mail-order business. Visit randyreek.com for information and opinions on making money, saving money, and your place in the global economy.
For more information on specifically on income opportunities in the new world economy, see the Making Money section of the blog.

The Big Pop - Understanding and Avoiding Bubbles In 2008's Wake

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Understanding the chemistry that fuels stock market bubbles is a difficult and complex study that even risk aversion professionals have a hard time grasping. So I wondered, is there any chance that we as first-time or even some of the seasoned retail investors can anticipate or predict, with even the most modest certainty, when and how these investment and asset bubbles will pop in the future?

I think the answer is no, not really. I do, however, believe that with just a little diligent effort in analyzing the patterns of previous bubbles, perhaps we can at least avoid them. Let's face it; bubbles not only exist and contributed almost first-handedly to the Great Recession and the financial crisis of 2008, but the phenomenon will continue and is almost guaranteed to happen again - maybe even sooner rather than later.

Let's start by looking at some of the U.S. history's biggest pops and use the knowledge and lessons learned in applying them to our hunt for today's stock market or asset bubble.

Two bubbles for the price of one

Unquestionably, the most devastating, and perhaps until recently the most infamous stock market crash of all time came between the months of September and November of 1929, when the DOW nose-dived from roughly 380 to 200 points, cleaning slicing off about 50%.

But what's "conveniently forgotten", says Michael Bordo, Professor of Economics, and Director at the Center for Monetary and Financial History, Rutgers University, in a presentation called the CFR Symposium on a Second Look at the Great Depression and the New Deal "is that over the next several months, from early November 1929 until sometime in the middle of April 1930, the Dow Jones average went up almost to 300 points again".

That seems fine and dandy, until the newly created U.S. Federal Reserve decided to reel itself off the god standard while the rest of the public was still knee-deep in a love affair with the precious metal. The result, many scholars and economists who study the events will argue was a world-wide boom in demand and squeeze in supply for gold, bank illiquidity, and the Great Depression, during which the Dow Jones sank back down to 42 points by July of 1932.

One lesson I would like to take away from here is that before, during, and after the catastrophic financial events of the 30's, gold has been widely considered a safe, hard asset to invest in during economic crisis.

The smartest bubble ever

What do the words, "Pets.com" mean to you? As a first-time investor, you're likely drawing a blank. As a seasoned retail investor in hindsight, that cute and na?ve domain name could have served as the single most important lesson you've ever had the irritation of learning.

While the dot-com bubble's bursting affects weren't necessarily powerful enough to bring the entire economy to its knees, after hitting highs of around 5,000, more than double its valuation from just a year before, the technology-laced Nasdaq Composite index lost more than 60% and $5 trillion in the market value of the companies listed on the exchange between 2000 and 2003 as the tech bubble popped and deflated.

The lesson I would like to take away from the dot-com bubble is the reminder of the definition of a stock market bubble itself, which according to Wikipeda.org, is a "self-perpetuating rise or boom in the share prices of stocks of a particular industry."

Absorbing the shock of the next pop

I think we can use these two valuable lesson and combine them to formulate our own personal "bubble preparedness plans" for our individual investment goals, and here's how: identify where you think the next bubble could be forming, pick specific price points for getting in and out, and always be ready to let go.

Gold again is making big headlines all over print, media, and the Web, and for the same classic and recognizable reasons as those listed above: the price of the ubiquitous metal is hitting new highs (although inflation-adjusted, some will argue that gold actually hasn't yet hit new highs, but that's a whole other article).

We don't have to look very far to identify the parallels between the historical crashed detailed above and the potential for a modern day gold bust. Panic ensued in the late 1920's and early 1930's as financial chaos set in to the economy, sparking a nasty recession, unemployment, and investor panic in the same fashion as the financial panic of 2008. The comparison is almost seamless.

Next, government officials, lawmakers, and the Fed's from both eras' poured billions of dollars into newly created laws that were designed to stimulate and kick-start growth in the economy. Both Feds also enacted fiscal monetary policies that included artificially low interest rates.

What happened next is again predictable for both eras' as investors piled into the safe, hard asset that is gold, driving prices sky high among the worries and concerns of inflation, a weakened dollar and continued turmoil in the stock market.

Now let's consider again the definition of a bubble as a self-perpetuating rise in asset prices. Fist, inflation isn't really much of a concern - in fact, the Federal Open Market Committee has recently been talking about deflation becoming more of a concern than inflation, which if true, could be a fatal blow to gold prices.

Secondly, the dollar isn't as weak as it once was going into the most recent crisis. Unpleasantly, the Euro was battered this year as Greece and a handful of other Euro-zone countries admitted the fiscal debt had become too much to bear, in some cases over 100% of GDP, resulting in a massive bailout for the country and the strengthening of about 11% in the U.S. dollar against our overseas currency counterpart.

Lastly, turmoil in the stock market may have finally stabilized. It's a bold claim, I know; but I'm making this prediction based on how far we have come since the beginning of the financial market fallout of 2008 and subsequent rally in March of 2009 to today. Despite some confidence-crushing stumbles like the Flash Crash of early May and continued volatility in all the major indices, September of 2010 has brought significant and solid gains almost across the board.

I don't think we as first-time investor or even seasoned retail investors will ever be able predict or correctly identify and avoid stock market bubbles, but I do believe it's never too early to start thinking about the next pop. After all, if I'm wrong, the only think I lose is some credibility or confidence in my investing abilities, which is probably good every now and then anyway. However, if I'm right, there's no limit to how much I can win - or save.

Tom Copeland is the founder and author of http://www.bullworthy.com/, a web content development and management company for small financial businesses based in West Palm Beach, Florida.

On Wal-Mart - The Bully of Bentonville - How the High Cost of Everyday Low Prices Is Hurting America

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In "Wal-Mart: The Bully of Bentonville - How the High Cost of Everyday Low Prices Is Hurting America," Author Anthony Bianco made an argument about the predicament that Wal-Mart is in.... Should we agree with his argument? Agree or not, Bianco's argument painted an interesting future of American society? Interestingly, 'interesting future' in Chinese figure of speech usually denotes "people living in hard times (e.g., the Great Depression or the Russian Revolution).

In a nutshell, Bianco is arguing that Wal-Mart's bullying tactics of ensuring 'everyday low prices produces a high cost that is hurting America.' The remedy he offered can be interpreted as the need for Wal-Mart to replace its present business model with a new business model; stop squeezing employees and suppliers, and charge customers a little more (Businessweek.com, 2007).

Alas, Mr. Bianco portrayed Wal-Mart as 'a leopard that cannot (in this case, will not) change its spots.' In basketball parlance, Wal-Mart lives or dies by its jump shots. Quoting Bianco, "it simply knows no other way to compete and seems no more capable of altering its path now than a hammer can avoid the nail it was made to pound" (Bianco, 2007, p. 289).

As a matter of fact, Wal-Mart knows it is at a crossroad in its development as a corporation. However, Wal-Mart CEO Lee Scott thinks that his company doesn't need a new business plan instead the U.S. Government needs a new public policy plan. In deed, Scott "declared Wal-Mart's support for an increase in the federal minimum wage of $5.15" (Bianco, 2007, p. 288). At first glance, an observer would speculate that Wal-Mart is pulling something new out of its nefarious bag of tricks. It would be like the Neo-conservatives adopting the golden rule, 'the meek shall inherit the earth,' than the iron rule, 'might make right.' What is the reason for Scott's paradoxical position? Let's hear it from Scott, himself: "We can see first-hand at Wal-Mart how many of our customers are struggling to get by.... Our customers simply don't have the money to buy basic necessities between pay checks. There are global forces at work flattening pay scales" (Bianco, 2007, p. 288).

Bianco's view is that Wal-Mart is one (the most powerful) of the global forces that is at work flattening pay scales because of its low-price, low-wage image - an image that sets the standard for the world economy (Bianco, 2007).

I'm in total agreement with Bianco's argument about Wal-Mart's predicament and the crossroad it finds itself. Hopefully, Wal-Mart will tinker (for the better) with its business plan as it tries to sell more organic food and fashionable apparel to capitalize on their higher margins profit. Thus, it will have an incentive to stop squeezing its employees since it will be charging (actually, it is at the current moment) more for the high-end products (Businessweek.com, 2007).

If Wal-Mart should adopt my recommendation given in the preceding paragraph, it will impede the global forces that are at work flattening pay scales. In fact, Wal-Mart would remake (for the better) its low-price, low-wage image into a fair-price, fair-wage image - an image that will set a new standard for the world economy (Bianco, 2007).

If not, the future of American society will witness a Wal-Mart self-destructing like General Motors and the Steel Industry. Verily, the self-professed unsinkable Wal-Mart would crash into the iceberg (the need for a new business plan) of reality. Unfortunately, American society will be a passenger on Wal-Mart's sinking Titanic, and like the employees of General Motors and the Steel Industry they will suffer the consequences of Wal-Mart's hubris.

In conclusion, I described Bianco's argument that Wal-Mart has to make the change that matters - the need to replace its low-price, low-wage image with a fair-price, fair-wage image - in order to get itself out of its predicament. In turn, I produced arguments of my own that agrees with Bianco's conclusion, and the importance of Wal-Mart's compliance to ensure a better future for American society.

In the role of a devil's advocate, I once entertained the thought that Wal-Mart's present business plan might be a benefit to the pharmaceutical industry. For example, American society would benefit from the low prices that a Wal-Mart would force upon its pharmaceutical suppliers. After all, the pharmaceutical industry notoriously shares a spot in 'the axis of evil (including the healthcare industry)' that tries 'to squeeze the blood out of the turnip.' (For example, Michael Moore's Sicko provides great documentation on the preceding sentence). Then, I asked myself wouldn't the Wal-Mart induced pharmaceutical low prices produce a high cost that would in turn hurt America?

Home Made Energy Guide

Home Made Energy is a guide that will teach how to make solar panels and wind turbines for under 200$! I researched this product quite a bit, and a high percentage of people are fully satisfied. With the recession and the growing energy costs this could come in handy. If you are like most people in America paying outrageous prices for energy, or just want to help the environment, this a something to buy.

I'm one of those people who wants to help the environment and all that jazz, but I can't afford to buy all of the expensive solar panels and other energy helping devices. I was looking for "green" things i could get instead of the less "green" items that do the same thing when I ran into this. I read through the sales page then searched for some user opinions. As I said above, a high percentages (not sure of exact numbers, 80-95%) of the people who have bought this don't regret it one bit and are saving tons of money. These weren't the responses you see in ads, I actually sent messages to a few of the people. On top of that I spent most of my free time since i was 10 on the internet so I've learned to recognize fakes.

This guide is really easy to understand. I read it was written so a 10 year old would be able to understand. All of the materials you need you can buy at a local hardware store for 200$ (total). Once again, this product would be a great buy and will save you plenty of money of energy.

'The First National Bank of Dad' Book Review

This book is sub-titled, "A Foolproof Method for Teaching Your Kids the Value of Money," and to my mind it delivers on that promise. At 190 pages it is an easy read, written in a very relaxed and humorous style, and full of personal anecdotes.

As parents, we are often conflicted about teaching our children to handle money. We want to give them practice at it, but we usually accomplish that by taking away their responsibility and forcing them to save. Large birthday or festive gifts of cash from generous relatives get whisked away from them and deposited in their savings account, out of their control, because we don't believe they will spend the money wisely. A child finds it hard to appreciate the need to save for college or a car or some other event way in their future, and the amount of money they earn on their deposits is so small as to be irrelevant (why is it called 'interest' when it is so uninteresting?).

It was while thinking about these problems that the author hit upon the idea of The First National Bank of Dad. This bank pays its depositors 5% interest a month on unused cash balances, which when compounded would equate to a 70% annual return (he does make it clear that he doesn't accept deposits from adults, or from anyone who didn't receive half their chromosomes from him!). The children's accounts were funded with an initial $25, their allowances were deposited on the first of the month, and after that they were completely in control, to spend or save, no questions asked. Not surprisingly, once they could see the advantages of letting their money 'charge up for a while', they voluntarily saved a good part of their income. They realized that, if they deferred consumption for a while, they would eventually be able to consume more.

As the children became older, the author eventually opened the Dad Stock Exchange to teach them about stock market investing. Once again, the 'rules' were easy to understand and implement but they were very effective in achieving their learning objectives. However, I won't spoil the plot by explaining them here - you'll have to read it!

Do whatever you have to do to get your hands on this wonderful book. My only regret is that it was published too late for me to use the excellent, easy-to-implement ideas on my kids. However, now that they're grown and have kids of their own, this book will be top of my present list for them to read and, hopefully, put into practice.

Mick Brooks is an educator, a public speaker, and an avid stock market investor. As a UK-qualified CPA, he thought making money in the stock market would be easy, but his 'education' cost him around $30,000, so now he makes it his goal to help others to avoid replicating the more obvious mistakes. Visit his website, http://www.beginning-investing.net/ for more advice and information, and don't forget to pick up your FREE copy of the 'Investing Secrets - Day Trading' report!
If you would like to teach your children how to invest, and give them a gift that will last them a lifetime, visit http://www.stocks-for-kids.com/ for information and resources.

Review of The Spirit Level - Why Equal Societies Almost Always Do Better

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Sex education for potential teenage mothers; free gym membership for the obese; cognitive behavioral therapy for badly behaved children - all are inadequate, piecemeal solutions to the symptoms of a wider social malaise - inequality - says a new book by UK researchers.

The Spirit Level argues that the difference in earnings between richest and poorest in developed societies is the source of a catalog of social problems.

What is more, the authors insist, these problems cannot be solved without first addressing the underlying structures of inequality.

Richard Wilkinson, Professor Emeritus at the University of Nottingham and his co-author Kate Pickett at the University of York argue that throughout human history the most effective way of increasing well-being has been to increase material wealth.

But we have reached "the end of that historical journey".

The starting point of The Spirit Level is the suggestion that when average income levels reach a certain level - comparable to earnings in countries such as Chile or Poland - increases in wealth cease to have any impact on well-being.

The book charts how inequality, not average income, is the more accurate predictor of signs of distress in developed countries - poor mental health, drug abuse, obesity, low educational performance, teenage parenting or violence.

Thus, in the US, one of the world's most unequal societies, one in four people have mental health problems. By comparison, in more equal societies such as Germany, Japan and Spain, the rate is lower than one in ten. This is just one of countless examples, backed up by compelling data. Across the 50 US states the pattern is the same: more equal states do better.

The common explanation for this is that unequal societies have proportionally more poor people. But Wilkinson and Pickett argue that although these problems affect the poor more seriously, the rich still suffer. This is why the super rich in the US, UK and Portugal - three unequal societies - do not live as long as the rich do, for example in Sweden, which has a more equal income distribution.

And this applies across the board. A rich child in the UK will not achieve as much educationally as children do in more equal European states like Belgium or Finland. On the face of it, the message is clear: we all suffer from inequality.

Wilkinson and Pickett draw on a range of evidence and theory, hypothesizing that more inequality leads to greater "status anxiety" - our concern about our standing in the world, whether we are going up or down, if we are winners or losers. Our self-image is forever in need of external praise to accept ourselves. Greater status anxiety leads to negative reactions like stress and violence, and their knock-on effects.

In offering a solution, Wilkinson and Pickett consider how some countries may have succeeded in achieving more equality. It seems that there is no single solution. Sweden and Japan for example, two of the most equal societies, operate by entirely different models.

Sweden has high taxes and redistributes wealth through a large welfare state; Japan, with some of the lowest public spending in the developed world, achieves the same by having much greater income equality before tax.

They also look to solutions already flourishing within unequal market democracies, turning to the success of the not-for-profit sector and workers co-operatives for inspiration.

Almost an outcomes agenda for the economy

A chapter is dedicated to suggesting how this philosophy can link up with current debates about environmental sustainability. Discussing the reduction of carbon emissions, they advocate a system that would make the rich - who inevitably expend more through greater consumption - pay their fair share.

But a more radical approach is needed. They question the entire ethos of consumerism and never-ending economic expansion that, they claim, is fueled largely by status competition. According to their research, cutting economic growth does not mean reductions in real quality of life. It almost sounds like an outcomes agenda for the economy.

Publishing of the book coincides with social activism in the form of The Equality Trust to carry the findings further. The trust is promoting employee-owned businesses; it commissions research on equality issues, lobbies politicians and policymakers, and engages with the media.

Were they to be widely corroborated, the conclusions of The Spirit Level would have potentially far-reaching implications for prevention and early intervention efforts. The authors acknowledge that governments can dampen the impact of some of the privations of growing up in poverty, for instance through social housing, health care and high quality early childhood education.

However, they are forthright in their criticism of interventions to tackle social problems one-by-one, on an individual basis.

"The unstated hope is that people - particularly the poor - can carry on in the same circumstances, but will somehow no longer succumb to mental illness, teenage pregnancy, educational failure, obesity or drugs." They are in no doubt that tackling inequality should be the priority before turning to intervention programs.

They question how far we can go by assisting the poor financially, without reining back the earnings of the rich. Far from being an asset, it appears the super rich are actually a burden on the rest of us. Salary caps and more progressive taxation are one way forward. Although this may horrify supporters of neo-liberal economics, Wilkinson points out that, in a curious twist of logic, equality is actually in everyone's own self-interest.

Addressing inequality is, in some ways, far simpler. It provides a universal remedy for many of society's ills. But it implies a much grander task. Rolling out a program of parenting classes for kids with conduct disorder is hard enough. Taking on inequality implies altering the values of entire societies.

The Spirit Level: Why more equal societies almost always do better by Richard Wilkinson and Kate Pickett is published by Allen Lane. It is also available as an ePub and an eBook.

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