Tuesday, February 17, 2015

The Losses of Winning

Coming into Money
Can Carry a Very Big Price

Suddenly coming into big money or having a large lottery win may be more of a curse than a blessing. Winnings, for many, have extracted a heavy price. 

Some interesting research projects suggest that we are better off generally staying on even ground. A large upward surge in your finances can give a spike on the happiness scale initially, but over time that effect fades and in fact leaves you much worse off.

Adaptation Level Theory.

The reason the happiness spike fades is because of a psychological phenomenon known as “adaptation level theory.” When something new and exciting happens to us, we feel a surge of pleasure. Our brains release a chemical called serotonin, which is a happy drug, and we feel a glow for a while until the drug fades.

The transient and relative nature of happiness.

Adaptation Level Theory also defines the transient and relative nature of happiness. For instance, with the passage of time, the loss of the use of say an arm generally tends NOT to make you significantly unhappier, once you have had sufficient time to adjust to the new norm.

For Better or for Worse - in the end much the same.

Two interesting studies carried out back in1978 looked at this factor. The studies took 22 lottery winners, 29 people paralysed in accidents, and measured against controls. The experiments in both cases clearly showed that people were not significantly worse off or better off than the controls. When either a positive or negative event begins to fade into the past, the levels of happiness or unhappiness that were initially created tend to go back to a general norm.

Among other interesting factors that emerged from various studies are the following;

(1) The Erosion of Satisfaction.

This one is what I would describe as a sort of Monday-itis or post-holiday-blues, or maybe it is more like drug adaptation? The studies showed that lottery winners, with the passage of time, not only were they no happier than the controls, but they took an additional and negative hit. I call this "the erosion of satisfaction". Ordinary everyday events, activities and chores etc. that previously gave a sense of satisfaction or pleasure no longer gave them that effect.

(2) The Losses of Winning.

This one I would describe as “The Losses of Winning”. A research project in 2009 at Vanderbilt University and the University of Kentucky showed two interesting trends: (a) Individuals who won between $50,000 and $150,000 failed to pay off debts that they had from before the winnings. (b) Lottery winners are twice as likely to go bankrupt.

(3) Sudden Money Shortens Life.

Another bit of research has shown that many individuals who have big wins, or otherwise come into big money, tend to smoke a lot more and increase their social drinking, so they are more likely to die younger and suffer more illness. These findings come from a 2010 study done by Bénédicte Apouey and Andrew E. Clark, who are economists at the Paris School of Economics.

So perhaps you are better off not buying that lottery ticket.

Friday, February 13, 2015

Atonement Redress and Justice

Atonement Redress and Justice

The recent news items about the high level of hidden slavery in the EU and UK has made me very very angry. One item outlined the case of women in the UK have been virtual slaves to very rich families who, in many cases, did not pay them, and did not even provide them with the most basic of necessities.

This news has re-triggered thoughts that have bothered me for some time about how our justice systems operated.

As it exists, our legal and justice systems would appear to be stuck back in time some hundreds of year in the past. The archaic use of wigs and gowns in court, and the sometimes obtuse language of the trade, attest to this fact alone. However, it is not lawyers and judges in fancy dress that concerns me here, it is how the law addresses serious crime.

Our Justice Systems = Punishment not Redress.

The current system of law focusses on PUNISHING the guilty parties, but does little or nothing to compensates the victims and make atonement. Over the centuries, the punishments meted out have become less and less. Prison to some is a holiday, and a time to catch up on their trade from more skilled fellow trades-people. They can get a free education in prison and do not have to worry, like the rest of us, about providing accommodation, food, heating, medical care, etc. etc.

Fine Fines.

When a fine is imposed it usually is not linked to the resources of the guilty party. If a person on £10,000 a year is fined £5,000. By all justice and fairness, a person on £2,000,000 a year should receive a fine of £1,000,000. The funds from these fines should go, at least partially, into victim redress and compensation funds. It should be possible nowadays to operate such a system by linking with the taxation system etc.

Victims and the Law.

Meanwhile our justice systems generally leave the victims of crime to fend for themselves, except maybe in cases where the victims have their own resources to take actions, or where some agency or charity initiates a civil action on their behalf. This part of the law is at best ad-hoc and in most cases not successful in redressing the injury or loss.

I believe that the justice system should first and foremost redress the harm done or loss sustained, and put punishment into second place. The State or justice system should, without being requested initiate a civil action, using all the Justice Department and the States resources, including tax and revenue systems, to secure redress.

In the case of rape, redress should include payment for full medical and psychological treatment over a period of at least 5 years, a lump sum, and a pension to the victim.

In addition to the Law seeing to redress and atonement on behalf of victims, IMHO individuals guilty of serious crimes, who own resources, should be made to pay the full cost of their own prison upkeep in addition to the costs of redress and atonement. Those on welfare should at least have a deduction made from their future welfare payments to pay back some of their prison upkeep.

Thursday, February 12, 2015

The Return of Medieval Feudalism

Reset your Calendar 2015 to 1015 
The Immanent Return of Medieval Feudalism
or if you like, you can call it Economic Apartheid

There was a time when more than half of the world's wealth was owned by a tiny percentage of super-rich kings, dukes and lords etc. 1000 years on, and history is about to repeat itself!

Oxfam has projected figures which show that the wealthiest 1% will by next year own more than the rest of the world's population put together.

The figures show a clear rapidly rising trend - indicating that we are heading back into Medieval times.

The Figures.

In 2009 the very rich, who represent just 1% of the world's population, owned 44% of the entire wealth. By 2013 that figure had inflated to their owning 48% of everything. On that trend any forecaster would easily pitch the figure at 50%+ by 2016.

In 2014 the global elite had average personal wealth of $2.7m per adult.

Davos Talking Shop.

No doubt the talk shops like Davos will table some well meaning spin-doctored stuff, and no doubt the well meaning projections will most probably never be reached - going on past performance.

Bono, an Irish musician, didn't put a tooth in it when he told the assembled Davos elite “Some of the criminals around here are not wearing ski masks, they are wearing skis.”


Oxfam have warned that this virtual explosive widening of the gap between rich and poor is "holding back the fight against global poverty at a time when 1 in 9 people do not have enough to eat and more than a billion people still live on less than $1.25-a-day".

* Allowing extremes of wealth and poverty to exist is simply morally wrong.
* The imbalance undermines economic growth,
* It threatens the national security as well as economic stability.
* It leads to revolt and revolution and promotes extremism.

Oxfam is advocating 7 point plan to tackle inequality:
(1) Clamp down on tax dodging by corporations and the rich,
(2) invest in universal, free public services health, education etc.,
(3) Fair tax laws to shift taxation from labour and consumption towards capital and wealth,
(4) Enforcing minimum wages and a living wage for all workers,
(5) Equal pay and conditions for women,
(6) Adequate safety-nets for the poorest,
(7) And a global goal to tackle inequality.

Some Interesting Quotes.

In 2013 Economics Nobel prize winner Robert J. Shiller said that the economic stratification of society into "elites" and "masses", is a major danger to world stability. And that it played a central role in the collapse of other advanced civilizations such as the Roman, Han and Gupta empires.

Oxfam made a bold assertion in 2013. It stated that worsening inequality is impeding the fight against global poverty. The 2013 report stated that the $240 billion added to the fortunes of the world's richest billionaires in 2012 was enough to end extreme poverty four times over.

Oxfam Executive Director Jeremy Hobbs said that "We can no longer pretend that the creation of wealth for a few will inevitably benefit the many – too often the reverse is true."

Jared Bernstein and Elise Gould of the Economic Policy Institute suggest that poverty in the United States could have been significantly mitigated if inequality had not increased over the last few decades.