London's G20 summit of the world's richest nations in April was accompanied by thousands of people demonstrating against an economic system that has been greatly discredited by the recent housing and subsequent financial crisis.
The ongoing crisis has already resulted in the fall of governments in smaller nations, the latest being Iceland and Latvia. Riots have broken out in Britain and the Balkans. And extremist movements have grown as unemployed people place the blame for the financial crisis on "Jewish bankers" and unemployment on immigrants.
Now there is increasing talk of this being a year of revolutions to rival 1848 and 1989. When people have lost everything—jobs, homes, retirement funds and all means of financial support—they have nothing to lose. History shows us that such conditions pave the way for revolution.
The year 1848 was a major turning point in European history; revolutions against absolute monarchs swept across the continent. England and Russia were the only two major nations to escape, the former because its political system had already made some significant changes, and the latter because poor communications made it difficult for groups to work together in their revolutionary cause. (Russia would, however, experience its revolution several generations later.)
The 19th-century French political thinker and historian Alexis de Tocqueville wrote in his Recollections of the social upheaval of 1848: "Society was cut in two: those who had nothing [were] united in common envy, and those who had anything [were] united in common terror."
Conflict between "haves" and "have-nots"
The struggle between the "haves" and the "have-nots" is universal, both within nations and between nations. The G20 countries account for 85 percent of the world's production. Since the world has almost
200 countries, this means the poor and disadvantaged far outnumber the wealthy.
Most third-world nations have gone backwards since independence from the former European colonial powers, who are members of the G20. A great deal of this backsliding is due to corruption at all levels of government. The gap between the wealthy elite and other citizens is particularly marked in the so-called developing world.
Of course, the gap between the rich and poor nations isn't the only wealth gap in the world. In fact, revelations coming to light from the financial crisis show there's also an increasing gap between the wealthy elite and the rest of society within Western countries, which bodes ill for social stability in the future.
This is not just a banking or housing crisis—it's a debt crisis. And we're not just talking about government debt.
Americans alone owe $2.5 trillion in personal debt. Millions of people are maxed out. If one person in a household loses his or her job, the money is no longer there to make payments on every loan, exacerbating a financial crisis that is progressively worsening.
Whereas foreclosures have been one of the main problems so far, now we are seeing increasing predictions of major credit card defaults. People are simply unable to pay their bills. Sometimes this is due to bad management of their personal finances; more often, now, it's due to unemployment.
In recent decades, many Western nations have been losing manufacturing jobs to cheaper nations in Asia, relying on the service industry to provide replacement jobs. This disappearance of millions of jobs, coupled with lack of a productive capacity, is now causing great financial pain.
Looming inflation another threat
In a desperate attempt to turn the economy around, the American, British and Australian governments all announced big stimulus plans that amount to printing money. One of their aims is to avoid deflation, but the likely result of the stimulus will be inflation—as more money in circulation means each currency note is worth less, making goods and services cost more. That means people will likely be even poorer a year or two from now.
Consider that a 25 percent inflation rate is effectively a 25 percent income tax. Inflation is, in a sense, just another form of taxation. Rather than directly taking more money from people in taxes, government robs their money of its purchasing power. Governments benefit from the fall in the value of the currency since the value of their national debt falls as well.
Many people falsely assume that if government provides the funds, we can spend our way back to prosperity. However, the problem is not a lack of money, it's a lack of production. If the government simply prints more money, we will not be able to buy more stuff; we will simply pay higher prices for the same things. The only way to buy more and increase the standard of living is to produce more. It is production that creates purchasing power, not the printing press!
This lack of production is a contributing factor to the rising inequality in the Western democracies. In the Detroit area, for example, fairly high-paying manufacturing jobs in the auto industry over the last few decades gave rise to a middle class composed of people who had not received higher education.
Today, jobs that pay well typically require considerable education. However, since many of these jobs are not involved in creating wealth, it is difficult to see how governments and academia can support them long-term without the necessary tax revenue from a productive sector that appears to be steadily shrinking.
This is also true for careers in the medical field. Most require years of expensive higher education yet in the end don't create wealth. Without the wealth created by a strong productive sector, who is going to be left to pay the ever-rising medical bills?
Inequality can lead to revolution
An economic law, known as "the Rule of Inequality," is a reliable indicator of civil unrest and even of revolution, based on the growing gap between the haves and have-nots. Tocqueville wrote of this problem in the 19th century, in reference to the United States.
"For Tocqueville, the 'general equality of condition' that so struck him during his stay in the United States was the basic building block for political democracy; any change toward overly skewed social and economic inequalities would, in his view, inevitably endanger democratic politics" (Terry Lynn Karl, "Economic Inequality and Democratic Instability," Journal of Democracy, January 2000).
The revolution of 1848 was against absolute monarchs who had ruled Europe for centuries and who had not adjusted to industrialization and the reality of the rising mercantile class. The revolution of 1989 was quite another matter.
This was a revolution against communism. Communist countries referred to themselves as socialist. Socialists believe the government should control all the means of production. Supposedly equal, everybody was known as "comrade."
But some were more equal than others! The bulk of the population witnessed the privileges of those who held the highest positions in government. This led to resentment, economic stagnation and eventual revolution.
Western nations should take note. The gap is growing between pay and benefits in the government sector compared with pay and benefits in the private sector. The Wall Street Journal some time ago marked the point at which the average federal pay and benefits package reached double the average in the private sector. As government does not produce wealth, it is, of course, the private sector that is paying those higher government salaries and benefits through taxes!
Although each generation likes to think it's an improvement on the past, history shows that no form of government devised by man has been able to solve the problem of growing inequality between the various members of society. Absolute monarchy, democracy, communism and socialism have all failed in this regard.
We've tried everything, it seems—everything except God's financial system, one that would end the widening inequality gap and give hope to the poor!
The world needs a godly financial system
God's financial system is based on a 50-year cycle. At the start of the cycle, every family had their own piece of land that they could live on and farm to provide themselves a livelihood.
Some families did well, some did not. Those who got themselves into serious financial difficulties could sell their land to those who were more successful, becoming servants or laborers for the purchaser, who had to take care of them. At the beginning of the 50th year, the land was returned to the original family, thereby ensuring that future generations did not suffer for the mistakes of their ancestors.
This meant that there would be no super-wealthy family dynasties amassing great fortunes and concentrating power over generations. It also meant that families who had needed to sell their land would regain it in the 50th year. This reduced the plight of the poor, in that their poverty wouldn't persist for generations and they could look forward to a fresh start.
The 50th year was known as the Jubilee. It was a time for a general cancellation of all debts. How the world needs God's system now! A general cancellation of debt would enable the global economy to start moving again.
We read about the year of Jubilee in Leviticus 25: "Then you shall cause the trumpet of the Jubilee to sound on the tenth day of the seventh month; on the Day of Atonement you shall make the trumpet to sound throughout all your land. And you shall consecrate the fiftieth year, and proclaim liberty throughout all the land to all its inhabitants. It shall be a Jubilee for you; and each of you shall return to his possession, and each of you shall return to his family" (verses 9-10).
The same chapter contains a condemnation of usury, the charging of interest, to fellow Israelites. "If one of your brethren becomes poor, and falls into poverty among you, then you shall help him ... Take no usury or interest from him...You shall not lend him your money for usury, nor lend him your food at a profit" (verses 35-37).
The implication is that lending would be rare, but when someone had a dire need, the lender would not charge interest. (Of course, this was also based on a stable currency without inflation.) In our modern world people have gotten themselves into far too much discretionary debt, and financial institutions have not been shy about charging high interest rates, especially on credit-card debt and payday loans that tend to hurt the poor the most.
The result is that people lose thousands of dollars, pounds or euros every year in interest payments to banks and other credit institutions, money they could spend on other things, thereby boosting the general economy. There's no wonder that a great deal of anger has surfaced toward bankers, whom many blame for the current crisis. The public was appalled to learn of huge bonuses paid to executives of companies in the financial sector that received government bailout money.
The year of the Jubilee highlights a stark contrast with the secular world in which we live. Throughout the modern history of the Western world, we have seen repeated cycles of boom and bust. We are now in the depths of an economic recession that some are calling another depression, a prolonged and deep recession.
This is man's financial system. God's financial system ensures that there will be no recessions. At the same time, there would be none of the booms that we have experienced in recent history, booms that feed on greed and often only increase the growing income gap. These also tend to create the economic "bubbles" that later burst.
Speaking at a gathering of religious leaders at St. Paul's Cathedral a day before the G20 summit, the summit host, British Prime Minister Gordon Brown, pointed out the moral dimension of the current crisis: "I believe that unsupervised globalization of our financial markets did not only cross national boundaries, it crossed moral boundaries too."
Global power shift prophesied
The Bible shows that man's financial systems may continue for a while before we see Christ's return and the establishment of God's financial system throughout the world. In fact, Revelation 17 and 18 describe the rise of a new economic superpower comprising 10 leaders or nations centered in Europe.
In this light, it's interesting to note the great divide between the English-speaking nations of the G20 and the countries that are members of the eurozone. Whereas the English speakers advocate increased government spending, the eurozone countries, led by Germany and France, remain opposed. Their reluctance to overspend and create even more debt will likely further strengthen the euro as the preferred currency, as the United States, the United Kingdom and Australia fall into an inflationary period.
Even so, it's not going to be easy for the Europeans, who are also faced with rising unemployment. Some eurozone members have a history of political instability, which could return and threaten European cohesion—in turn leading to a stronger European central government as foretold in Scripture.
A year of revolutions certainly remains a distinct possibility in the near future, not least of all in Europe. This could alter the political landscape, paving the way for the coming together of a new political and economic superpower prophesied in the Bible. It's important that you continue reading The Good News to stay abreast of these world-redefining trends. GN