Dire Trend #2: The Global Pyramid Scheme

Third in an ongoing series about the deeper reasons behind the difficulty of finding work

Dire Trend #2 – The Global Pyramid Scheme: This second trend is a little easier to miss than the first one.  Did you ever get a letter –or an email –promising you $625 in the mail? All you had to do was send five dollars to each of the four people’s names above you on a list, add your name to the bottom of the list, and send the letter on to five (soon to be former) friends. This is what is known as a pyramid scheme, and it sounds like a great deal. Basically, the people at the beginning of the scheme, the top of the pyramid, get paid by an ever increasing pool of people at the bottom of the pyramid. It really does work as advertised, at first, but the same law of mathematics that promises exponentially huge payouts dooms the scheme to an unhappy ending. After only a short amount of time, you run out of people to recruit at the bottom of the pyramid. The very large group of people who come in at the end of the pyramid scheme pay money that goes to the people above them on the pyramid, but they never get any payment back because there aren’t enough suckers left to recruit under them.

Pyramid schemes never completely die off because they seem so promising. Most people learn pretty quickly to avoid the most obvious chain-letter type schemes, but millions of dollars are routinely lost in more upscale Ponzi-type pyramids, such as the one run by the crooked financier Bernie Madoff.

As many shock waves as were set off by the collapse of Madoff’s pyramid, however, it was small potatoes compared to the biggest pyramid scheme of all –the one played by nations. It works like this: In order to become wealthy, a nation industrializes, which means it opens up factories and begins mass producing consumer goods. In order for this to work, however, a nation needs a constant supply of low-priced raw materials, and a market full of consumers ready to buy the finished products.

When what are now the “First World” countries industrialized, one of the ways in which we accomplished that task was by entering into an exploitative relationship with less fortunate countries around the world.  In that relationship we obtained raw materials from them at artificially low costs, and sold back finished products to them at inflated prices. This relationship still continues, but there is now also a second tier of industrialized countries –places like China and India –that are still subsidizing the luxurious First World lifestyle, but that are also entering into their own exploitative relationships with countries further behind on the pathway to industrialization.

Like the Madoff investment group, the payoffs are great for the top of the pyramid –so far–, but a collapse is inevitable. The number of people in the world is large but finite, and the resources of the Earth are vast but exhaustable. Now that countries as large as China and India have entered the game, the chances of there being enough new recruits further down the pyramid to keep the system running are becoming smaller and smaller.

NEXT WEEK: Dire Trend #3

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