Published On: Fri, Aug 14th, 2015

Is this time different?

Central Bank“Study the past if you would define the future. In other words, if you want to be able to change the future, you need to learn from your past experiences.” ~ 21st Century Credit Unions Success Through Shared Services, opening speech delivered by Mr. ShelwynSalesia, Director of Supervision Centrale Bank van Curaçao en Sint Maarten

With keen interest I listened to the lecture and interview from Candice Henriquez of the Central Bank of Curacao and St. Maarten while travelling from Curacao to St Maarten on August 12th, 2015 (files can be found here The information, although not surprising to me, is informative. However I don't agree wholeheartedly with the proposed solutions for one fundamental reason; focusing on growth through private initiatives without taking in the context of the inequality in wealth and income distribution will result in the status quo. Without balance nothing works as it should. I would not fly an aircraft if the weight distribution is wacky. The economy is the same way.

Economic growth, as has been taught to many of us, is a smokescreen based on my findings. When you look at the repeating economic cycles of booms and bursts, we see more and more wealth destruction happening to the middle class while increasingly wealth being transferred to a small group of “upper” class. “Wealth is never created, nor destroyed, it’s merely transferred.” And as the middle class keeps shrinking in each boom and burst economic cycle, how can we talk about economic growth? In other words if you made one million United States Dollars in an economic boom and lost one million in an economic burst, what growth occurred? Even if it is transferred, from a global perspective as a whole, we cannot call this economic growth. We however can talk about inequality in distribution but as a human race, imbalances will affect the whole in the long-term.

Biblically it is written, “What has been will be again, what has been done will be done again; there is nothing new under the sun.” ~ Ecclesiastes 1:9

History is a great teacher. All throughout history we have learned how great civilizations collapse but to date scholars are still debating how and why. But many similarities can be seen happening today from that as the past. For example it is said that the city of Atlantis possessed great technologies before its demised (According to Plato, the city of Atlantis was home to the most advanced society in the world), and Egypt’s infrastructure and technologies are still a mystery to date. But one thing that remains common and practically the same, even within this day and age, is the arrangement of human affairs. Despite our advancement in science and technology, the arrangement of human affairs remains practically the same for thousands of years. My hypothesis is then that this could be the core reason why history keeps repeating itself because our arrangement of human affairs has never changed and evolved. The Middle Ages feudal system of king, serfs, peasants, etc is still very prevalent today. The form may have changed but the substance is very much still alive today.


“An imbalance between rich and poor is the oldest and most fatal ailment of all republics.” Although it is being debated if the well-known Greek historian Plutarch – who died in 120 A.D. wrote this quote or not, it speaks volume. If Plutarch was right, the world has been getting sicker and sicker for quite a while. As the year 2000 approached, former President Jimmy Carter was invited to speak at a forum devoted to the question of, "What is the world's greatest challenge in this new millennium?" Carter's speech in answer to that question focused on the growing gap between the rich and poor. In his words:

“At the beginning of the last century, the ten richest countries were nine times wealthier than the ten poorest ones. In 1960, the ratio was 30:1. At the beginning of this 21st century, average income per person in the twenty richest nations was $27,591 and in the poorest nations only $211, a ratio of 131:1.” (Carter, 2005, p. 179).

How has this happened? What do we know about the root causes of the deepening divide between the rich and poor? Unfortunately you won’t really find answers to such questions and many more in traditional text books. I know because I came out of University with more questions than answers to be honest and I had to find the answers too many of my outstanding questions in non-traditional media, literature, and text books. Going deeper into this subject is beyond the scope of this medium but trust me when I say that history is fundamental and does repeat itself. For now, I leave you with the following statement:

"...... when the rate of return on capital (r) is greater than the rate of economic growth (g) over the long term, the result is concentration of wealth, and this unequal distribution of wealth causes social and economic instability." ~ Thomas Piketty

By Emilio Kalmera, Financial Advisor

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