At the time, Venice was one of the richest places in the known world, underpinned by its dominance in trade and the upward mobility of its citizens.
The modern Limited Partnership structure, in fact, is derived from an early Venetian model called the 'commenda', a sort of special purpose vehicle for trade missions.
A standard commenda involved young entrepreneurs with a lot of energy but no capital partnering with older veterans with a lot of capital but no energy. The old guys would finance a trade mission to Asia, and the young guy would head off to foreign lands to make money.
When (or if) he returned, they would split the profits with the young guy receiving 25% to 50%.
A lot of people became very wealthy through this model, and even the poorest serf could come to Venice and rise up in social and financial status.
As you could imagine, though, the politicians, the bureaucrats, and the business elite managed to find a way to screw it up.
In the early 1300s, the ruling elite eliminated the commenda structure that had made so many people so much money. Shortly afterward, the state started charging exorbitant taxes to merchants and nationalizing trade.
A police force was introduced in 1310 for the first time ever... not to protect the people from criminals, but to protect the criminals (ie the government) from the people.
It didn't take long for Venice to decline into insignificance. Any opportunities to create wealth and live prosperously vanished as Venetian politicians engaged in the wholesale destruction of their economy, the livelihoods of its participants, and the 'Venetian Dream.’
With 20/20 hindsight, we can look back upon medieval Venice and pinpoint the early 1300s as the turning point to rapid decline... when there was a great unraveling of economic foundations and personal freedom.
It certainly makes one wonder if future historians will look back upon this period in Western civilization and draw the same conclusion.
In a recent book, The Price of Inequality by economist Joseph Stiglitz, there is copious data showing how today’s divided society is shrinking the middle class and endangering our future.
He highlights that there is income concentration in that the top 1 percent of Americans gained 93 percent of the additional income created in the country in 2010 compared to that created in 2009.
This type of income inequality is a cancer that affects many aspects of our society and economic system.
The main cause of wealth and income inequality is not globalization, a less educated population, or technological change but the main cause is that American business has entered politics through lobbying and financing campaigns.
For example, bankruptcy laws favor the banks over the homeowners and the holders of student debt.
Also, instead of a system with one person one vote, the evidence is clear we are moving to a system with one dollar one vote.
This type of inequality creates instability, lowers output, increases unemployment, and decreases Gross Domestic Product (GDP). It also erodes the rule of law, creates a nation of injustice and unfairness, diminishing social-economic opportunities, and a lack of participation of citizens. It promotes cronyism and insider-ism.
For example, (as I author this post, circa late July 2013), it has been reported that Congress has just voted to essentially exempt themselves and all members of the legislative branch of government from the “Affordable Care Act” also known as Obamacare. Members of Congress are facing skyrocketing healthcare premiums due to Obamacare like the rest of us. They felt compelled to act and exempt themselves from being forced to pay thousands more for health care and most likely get worse coverage Too scared to be clearly seen as voting against the law that they put in place, they voted to have the government pay the Obamacare premiums. Apparently what is good for the citizens of the country is not good for the members of Congress and their staff. Once again, this type of activity shows that they are not leading by example and that cronyism and insider-ism is rampant.
The Stiglitz book is a good read and clearly shows that individuals in the United States now have a lower likelihood of moving up in social and financial status than any other developed country in the world.
This fact is reinforced by the Federal Reserve in a recent report titled Survey on Consumer Finances, which showed that median US household net worth fell nearly 40% from 2007 to 2010.
This is the natural effect when you base an entire system on the whims of a very small elite that has awarded itself the ability to spend recklessly, rack up unsustainable levels of debt, and conjure money out of thin air.
As in Venice before them, US politicians have been engaging in the wholesale destruction of their economy, the livelihoods of its participants, and the American Dream.
Based on the results of the past few years, it is best to give credit where credit is due, and say ‘Mission Accomplished!”
With this in mind, it is a good idea to learn how to be an entrepreneur, become self employed and get self sufficient. Before I leave this topic, I want you to know that at the end of this post, I will introduce you to a top-tier income generating business opportunity where you can earn while you learn. This opportunity will provide access to education, tools, and best practices as well as a community that will provide support to you as you take action. Once you get traction, a whole new world will open up and you will see all kinds of business ideas and opportunities.
In addition, it is a good idea to protect the purchasing power of your money in gold; and there are several ways that may be appropriate to obtain this protection. These include direct ownership in minted coins, use of gold exchange traded funds, gold mutual funds, and junior gold stocks. Many are investigating having part of their IRAs in gold, silver, precious metals, and non-dollar denominated currencies.
For those that truly believe default of sovereign debt is the greatest risk we all face, it is wise to learn how to implement a multiple flag strategy to diversify this risk or provide protection against higher taxes, capital controls, hyperinflation, civil unrest, erosion of personal liberty, and the rise of a police state. With a multiple flag system, you consider taking preparations like, but not limited to, establishing a foreign bank account, purchasing some real estate overseas, seeking alternate sources of income, dual citizenship, and carrying multiple passports.
I will continue to provide examples of things we need to learn, the secrets of the insiders, as part of being savvy with our money, and introduce alternative wealth creating strategies, in future articles and updates at my blog over the next few weeks.
If you are like-minded, be sure and join me here as a way to be savvy with your money and get back in the game … Passionate Professionals ... Rebuilding Careers in order to generate top-tier income.
Finally, I want to thank Simon Black, of Sovereign Man, as he was the source of some of the material mentioned in this post.
In closing, be sure to Meet Me at my website, WhoIsMikeFarrell; Learn How to Get Self-Employed, at my HomeBizSocial website; Read about my Internet Marketing Business, at myaspenIbiz site; Obtain Some Tips About Being No 1 on Google, at aspenIbiz My Go-To-Market Partners website; and Learn How to Live Longer, at aspenIbiz My Life’s Advantage Today site.
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