Posts Tagged ‘capitalist’

The Impending Japanese Economic Implosion

Thursday, November 13th, 2014

Dear Friends,

It seems to me, Japanese Prime Minister Shinzo Abe, is both strangling his nation’s economy while he forces food down it’s throat. The Japanese Central bank’s decision to monetize their debt is a sure path to economic asphyxiation. The side of the road of history is littered with the wreckage of economies that have tried that hocus pokus. Abe is choking his economy with high taxes, and is planning on raising taxes even more, while he destroys their currency! Japan has endured a Keynesian driven depression for over a decade. Each political party more in love with the welfare state than the other. If Japan wants to remain an economic powerhouse, and thereby it’s standard of living, it must turn away from coddling super giant businesses, and unleash the dragon of entrepreneurship. That would save his economy and restore prosperity to Japan, or France, Ukraine, Greece, Argentina, Venezuela, etc…

It is like the ancient proverb about the old farmer. At the end of the day an old farmer came into the house covered with dirt. His son asked him where the Old Farmer had been all day. “I have been out helping the corn grow.” Replied the old farmer. The son ran out to find the old farmer had pulled up all his corn. Like the old farmer Abe is trying too hard to “help” his economy grow. Instead of printing huge sums of money for the government to spend, the Japanese central bank should be buying gold, strengthening their currency to protect the people’s wealth. Instead of following the example of Switzerland the Japanese are following the example of Argentina.

Argentina has gone through more than one episode of hyper inflation and are headed to another. The middle class in Argentina has been hollowed out by repeated rounds of economy crushing monetary calamity. They have monetized their debt which has always led to hyper inflation. Monetizing a nation’s debt is basically printing money for government to spend. It is usually done by the central bank buying it’s government’s bonds. This cycles the money through the crony banks on it’s way to the government’s checkbook.

Switzerland has always protected it’s currency and has always had a good standard of living coupled with low inflation. The Swiss middle class is healthy. On November 30 the Swiss are going to the polls to decide if they are going to force their central bank to buy gold and repatriate their expatriate gold. That would have the effect of increasing the level of gold backing of the Swiss Franc while also protecting the nation’s gold from third party adverse incentives. Japan would be well advised to strengthen their currency, keep it stable even to the point of deflation, than ruin the credit of the nation as a whole.

When Japan started down the rabbit hole of Keynesian deficit spending, they had a government surplus, now they have a decade of no growth and more than twice their GDP in government debt. Instead of squandering all that money on Keynesian demand side “stimulus” they should have spent it on funding supply side entrepreneurs. More businesses require more employees. The redundancy of labor among many smaller businesses drives up the demand for labor and thus wages. New products that flood into a society during times of rapid innovation, from many entrepreneurs adding to the economic aggregate, improve the standard of living of everyone in those societies. High and rising wages drives up demand, exponentially more than any government program, which can only take from someone who earned it, so they can’t spend or save it. The government then simply throws that hard earned money into the fire of inefficiency that is government spending.

Raising taxes in an already highly taxed nation is insane. Japan is the poster child for crony capitalism. It is highly taxed and regulated, suffocating entrepreneurs with regulations and taxes. All of which is done to protect super giant businesses from competition. Economy of scale is true when it comes to brute force manufacturing, but not in the creation of new products, ways of organizing a business or making existing products more effective. The ability of a small startup to get funding, operate with minimal government friction, (taxes and regulation), as well as operate in a standardized economic environment, are very highly correlated with the long term growth of that economy and a rising standard of living.

The Japanese government needs to cut taxes. Cutting taxes puts more money into the hands of people. It doesn’t matter if they spend that money, put it in a bank, invest it in equities or give it to charity, the money kept by the people will go miles further, per dollar, than it ever could being squandered by government. Allowing a little deflation wouldn’t be such a bad thing. Instead of taxing and spending, government could give back by allowing deflation, in an entrepreneurial society deflation allows innovators to do more with less. Deflation is like a pay hike to everyone in society. The only one who is harmed by deflation is an overspending government. The Japanese government should appoint a panel to find outdated and redundant regulations and laws that can be stricken from the books. Cull the regulations and laws as often as possible and as hard as politically feasible. These pro free market innovations would unleash terrific creative power, leading to well distributed societal wealth, than unlimited government spending on fifty thousand dollar hammers and solid gold heated toilet seats.

Sincerely,

John Pepin

Creative Destruction, Say’s Law and the Pseudo Science of Economics

Monday, October 20th, 2014

Dear Friends,

It seems to me, supply really does drive demand in the creative phase of the creative destruction cycle, and arguments to the contrary are most often based on observation bias. The theory that supply drives demand is Say’s law, but I am changing it a bit. Keynesian economic theory is that demand drives supply which is the opposite of Say’s law. These two theories have been at odds since John Maynard Keynes developed his theory. Keynes theory falls short of the mark, as does Say’s law, but if we combine Schumpeter’s theory with that of Say, the amalgam provides us with a better snapshot of the workings of a healthy economy. This is because an economy is a complex system, and complex systems are by their nature messy, making it impossible to quantify and measure the inputs to any real degree of reliability, therefore economics are a pseudo science or in other words, an art. This is important because our lives are better when we live in an expanding economy with a rising standard of living.

Economics is not a real science in the strictest of terms. The theories cannot be independently verified because the fundamentals cannot be effectively measured. Moreover economics, like any of the humanist “sciences,” are subject to the personal bigotries of the “scientist.” These pseudo sciences have built in traps for those who would promote their theories over those of another. One of those traps is observation bias. In the hard sciences like physics the parameters can be set, measured and quantified. The bias of the observer is irrelevant, a stone dropped accelerates at nine point eight meters per second squared, no matter who is observing it, but since humanistic sciences, economics and climate “science” are not hard sciences based on directly observable phenomenon, but are instead complex systems that have far too many inputs and interactions, so observing and measuring any number of inputs and interactions, many of which are not directly observable at all let alone measurable, gives very little insight into the emergent phenomenon that is different in kind than the sum of the inputs… a key distinction of a complex system.

Since economics is the science/art of a complex system, theories cannot be measured by looking at any of the inputs, but instead must be measured from the emergent phenomenon that rises from the complex system itself. In other words, we cannot reason from the bottom up, like the hard sciences, we have to reason from the top down, and even then, we find observation bias creeping in. In the aggregate demand aggregate supply model, the assumption is that if there is no demand for products and services, any supply is over supply, and therefore demand drives supply. In Say’s law, that supply drives demand, the foundation is that if there is a supply of something there will be demand, even if the demand is at a price point that is lower than the manufacturing cost. In Schumpeter’s theory of creative destruction, the theory rests on the concept that new ideas draw in the means of production until the idea is fully implemented, then the outmoded ideas are destroyed.

All those theories start at some sub function of the complex system, demand, supply, new ideas, etc… then reason from the sub function or input, to the emergent phenomenon. As I have explained this is not an efficient way to reason about complex systems. If we instead look at the desired results, the emergent phenomenon we seek in an economic system, IE. a “healthy economy,” and then reason down, we are more likely to find workable theories that are less subject to observation bias… as long as the term “Healthy economy” is agreed to at the outset. Let’s set the parameters for a “healthy economy,” to be full employment, an expanding economy and a rising standard of living. Notice I didn’t make one of the parameters no recessions. This is because recession’s are clearly a facet of a healthy economy as we have described. We can deduce this by the fact that all complex systems grow in fits and starts, animals and plants grow rapidly, slow, then grow rapidly again, until they have reached maturity. Weather patterns change constantly from rain to clear and back to rain, all complex systems wax and wane and therefore reasoning from the top down, we can reasonably conclude recession is a function of a healthy economy, just as sleep is a function of a healthy body.

The emergent phenomenon of a healthy economy, requires a high utilization of workers, increasing demand for products and services, innovations that improve the standard of living and rising wages relative to the cost of living. From this we can see that driving demand by whatever means has no effect on innovation, it has no direct correlation to wages and only a tangential correlation to demand for labor. Creative destruction correlates well with innovation and tangentially with demand for labor but falls short of the mark when it comes to wages and demand. Say’s law that supply drives demand also falls short. If we combine them however we can get closer to describing conditions required for the emergent phenomenon we are calling a healthy economy.

Justus Moser lamented the fact that the market system invents new products then creates a demand for them. Before there were home computers there was no demand for them, in fact many of the economic brianiacs of the day argued there would never be a need for a home computer, because who needs all that number crunching power? Once the PC came out however, many new uses, from word processing and spreadsheets to computer games followed, giving the home computer uses that exceeded anyone’s initial concept of what a home computer would do. These innovations drove demand for the products they created and for their ancillary products as well. The same holds true for new innovations that have not even been thought of yet.

Aggregate supply aggregate demand, being easy to quantify is therefore scientific appearing, it is an oversimplification however that leads to many negative policies that hinder an economy from being healthy. Moreover it is especially subject to observation bias. This model is easy to understand. The most pernicious effect of this theory is that it’s inherent observation bias gives rise to bad policies. Policies that encourage politicians to deficit spend and redistribute other people’s money. It argues all demand is equal. If that was so then full aggregate demand of anything would give rise to a healthy economy. This is reasoning from the bottom up however. For example, if the only demand in an economy was for cocaine and all the productive resources was put to that end, would that lead to a healthy economy? Of course not, a truly sick economy would arise from such demand, even though aggregate demand exceeds aggregate supply, proving the weakness of the aggregate demand aggregate supply model.

If however, we combine Say’s law with Schumpeter’s creative destruction, reasoning from the top down, we find we have a better description of what is needed to have a healthy economy, ergo… sufficient demand for supply, innovation that betters people’s lives, increasing demand for labor and a rise in real wages driven by the demand for more complex labor. Put simply the theory simply works. Reasoning further down, we can observe the conditions that give rise to creation and the supply produced driving demand. The lower we descend however the more observation bias is likely to come into play. Creation requires as a prerequisite, ease of starting a business, else there can be no creation. This presupposes access to the capital necessary to start a business along with the tax and regulatory environment conducive of it. If these conditions are not met, lacking the supply that creation provides, demand falls short, and an economy fails to meet our definition of healthy. That is why I say, creative destruction must be wedded with Say’s law, to better explain the factors that give rise to the emergent phenomenon of a healthy or sick economy, which then points us to policy directives that will result in a healthy economy.

Sincerely,

John Pepin

The Poison of Propaganda

Thursday, September 25th, 2014

Dear Friends,

 

It seems to me, knowing propaganda is not the same thing as having knowledge. People who have been well indoctrinated in propaganda will stand on a rooftop and spout their pseudo knowledge with the certainty of a prophet. Most often those who think they know, will shout down someone who actually knows, because there is confidence in propaganda that is not available to those who actually understand the subject at hand. This is because actual knowledge requires an open mind, reasoned thought, observable reality and the evolution of knowledge, while propaganda gives a certainty that is not possible to someone with an open mind. Knowing the difference is critical if we are to seek knowledge and not fall victim to hucksters shilling propaganda.

 

Socialists, Marxists and progressives use propaganda like a poor Italian cook uses too much garlic. You can smell it on those that imbibe it. Propaganda is always offered as the end all truth. Anyone who has the audacity to offer a different opinion is vilified as promoting ignorance or as ignorant themselves. The propagandist will attack the person with an opposing view instead of addressing the arguments. That is because propaganda cannot stand up to open minded review while actual knowledge can.

 

The Enlightenment was about changing the source of knowledge from authority to observable reality. The propagandist eschews open debate for authority. You hear propagandists constantly referencing authority while claiming to be the rightful heirs of the Enlightenment. College professors are of this ilk. They stand in front of ignorant youths, (theoretically, that is why they are in college in the first place, to grow out of their ignorance), and teach them propaganda couched as truth, based totally upon the authority of the professor. This has become such a problem that colleges and universities have transformed into indoctrination centers for the new class progressive world view, real knowledge cannot be allowed, because it would alter the narrative that socialism is good and markets are bad, against all observations of history.

 

Global warming is the epitome of propagandist reasoning. The IPCC has been caught lying over and over, none of their predictions have come to pass and there is a ton of information available that counters their propaganda, but they rely on the false appeal to authority, “the science is settled.” Science is never settled, once the leading minds of the day were convinced light traveled through the “ether.” Today we know it doesn’t, because it is acts both a wave and a particle, which travels the same speed in any direction, all of which destroys the argument light travels through an “ether.” Real science is based on observation proving theory, in the global warming alarmist circles however, whenever observation goes against theory, it is observation that must be thrown out. We must instead rely on the self interested authority of the alarmists.

 

The youth are the most susceptible to propaganda. They haven’t the knowledge base or life experience to put into perspective the sweet lies that the propagandist feeds them. Since every one of us would rather believe a delectable lie rather than a bitter truth, propaganda that is appealing is well received by ignorant youths, as well as lazy minded adults. If you tell an old man that communism has never been tried, he will scoff at you and consider you an idiot propagandist, while an ignorant youth or lazy minded adult, will lap it up as though it was universal truth. In this case the poison of propaganda is sweet while the bitter truth of communism is hard to swallow.

 

By definition propaganda is false knowledge, or sophistry, that sounds reasonable but in fact is designed to trick people into making decisions that are not in their best interest. Otherwise why do it? Lacking life experience the youth are the most susceptible, but even lazy minded adults can be persuaded by propaganda, sometimes even when they know it is propaganda, because it is easier to just go along. The propagandist will make arguments based on partial truths mixed with many lies and backed by omissions. When they are caught in a lie they change the subject and their willing accomplices will vilify those who point out those lies. All showing that the propagandist despises the advances of the Enlightenment, and undermines it in the most pernicious ways, returning us to the dark ages of serfdom.

 

The bloody history of communism, socialism and progressivism shows all too well the results of mindlessly going along with propaganda. The progressive Woodrow Wilson and his eugenics movement led to the sterilization of thousands of American citizens against their wills, and provided the intellectual backstop for the Nazi eugenics based, final solution. The socialist Goebbels was the consummate propagandist, he used propaganda to put a ring in the nose of the German people, leading them to the most horrific slaughter of human beings the world has yet seen. Lenin used propaganda to enslave the Russian empire resulting in tens of millions of human beings, killed, tortured, sent to gulags and insane asylums. If we want to repeat that history, all that is required is to go along, if we wish to avoid such human suffering however, it is incumbent upon us to speak up and point out propaganda when we see it.

 

 

Sincerely,

 

John Pepin

Capitalist Security System and a Zero Unit Cost of Labor

Monday, August 18th, 2014

 

Dear Friends,

 

It seems to me, another thing most countries could do to improve their economy, would be to establish a Capitalist Security System (CSS). Such a system would be completely different than the typical social(ist) security system (SSS) we have now. Some of the ways they differ are, CSS would invest and add to the stock of capital available for growth; while SSS steals from the capital stock, CSS would add to generational wealth; while SSS steals from generational wealth, CSS gives every man woman and child a stake in society; while SSS gives people a stake in more powerful government, to take the taxes needed, etc… If a country redirected the funds now going into all the SSS in that country were instead turned to a CSS, that nation’s economy would reap huge rewards, incentive wise, in productivity and capital available for new companies. Everyone would benefit with each successive generation reaping ever larger rewards while contributing to the economic success of their countries.

 

We all know how SSS works but I’ll explain it for those who might not be sure.The Social(ist) Security System is a system, where the government takes money from those young enough to work and the businesses that hire them, then gives some of that money to those who have reached an age deemed too old to work. The money goes through various bureaus of government and some of the money stops there to fund those bureaus. Some of the money gets caught in the sieve of corruption and conniving that surrounds every government bureaucracy and stops there funding corruption. The rest gets to those on government pension. The system is expensive because so many hands are in it, it fuels corruption with government money, it is unsustainable, it takes capital from producers and redistributes it to non producers… among many other problems.

 

A CSS would operate very differently. A Capitalist Security System would not invest in government’s power, as does typical social security, Capitalist Social Security would instead invest in the power of the market through dividend paying stocks. Initial funding would be through legally required investment of a portion of one’s income, or perhaps a .5% tax on consumption, (Sales tax). It would be run by an algorithm that buys dividend paying stocks the world over based on several criteria, one of which would be longevity of the business model and of dividend history. The fund would grow by reinvesting the dividends and selling stocks that under perform via dividends. Once the first generation reached the requisite age, then it would pay out 50% of the dividends to the retirees and reinvest the other half. A person’s portion of the income stream from the fund would transfer to their heirs upon their death as the pensioner see fit. The heir could then start receiving payment immediately or allow their portion to grow and get larger payments later, say when they retire.

 

It would probably be administered by a bureaucracy in government, but it doesn’t need to, it could be administered by some financial firm, the operation of the CSS fund being awarded by competitive bid based on the firm’s fees. There would have to be special tax exemptions for the fund. One tax exemption would be to stop the double taxation of dividend income. Either tax the company or the investor, not both. In the case of CSS the company would pay the income tax, (if there is one) and the fund would face no tax penalty. The investor should not be taxed on the income he or she gets out of the fund, since the corporation already did, and the fund itself is just an agent of the investor. In the case of the CSS fund the investors would be everyone.

 

The economic advantages should be clear for anyone to see. One would be the strong incentive for companies to reinvest in plant equipment and training. Else they run the risk of being sold by the CSS fund which would be the kiss of death to a company’s stock price. The huge fluctuations in the stock market would be diminished due to the fact the CSS fund wouldn’t sell it’s stocks in a panic, the incentive for companies under such a system would be to pay dividends as well as grow the company. Another advantage would be that pay for corporation bigwigs would face downward pressure, because if too much is sucked off today the power of shareholders to demand more of the company’s profits given to them as dividends is far too diluted by various factors, but if a giant fund such as the CSS showed displeasure at the high pay of a CEO the firm would toe the line. Perhaps most importantly, in the real world, SSS must eventually fail, because government will eventually run out of other people’s money to take, but a CSS would be self sustaining and grow organically. The list of economic advantages is endless for a Capitalist Social Security System.

 

With human like robots coming on the scene sooner than people realize, (20-40 years) this will be a phenomenon that will eventually drive the unit cost of labor to zero. A zero cost of labor will usher in a completely new paradigm for humanity. Maybe for the better and maybe for the worse but it will be different than anything that has come before. For a leader in government to see this and envision a means to stave off the possible starving masses, that such a situation could give rise to, shows vision. A Capitalist Social Security System could be just such a means to keep future generations, who will have lost the ability to sell their labor in the open market for wages, a means of sustenance. A means of sustenance that will grow with each generation. Like I said, “ another thing most countries could do to improve their economy, would be to establish a Capitalist Security System.”

 

 

Sincerely,

 

John Pepin

 

Oligarchy of The Red Tapeworm

Thursday, March 27th, 2014

Dear Friends,

 

It seems to me, the legal system is supposed to facilitate market interactions, but in reality the legal system more often than not, is a parasitic drag on the free market. Like a tape worm imparts some resistance to diarrhea when it is small, it eventually outgrows it’s host, and if it isn’t dealt with, the host eventually starves to death no matter how much food they eat. This is not to say that there should be no laws. It is to say that the legal system in most western countries has out grown their hosts, the economies, and is draining those economies the vital sustenance, capital, they need. Many people have pointed this out to no avail. The reason the legal system always overtakes the national good is because Lawyers are a defacto oligarchy. Our economic futures rest on our ability to prune back the parasitic nature of our legal systems, else we and our children will live in an economy that is being starved, by the very legal system that is supposed to protect it.

 

Market economies need standards, this is a basic fact of any study on market economics. People have to be able to make valid legal contracts, that are binding, we have to be able to sue for redress of economic harm visited on us… among a whole host of other valuable services a functional legal system provides. No economy can do without laws and standards. However, as Madison said in The Federalist Papers, when those laws become so abstruse, even a person knowledgeable in the law cannot possibly understand them all, you have tyranny.

 

The legal system is essentially a faction. This faction, like all factions, seeks the best interests of it’s members, no differently than a labor union. The legal faction is made up of attorneys. It is not coincidental that all governments have a large portion of their members as attorneys. Modern governments are broken into three branches, Executive, Legislative and Judicial. This was Montesquieu idea, to limit the source of most tyranny that ruins republican government, an overly powerful Executive. Break the authority from the Executive to adjudicate over law, and form it into a new, or third branch, the Judicial, (the lawyer’s exclusive branch). So, since all three branches are largely populated by lawyers, most legislators are attorneys, most Presidents have been lawyers, and with one branch exclusive to lawyers, the legal faction is overly represented in government. This makes the legal faction an oligarchy. They eventually rule, not in the interests of everyone, but in the interests of their faction, the classic definition of an oligarchy, ala Aristotle’s wrong forms of government.

 

Many learned people have suggested tort reform but it never gets anywhere. That is because the very people who would have to pass it, lawyers, would suffer real harm from it. The legal faction’s power would be diminished and the members of it, attorneys, would suffer economic harm. That is why tort reform is always dead on arrival whenever anyone offers it. Moreover, every time a new regulation is written, a new law is passed, a court finds a business has to pay a litigant for burning herself with hot coffee, or a judge rules a legal contract is null and void, along with many other legal abuses, the demand for lawyers goes up. Economics 101 is supply and demand, as the barrier to entry is raised by more and more stringent testing and pretesting requirements, lowering supply, while at the same time the demand for attorneys is elevated by absurd rulings and tomes of arcane regulations and laws, raising demand, the profit for lawyers must necessarily go up.

 

That is why the media and lawyers attack oil company profits in the tens of billions but no one decries the profits of law firms that run into the hundreds of billions. Doctors are vilified for charging what they do to save the life of a child but the absurd charges attorneys get away with are ho hummed. The legal faction controls the government and thus the conversation. The fees of lawyers goes up, along with the regulations they pass and society has to follow, in a Fibonacci curve while economic growth dwindles away. No matter to the legal faction however, their fortunes continue to rise. But, like the Roman empire was destroyed, in no small part by the stifling regulation and bureaucracy, their legal system built up, our modern societies are being eaten from within by the red tape worm of the legal faction. Most likely, we will end up like the Roman civilization, because we refuse to learn the lesson history teaches us.

 

 

Sincerely,

 

John Pepin

New World Order

Monday, March 17th, 2014

Dear Friends,

 

It seems to me… there is a push today to bring the entire world under one government. We see this in the expansionist policies of Russia, the push for a Caliphate and Chinese doctrine of dominance. Many of the world’s intelligentsia argue, the world would be better off if we were all under one government, and indeed that is the covert goal of the United Nations. It is to be the model for a world government, by the New Class, for the New Class. These are not the only examples but are the most overt. One world government is the dream of every tyrant that has ever lived, and with modern technology, it is becoming increasingly possible. The sophist arguments for it usually run along the lines of, war will be ended, it will usher in a new age of prosperity, or it would be more efficient. These are all spurious because they are not even remotely possible, but in fact, the exact opposite is the only conceivable outcome. If you like the life you have… you won’t be able to keep it.

 

China is at odds with every neighbor it has, from Japan to India. China demands the Senkaku islands from Japan, the Spratly islands from the Philippines, the entire South China Sea, Taiwan, the northern portion of Vietnam, two northern states of India, along with many others. Tibet, Mongolia and several other annexed countries are already under Chinese Communist dominance. With a skewed ratio of men to women, because of the one child policy, China has a restive and angry male population that is of age to fight in wars of aggression.

 

The great powers around the world have been emboldened by the weakening of the United States. Russia took two states from Georgia a few years ago, with no negative consequences, and now has taken the Crimean peninsula from Ukraine in all but word. Once this usurpation has played out Russia will have another piece of land under it’s control. Europe has been rendered impotent by Russia’s energy dominance, fueled by their unwillingness to exploit their own resources, and so may fall into the Russian sphere, but more likely will become part of the Caliphate. Only time will tell the next property Russia eyes with avarice.

 

Obama’s best friends, the Muslim Brotherhood, have in their very charter, to restore the Caliphate. In order to achieve that end they must conquer over fifty nations around the world. In their crusade to restore the Caliphate, there is no bridge they are not willing to cross, including terrorism, genocide and revolution. The US, under Obama, is more than happy to help, no matter the cost in human suffering.

 

The UN was supposedly initiated to stop wars, genocide and intrusions on human rights, but they side with tyrants, oppressors and dictators in every instance. The only nation that regularly comes under UN sanction is Israel. The worst human rights violators run the UN’s council on human rights! This is nothing new however. The New Class, (the world’s intelligentsia), have dreamed of a socialistic world order, run by them, for over a century. The UN is the structure and human suffering is the means.

 

Technology has progressed to the point that a world government could have every human being on Earth under surveillance. The level of oppression that data mining, mass data storage, miniature cameras, satellite surveillance etc… could give a world government, would guarantee tyranny for the people of the world in perpetuity and without recourse.

 

When the would be autocrats of the world espouse and end to war, universal prosperity and unlimited freedom, they are lying in the worst way possible. History shows unequivocally that government never gets smaller, more free or is ever able to provide prosperity, it only gets bigger, more intrusive and thereby people suffer famine and oppression, in every case. The nature of government and the human beings that run it is why this is always so.

 

Now that the US has been lowered by Barack Obama to powerlessness on the world stage the brakes are off. Every conniving tyrant slathers at the chance to grab as much of the pie as possible. Those who would restore and protect freedom, have no stomach for it, while those who would be tyrants, like vampires have an unlimited thirst for blood.

 

Once the world has been chopped up, the biggest world war ever imagined will start. There is no other possibility. With the proliferation of nuclear weapons, induced by the actions of Obama and past US Presidents, as well as Russia, China and Europe, the next world war will be nuclear. Perhaps the human race will be destroyed in a radioactive holocaust, perhaps we will be simply subjugated, but no matter how it ends… it will end badly. Barring divine intervention, unless some smart people who have political power, standing for free markets and liberty, can pit the various factions, China, Russia the UN and the Caliphate, against each other, the war for the world will go on as scheduled.

 

 

Sincerely,

 

John Pepin

The Retirement Paradigm

Monday, February 17th, 2014

Dear Friends,

 

It seems to me, the human body is not designed, nor is it suitable, for decades of physical toil, that is why people retire in their 50s and 60s. The system where we put aside some of our earnings for retirement is elegant, because it sets up a paradigm where people provide labor to the market system when we are young, and capital when we are too old to work. Those who claim, people will have to work until we are 70 or 80, have no concept of the physical toll of labor, because the have never physically toiled at a job. The system, where we provide labor when we are able and then capital once we have accumulated it, works well with the human body and it’s basic limitations as well as it’s abilities. Once we have moved from providing labor to providing capital, we can pursue new things, like starting a business, personal enrichment or helping with the grand kids. This is just another of the myriad of ways the market system benefits humanity and human beings.

 

The market system requires two basic inputs to function, labor and capital. When Marx derisively labeled the market system, capitalism, he was pointing to one of the fundamental requirements of the market. Marx considered labor to be the most important input, and that the introduction of capital into the equation rendered all human interaction, including that of the laborer and the manager, into a crass means of exploitation, the cash nexus as he called it. This is why he claimed, when we labor within the market, our work is alienating. What he failed to understand, is that the improvement in the human condition that the market system brought, and brings about, is based on capital funding the new ideas that create the improvement.

 

The market system allows the efficient transmission of ideas into production, while every other system, including and especially Marxism, discourages it. This transmission of new ideas requires capital, to purchase the means of production, and labor, to provide the production itself. As new ideas are incorporated into the existing system, old less efficient ones are rendered obsolete. This creates a basic instability to any nation that uses the market system, but that instability comes with a wage… an ever increasing standard of living for everyone.

 

When we are young we are able to labor without damage to our bodies. That is the nature of youth. But as we age, labor becomes more and more dangerous, even as our knowledge of our labor becomes greater. In the most efficient economies, as we become less able to labor and our knowledge about our labor becomes ever greater, we are promoted into management to take advantage of that practical knowledge. This has been undermined by the rise of the New Class, who go directly from school to management bypassing the labor phase. Thus crowding out those with practical knowledge. This means they enter management with very little practical knowledge but a large amount of theoretical knowledge and thus, hubris born of ignorance. Since this paradigm has become entrenched, the market system, which is ever evolving to meet the needs of humanity, has evolved to allow people to retire at earlier ages, even as our life spans get longer.

 

But our physical limitations remain. This is born out when we see ever more people getting hurt in their labor. The rise of physical therapists is the market system’s reaction to people laboring at older ages. Our bodies only have a few decades of physical labor in them, and then we must move from providing our needs from labor to either management, or by providing capital. Since the market system needs two inputs, labor and capital, both have value and either can be a means of support for people. Those who have labored for decades, and have set aside money for retirement, or where they have taken less in immediate wages in exchange for a defined pension, are able to retire from a labor based sustenance to a capital based one. Those who have been spendthrifts however undermine their own best interests.

 

Since capital is a basic input into the market it has value and in a functional market is paid commensurately with that value. This is upended when government policies lower the demand for labor, and thus wages, by importing cheap low skilled labor by immigration, making it harder to run a business through regulation, taxing labor, etc… or where national banks change the value equation of capital, through inflation or low returns on equity, caused by market warping policies, like money printing and nationalizing debt. When governments or central banks do this, they make it harder for those who have saved for retirement, to move from providing labor to providing capital. Other ways this paradigm is undermined, is when government’s seize the retirement funds of the people, (like in Argentina or Cyprus), or where the New Class manage companies so there is little return to shareholders, but huge wages paid to upper management. These economy damaging practices create the conditions, where people will have to labor far longer than is optimal for our bodies, and gives the incentive not to save but to spend.

 

Today we have people in the intelligentsia, (The New Class), who claim our children will have to work until they are ready to die. This is less of a burden for the new class, because they don’t labor, they manage. The human condition is such that, it is in everyone’s best interest to have a system where we labor when it is most efficient and least dangerous, and where we move to providing capital instead of labor, when our bodies become less efficient and more prone to damage. This has the added benefit of freeing up those who are retired to expand their minds, and perhaps provide some of the ideas, ideas that are fundamental to the market system’s growth. The practical knowledge and skills we build up throughout our working careers is excellent fodder for new ideas and new business possibilities. Rejuvenating the market with new ideas that become available, because people can switch from providing labor to providing capital, frees us up to pursue new ideas to the market, creating a rising standard of living. Unless the system is warped by our own leaders that is…

 

 

Sincerely,

John Pepin

Socialism Makes Us All Enemies

Monday, February 10th, 2014

Dear Friends,

 

It seems to me, as we progress more and more to socialism by means of the welfare state, we are sinking into a state of total war, everyman versus everyone else, where all vie against all. This is the opposite of the claimed goal of socialism but is the inevitable result of that pernicious notion. Even in a state of nature where, as Hobbs said, “life is brutish and short,” there is a strong incentive to rally together against the forces that threaten us, but in a state of total government that incentive is reversed, and is changed to a disincentive. While to the committed socialist this concept, that socialism pulls us apart, is an anathema, it is empirically provable. As we move from liberty to a total state this truism becomes more and more apparent. So, unless we want to live in a perpetual state of war, every man enemy to everyone else, we must change the direction we are traveling.

 

The welfare state is merely a means to progress us to a socialist state, where the distribution of the goods of society are made by political favor, instead of merit. As we progress to a total state and political favor becomes the primary means of deciding who gets what, the incentive ceases to be to work hard to get ahead, but to game the system. This is because the products of our labor will be taken, and redistributed to the politically favored, so a rational maximizer will logically eschew work and instead seek political favor, resulting in an ever shrinking economy. This should be obvious to anyone with their eyes open. The incentive under the total state is to gain political favor, as it is the only means to get ahead, and make no mistake, the more draconian the communist state the less equal people become, and the more we are torn apart.

 

Even a cursory look at historic examples of socialism show that equality is nonexistent under a socialist government. Those who don’t have political favor are lucky if they even get subsistence while those with political favor live like kings. Every example of a communist/socialist state show this to be true. Those in the party are not held to any standard at all. Socialism always results in a cleptocracy where those in the party steal from everyone else. Communist China is a perfect example. They have forsworn the communist means of production for the capitalist, which has resulted in huge wealth for party members by outright stealing, taking bribes, and other corrupt practices. They are almost never held to the law or morality, because the nature of socialism and socialist policies make those with political favor above the law. This shows the societal divisions that socialism begets.

 

It is clear that as we progress through the welfare state to socialism, our leaders are held to the Constitution and law, less and less. Their political favor gets them a get out of jail free card as well as riches far in access of what they have earned. That is why politicians become so wealthy while in office. They don’t produce, they steal the production of their constituents and give a pittance back, claiming they are liberal and charitable, when the exact opposite is true. If a thief stuck a gun in your face and took all your money, then gave you back a twenty and said, “get yourself a nice meal.” Would you call that crook liberal or charitable? If the thief was above the law, which would you rather be.. the crook or the victim?

 

Harry Truman said, “Anyone who gets rich in politics is a God damned crook.” Take the example of Senator Bernie Sanders. The man has never worked a day in his life. He was on welfare until he became the mayor of Burlington. Since then his brand of socialism has made him a millionaire many times over. Everything he has got was by political favor. When he was elected to the House, the Banking scandal broke. Sanders claimed the corrupt names should be withheld from the people, but as it turned out… Bernie had bounced checks the moment he got into office! You or I would be prosecuted for check fraud. Meanwhile he has made it harder and harder to make a living by honesty and hard work. This example shows, political favor allows those who have it to skirt the law, and is at least as good a means to wealth as being an entrepreneur, especially for the lazy.

 

The example of North Korea shows us how far we will be torn apart by socialism. In that hell hole parents are at war even with their own children. There are reports of parents eating their own children because hunger is so rampant. The gulags in North Korea are known as the most terrible places on the planet, where children will turn in their parents, for a slice of stale bread. During Stalin’s famine in the Ukraine, the teachers told the students to report their parents if they were hording food. An innocent little boy raised his hand and said his parents had a few potatoes in the floor boards. The police went to the home and indeed found several potatoes in the floor. The parents were arrested and executed as examples. The boy was called a hero and a statue was erected in his honor in Kiev. The boy starved to death the following year.

 

As I have said many times in these articles, when observation comes into conflict with theory, theory must give weigh. History in unambiguous about the fact that socialism creates a state of total war between people. We are pitted against each other in a race for political favor, else we run the risk of starving to death, or worse. The brutish and short life in a state of nature makes us band together, to get our needs met, while capitalism rewards collaboration, hard work and equality, creating conditions conducive to brotherly love, and the inhumane nature of a socialist government rends us apart in a never ending race to get our needs met in an ever shrinking economy, under a system where the party is oligarchy, and everyone else is a slave. I count this as one of the most evil things about the diabolical system called socialism.

 

 

Sincerely,

 

John Pepin

The Gap Between the Rich and the Poor

Thursday, February 6th, 2014

Dear Friends,

 

It seems to me, the disparity between the rich and the poor is so misused and so misunderstood, it ceases to be a metric of the justness of the market system, and has become a mere tool for leftist propaganda. The term is never fully defined, is it the difference between the income of the highest earners and the lowest earners, is it the difference between the wealth of the richest and the poorest, or perhaps it is the difference between the both income and wealth of the prosperous and the pitiable? The parameters are never stated, only left to the imagination of the observer, and as such becomes a subjective measure and not an objective measure. This makes the term spurious in that it appears logical but is in fact false logic meant to deceive. Yet this sophist measure is touted as proving the unjustness of the market system, and by extension, the justness of the socialist system. If we are to improve our standard of living and not backslide, as we have done under Obama’s reign, we must throw away this specious measure for one that is objective and empirical.

 

It is all the rage today in the unbiased press to claim the disparity between the rich and the poor is at an all time high. We are scolded by the rich media elite that we must do something about this disparity else we are immoral and self indulgent people. The media elite however never actually lower their own standard of living they only demand us to lower ours. Using this false measure to goad us into accepting government actions, that we know will harm our economic interests, for the supposed interests of the “poor.” As we are shamed into lowering our standard of living the elite in the media, government and culture increase theirs. Are we to assume then that we are the culprit when it comes to the disparity?

 

President Obama is constantly using this specious claim, along with the spurious admonition that all of us must give a little so that others can get a little. All the while Obama vacations on Nantucket island, the playground of the rich and powerful. He never vacations at a bowling ally, Detroit or Seven Flags. He spends all of his time with the rich, living the life of a king, at the expense of the taxpayer… you know, us… the ones who have to give up a little so that others can have a little more. Apparently we must give so the king can have more. How does this help the poor though? His spurious rhetoric makes Obama’s admonition that we “share” the sacrifice, hypocrisy at best.

 

Socialism is always touted as the means to close the gap between the rich and the poor, but when we examine the results of socialism, honestly and fairly we find the direct opposite is true. Take the most socialistic nations, Cuba and North Korea, there are many more but these two will suffice. In Cuba the socialist haven in the Caribbean, Forbes Magazine has deemed Fidel Castro one of the richest men on the planet.. A label he vehemently denied but is empirically true. He owns not only everything on the island of Cuba but everyone as well. If he arbitrarily orders someone to do a thing, they must do it else face jail, or worse. He decides what everyone gets, he decides every aspect of the county’s economy. This all makes Fidel Castro richer than rich, it makes him the slave master of Cuba.

 

In North Korea people must do and think exactly as the tyrant says, even crying at the death of the last tyrant, if the tears are not sufficient or realistic, they get punished for three generations in forced labor camps. People who have escaped those human atrocity factories, have given some of the most horrendous stories of human suffering, starvation and deprivations imaginable, where a child will sell out their mother to the hangman for a slice of stale dry bread! Meanwhile, the tyrant lives the life of a king. He has the best of everything while his people starve. Is it possible to have a greater disparity, by every measure, than between the master and the slave?

 

A better scale would be to compare the standard of living of the poorest in a society to the richest. If the poor are well fed, have multiple flat screen televisions, at least one car and the finest sneakers… as compared to another country where starvation is common, housing is filthy, leaky and subject to collapse, where it can be obtained, which of the two is more just? The wealthy will always have a high standard of living and the poor will always have a lower standard of living, that will never change, and is only exacerbated by socialism’s benefit to the politically favored versus the politically disfavored. When the actual disparity between the standard of living between the rich and poor is low however, the rich claim the environment and thus the carrying capacity of the planet is threatened. The truth is, it is not what they have that makes them happy, it is what we don’t have that they have. To that end, they use spurious arguments like the gap between the rich, (themselves) and the poor, (us) to further their selfish ends.

 

When we use the standard of living of the wealthy versus the poor we are using a metric that can be measured empirically, is objective and not subjective and is far more indicative of the real justness of an economic system. Moreover, if we add the rate of rise of the standard of living in a given system, we have a much more accurate measure. This is not done because if it were the market system would always win out hands down. Since the New Class sets the parameters of any debate on the justness of a given economic system, and they are the ones with political favor and power, they always seek to give us false choices, hanging us on the horns of a dilemma, so we are gored no matter what we choose, resulting in a system that further empowers them.

 

Since socialism in all it’s pernicious incarnations is simply distributive justice by political favor, and since the New Class has both political favor and political power, they benefit most when society is socialist. Therefore they want socialism despite the very real damage to the lives and welfare of the people. To this end, it is in the egoists self interests to use spurious claims of economic justice, to goad us into allowing government actions that do real harm to our economic, cultural and social interests. Spurious claims are by their nature difficult to counter and so they become memes in our society. It is up to us then, as self interested human beings, to do everything in our power to point them out as well as the sophist nature of them, else we fall into the rabbit hole of absurdity in the name of justice.

 

 

Sincerely,

 

John Pepin

The Ukrainian Riots

Monday, January 27th, 2014

Dear Friends,

 

It seems to me, the people of the Ukraine are ripping mad, and they have every right to be. They have been deceived and stabbed in the back over and over. The riots that have been going on now for weeks in Kiev are the manifestation of that anger. Now cities around Ukraine are joining the protests. Like in the United States and the World over, politicians in the Ukraine believe they can run on a platform, then rule in direct opposition to that platform without consequence. In the US politicians get away with it, with the help of the unbiased media, but in Ukraine their feet are being held to the fire. A real fire as it turns out. The Ukrainian government has offered several concessions to the protesters but they are too little too late. Perhaps the riots won’t end, until either the government stomps them down like the Chinese communists did in Tienanmen Square, or the government falls, but there is a way to solve the problem in both the Ukraine and the World over.

 

People have a great ability to forgive. We understand that others are flawed human beings as are we. Upon a continued assault however, no person no matter their demeanor, will remain calm forever. Politicians in both the Ukraine and the US run as conservatives and libertarians but rule as tyrants and socialists. This enrages the people who voted for those corrupt politicians based, as it always turns out, on lies. No one can stand ceaseless irritations without eventually becoming irritated and that is where the Ukrainian people are. How long will it take for the American people to wake from our slumber?

 

One of the concessions offered by the Ukrainian president is the amending of their Constitution. What the unbiased media fail to report, or even understand, is that if a President can unilaterally amend the Constitution… there is no Constitution. The Protesters understand this basic fact of Constitutional rule, but the elite in the media and government don’t, (or don’t want to). A Constitution is supposed to be a document that limits the power of the elite over the people. If the elite can change it willy nilly, it does not limit their power, but give their reign a faux legitimacy. If the protesters allow the Constitution to be changed by the political elite, it will be changed back again the moment the exigency of the riots are over, giving the government unlimited power again.

 

History has not been kind the the people of the Ukraine. They have suffered under the Mongol hordes, they have faced wave after wave of Muslim invasions, they have suffered under the Tzar’s tyranny and oppression and have endured under Stalin and his artificial famine. The unfortunate people of the Ukraine have no history of freedom and liberty to fall back on. They have only famine, oppression, war and slaughter to remember. Now they have an opportunity to forge a different path, one free from oppression, and they are seizing it. I pray to God they can pull it off, their lot has been so bad for so long, if anyone deserves peace and prosperity, it is the people of the Ukraine.

 

Clearly what is needed in the Ukraine is laissez faire capitalism, a strongly limiting Constitution and a NUMA to enforce it. Otherwise the government will continue to run amok, progressing to socialism and tyranny, as they are in the US. Barring that, as soon as a new government comes into power, it will act the same as the old one. A NUMA would change the paradigm in Ukraine for the better by holding the political elite to the Constitution’s limits. This is something very few political leaders have been held to, since the dawn of time, anywhere. Power must be limited else it limits the people. We have seen this played out throughout time and the World over.

 

Only time will tell how the protests in Ukraine will turn out. The strong likely hood is that some new dictator will emerge, charismatic and ruthless. History is not on the side of the people. The normal state of humanity is under the thumb of a tyrant, it is the exception where and when a people escape from it and forge a new way. The US did for a while, but the current of politics always wears away the people’s resolve, eventually eroding the limits put on government by Constitutions. Only a Constitutionally empowered branch of government could ever hope to have the authority to contain the avarice of the political elite. Without a NUMA, Ukraine will fall back into oppression, as the US is progressing to.

 

Perhaps it is a pie in the sky dream that Ukrainians could have liberty but every man woman and child yearns to be free in his or her heart. Freedom has lifted millions of people from poverty while arbitrary rule has lowered billions to slavery. I am on the side of the protesters, I believe liberty is the only way to lift all boats, and liberty is the protester’s goal, but the protesters need to have a plan. To that end, a NUMA along with a strictly limiting Constitution, would do just that. Let’s pray it happens and that the political current doesn’t wash away the hopes and dreams of the Ukrainian people. God speed and God bless the Ukrainian people… and may God help us here in the US.

 

 

Sincerely,

 

John Pepin