Posts Tagged ‘economy’
Thursday, September 9th, 2010
Dear Friends,
It seems to me that the Chimerica analogy is apt but misses a critical point.
The Chimerica analogy is… That the growth we saw during the first decade of the 2000‘s was a result of China producing products, Americans purchasing those products and borrowing the money to buy those products from China. The collapse of the American home market translated into a collapse in the American appetite for Chinese products.
Where it misses the point is the part where China loans Americans money to buy Chinese made goods. The largest consumer of Chinese goods is the United States Government. In the form of debt. Take the US debt out of the equation and the American Chinese picture changes.
Today we hear rumors of sovereign insolvency. The news reports that Harrisburg Pennsylvania has gone insolvent. Another example of Sovereign insolvency. We find out Greece hasn’t come clean on it’s debt yet. Rumors abound, about the other countries in Europe teetering, even as Germany reaps huge profits from the devalued Euro.
Governments are spending money as fast as they can to “prop up“ their economies. Especially the American government. Spending to “Improve” the economy and drive up aggregate demand. Some are cheering the spending claiming that as long as the bond market keeps interest rates low government can keep spending. Ignoring the fact that most people thought Lehman Brothers was a good investment… until it wasn’t. So is government borrowing. There is a brick wall somewhere in the fog out there. No one knows where it is… So might it not be prudent to slow down?
Government borrowing also has the pernicious attribute of raising the expected level of government spending. People get more money from government and expect that money to never stop coming in. Look at the mohair subsidy. The US stopped putting mohair into military uniforms after the first world war.
The Obama administration believes, publicly, that there is a multiplier of .8 for government spending. So a dollar of government spending stimulates $1.80 in the private sector. If this were true then all spending should be channeled through the government. It would be a win win. This is exactly what some in the administration believe. That the government is in the best position to determine what should be bought and sold in the economy. Added a .8 multiplier and it makes it seem, to them, a no brainier.
Of course reality has to stick in it’s ugly head. Empirically, if that were true the 3 trillion dollars the US government spent on stimulus should have generated 5.4 trillion dollars in economic output. At a tax rate of 33% that aggregate demand should have generated 1.78 trillion in tax revenue. We clearly see that it did not. In fact government spending has a negative economic multiplier.
Now the money is spent, (on everything BUT infrastructure), and we nothing to show for it. The national debt load to foreign persons and nations has dramatically gone up. Driving up the aggregate balance of trade deficit, Soaking up capital for industry and creating fear of future taxation. All have a negative effect on any economy.
So the American economy is faltering. Due at least in part to the unrestrained spending. The US budget deficit is slated to be 100% of GDP this year. The last time this happened was during the FDR administration when we were fighting the Second World War. With no such existential threat the US government is spending like it is fighting an all out war.
Maybe it is… Against the American People, our children and our grandchildren…
Tags: capitalist, chimerica, economy, government, government borrowing, government spending, incentive, International Capitalist Party, keynsian economics, money, rational maximiser, redistribution, sophist, Sophistry
Posted in International Power, Mercy, economy, philosophy | No Comments »
Thursday, September 2nd, 2010
Dear Friends,
It seems to me that the reason Americans don’t save money and the stock market is not a good investment is because the system is loaded.
American’s are self-interested people rightly understood (rational maximizers). We will roll dice all day long. But, as soon as we see the dice are loaded, we pick up our money and we stop playing that game. The dice are clearly loaded in the stock market.
The personal investor is barred from using money gained as a result of a stock trade for 5 business days. But the investment firm is not barred from charging $60.00 to transfer $112.00. Does that seem like regulation that is written to protect the consumer?
No it benefit’s the institution. Regulation and regulators always get into bed with the industry they are tasked to regulate. There is even a term. (If the phenomenon was rare there wouldn’t be a term in the lexicon). That term is ‘regulatory capture‘.
How is it efficient for a firm doing financial business to be so large their net income surpasses 50% of the countries of the world’s GDP? To control such a behemoth requires gobs of bureaucracy. The only advantage a giant would have over an ad hoc group of smaller leaner firms… is regulation.
What about blatant price fixing? When financial firms bring an IPO to market they have agreed before hand on a price floor! Imagine if sofa dealers agreed on a price floor. Someone would go to jail. But no matter the consequences to society the outright corruption of giants is overlooked. But when it is so egregious something has to be done… Government punishes the investors, not the culprits! No one who made the decision to break the law ever has to face negative consequences. They keep their jobs and their bonuses. The investor gets charged. Who is paying the price for the BP disaster? Management or the investor? What incentive does this give to potential investor? What incentive to management?
Government regulation punishes investment and rewards corruption in the people who handle money. FANNIE MAE and FREDDIE MAC are examples of institutions that were intricately involved in the recent economic meltdown. But the regulator didn’t see fit to saddle them with any new requirements. In fact the regulators rewarded them with more money and new powers.
The reason that firms grow too big to fail is that regulation favors that outcome. Why would regulation, that is supposedly there to protect the consumer, be an incentive for businesses to grow to huge scales making supernatural profits, even in a down turn? Because the people at the table when regulation is written are the industries that are being regulated.
That has to be done to get sane regulation. The problem is that the total lack of oversight of government and it’s action results in corrupt officials. If there was no oversight in the business you work for, would the level of corruption go up, or would it go down? Further, add to that, when corruption that will inevitably lead to the diminishing of our standard of living is discovered… people laugh! We laugh at our own funerals.
Now we have a huge amount of regulation flowing down the aqueduct into our investments and our employers investments. Can we trust that our officials are clean and wrote those new regulations with an eye to fairness and without bias? Of course not! What fool would actually believe that? A willing suspension of disbelief would be required.
The amount of shady things institutions can do with our investments is the reason people don’t invest. As soon as you put your toe in you are bombarded with caveats and gotchas that ensure that unless you are extremely luck or somehow navigate around the gotchas you cannot make a profit. Even tough your stocks may rise in value the fees, hidden charges and outright gotchas winnow down the profit to nothing. (Loading the dice). And nothing stops commerce in it’s tracks like a rigged game. No one willingly plays when they know they are being played. Only a fool.
So why go without to invest? The institution you invest in will get the profit and the investor gets the bills. Unless there is a giant catastrophe and the investment houses loose money… then the taxpayer covers the investment houses, the investor takes a bath and is looking at inevitably higher taxes to pay for the bailout. So the investment houses can keep playing the people…
Here’s an idea… Tie the profit of the investment firms (and their employees) to the profits of their clients. Force the alignment of the two party’s interest. Then lay off thousands of government CPAs…
Tags: Americans saving, disincentive, economy, incentive, International Capitalist Party, investment, poor saving rate, rational maximiser, regulation, Sophistry
Posted in Group Politics, Law, Mercy, economy, philosophy | No Comments »
Sunday, August 29th, 2010
Dear Friends,
It seems to me that money flowing through an economy is like blood flowing in a human being. Ergo it can be compared with fluid dynamics or electricity.
Instead of looking at volume or amperage, economists should keep in mind demand vs. supply, (pressure or voltage). As well as the (resistance, pipe diameter) or regulatory friction expressed as some factor.
Modern economists are like the doctors at the birth of the modern age in medicine. They look at the body (macro economy) and see too much blood (money). Too much blood must cause ailments like inflation and unemployment. So the answer is clear. Keynes said to open a wound and drain some blood from the economy. Not too much… just enough to get the economy healthy again.
Because that is exactly what most government spending amounts to… Draining money from the economy. When did a government program ever do its job and finish? Really. Isn’t that the measure of success? To complete a job. Imagine if Ford Motor company never actually finished a car. They started millions but never actually finished one. How long would the market economy reward such incompetence?
Some economists claim that some money needs to be taken to keep inflation in check. That if the government wastes some money oh well. It keeps demand in check. (A UVM economist told me this once). Recognizing that much of government taxation and spending is a waste of money. Again, an example of, draining the body economic of “excess” money.
Others argue that money the government spends today drives demand today. Even if the money is wasted as far as the actual intentions go the money goes into someone’s paycheck. They then spend that money etc… The problem with that reasoning is in proportion. The very few who will receive and spend the largess at cost to the rest putting the money to productive use is miniscule. Especially when compared to the cost.
Not only in money taken from producers but in governmental corruption that is generated by access to money. Bureaucracy is very good at adsorbing money. Growing the corrupt bureaucracy which then require more and more from the producers. There is no end to the demand for tax money from a government that seeks to do everything. It’s like a tool that will do everything… It will, but it will do nothing well.
If these factors (volume, pressure of resistance) get too far off in the human body the circulatory system shuts down. Economies work the same way. Lately the Hindenburg effect has shown itself in the stock market twice. It is an ecclectic theory that when certain criteria are met the economy has built up tension. That tension will be relieved by a correction in the market. It has been shown to be “statistically” accurate. We’ll see if it holds this time.
Regulation and the threat of regulation have the effect of constricting the demand for money. People make good bets on things they have a good read on. That is why they always tell you to read the prospectus. The more you know about a given situation the better you can profit from it. But if there are changing or potentially changing parameters the amount that can be known shrinks. If that which can be known shrinks beyond a certain amount it becomes no longer prudent to engage in the venture. Constricting the demand for money.
Today the government is spending money like never before in an effort to jump start the economy. While at the same time they are increasing regulation in every area of life. Corporate and personal.
Why do you suppose the macro economy is running on life support?
Tags: economy, government, group, incentive, International Capitalist Party, Medeival Doctors, regulation
Posted in economy, philosophy | No Comments »
Thursday, August 26th, 2010
Dear Friends,
It seems to me that the integration of African Americans into White society was as much a factor of capitalism as it was political.
Take the example of Jacky Robinson into the major leagues. What today seems obvious is not so obvious before it has been done successfully. We look back and think that it is absurd to exclude people from an activity due to the color of their skin. But, in the day, people were afraid of public opinion. They didn’t have a good read on whether or not it would be tolerated.
That is the role of the entrepreneur… to see an opportunity and seize on it. If you reduce baseball to it’s capitalist roots you see that each firm vies to have the “winning team.” the more winning your team the more profit there is in owning it. With this as the incentive it is in the best interests of the owners to put the very best players on their teams… that are available.
The entrepreneur notices that the available players are not necessarily the best players alive. So in his evil way the entrepreneur changes the parameters of what attributes are allowable. In this case erasing skin color as a disqualifying attribute. The entrepreneur who makes the leap first… successfully makes monopoly profits until the rest catch up. But in the interim the entrepreneur has bought up the best players at the beast prices. Monopolizing them to his evil ends.
Take the example of the wicked factory owner. He wants access to the cheapest labor he can get. Cheap in the smart capitalist terms… Lower labor cost per unit produced. Cheap cost is not necessarily cheap labor. Labor that is very inefficient is not cheap at any price… He sees that there is a segment that is excluded from his factory. If the exclusion were removed the available pool of labor would go up and his labor cost would at least stabilize if not go down. So the self interested entrepreneurial factory owner will seek to open up the formerly excluded people to his labor pool. It is in his self interest.
This is a fundamental attribute of capitalism and the market system. The very thing that make capitalism so hated by the romantic anti capitalists. Like Moser and Freyer worrying about the market system’s effect on community and the loss of ethnicity. To Marx and (in his own way) Schumpeter, on the imminent demise of capitalism… In the case of Schumpeter his book might have saved us all decades of stagnation at the hands of the progressives… One uniting attribute of all the anti capitalists is that they have a fixation on groups.
They love to group people and think about them in groups and as members of groups. Like meteorologists use blocks of data to represent large volumes of air in their computer simulations. It makes the computing task much easier. But introduces a huge amount of discrepancy. That discrepancy is why the weather man claims it will rain and it actually is clear and sunny. People are people. We react as individuals. Our actions then aggregate into societal action. But to try to represent human beings as groups looses a huge amount of data. This is a case of arguing from the specific to the general.
Because capitalism has introduced the ability of the individual to follow a path according to his or her desires and propensities. Allowing people access to the means of human improvement. The very thing that the original conservatives like Burke wanted to protect. That genie or djinn is loosed from the bottle. It will wrought what it wrought. But it is loosed. The internet only exacerbates the situation for the anti capitalist.
As more and more people follow their own paths and free themselves from group attachment we will see an improvement in the reactions of people to those that are different. As we have said before the sofa salesman cares nothing for the color of the customer’s skin he only frets over the color of his money…
But this vanilla-ing of society infuriates the romantic anti capitalist. They look at people doing their own thing and never fail to find fault. The planet cannot sustain it! Is a modern cry. But it has echoes from the past as well. During the 1930’s the Elite were claiming the Depression was caused by the diminishing of the Earth’s natural resources. As we have seen, empirically, that was not the case then, nor is it the case now.
It is romantic, to be anti capitalist, but romance is blind, and it is often foolish.
Tags: anti capitalists, capitalist, economy, elite, freyer, government, International Capitalist Party, moser, politicians, recession, redistribution, shumpeter
Posted in Group Politics, economy, philosophy | No Comments »
Sunday, August 22nd, 2010
Dear Friends,
It seems to me that anything that quenches the natural dynamism in the market system, results in lower economic growth, to the point of recession if the anti stimulus is sufficient. I contend that is exactly what is holding back the US economy now.
As Schumpeter said, everyone hates the entrepreneur. His innovations result in the destruction of whole industries and ways of living. But that dynamism, the “creative destruction” is what continually builds up the economic standard of living of society. Nations unwittingly quench the dynamism that drives economic growth. With regulation aimed at stifling the negative externalities that result in free entrepreneurial enterprise.
Much must be controlled else the markets would seize up. There must be accountability when dealing with people’s money. Especially money someone has saved over many years to have for retirement. Such funds are the most precious that a banker, broker, etc…. will ever handle. Someone went without, to put those funds in the hands of a person, so the capital can be invested effectively. That capital should be invested in the means of production resulting in a short and long term capital gain for the saver. Anything that misappropriates the money of investors must not, under any circumstances, be tolerated.
But regulation too often benefit’s the people regulated at cost to potential competitors. Existing companies get deferrals to upgrade to the new regulation. New businesses don’t. This keeps entrepreneurs from competing with established firms. The established firms then grow larger, taking up more market share and monopolizing their business sector.
Japan is an example of this type of corporatist regulation and banking. We see that when The Japanese corporations were growing entrepreneurially the Japanese economy grew at a fast pace. But for the past few decades the corporatist economy has shown it’s weakness. Once the corporation grows too large it becomes inefficient. In part due to the ever burgeoning bureaucracy. In this way the lack of entrepreneurial competition slows economic growth.
Japan’s embrace of Keynesian economic theory… Japan’s corporatist economic system is the most effectively stimulated by Keynesian economics. Large corporations have the in house legal ability to navigate government bureaucracy. Entrepreneurial companies do not. Even though the Japanese model is best suited for Keynesian intrusion Japan has stagnated, despite huge amounts of government spending, for decades. To the point of turning Japan’s huge government surplus into huge government deficits. I have heard that Japan pours more concrete than the US. That is a lot of government spending… Having produced economic stagnation.
The US economic system is far less responsive to Keynesian style stimulus for exactly the reason Japan is better suited for it. The US model is more entrepreneurial based. Except for some highly regulated sectors the US economy in which corporations are encouraged to grow too big to fail the US model is more free wheeling. Entrepreneurs are heroes in America. (To most people except romantic anti capitalists). But entrepreneurs are far less able to tap into government stimulus.
Entrepreneurs have some specialty. They obsess over something the rest of us overlook. In doing so they come up with a new way of organizing business, manufacturing a product or process for the delivery of goods. They are not good at changing their focus on governmental minutia. Rules to keep fraudsters from bilking the system.
So that is why the Keynesian economic stimulus that the Obama administration has been implementing has not worked. The US economic model is far too entrepreneurial in it’s nature. That nature will have to be changed for Keynesian stimulus to have any effect. But as we see with the Japanese model even under nearly ideal conditions Keynesian economics are no panacea. They still lead to stagnation. So why keep ignoring the obvious.
Take the brakes off the entrepreneurs.
Tags: economy, government spending, jobs, politicians, redistribution, regulation, stimulus, tax
Posted in economy, philosophy | No Comments »
Thursday, August 19th, 2010
Dear Friends,
It seems to me that the statement “I find it morally wrong that some people have so much while others have so little.” is comparative. It compares that which the speaker knows nothing to that which the speaker knows little. And so, it says more about the speaker than it does society.
Because how can anyone actually know the heart and the true worth of another? Is the person the speaker has in mind about to go bankrupt. Is a terrible accident about to happen to a loved one of the person with too much. Or is the person with too little actually a miser?
Groups are ever more slippery. Because statistics are so poorly done. They are wielded like scientific certainty when there is increasing evidence, (scientific evidence) that statistics are misleading at best. If they are done right they can be informative but they are so rarely done with the proper scientific scrutiny that most are useless. Since groups must be compared statistically the comparison is ever more flawed.
The assumption is that material wealth is the paramount attribute. All others are tangential to it. And so a large difference between the top ten percent and the bottom ten percent is seen as a metric on the moral value of society. But if that is so then they must believe that a society with perpetual want is preferable to one where obesity is a constant threat to the impoverished.
The Desiderata says, “If you compare yourself to others, you may become bitter or vain, for always there will be greater and lesser persons than yourself. “ How much worse comparing others to others?
If a metric to apply the morality of a system is needed then take the lowest segment and compare their lot with the aggregate world standard of living. If the impoverished in a society live at or above the average standard of living in the world then we can say, empirically, that society is moral.
On the other hand if the average standard of living in a society is lower than the world average then we can say that this society is less moral. There is some roadblock to that societies effective use of the market system.
In both cases we look at the fruits of a given economic policy not the intentions. If the results are a high standard of living for the lowest 10 percent then the difference between the lowest and the highest is irrelevant. If the intent is simply to make the economic outcome equal for all players then the only workable means is to lower everyone’s.
I cannot ski that well. It is too late for me to learn to ski at more than a remedial level. If skiing were economic outcome then the socialists, progressives and communists would have to break the legs of those that ski well. So I would n’t feel inferior to them. Because it is impossible to raise me to their level so it is only possible to lower them to mine. But there are people who cannot ski at all…
But, like most things romantic anti capitalists say, it sounds great until you actually think about it. Then it sounds pretty silly.
Tags: economic system, economy, government, International Capitalist Party, recession, redistribution, some people have so much while others have so little
Posted in Societal Myth, economy, philosophy, polictics of class envy | No Comments »
Thursday, August 12th, 2010
Dear Friends,
It seems to me that In all matters it is best if government use incentives instead of regulation. Incentives work universally. Regulation is bypassed universally.
Take the new banking regulation. While I haven’t read the 2000+ page bill I am no less ignorant of it than most (If not all) the people who voted for it. It seeks to move power to the Fed to regulate certain actions. But it is no different than the SEC. Remember the SEC who’s employees were looking at porn while the banking system burned? I have heard (on Bloomberg radio) the SEC as the most captured unit of government.
Industry capture is always an omnipresent pernicious force. It undermines the people’s trust in fairness of the financial system lowering GDP growth. Regulators, consciously or subconsciously, start to believe that their job is protecting the companies or industry they oversee, (an example of normalizing deviance), not protecting the consumer. This capture is especially prevalent where companies have access to huge amounts of capital and legal resources. They over awe the people who are tasked with keeping them honest.
But if the incentives are set up thoughtfully… I heard an excellent idea the other day. Unfortunately I don’t remember who said it but it was on Bloomberg Radio. He said that if banks or institutions grow beyond a certain size the amount of capital reserves would have to grow at a faster pace. Thus reducing the incentive to grow out of proportion. Basically like a transmission in a car.
In a transmission the ratio between the engine speed and the drive shaft speed changes given the gear ratio. In his idea the capital needed to be tied up unproductively as M1 money would change as the capital size of the corporation changed. An incentive like this would make growing too big to fail too expensive. The amount of capital needed to grow would make it more productive to spin off a division to handle a new opportunity. Reducing the risk to society if the new (or old) company fails.
Today there is no personal risk to management if a company were to fail that was too big to fail. The government would certainly step in to rescue them. In fact that in itself is a pernicious incentive to grow to be too big to fail. Once your company is too big to fail it will have a tacit free safety net. The precedent has been set on numerous occasions.
Regulation is always full of pernicious incentives. They are inevitable when extremely complex transactions are regulated. No person or group is omniscient. There will always be pernicious incentives when activity is regulated. No matter the activity.
The wise lawmaker keeps the law simple and thinks it through. A few years ago there was a spike in falls from aerial lift vehicles in the USA. The spike lasted a few months and the companies that were involved addressed the situation. (People not wearing their fall protection devices or lanyards). The Occupational Safety and Health Administration (OSHA) stepped in.
They did millions of dollars of taxpayer funded research and decided that the answer was to shorten the length of the lanyard and increase the fine to companies that didn‘t comply. The fine was the same whether the wrong lanyard was worn or not at all. The incentive for the person using the aerial lift vehicle was not to use the new shorter lanyards because they are far more restrictive. So the incentives the new rules set up were pernicious. They undermined the solution to the actual problem. Which was, people not wearing their lanyards while operating aerial lift vehicles. The result was lower productivity from the employees, higher operating costs to implement the new rules, (buying the new equipment) and I bet not one more lanyard was connected than had been done after the companies involved had addressed the situation in house.
Results are irrelevant when government is involved. It is good intentions that counts. Regulation that produce the worsening of a situation requires more government intervention. It’s obvious. If the result of the new government intervention make things even worse, then it requires a cabinet post in the Executive branch…
Government’s ineptitude and outright corruption coupled with good intentions always result in more government. Regulation is simply the road to it…
Tags: banking system, corruption, economy, elite, government, incentive, incentives, intentions, International Capitalist Party, politicians, porn, regulation, SEC, sophist, Sophistry
Posted in Law, economy, philosophy | No Comments »
Sunday, August 8th, 2010
Dear Friends,
It seems to me that If the nations of the world are stupid enough to give taxation rights to the UN they do not deserve to exist as nations… and soon will not.
Once the UN has the right to tax individuals in sovereign nations then the governments of those nations become redundant. The services and functions can be easily moved to the higher level of government. The power that the UN will gain will be an even more corrupting force on them.
The UN is already profoundly corrupt. To it’s core. The putrefaction drips from it’s every word. From the self serving Ban Ki Moon to the corrupt Kofi Annan the UN is a entity that exists to perpetuate the power of the corrupt Elite.
But why shouldn’t they be utterly corrupt? There is no oversight of them. They are not held to any standard of personal action. The list of infractions that UN diplomats have committed are enormous. They have been let off Scot free on the most heinous of charges. Diplomatic immunity.
To fight global warming is the reason given to tax us. Then the UN can pass climate legislation that will slow economic progress for the rest of our lives. Regulation that will require ever more taxation to enforce. Increasing the power of the bureaucrats at the UN. The Elite will argue that it is redundant for nation states to exist. The UN can handle the world’s problems. It only needs more money and more power.
For the UN to seize power under the guise of a hoax is elegant. Those that seek to lower the lot of Mankind have at their disposal a perfect hoax. Global warming. They are using it to move sovereignty from the individual in some States and the nation state in others to a world state. World tyranny.
They defend manmade global warming like a religion. Because it is. Like the cigarette companies defending the healthy aspects of cigarette smoking. The fact that there are none is irrelevant. It is the same to global warming proponents. Self interest whether individualist or egoist trumps community interests. Look at the money trail. Who wants your money and to do they what to do with it.
To them the dishonorable means of gaining the world state is acceptable because the ends are so good. They honestly believe that the philosophical progress made in the last few centuries is a bad thing. They believe that the masses are living outside their station in life. Like the precedes of the modern Elite (aristocracy) arguing that such luxuries as sewing needles are too much for the average person to have. It only makes them want more.
Once government is moved farther away from the people it governs the less responsive it is to their concerns. Like all bureaucracy government has great moment of inertia. That moment of inertia protects the bureaucrats from having to actually do anything. They are busy all the time but accomplish nothing.
Because if government solved a problem there would be less need of government. It is not in bureaucrat’s interests to solve problems. It is in their interests to create problems for them to fix. The larger the government the greater the propensity.
The larger goal is to take capital from those that would use it to produce an ever expanding standard of living for the people of the world and squander it by redistributing it. Government projects and lavish vacations for the Elite will be commonplace . Bureaucrats will find more and more uses for money they did not earn. Don’t have the intelligence to earn, but have the hubris to want to control.
If this passes, the lot of the average person in the world will go down but, the lot of the Elite will go up… dramatically. If you think it is a good idea to lower your standard of living so the elite can raise theirs you simply have to back this proposal. But if you think that merit has some standing in the way money is spent you are adamantly against this proposal.
Either way the Elite back it one hundred percent. They are self interested. Does that make them individualists or egoists?
Tags: climate, corruption, economy, elite, government, incentive, International Capitalist Party, meritocracy, progressive, Sophistry, tax, tyranny, UN
Posted in International Power, Law, Mercy, economy, philosophy | No Comments »
Sunday, August 1st, 2010
Dear Friends,
It seems to me that the ultimate example of capitalism is nature. Does the flower address the bee’s charity? No… the flower addresses the bee’s self interest. In that way the bee gets a need met and the flower gets a need met. A basic capitalist exchange.
Nature is filled with other examples of capitalist exchanges throughout. From ants protecting a fig tree to people planting cucumbers that is the way the ecosystem has grown. One species of fauna eating a species of flora and thus spreads the seeds of it’s preferred food. Small Wins adding up to a great win for the ecosystem.
There are examples of fraud in the natural world, (corpse flowers and pitcher plants are a few) as there are examples of monopoly (miles of forest… all one aspen tree, duplicated over and over, monopolizing the habitat). The environment around us is rife with examples of the market economy complete with division of labor. (Our little self interested bee handle’s the pollinating segment of the tomato production process).
On a meta scale plants produce sugars and oxygen, and animals use those sugars and oxygen to produce locomotion to move plant‘s seeds and pollen. On a personal scale soy produces oil, sheep-wool, dogs-protection, apple trees-apples… the list is endless. The division of labor in nature is there for anyone to see… if they only open their eyes and look. Marx pointed out that capitalism (the market system) is dynamic. As is nature.
The term capitalist and markets are human words created to explain a phenomenon. There is nothing unnatural at all about exchanging one thing for another or specializing in a job. That is what separated cats from dogs millions of years ago. There is something unnatural about demanding charity from individuals in the form of slavery to government. Benign or otherwise.
I have never heard a complaint about how the flower exploit’s the bee‘s labor. In fact if someone did complain that the flowers were exploiting the bee’s labor and getting rich doing it I suspect people would give the argument the weight it deserves…. None. When we look at a phenomenon from a distance we have perspective. We can see the big picture. But an attribute of perspective is that the closer we get to something the less of it we can see. Like the story of the three blind men describing an elephant.
I can imagine a bee flying into a hive. Tired and frazzled. Birds tried to eat her all day. The flowers were picked over. Her wings are tired and her stinger is sore. She lands with a paltry amount of pollen and nectar for the receivers. They complain she must be slacking off to have so little nectar… It would be easy to convince her that the flowers were exploiting her labor. Then further to convince her the flowers need to be controlled and many would have to be killed in the revolution. In the long term… Would it be in the bee’s best interest to follow, and kill many of the flowers? Does it make a diffrence if the flowers trying to convince the worker bee that other flowers care nothing and do nothing to help the bee cope with, Verona mite, tracheal mite or even the dreaded colony collapse disease?
Today most people know what would happen if we allowed an open river of effluent to run down our streets. We also know what would happen if vermin lived too close to us… Black Plague. Or some other deadly disease. By not taking care to have a full waste cycle we open opportunities for the smallest players in the ecological market to exploit the niche. They will step in and use the nutrients available to them with devastating results for other larger players in the ecological market.
Government policies that restrict supply or demand for a service or thing forces inefficiency into the system. This drives capital into the streets so to speak. This inefficiency is like effluent running down the streets. The wasted capital (effluent) becomes a source of funding (nutrients) for the underground economy. Government policies directly incentivize the underground economy. With the negative externalities that all underground economies have.
Ironically in some countries people are more virtuous to each other in underground economies than they are in the open markets. Because in the underground economies participants are held to their actions. If someone lies or cheats, if they are not executed, they will be ostracized. In the open market they are protected by government policies. Unenlightened policies that are tantamount to flushing effluent into the open streets.
But as with Tracheal mites, it is better to keep the hive free, than to use menthol to control them.
Tags: capitalist, ecology, economy, environment, government, incentive, International Capitalist Party, market, market economy
Posted in Group Politics, Law, Societal Myth, economy, philosophy | No Comments »
Thursday, July 22nd, 2010
Dear Friends,
It seems to me that there has always been capitalism. The market system may be a relatively new invention but capitalism is as old as humanity. From the first time Ug traded Grug a spear head for a dear head there has been capitalism.
The market system has it’s roots in the time just before Adam Smith. It was the invention of the factory and the division of labor factories brought about that made production cheap and of higher quality. These innovations along with a capitalistic ethos have made our modern society so prosperous.
Imagine if the Romans had discovered the market system. Today Humanity would be striding among the stars. But they didn’t. It was after the last gasp of Roman Civilization (about a century after the fall of Constantinople) that the market system was being born in Denmark. The market system has evolved and devolved in steps since then.
But capitalism is a consequence of mankind’s social nature. It is a fact of our sociability that we mingle and trade. Each getting a need met in the trade. The one a plow and the other funds to build another plow and to feed his family for the day. Each getting more than he had before in the trade. No matter if the product or service is a spear head or fiber optic service the result is the same. It is a win-win.
That is the driving force of capitalism. That we all win when we engage in it. The buyer gets a good or service that in some way enhances his life and the seller gets to make a livelihood. Both have a positive outcome from the transaction. The small personal gains translate to huge societal gains in the aggregate.
Taxation lowers the good for each person. Some profit is diverted from new production or personal wealth to government use. Or some good or service costs more than it otherwise would, The good is lessened by taxation. Regardless of the societal good gained by the service paid for by the tax. There is a cost to a tax.
It is a valid role of government to protect the persons and property of it’s citizens. To that end taxation is a necessary evil. But it is never stopped at that end. Taxes are like an unstoppable tide. They rise and rise until they have drowned economic progress. Then the lawmakers responsible lament the lack of economic progress. But more importantly… the Elite lament the lack of tax revenues. So they raise taxes more…
This is because; if taxation lowers the good to the point that it is equal to or greater than the positive effects from all transactions, transactions will only go on, “under the table.” Off balance sheet transactions become more and more prevalent, when government taxation or other interference in markets are too onerous, erasing the benefit of a free exchange transaction.
If, a country want’s to measure how much it’s interference in the markets effect their markets, they need only compare the size of the black market to the legal market. If there is almost no black market the government is doing a good job not interfering in the markets. If there is a large black market then the government must look into it’s policies else it will face poverty and hunger in the future.
Capitalism is like air. The level of economic activity being like the pressure… The positive outcome is like the oxygen in the air. You can have plenty of air pressure but if there is no oxygen, (Because of government interference) then you cannot breathe. But if there is plenty of oxygen but little pressure you can breathe… If labored.
In other words… Business can go on in a poor country if the government doesn’t, tax too much, impose unnecessary rules, licenses, or other ways governments cause friction in their markets. The profit motive is still there. Even though business conditions are poor. But when government makes doing business too expensive to make a profit…
The point being that government policies have a direct bearing on the state of their economies. To blame capitalism for poor performance is like knowingly depleting the oxygen in a closed room then blaming the inanimate oxygen itself for our shortness of breath…
… if you use rhetoric, like “capitalism is dead.” no one points out the idiocy of the statement, and I believe it…who‘s the fool?
Tags: capitalism, capitalist, economy, elite, government, incentive, International Capitalist Party, media, redistribution, regulation, sophist, Sophistry, tax, taxation, unbiased
Posted in economy, philosophy | No Comments »