Posts Tagged ‘politics’


Thursday, January 1st, 2015

Dear Friends,

It seems to me, a bearing is designed to reduce friction so the shaft it holds can rotate with as little loss as possible, adding sand and thus more friction increases loss to the point the shaft fails in service. We all intrinsically understand that friction makes machines break and work less efficiently but for some reason we don’t correlate that effect to our economy. Just as the friction from sand, rust or a failed bearing reduces efficiency and eventually causes failure in a machine, economic friction from taxes, regulations, corruption and having interest rates set by unaccountable people with dubious alliances, all cause an economy to function less efficiently and eventually fail.

Economics to many seems like magic, giving economists the gravitas of Merlin, but like Merlin’s magic, economics is mere pseudo science. Economics tries to explain how an economy works, and prove it understands by correctly predicting future economic conditions, given present circumstances. A tall order by any standard. It’s fatal flaw is that one of the underlying functions of economics is the human being. We are instrumental to economic outcomes. Clearly, in any area of “science” that involves the human being our science is woefully inadequate, especially as compared to our grasp of physics, mathematics and lately astronomy.

It is our lack of perspective about ourselves that makes our research into ourselves, our nature and emotions, reactions, decision making, etc… so difficult. Without comprehensive knowledge of ourselves we cannot ever really call economics a science. Our lack of dispassion concerning ourselves results in our self interests driving our observations. It is self evident that every politician always wants more power, to do whatever she sought power for in the first place, therefore, given a choice of several options she will always choose the option that results in increasing her power, it is in her self interests. Each time this happens the friction to our economy is increased. The effect on the economic outcome of each person is small individually, but the cumulative effect is huge, and the friction adds up.

Money flows through the economy like hydraulic fluid, mechanical energy or electricity flows through a machine. In a machine the engineer strives to limit the resistance to the flow of whatever the energy the machine is processing. In an economy, the engineer is the government the blue prints, government policy. The engineer builds a machine to do it’s function as efficiently as possible but a bureaucrat builds the economy as inefficient as possible. That is because the engineer is using mathematics and physics to build her machine while the bureaucrat has only his self interest to guide him. No matter how schooled in economics he may be, the bureaucrat’s incentives are in the end, self interest. The same hold’s true for politicians only to a much greater extent.

Every tax, license, regulation, requirement, zoning law, etc… requires an entrepreneur to get a lawyer, which costs money and time, multiplying the friction of the initial rule. Where an engineer puts in a bearing a bureaucrat puts in a clamp that he can tighten at will. The politician has hands to grease, and his ability to grease those hands, is based on his ability to effect changes in economic friction. He can tighten down the clamp a bit, so only the largest company in an industry can turn a profit, returning hundreds to one to his corrupt backer, for her campaign donation. At every level of government, friction to economic operation is piled on, and our politicians lament the gap between the rich and the poor.

This is only one of the fundamental problems with the “planned” economy, and why the laissez faire economy does so well… friction. The planned economy is nothing but friction, bribes, restrictions, permissions, the list of impediments to operating a business efficiently, even with virtual slaves as workers are so pervasive, that instead of adding value at each stage of the manufacturing process the system actually destroys value. In other words, the cost of labor and other inputs become so high due to friction, the value of the manufactured good is less than the original cost of the raw material. All due to friction imposed by politicians, because economics is a pseudo science, in the hands of self interested politicians.

We all want a well functioning economy. A well functioning economy produces general prosperity, low crime, advancing standard of living as well as other social advantages like less racism, more virtuous people and a return to the nuclear family as the primary family unit, that is because in a well functioning economy, we are too hard at work getting ahead, to commit crime, if we are selling sofas we could care less if the buyer is African, Asian or space alien, it is the color of his money that counts, the effects of a well functioning economy are many and positive. The way to a well functioning economy then… is to remove friction from our economy.


John Pepin

Solving Ukraine’s Problems

Thursday, December 18th, 2014

Dear Friends,

It seems to me, Ukraine’s situation is rapidly deteriorating, impoverishing it’s citizens and pushing the breakaway areas with war and the threat of war. What a sad state of affairs for people who, because of their geologic location, have taken it on the chin over and over. The political system is broken beyond repair with whomever is in power crushing any opposition at will. There is no effective protections for freedom of speech, assembly or conscience. The people of Ukraine deserve much better. Every nation on the planet could learn a thing or two, how not to run a country, from Ukraine’s example. There are answers to the thorny problems Ukraine faces, but unfortunately, real solution are being ignored for war and arbitrary power.

Ukraine’s history is one of invasion, violence and tyranny. From the dawn of history Ukraine has been invaded by empire makers. The Mongol invasions were particularly hard on the people, with whole cities raised to the ground, every man woman and child killed, even the dogs, cats and livestock! Tamerlane slaughtered the Ukrainian people with the glee of a demon. When the Soviet union controlled Ukraine, Stalin stole the food the Ukrainians had grown themselves, selling it on the world market, starving to death millions of human beings! The poor Ukrainian people have suffered for centuries under the heavy hand of sadistic invaders and despots. It is past time for those sturdy people to have a measure of freedom and prosperity.

President Petro Pososhenco continues in the footsteps of the man he deposed. Instead of ushering in an era of peace and prosperity he has turned to war and autocracy. While it is only human to want revenge for grievances suffered, when a politician does it, the lot of the whole people is lowered. Today the Ukrainian central bank is broke with all of Ukraine’s gold stolen. The war with separatists sporadically flaring up, and now with US lethal aid going to Ukraine, the likelihood of a shooting war with Russia becomes a real possibility. Crimea is lost to Russia, for now, and the Eastern cities are in the hands of separatists, which would be a blow to any sovereign nation. Sadly, Ukraine is used to blows, and is likely punch drunk.

A better option, in my humble opinion, would be to sign a peace accord granting the breakaway areas autonomy, as long as they don’t formally become part of Russia. This would stop the bleeding, both of human blood and economic red ink. War is never a good option especially when there is an alternative. Of course it take two for peace and only one for war, with the Russian Ruble in free fall, the Russian people looking at hyper inflation and the Russian economy collapsing, war becomes more probable, since war is a traditional way to make patriots of starving people. Nothing rallies a people like a rip snorting war. Granting the breakaway areas autonomy would take the possibility of outright war off the table.

The next thing Ukraine should do is get their political house in order. To that end, I have advocated for all nations, including Ukraine, a NUMA or Fourth Branch. It would chain the lawmakers to their own laws and Constitutional limits. Of course the Fourth Branch option would require a Constitutional rewrite. If done right such a rewrite would have many beneficial effects. The US Constitution should be the basis of any new Ukrainian Constitution… with the addition of a NUMA. A Constitution that strictly limits the role, scope and power of government, would allow the free market to do it’s thing. For a better explanation see an excerpt from my last blog here.

If these two things were done Ukraine’s economy would start flourishing. The Ukrainian people are smart, hard working and risk takers, all of which are essential to a rapidly growing economy. Until the war is ended, and the government retreats to it’s rightful role, the Ukrainian economy cannot possibly get on solid footing. If the economy of Ukraine becomes dynamic, the gross domestic product per person would skyrocket, or in other words, the Ukrainian people would see prosperity they could have only dreamed of before. Once that happens the breakaway areas will almost certainly petition the Ukrainian government to allow them back in. Self interest trumps all other considerations. Ukraine could slowly rebuild itself without the exigencies and ruin that protracted wars always bring on. This would be a peace and prosperity based solution to the fundamental problems of Ukraine. Wise leaders would take the path of peace and prosperity, while foolish ones, war and poverty… Let’s pray the leaders of Ukraine are wise and not foolish.


John Pepin

Regulation in Canada and the US

Thursday, December 11th, 2014

Dear Friends,

It seems to me, the contrast couldn’t be more stark between the policies of Canadian Prime minister, Stephen Harper and the US President, Barak Obama, the difference being their exuberance to regulate. I am of course talking about Stephen Harper’s response to new regulation over Canada’s oil and gas industries. Harper called the idea, “Crazy economic policy…” While at the very same time, Obama is implementing new regulations to limit the amount of potentially explosive gasses in crude, shipped out of North Dakota. The first protects the wealth and freedom of the people while the second corrodes our economy, wealth and liberty. Unless we grasp this fundamental difference between sound economic policy, and poison pill economic policies, we will be forever trapped in an ever downward spiral of poverty and despotism.

Stephen Harper was the only head of state that successfully navigated the financial crisis with his country’s economy intact. Canada didn’t see the collapse of it’s economy like every other nation on Earth did, (including China), and it’s banking system emerged as one of the most stable on the planet. Today, Canada is experiencing a decline in their fortunes due to the floor dropping from commodities prices, because Canada’s economy is dependent on natural resources as the primary growth mechanism. Yet even with the steep decline in commodity prices the Canadian economy is still firing on all eight cylinders. Because of Harper’s policies.

The US on the other hand, was the primary cause of the financial collapse. The policies that led to the crisis had their roots in Congress’ desire for economic tinkering. Democrats had become incensed by what they called “Redlining of neighborhoods.” To rectify that “unconscionable” situation, they forced lenders, via regulation, to give loans to people who the lenders knew couldn’t pay back. Economics is like water, no matter how tight you hold your hands, you cannot squeeze water, and like water those regulation caused the banking and financial system to have untended consequences. The financial system had to create new and innovative ways to mitigate the risks of default by borrowers, through bundling huge numbers of mortgages together, including many good loans with a few bad loans, (a derivative), with the idea that if a few went underwater, the rest would be fine and the underlying security would be solvent.

When the housing market went into bear territory the whole scheme came crashing down. More loans were going into default than projected, due to home owners not only unable to pay their loans, but unable even to refinance, because their principle had now become higher than the underlying asset price, IE, their homes. Many lost their homes and many voluntarily gave the keys to the bank. This caused the whole economic system to become unbalanced, (since no one could determine the real value of those derived financial products). With no one able to fix the value of the derivatives, the banks balance sheets became opaque, leading to them looking to their insurers to re balance their books. The giant insurers like AIG became insolvent with so many claims, and the house of cards came crashing down… all because of the government meddling in the economy to give a politically favored class an advantage in an otherwise free market exchange.

Canada changed course when they elected Harper. They went from an uber progressive state to a conservative one… just in time. Harper has been trying to remove burdensome regulations from the books and standing strong against new economy destroying regulations. This latest statement from Harper is telling of how cagey he is when it comes to economics. He rightly realized that further hobbling an economy that is already being slowed by external forces, (the global slowdown), would be counter productive if Canada is to see economic expansion and an improving standard of living. The difference was further highlighted by the Canadian dollar versus the US Dollar, during the financial crisis, for the first time the Canadian dollar became more valuable than the US dollar!

Regardless of the economic weakness, Obama and his new class progressives are increasing regulations at light speed. The newest regulations on the US oil and gas industries is supposedly to protect people from exploding rail cars like in Quebec. Now, that makes perfect sense, unless you know the facts of what happened in Quebec. The cause of the accident that burned Lac-Megantic to the ground, was faulty brakes that allowed the untended full train to roll seven miles down a hill, and derail near the waterfront. It had nothing to do with any explosive gasses it had everything to do with the brakes on the train. Moreover, if safety is the real concern, then a pipeline could easily be built that would transport the crude more efficiently and more safely, but the downside of that idea, is that politically favored Warren Buffet would loose millions, since his trains are the ones that transport the crude.

Today the US is mired in an economic depression in some ways more pernicious then FDR’s. The reason is the incessant meddling in the economy by the elite to enrich their cronies at cost to everyone else. Thousands of hard working bureaucrats tirelessly writing new regulations to destroy the world’s economy has become the norm. Canada is trying to chart another course, piloted by Stephen Harper, that will enrich the average Canadian. Every time deregulation has been tried, it has resulted in economic prosperity, and every time the elite have become enamored with economic shenanigans, the economy has gone into depression. This time is no different. What I hope will be different, is that we will learn our lesson, that heavy handed regulation of an economy, destroys that economy. Sadly, with all the hard lessons we have ignored in the past, I doubt we will learn it this time, but at least Canada is on the right course… for now.


John Pepin

Arbitrary Rule and Great Poverty

Monday, December 8th, 2014

Dear Friends,

It seems to me, two of the most corrupting influences on Mankind, are both arbitrary power and great poverty. Both stultify the soul and wither one’s empathy, they lower a person’s thinking to the most base level, reducing him to a mere animal, and both great poverty and arbitrary power give a human being a sense of entitlement, all of which lower instead of raise the individual. Only a saint could remain unaffected by unlimited power or great poverty. Therefore, if we want to live in a virtuous society, if we want mankind to grow in knowledge and wisdom, and if we want our children to live in safety and prosperity, we must strive to mitigate the effects and to eliminate arbitrary power and great poverty.

Arbitrary power has been known to be evil for thousands of years. Solon, the lawgiver of Athens, made even favoring arbitrary power punishable by the ostracism. Such was the threat the ancient Athenians held for arbitrary power. What arbitrary power is, is exactly what the term implies, that a person or group, have total control over a land and it’s people. They can make up laws as they want, they can change laws, they can take the property of others without consequence, they can order citizens executed without trial… basically, there is no limit on their power over others. Essentially, everyone suffering under arbitrary rule, are slaves, in the most draconian sense of the word. There are two kinds of tyranny, legal and arbitrary, a legal tyranny is the better because even the despot must follow the law when he tyrannizes you, but in arbitrary rule the despot’s power is unlimited. Nazi Germany is an example of a legal tyranny.

Great poverty lowers a human being’s thought to basic needs. What drowning man wouldn’t pull down even his own loved one? When living in great poverty a person doesn’t have the luxury of being able to take flights of imagination, the stomach intrudes on the mind. Those who live in great poverty have no means to change their lives because society itself lacks the resources. The starving man has no scruples around a loaf of bread, similar to a despot, who has no scruples at all. Seeing one’s own children starve to death takes away our humanity. How can it not? All of these factors impel those who live in great poverty to join rebellions, and engage in crime, because nothing strips the veneer of civilization from a person like starving to death. Unlike the despot however, once great poverty is lifted from someone their humanity returns rapidly, but the person who practices arbitrary rule is lost forever.

Wherever there is great poverty there is arbitrary rule, and whenever there is arbitrary rule, there will be great poverty. The two go hand in hand. In States where there is arbitrary rule the economy cannot function properly. There is not one example of an economy that survived arbitrary rule throughout history. Marxist nations have all collapsed economically because socialism grows arbitrary rule like a stagnant pond grows algae. Throughout the ages every great civilization that has risen in virtue has fallen in vice, vice that was introduced by arbitrary rule. When Pericles came to power in Athens he perverted Athenian polity and law to his own ends. He built great edifices to his mythical gods, and his ego, he used the ostracism as a weapon to enforce his arbitrary rule, and the result was the subjugation of Athens to Sparta.

In nations with great poverty there is always arbitrary rule. Darfur is an example of arbitrary rule destroying a people and ushering in great poverty. There has never been great wealth there, but the people had sufficient food, shelter and clothing. Once the despot, Al-Bashir, decided the people of Darfur were expendable, and on resources he wanted, he simply took the resources. When the people rebelled, Bashir sent military jets to kill them, he forced them out of their ancient villages and into the desert. The resulting great poverty was on television for all to see. Yet, most took the wrong lesson from that example, most believed the great poverty of the people of Darfur was the result of war, ignoring the root cause of that war, arbitrary power. Many believe Darfur’s great poverty could be alleviated by foreign aid, but the reality is that the warp and the woof of the problem is arbitrary rule.

Unfortunately, the siren call for the leaders of any nation to arbitrary rule is so great that only the most saintly, or the most limited, can resist it… and it is obvious that our leaders are not resisting. Despite the cautionary history of collapsed civilizations, lost wealth, and entire nations enslaved, arbitrary rule is even more of a threat now than ever in history. With modern technology, a despot could control every aspect of the people’s lives, like in the book, 1984 George Orwell. With our market based economies, of the various nations around the world, incipient arbitrary rule has already done great damage. Today we still live in relative wealth, but that is slipping away fast, even as we are told we should turn to socialism, to get an ever larger piece of an ever shrinking pie. In the end, if our children have to live in great poverty, it will be because we allowed arbitrary rule… again.


John Pepin

On The Riots In Ferguson

Monday, December 1st, 2014

Dear Friends,

It seems to me, the fundamental reason there are riots on the streets of Ferguson is the deficiency of clear knowledge of what really happened, magnified by the lack of a fair process for the redress of grievances. That lack of redress could be effectively addressed by the Fourth Branch’s Consumer Protection Bureau, and the lack of transparency, which was the first cause of this unrest, would have been solved by the Executive Ombudsman’s office. All the lives that have been lost, the businesses destroyed and future profits erased, money spent by government to police the uprisings, repair the damage and heal broken bodies, all of it would have been avoided had we had a NUMA. So much of what is wrong with our world today would be resolved, if we only could spread the news about the potential of a Fourth Branch, and then actually succeed in enacting one. Our standard of living would increase every year regardless of the political winds.

The spark of the conflict in Ferguson is the lack of knowledge of what actually happened that night between that officer and that unarmed man. Even the fuel of anger in the air, well above the lower explosive limit, came about because of the lack of transparency magnified by a lack of redress. Everything beyond that point in time is dependent on that lack of clear knowledge. If the police shot the unarmed man, (regardless of his skin color), while the man was pliant and not aggressive, the officer who pulled the trigger must be charged with, at the least manslaughter, and potentially murder one, if the crime was premeditated and so forth. If however, as the grand Jury found, the police officer shot in self defense, there should be no charges and the officer should be reinstated with all benefits and back pay without prejudice. Anyone who disagrees with either of these two possibilities is unreasonable, their opinion is based on prejudice and not on reason, to them there is no conciliatory logic.

So the basic problem is the lack of clear, unambiguous knowledge of what really happened, that everyone can agree on. If Darren Wilson was wearing a camera that night, recording everything that went on, and the video was available for anyone to see, there would be no reason for the protests, except as a violent means of sedition. One of the basic tenants of a Fourth Branch, or NUMA, would be that everyone in government would be monitored at all times, (like the checkout girl at Walmart). Internal Affairs in police departments would be handled by the state NUMA. More specifically, the Ombudsman of the Executive’s office, would monitor the Executive branch and all it’s employees. The police would be equipped with body cameras, turned on at all times when they are on duty, to protect them and the public. National police like the FBI would be similarly equipped using the same practices. Every interaction with the public would be available immediately upon request of any person involved or at the request of the Consumer Protection Bureau of the NUMA.

If someone had a disagreeable interaction with the police, or their son or daughter was, God forbid, killed, in an interaction with the police, or any other agency of government, that grieved or even an involved person could file a complaint against that officer, department, or agency, and the complaint would be looked into by the Consumer Protection Bureau. The complaint would get sent to an adjuster who would make the initial investigation within a month. After the initial investigation, if cause was found, the case would be assigned to an investigator, otherwise the results would be posted on a government website set up for that purpose. A case that gets appointed to an investigator would be exhaustively investigated, all the findings would become public record available on a government website, free of charge. If the investigator found cause for criminal proceedings the offender would be prosecuted to the full extent of the law.

Since the fundamental reason for the riots was a lack of clear knowledge, and a NUMA would have provided that clear knowledge, as well as a fair mechanism for redress of the grievances of family and friends, we can safely reason that if there was a NUMA in place in Missouri, this whole violent, expensive and bloody affair would have been averted. The lives that have been lost would not have been lost, the human beings wounded need not have suffered nor lost the use of limbs, the property destroyed would be available to enhance someone’s life, the businesses razed would still be providing paychecks to hard working people and the money not spent could be used to cut taxes, harden our electrical grid against solar flairs and EMP, provide incentives to entrepreneurs, or a whole host of other things to improve the lot of humanity, instead of on trying to get back some of what was lost. This is just one example of how a Fourth Branch, or NUMA, would make our lives better. How many more can you think of?


John Pepin


Monday, November 17th, 2014

Dear Friends,

It seems to me, balance is paramount to a prosperous, safe and upwardly mobile life, just as it is to a flourishing, secure and advancing society. To keep balance, religion, science and politics should not intermingle, being different in kind they are like water, iron and salt. It is self evident that religious people should not decide who can run for politics, the same as scientists shouldn’t make decisions of religion, politicians shouldn’t interpret science or religion, etc… Each in it’s own field is a good that uplifts the human condition, but when one becomes supreme or is crushed by the others, the whole of society suffers. Societies have three parts just as each of us have three parts to our psyche. Our rational mind, our emotional mind and our spiritual mind have their doppelgangers in a society… science being the rational, politics being the emotional and religion being the spiritual. Balance being the way to keep society advancing, prosperous and moral. If we see our society becoming corrupt and needy, it is because the balance is off.

Our emotion is like an elephant, it has power to do a ton of work, but it has the potential of getting out of control too. Our rational mind is the rider of that elephant. The rider can steer but it is the elephant that does the work. Our spiritual mind lets the rider know what is right and what is wrong, what work the elephant should, and should not do. Working together, the rider guided by his morality, driving the elephant, is how societies get great works done. The grandest advances of the human race have been accomplished by societies that had this balance. Great works of architecture, art, philosophy and the mechanical arts have all sped ahead in times of balance.

Balance is never long kept. Power being so seductive, any faction that has got a chance to become supreme or to advance their power at cost to one of the others, will do so. It is human nature. The moment this happens the balance is upset and society precesses. It is hard to discern at first, and the faction that has gained power is in the best position to see it, but their egoistic interests collide with their self interests rightly understood. Sometimes even a small disturbance to the balance can result in a large tailed event, because when dealing with human societies that are complex systems, the likelihood of outcomes is on a power scale not a bell curve.

When the three legs of a society are in balance even if there is a collapse, as when the grains of sand exceed the angle of repose and settle to a new equilibrium, the slide lands with most people much better off than they would in a totally chaotic reset. The new societal equilibrium is more stable as well. Based on a balanced foundation, a society can stand a great many imbeciles for rulers and villains for advisers, but where society lands unbalanced, it lands with voids that weaken the whole, leading to social sinkholes to fill those voids, sometimes leading to a total societal collapse and reset.

A balanced society where religion is respected, science is allowed to flourish and politics is well disciplined, will naturally be prosperous, have a growing standard of living and it will be safe. We all want to live in such a society but we cannot let go of our prejudices. The despotic politician wants total control over everything, as does the religious zealot, and the mad scientist. If we want a safe, advancing and prosperous society, where our children can be expected to live better, longer and healthier than us, we have to start in our own hearts.

Once we get ourselves in balance we need to get our societies in order by electing people who are in balance. We have a tendency to elect mad scientists, despots or zealots to power. They have the most charisma and elections are nothing but a charisma contest. A perfectly spinning top is not dramatic and has no charisma, but a top that is so unbalanced it hops cannot help but catch the eye, and move our heart. We then vote with our emotions. We would like to think we use our logic to choose, but most of us don’t at all and none of us are immune to emotion, or our blind faith, and even logic itself without passion and the golden rule can lead us astray. The sad outcome is that we happily elect the very worst people to power because of their unbalance.

A well tuned car runs most efficiently, but to keep a car well tuned, one must understand how a car works. On a macro scale, when societies keep a balance between science, politics and religion they enjoy prosperity, safety and a rising standard of living. When a society attacks any one of those legs and one or two of the others become ascendant, that society experiences crime, poverty and a crumbling middle class. The way to become a balanced society is to become balanced ourselves. Nurture the scientist in us with education, feed our inner cleric with prayer and engage in the politics of the day. Balance ourselves, elect balanced people to office, often against our emotional inclination, and balance will return to society. Balance is the answer.


John Pepin

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.


John Pepin

Pseudo Wars

Monday, November 10th, 2014

No nation could preserve its freedom in the midst of continual warfare.”
? James Madison

Dear Friends,

It seems to me, all the “wars” the US has engaged in as of late, are nothing but pseudo wars, not wars at all but a way to take away the liberty of the people. I am of course talking about the war on drugs, the war on poverty, the war on terror, the war on obesity, and so forth. These cannot be termed wars anymore than any other policy a government enters into to meet a non corporeal problem. War is violent, terrifying and expensive way to defeat a corporeal threat. Moreover, calling such things wars, lowers the brutal reality of what war is, and creates a situation where the elite can keep a nation in a state of perpetual war. The appointing of “Czars” to oversee these “wars” is more proof they are overtly a means to evolve us to tyranny, war has generals, Czars are despots. If we want to stop the slide to tyranny we must examine the ways the elite evolve a nation to despotism and demand they be stopped.

Let’s face facts, a war on fatty food is an unwinnable war, like a war on terror or a war on poverty, by their very definitions they cannot be won. It is impossible to eliminate fat from foods. Fat is an essential nutrient that provides the calories we need to live. Like anything that is good, when overused, like the term war, it leads to all sorts of bad consequences. To fight a war on the strategy of an enemy, so as to avoid naming that enemy, is as certain a way to loose the war with the unnamed enemy, as it is to loose the war on their strategy. Imagine how the Second World War would have turned out of the allies fought a war on Blitzkrieg instead of the Nazis. Poverty will always be with us it is a human condition. The definition shows how absurd it is to fight a war on poverty, poverty is the lowest ten percentile of a people, economically, it is a relevant statistic. Even if a government were to execute the poorest ten percent there would still be a poorest ten percent. Even if ninety nine percent of the population were executed there would still be relative poor!

Embarking on fictitious wars has the propaganda value of claiming the government is doing something about a perceived problem. The term war focuses the mind and implies all a nation’s might will be brought to bear on the problem. The leader who coins the war will be thought of as really caring, to be so adamant about fighting such and such a problem, that they go to war with it. The value is only to the politician who names it… not the people, government, society or culture, they are damaged by the “war” effort. Everyone but the politicians must give up some sovereignty, money and liberty to the politicians during times of war, and so a fictitious war is a way of prying our liberty’s and largess from us, not to achieve some excellent goal.

War cannot be fought against an idea, tactic, class or food, it can only be fought against an enemy nation by killing and maiming real human beings, and destroying the infrastructure that supports their war effort. Von Clausewitz said that war is politics by violence. No one wants our government to do violence to the poor, we already do violence to our food simply by eating it, and ideas cannot be suppressed by violence. Look at the Second World war again, it was supposed to be against fascism, but how many fascists nations did the US and Europe support during the Cold War? WWII was against the Axis powers of Germany, Japan, Hungary, Romania, Finland and Italy. Four of which were not fascists at all! The war was against those nations, not the tactics they used, not the food they ate and not the political systems of their various governments… the war was against those states, period.

War against an idea, tactic or some other nebulous “enemy” is an absurd distraction from solving a real problem. It gives the people the idea something substantial is being done, but in fact what is really being done is, the liberty of the people is being stolen. The propaganda of a war against a non corporeal enemy is effective at reducing a country to despotism through the costs of continual warfare and a war mindset. It does nothing to solve the problem the elite are ostensibly waging war against, but through a constant chipping away it destroys the wherewithal of a people, saps our resolve to meet actual existential threats, and the lack of any possible victory corrodes our self esteem. War can only be fought against corporeal enemies that can be killed, maimed, impoverished and thereby forced to knuckle under. Further, to wage war against an enemy’s tactic, to avoid naming that enemy, is a sure way to loose the war with that enemy. It is time to complain loudly and forcefully whenever our leaders claim we should launch into another war against a non corporeal enemy and stop the ones our leaders have pulled us into already. Else our lot and the lot of our children will be despotism and poverty.


John Pepin

A stake in Society

Thursday, November 6th, 2014

Dear Friends,

It seems to me, if we want to eliminate the scourge of drugs, stop our children from joining gangs, and prevent the youth from traveling abroad to bolster terrorist groups, what we need to do is give them a sense of ownership in our society. Mencius said, “The people constitute the way (Tao). Thus the hearts of those who have a stake in the country are fixed and those who have no stake in the country are not fixed; and if they have no stake they let themselves go in vice and extravagance…” That advice is as relevant today as it was in 500 BC. A stake, or ownership in the nation, society and culture is essential to a person’s self worth and sense of future. When that stake is taken away the individual becomes careless about society, the culture and government. We see this plainly in the results of the Frankfurt school of philosophy when it was introduced into American culture in the early 1960s. If you want a better life for your children and yourself, it is up to you to make sure we all have a stake, else our standard of living will dwindle along with the fortunes of our society.

When people own their own home everyone keeps it up much better than when they rent. That is an established fact. People are at heart rational maximizers. Any rational person will maintain what they own and let go that which they do not own. This has been proven over and over in cultural experiments. In the slums of South America, when the impoverished are given title to the shacks and land they are on, those shacks get maintained, fences get built around them to protect them, they get painted and expanded. Those who do not have a deed on their shacks let them rot into the ground, because they could be bulldozed down at any moment or someone will simply come and take it from them. That is the crux, when someone has title, their stake is protected, but when someone could be tossed out at a moment’s notice, why should they maintain it for some usurper?

A nation is like a home. In nations with Right government, those countries protect the property of the people, they protect the lives of the people, apply law equally and they provide a framework that allow people to get ahead, if they work hard… and get rich if they both work hard, take chances and are smart. A nation can be allowed to deteriorate by negligence or it can be built up by elbow grease. Let the roof on a home rot away and the rest of the house quickly becomes uninhabitable, let the laws of a nation become corroded by arbitrary enforcement, and the nation rots from the inside. Break the foundation of a home and it crumbles to the ground, smash the foundation of a society and it collapses from the first wind of crisis. Give the people a stake and they will maintain it, take that stake away, and they will allow it to fall to the ground.

How does one give the people a stake in a country, culture and society? By several means. Protect the foundation of that nation by protecting the societal myth is critical. The constitution of those countries with one is that foundational societal myth. When someone destroys the constitution, they destroy the nation that was built upon it, no differently than when the foundation of a house is smashed the house falls in. To do that we must keep those who despise the constitution from having power over it. There will always be those who seek to destroy a constitution by conniving. Those people are villains of the most heinous sort.

Another thing that must be done is to enforce the laws equally and without bias. That requires laws that can be read and understood. While this should seem obvious, in practice it is perhaps the hardest to achieve. All people are selfish to some extent. Lawyers make the laws, lawyers prosecute those laws and lawyers interpret the laws. This gives lawyers a great incentive to make laws that benefit them, prosecute laws in such a way as to enrich themselves and interpret those laws to protect their position in society. To do that they must make the laws of a society so circuitous that no one, even lawyers themselves, can fully comprehend them. Furthermore, it is in lawyers best interests to force everyone to use a lawyer for every economic interaction, by undermining the very laws they are supposed to protect.

Perhaps the most important thing a people can do to give everyone a stake in the system is to maintain class mobility. Not only to maintain the ability of individuals to rise from poverty to the elite but to maintain the societal belief of class mobility. When schools teach children that it is not possible for them to advance beyond their status they undermine class mobility. When the elite pervert the societal myth, that class mobility is available for anyone if they work hard, take smart chances and persevere, they destroy the belief of class mobility. Possibly the worst way the elite in a society can eliminate class mobility as well as the belief of class mobility is to sell the fiction of equal outcomes.

The very concept of equal outcomes takes away everyone’s stake in society. When you will get the same as everyone else, no matter how hard you work or even if you work, you have no stake in that society. You are merely a slave and everyone knows a slave cannot own anything. Redistribution is so corrosive of a people’s sense of ownership in a nation it should be attacked anytime it is mentioned. The only people who have a stake in a country that redistributes the wealth of the people are the elite that do the redistributing. They always take more than their share and their share is protected by the army.

The results of these negative incentives can be seen in the United States since the 1960s. The concepts of the Frankfurt school came into their own then. Redistribution became vogue, class mobility was attacked in the classroom and in popular culture, the laws had been undermined by bureaucracy for two decades, the arbitrary application of the law became obvious, and the US Constitution became a living breathing document destroying the very foundation of American society. All these innovations took away the people’s stake, or ownership, in the country. The results were that drug use became rampant, it was the beginning of the scourge of drugs, crime skyrocketed, violence became endemic and the institutions of civil society began to deteriorate. Clearly, the path to prosperity is through giving all people a stake in their nation, the path to poverty is to take that stake away.


John Pepin

Election Integrity

Monday, November 3rd, 2014

Dear Friends,

It seems to me, for the democratic element of our republic to function, as democratic, first there must be honest elections, barring that there is no democracy only the tyranny of the powerful over the powerless. If someone wants to become a despot, all that is needed is to give the appearance of free and honest elections, but in fact so undermine the election process with fraud and vote rigging that there is no honesty to the election process at all. Of course to do such a thing is villainy of the highest order. History shows however, and we all know from experience, that people can be counted on to do whatever they can to get advantage, in this the political elite are far worse than the average man or woman, because there are almost never consequences to their wrongdoing. Elections that are rigged are not elections at all but coronations.

Since the democratic element of the United States is the essential means for our governors to get the consent of the governed, us, the integrity of the election process is essential. The United States is a republic, a mixing of Aristotle’s Right forms of government, despite the pervasive propaganda that the US is a democracy, one of Aristotle’s wrong forms. Aristotle’s right forms are, monarchy, aristocracy and polity, while his wrong forms are tyranny, oligarchy and democracy. His best form is a republic, a blending of two or more of the right forms. What the right forms have in common, is that they serve the needs of all people, and what is wrong with the wrong forms, is that they each serve the people with the power. Tyranny serves the monarch, oligarchy serves the aristocracy and democracy is the tyranny of the majority over the minority.

Perverting the democratic element of our republic turns the aristocratic element of our republic, the legislature, into oligarchy, it perverts the monarchical element, the President, into a tyrant, eliminating altogether the democratic balance. All this mischief is done by degrading the base of our system, which is democracy. It should be obvious that corrupting the foundation makes the edifice unstable. Each part of the government must necessarily change from serving all the people, rich, middling and poor, to serving themselves only. The President becomes a tyrant who only serves him or herself, the legislature becomes an oligarchy that seeks only more power and wealth… and the people follow their leaders and become self serving egoists as well. Clearly, no society or government no matter how constituted, can survive such depravity for long.

Those who might agree with what the corrupting faction is doing today, should take heed that no matter how much you might agree with them today, you may not tomorrow, but then it will be too late you have given them the power to do it, and given up your power to stop them. Many know there is blatant vote fraud but spuriously argue there is none because they want their guy to have power. They might believe their guy will do good with that power, but there is no case in history or in the future, that power gained by such means has led to anything but ruination for the people and the society. This is because power is like cocaine or heroin, in small doses they help with pain, but as the doses get ever larger, they fog the mind and corrupt the soul until the drug is all consuming. The addiction of the elite to power never leads to a good result, it can only lead to all of us loosing all that we have, our grace, our wealth and our children. All great civilizations have fallen thus.

It is by small steps that we race to Hell and by small crimes that great societies crumble. Voter fraud is by far the most corrupting form of small crime. Each instance may seem small but cumulatively they add up to great evil. Dishonest politicians can be dealt with, common crime can be cleaned up and foreign attacks can be beaten back, but rot from within hollows out the very center of a civilization. Once the center is gone collapse is imminent and nothing can stop it. Accepting vote fraud and election rigging is the surest sign a civilization is rotten from within. In 25 AD Titus Livius told the Roman people that unless they changed their ways Rome would collapse. He was called an idiot by the patricians and plebeians alike. Rome had lasted a thousand years and would last a thousand more. History showed Livy correct and everyone else wrong.

What Livy did have wrong however, is that it is never the people that corrupt a society, it is always the elite that introduce it, then pass it down to those they lead. Tolerating rigged elections guarantees corruption of the most pernicious sort… no matter how much you agree with the party doing it. That is because government must serve all else it is one of Aristotle’s wrong forms and will become despotic. Since democracy is the base of our system of government, election fraud that pulverizes the foundation, weakens the whole of our society. Therefore, if we don’t stand up to our leaders and demand vote fraud be eliminated, requiring those engaging in it be punished severely, our complacence will sow the seeds of our own destruction, enslaving our children to whomever rises in our place.


John Pepin