Posts Tagged ‘politics’

Confusion About the Market System…

Monday, January 26th, 2015

Dear Friends,

It seems to me, very few people the world over actually understand what the market system really is, most have fallen into the trap set for them by new class Marxists, that the market is evil and government is good. As long as the new class elite can maintain the fiction they spew we are on a path to predestined serfdom. The global elite quake at the thought that the hoi polloi discovering the ruse. If enough of us did understand what real capitalism is, we wouldn’t stand for their bigger government solutions that never work, but only make the problems worse. That is why we are constantly bombarded by spurious arguments like, the gap between the rich and poor, the market needs regulation, capitalism only benefits the rich, the wealthy got that way by stealing, etc… always made by the uber rich to blind us to the truth that we haven’t lived under a market system anywhere on the planet for generations. Ignorance may be bliss, but it is the best way to keep us in a state where our slavery is all but guaranteed.

What the world struggles under today is called “welfare state capitalism.” It is to the market system as bone cancer is to astrology. Welfare state capitalism is a system where the government redistributes the profits of free market interactions, from those who worked and took risks for them, to those who didn’t. In doing so, the government gains terrific power to destroy businesses that are not politically favored, enrich those who are, hold people in generational poverty, wipe out class mobility, destroy the family unit and create a permanent upper class… all in the name of fairness.

In a real market system, people get rich by taking risks, providing service and value to their customers. Under a welfare state however people get rich by having political favor. When those with political favor fail, they are bailed out by the government, (you and I), but in a market system, failure is paid for by he or she who fails. Moreover, failure in a market system leads to new ideas and greater efficiency, while in the welfare state, failure leads to more of the same, since there are no consequences to the elite, only the people. That is why too big to fail banks were bailed out with enough money to pay off three quarters of all the home mortgages in the US, and QE3 was sufficient to create eighty five thousand millionaires a month! Meanwhile, you and I were stuck with falling house values, wages and financial repression. All because of the bubble created by government policies. Not a real market by any measure!

In a functional market system deflation is the norm. That is one of the ways you can be certain that we have not lived under a market system for generations. The cost of those things we need and desire gets cheaper and cheaper. This is because the market system drives down the cost of everything by increasing productivity. That increase in productivity also has the effect of raising real wages. A carpenter with a nail gun and precut studs can frame a wall in seconds, where a carpenter, even a much better trained one, using a hand saw, hammer, nails and rough cuts, takes an hour. That increase in productivity lowers the cost of the final product even as it raises the wage of the carpenter. Raising his or her standard of living and making the work easier and less taxing on the body.

In welfare state capitalism however deflation cannot be allowed. Government runs a perpetual deficit to maintain the illusion of a functional market and prosperity through bubbles, and so, if the elite were to allow the market to do it’s normal operation and deflate the cost of everything, that huge debt would quickly become unserviceable. Inflation is needed to evaporate the debt through currency devaluation. Without inflation lowering your wages and driving up the cost of everything, the government would collapse, as many have in the past, and the elite would be out of their cushy high paying jobs. A disaster that the elite cannot allow to happen. So they inflate bubbles, watch them pop, destroying the meager wealth hard working people have saved up by the sweat of their brow… and the government inflates the next bubble, to maintain the illusion of economic growth.

Welfare state capitalism is a system where the elite decide who gets rich and who doesn’t. It undermines the market’s innate class mobility. The old saw, “shirts sleeves to shirtsleeves in three generations,” is rendered inert by the state’s interference, allowing the half witted grandchildren of the elite to remain wealthy, despite themselves. This is done by the state requiring everyone to get permission from the state for every economic activity. Those who are the children and grandchildren of the elite not only get permission, but the largess to engage in market activities, (as in Solyndra), while the children of the plebeians have to fight, pay bribes and struggle to get even the smallest of permissions. Crony capitalism is created this way.

Harry Truman said, “Anyone who gets rich in politics is a God damned crook!” Since the all powerful welfare state decides who will get what, the benefits will naturally flow to politicians, their cronies and family. Others who would compete are frozen out. Ways to measure this… are the number of small businesses in an economy, how many are started in a year and the rate of expansion of small businesses to medium and large. Moreover, people will spend absurd amounts of money to gain political office… so they are the ones to decide who gets what, insuring their business isn’t destroyed, and giving them the power to destroy their competitors. In a country where welfare state capitalism is at it’s apex, small businesses cannot compete with large ones because of political favor, and therefore, there will be few small businesses, and most of them will be engaging in illegal activities, ie, doing business without the proper licenses, paying employees under the table, selling non pasteurized milk, exceeding the weight limit of a road, idling a truck so a worker can get out of the cold, hauling without the proper permits, cutting hair without a license, etc…

The new class elite have to keep us in the dark about the market system. To that end we are inculcated in a doctrine that has no basis in reality… that crony capitalism is the market system, that we need the elite to regulate the economy to protect us from it, we are taught to hate those trying to get rich by providing value to us, and love those who get rich by political action. Our children are programmed in school to have a visceral reaction to the term “capitalism,” as a bad thing, and socialism is lionized as the solution to all the world’s problems. The bloody history of socialism is glossed over with absurdities like, “Marxism has never really been tried.” If most of us understood the fiction we have been inculcated with, is just that, fiction, we would demand real capitalism, and that cannot be allowed. The elite have too much at stake… their power, wealth and prestige.

Sincerely,

John Pepin

Should GDP Include Government Spending?

Monday, January 19th, 2015

Dear Friends,

It seems to me, to bring sanity into economic figures and government decision making, government spending should not be considered part of gross domestic product. Gross Domestic Product, (GDP), is a measure of national income. The number is used in a variety of ways… to determine the wealth of a nation, the prosperity of it’s people, it is a way to compare the efficiency of various nation’s economies against each other, ETC… Basically, GDP is a benchmark of a country’s economy. GDP is figured by adding together all government, consumer and business spending, investment, and exports then subtracting imports, and you have the expenditure method of calculating GDP. Which is to say, it uses national spending as an indirect means to estimate national income. Why should you care how it is calculated? Because GDP is used for so many economic policy decisions that directly effect your personal financial well being.

Government’s addition to GDP is problematical, because government doesn’t really produce anything, it only consumes. As such, government doesn’t add to national income and does not support the economy… it is supported by it. You can’t say borrowed money should be added to a person’s income, but economists do, when it comes to government spending. Welfare spending is one example. If I take a dollar from you and give it to someone else, does that make two dollars of income? No, it still only one… counted twice. If any government spending is included, it should only be that portion taxed and spent that year, and even that would distort the real picture due to the debt that has piled up, the service on that debt, welfare spending and the negative incentives government largess creates.

If the economy outside government folds, government spending must stop as well, because it is in fact spending and not income, but if government went away the real economy would hum along fine. Oh, government alone can go on a while by printing money and buying bonds, (monetizing debt), essentially stealing the wealth of everyone who holds the currency, but even that extraordinary measure must end in hyper inflation and the repudiation of a fiat currency, as in Argentina, Hungary, Yugoslavia, Zimbabwe etc… If the currency is backed by gold or some other commodity however, government cannot print money to keep up spending, because it would have to create that backing commodity out of thin air, which is why economists and politicians hate gold backed currencies, it limits their ability to fudge the numbers.

GDP is supposed to be an analog of a nation’s economic income and so adding in what should be subtracted distorts the picture. A nation’s real economic growth cannot be effectively measured when a drag is called a boost. In the most simple terms, if you are driving to a place, and want to know how long it will take to get there, normally you would discern the distance and your speed, divide the distance by your speed to get the time it will take to get there. We have all done similar calculations in our heads when the kids in the back seat say, “Are we there yet?” But what if we stop to eat? The calculation then would have to add in the time you spent at the restaurant, what if you subtracted the time you spent at the restaurant instead? Your calculation would be very different than reality wouldn’t it? Adding in government spending is like subtracting the time you spend eating instead of adding it, performing the opposite function than is called for, it gives a very distorted idea of what is really happening.

This provides a pernicious incentive for politicians to spend more to make GDP appear higher than it really is. Let’s say a nation is experiencing a recession and it is an election year. Government officials could borrow money and increase money printing to raise government spending, making the economy appear to be growing, even as it is really shrinking. Moreover, that raise in debt and corrosion of the currency to fund the spending, actually lowers real economic growth! That might help with an election campaign but it is certainly not a real calculation of that nation’s economy or income. Further, it skews the incentive for politicians from helping the real economy with actual reforms, to fudging the numbers with government spending, to make it look better. That is a recipe for eventual economic disaster.

Take GDP per person, a typical use of GDP to figure the income of each person on average. A nation with 10 people with a GDP of $10.00 a year would have GDP per person of $1.00 a year. What if in one year, a country’s government increased borrowing and spending an equal amount to the rest of the economy? Since that spending is included in the GDP figure it would make GDP appear to grow 100 percent in a single year! Would an average person’s income double though? Of course not, they would be poorer, because they would have to carry that debt… and if the scheme went on, that country would sooner rather than later go belly up, destroying all the prosperity of the people.

In the pseudo science of economics the wants and desires of those who do the measuring are included in their measurements. Unlike a physicist weighing the mass of a particle, the economist put’s his or her wishes into the measure, because they lack the perspective, testability and observability of the assumptions of real science. An electron has a testable verifiable charge that is consistent anywhere it is done, while no economic theory can be tested, they cannot be verified and are not universal. We all have egos and want to be more important than we are. None of us have a real perspective on ourselves, it goes back to Jung’s theories, that there is that we know about ourselves, that which everyone knows, that which others know but we don’t and that which no one knows. New class economists want government spending to be included in GDP, because they can effect government spending with their theories and assertions, therefore, adding government spending to GDP makes them more important. It serves their egos and the egos of those in political power. Sadly, it doesn’t serve us at all. That is why government spending should not be included in GDP… it calculates borrowing as income and calls a drag a boost, creating pernicious incentives and distorting the real picture of an economy.

Sincerely,

John Pepin

Obama’s War on Ideas

Thursday, January 15th, 2015

Dear Friends,

It seems to me, the newest war the US and Britain are fighting, the war on extremism, is a very dangerous slippery slope. The bottom of that slope is arbitrary rule. A slippery slope is when doing a thing, leads to another, then another, until eventually you have gone far beyond where you planned to go, like sliding down a slippery slope. A lie is a form of slippery slope. A white lie leads to another, then another, until they are no longer white lies they are bold faced lies… all to cover the initial lie. Once you step out onto that slope, the slide is unstoppable until the bottom is reached, then there is usually no way to get back up. The damage is done. Those who wield political power are many things, but stupid they are not, so the fact our leaders are moving us onto that slope is telling of their diabolical nature.

I would like to remind people that scientific progress, social evolution and political evolution depends on extreme ideas. When Columbus said the world is round he was an extremist, when Kepler said Earth revolves around the Sun and not visa versa he was extreme, when Einstein came up with his theory of relativity it was extreme, when Thomas Jefferson penned our Constitution it was extreme too. Every advance of humanity was called extreme at the time! To eliminate extreme ideas is to stop humanity in our tracks. New ideas are always extreme, to stop all new ideas is a recipe for stagnation and decay of a culture, it’s people and government.

As Clausewitz said, war is politics by violence, since the government has declared war then by definition, they mean to use violence for political ends. State violence is like a Pandora’s box. Once it is opened it cannot be unopened. Once someone is dead they cannot be brought back, (except by Jesus Christ as Lazarus). Therefore, before a government uses violence, it had better make sure the violence is justified. Violence is far more horrible than people realize, especially State violence, (war). So when a state resorts to violence, the enemy must be identified, the threat must be real, the goals set and the exit strategy decided. Else a war gets quickly out of hand and becomes an unending quagmire. The question now is, who will they use violence on?

As long as a faction isn’t violent who is to say it is extreme? Extreme is in the eye of the beholder. Many think the Mennonites are extreme, but not at all violent, so does that put them in our government’s sights? What about a saint? No one is more extreme than a saint. In the war on extremism both the US and Briton made sure to inform us that violence is not the defining factor… Extreme ideas are. The founding fathers were definitely extremists, and today, agreeing with them is one of our government’s definitions of extreme. A belief in individual liberties puts you on the extreme list. An anti abortion stance is another position that puts a person on the governments hit list. In fact, anything not in the new class progressive philosophy, is extreme, as defined by our government! Well, except for violent Islamic terrorism, but then again they did tell us it isn’t about violence, it is about ideas. Basically, anyone who disagrees with the government line, is an extremist.

It is the fear of Islamic terrorism that is the foot in the door for government to declare war on anyone who doesn’t agree with their new class philosophy. Yet the US government refuses to name Islamic terrorists as the target, in fact, they are careful not to. The lists put out by the US government and the British government on whom is extreme should make any liberty loving individual’s blood run cold. Throughout the ages, whenever a government wanted to usurp power, an enemy of the state has been the means, and Islamic terrorism provides just that means, and so must be protected, nurtured and husbanded. Now that we have allowed Obama to arbitrarilly decide who should be executed, out of fear of Islamic terrorists, there is no real limit to his power. Yesterday, Obama arbitrarily ordered Anwar Al Awlaki killed, for inciting Islamic terrorism, tomorrow, it will be Joe Smith, for reading the Constitution aloud in the public square.

So what does it mean to have a war on extremism? Simply stated, it means government will do violence to anyone who they disagree with or disagrees with them. Islamic terrorism provides the propaganda, but the real war is against the citizens of the US and Britain. Those governments bend over backwards to kowtow to violent factions within the Islamic community and never miss an opportunity to poke Christians in the eye. Remember Obama’s jailing of a film maker because his film offended Muslims? Last week Obama refused to attend the rally supporting Charlie Hebdo, and do you wonder why the US CIA is sending so much money and arms to Islamic terrorists around the world? Why were Christians forced at gun point to fund Piss Christ and a picture of the Virgin Mary in dung? Feces is the sign of Baal. So, if our governments are fighting a war on extremism, why do they engage in all those counter productive things? Because their war is not on Islamic terrorists it is against their own citizens!

Why would government wage a diabolical war against it’s own citizens? To disconnect us from our founding principles and documents. Obama himself said Our Constitution is too limiting he would like to change it, to empower government, not limit it. His war on extremism is just the bill to do that. Obama, and other world leaders are willing to let a few thousand children be killed horribly, they are willing to accept violence on our streets, rape as a weapon of war doesn’t bother them, they will tolerate the slaughter and even the extermination of Christianity, as well as genocide, human suffering to them is a means to an end, in short, those who will wage war on extremism, (do violence to those citizens that disagree with the elite), have no conscience and no morality, power is their only love. Oh, they will shed alligator tears over the suffering they cause, but that is only propaganda too.

To wage war against one’s own people is a description of truly evil person. In their war on us and our liberties Islamic terrorists are the new class progressive elite’s allies. Moreover, crushing ideas that the elite call extreme, is a certain way to stop humanity’s social, cultural and political evolution. War is politics by violence and by declaring war our government has avowed to use violence on anyone they deem extreme. Since they refuse to call Islamic terrorists extreme, but do call Tea party members, anyone who speaks of individual liberty, constitutionalists, returning US soldiers, gun owners, pro lifers, etc… extreme, it is clear the citizens of the US and Briton are the target of their war. Talk about slippery slope! Now that you know your government is planning on doing violence to you and your loved ones… what will you do about it? Oh, never mind, dancing with the stars is on… go back to sleep.

Sincerely,

John Pepin

QE Insanity

Thursday, January 8th, 2015

Dear Friends,

It seems to me, if as Einstein said, “Insanity is doing the same thing over and over again and expecting different results…” then our Central Bankers are the most insane people ever born. The pseudo science of economics will not be dissuaded by mere real world observed results, that contradict their theory, no, that would be like… giving up! You have to admire their willingness to sacrifice the standard of living of the whole world to prove a point. The United States Federal Reserve has printed trillions of dollars and used them to monetize the debt. The Bank of Japan is doing the same thing with the Yen, as now Draghi is claiming he will do as well to the Euro. Despite the trillions printed and given to government and the big banks, which in a normal economic cycle would result in runaway inflation, there is no inflation as measured by the eggheads at the Fed, ECB, or the seat of Abenomics. Their failures lead to our losses, in our wages, pensions, savings, house values, and yes, our basic standard of living.

Keynesianism is a philosophy in the arena of the Wealth of Nations. John Maynard Keynes was a British economist, who posited that since an economy is driven by the demand for it’s supply, in an economic downturn, which by his thinking was a period of time where supply outstripped demand, then government spending could gin up demand and swing an economy back into growth. Basic and simple to understand, it also had another thing going for it… it empowered government officials to tax and spend more, “for the good of the economy.” What Keynes and later demand side economists fail to understand is… not all demand is created equal. Consumer demand is always the most productive and government demand is actually often destructive of economic growth.

Japan is the poster child for Keynesianism’s failure. When Japan first went into their decades long recession the government was flush with excess reserves. The government of Japan spent huge sums in typical Keynesian fashion to stimulate the economy. It failed. They raised taxes and spent more, the economy floundered, a new party was elected into office on the promise they would spend more. They regulated and spent more, and the economy went downhill even faster. Abe was elected to print more and spend more, he raised taxes, printed more and is monetizing Japan’s huge debt… to no avail.

The southern states of Europe have had a healthy government sponsored safety net for decades. As a result, today the governments of south Europe spend huge amounts of money, keeping able bodied young people out of the workforce. The drag on the economies of those countries is like pulling a three bottom plow through a swamp. No amount of government spending would be enough, to satisfy the demand for free money from government, but the politicians have promised what they have promised. The elite could never lessen their grip on the economy through regulations and taxes, buttressed with graft and bribes. If they had the ability to print their money into hyperinflation they would do it in a nanosecond.

The US Federal Reserve has gone through six incarnations of money printing, TARP, TWIST, QE1, QE2, QE3, Monetary easing, and now ZIRP. Trillions have been printed and handed to the too big to fail banks (TBTF), and government. With all the propaganda that the US government has reigned in spending, the numbers the unbiased media use are compared to the days of trillion dollar stimulus short term measures, not long term averaged spending to GDP. Today the US government spends as much of GDP as anytime in history, 36% of GDP is government spending! That means 64% of the economy is pulling the plow while 36% ride it and claim they are helping. Yet even with all that Keynesian “stimulus” the economic outcome for Americans is getting worse by the day.

The past is littered with regimes that tried to print and spend their way out of a recession, they have all failed, spectacularly. The ones traditionally cited are Wiemar Germany and Argentina, but there are many other examples of hyperinflation triggered by monetizing the debt. Hungary was the worst ever in 1946, but Zimbabwe in 2008, and Yugoslavia in 1994, were crushing… the examples go on and on. Printing money to stimulate the economy has failed every time it has ever been tried. It empowers the political elite to take more and spend more however, and with that incentive at play, it will be given many more chances in the future as well, just in case it might work sometime.

The egghead economists answer to their failure of money printing… to raise wages, lower real unemployment and underemployment, the lack of small businesses, rising food inflation even as imported goods get cheaper, stagnated housing market, and the multi trillion dollar bond bubble the Fed’s policies have created… is to do more of the same. We are told we must let them print more and blow up more economic bubbles else we would be in for it. They have become like a typical mad scientist. Despite all the monsters they have created in the past, and the destruction those monsters wrought, there is only one way, their way, the consequences be damned because someday it will work… it just has to!

Sincerely,

John Pepin

Friction

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.

Sincerely,

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.

Sincerely,

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.

Sincerely,

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.

Sincerely,

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?

Sincerely,

John Pepin

Balance

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.

Sincerely,

John Pepin