Posts Tagged ‘recession’

Romantic Anti Capitalists

Thursday, August 26th, 2010

Dear Friends,

It seems to me that the integration of African Americans into White society was as much a factor of capitalism as it was political.

Take the example of Jacky Robinson into the major leagues. What today seems obvious is not so obvious before it has been done successfully. We look back and think that it is absurd to exclude people from an activity due to the color of their skin. But, in the day, people were afraid of public opinion. They didn’t have a good read on whether or not it would be tolerated.

That is the role of the entrepreneur… to see an opportunity and seize on it. If you reduce baseball to it’s capitalist roots you see that each firm vies to have the “winning team.” the more winning your team the more profit there is in owning it. With this as the incentive it is in the best interests of the owners to put the very best players on their teams… that are available.

The entrepreneur notices that the available players are not necessarily the best players alive. So in his evil way the entrepreneur changes the parameters of what attributes are allowable. In this case erasing skin color as a disqualifying attribute. The entrepreneur who makes the leap first… successfully makes monopoly profits until the rest catch up. But in the interim the entrepreneur has bought up the best players at the beast prices. Monopolizing them to his evil ends.

Take the example of the wicked factory owner. He wants access to the cheapest labor he can get. Cheap in the smart capitalist terms… Lower labor cost per unit produced. Cheap cost is not necessarily cheap labor. Labor that is very inefficient is not cheap at any price… He sees that there is a segment that is excluded from his factory. If the exclusion were removed the available pool of labor would go up and his labor cost would at least stabilize if not go down. So the self interested entrepreneurial factory owner will seek to open up the formerly excluded people to his labor pool. It is in his self interest.

This is a fundamental attribute of capitalism and the market system. The very thing that make capitalism so hated by the romantic anti capitalists. Like Moser and Freyer worrying about the market system’s effect on community and the loss of ethnicity. To Marx and (in his own way) Schumpeter, on the imminent demise of capitalism… In the case of Schumpeter his book might have saved us all decades of stagnation at the hands of the progressives… One uniting attribute of all the anti capitalists is that they have a fixation on groups.

They love to group people and think about them in groups and as members of groups. Like meteorologists use blocks of data to represent large volumes of air in their computer simulations. It makes the computing task much easier. But introduces a huge amount of discrepancy. That discrepancy is why the weather man claims it will rain and it actually is clear and sunny. People are people. We react as individuals. Our actions then aggregate into societal action. But to try to represent human beings as groups looses a huge amount of data. This is a case of arguing from the specific to the general.

Because capitalism has introduced the ability of the individual to follow a path according to his or her desires and propensities. Allowing people access to the means of human improvement. The very thing that the original conservatives like Burke wanted to protect. That genie or djinn is loosed from the bottle. It will wrought what it wrought. But it is loosed. The internet only exacerbates the situation for the anti capitalist.

As more and more people follow their own paths and free themselves from group attachment we will see an improvement in the reactions of people to those that are different. As we have said before the sofa salesman cares nothing for the color of the customer’s skin he only frets over the color of his money…

But this vanilla-ing of society infuriates the romantic anti capitalist. They look at people doing their own thing and never fail to find fault. The planet cannot sustain it! Is a modern cry. But it has echoes from the past as well. During the 1930’s the Elite were claiming the Depression was caused by the diminishing of the Earth’s natural resources. As we have seen, empirically, that was not the case then, nor is it the case now.

It is romantic, to be anti capitalist, but romance is blind, and it is often foolish.

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Posted in Group Politics, economy, philosophy | No Comments »

What Metric to measure the Moralality of an Economic System?

Thursday, August 19th, 2010

Dear Friends,

It seems to me that the statement “I find it morally wrong that some people have so much while others have so little.” is comparative. It compares that which the speaker knows nothing to that which the speaker knows little. And so, it says more about the speaker than it does society.

Because how can anyone actually know the heart and the true worth of another? Is the person the speaker has in mind about to go bankrupt. Is a terrible accident about to happen to a loved one of the person with too much. Or is the person with too little actually a miser?

Groups are ever more slippery. Because statistics are so poorly done. They are wielded like scientific certainty when there is increasing evidence, (scientific evidence) that statistics are misleading at best. If they are done right they can be informative but they are so rarely done with the proper scientific scrutiny that most are useless. Since groups must be compared statistically the comparison is ever more flawed.

The assumption is that material wealth is the paramount attribute. All others are tangential to it. And so a large difference between the top ten percent and the bottom ten percent is seen as a metric on the moral value of society. But if that is so then they must believe that a society with perpetual want is preferable to one where obesity is a constant threat to the impoverished.

The Desiderata says, “If you compare yourself to others, you may become bitter or vain, for always there will be greater and lesser persons than yourself. “ How much worse comparing others to others?

If a metric to apply the morality of a system is needed then take the lowest segment and compare their lot with the aggregate world standard of living. If the impoverished in a society live at or above the average standard of living in the world then we can say, empirically, that society is moral.

On the other hand if the average standard of living in a society is lower than the world average then we can say that this society is less moral. There is some roadblock to that societies effective use of the market system.

In both cases we look at the fruits of a given economic policy not the intentions. If the results are a high standard of living for the lowest 10 percent then the difference between the lowest and the highest is irrelevant. If the intent is simply to make the economic outcome equal for all players then the only workable means is to lower everyone’s.

I cannot ski that well. It is too late for me to learn to ski at more than a remedial level. If skiing were economic outcome then the socialists, progressives and communists would have to break the legs of those that ski well. So I would n’t feel inferior to them. Because it is impossible to raise me to their level so it is only possible to lower them to mine. But there are people who cannot ski at all…

But, like most things romantic anti capitalists say, it sounds great until you actually think about it. Then it sounds pretty silly.

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Posted in Societal Myth, economy, philosophy, polictics of class envy | No Comments »

Japan’s Economy

Friday, February 26th, 2010

Dear Friends,

It seems to me that Japan has real economic problems. They rely far too much on large business. The model served them well in the age of behemoths but today Japan would be better served to open up the internal markets and help develop small entrepreneurial business.

The manufacturing model can be phased out with the lowering of the working population. The younger people, who are excellently educated, can move to management of the large industries their parents and grandparents built. Other more outside the box thinkers should be encouraged through harnessing a market for start up ventures. Deregulate startups and lower tax rates for startups. This would open the throttle to the Japanese economy.

Today Japan is mired in the policies that the US administration wants to take. Japan is ten years down the road. It doesn’t look good to me… Japan carries a debt load that sops up funds from the capital markets. Fortunately for Japan the Japanese people have always had an excellent savings rate. That has been a godsend to them today. It allows the Japanese government to borrow and borrow to try to prop up demand ala John Maynard Keynes.

Government demand always favors large well connected (politically) companies. As demand moves from private sector demand to “temporary” government demand, that never stops, industry moves to the paradigm that fits it’s customers needs. And that is large politically connected companies. Only these companies can fill out the necessary paperwork and spend the rescores to meet government criteria.

Japan is reaping the rewards of government keeping up demand. Supply has shaped demand. Large corporations dominate the Japanese economy. I would bet the ratio of the economy that makes up small business share to large business, is skewed to large business in Japan, against a world mean.

That coupled with government sopping up all available local capital. Diminishing capital markets of startup money is never a good means to an increasingly productive, vibrant economy. Helps keep Japan in the economic doldrums. Sleepy GDP growth year over year corrodes the Japanese standard of living.

I hope they will move into a better fitting paradigm. Like the one I have suggested. To do this however the government must put down the toys. Some Japanese government must have the guts to stop spending. Pay down it’s debt and reload the capital markets with money.

One of Confucius’s disciples asked him what must a kingdom have to be in order. Confucius replied, Adequate supplies of food, adequate supplies of munitions and the confidence of the people. Confucius was then asked, what if he had to go without one? Munitions was his answer. What about if he had to go without another? Food; For all through history death has come to all men (yet society survives). But people who have no confidence (in their rulers) are undone, was Confucius reply.

Government must have the confidence of the people. Ten years of stagnation is too much. Japan has shown Keynesian economics to have major flaws. Every time there is a recession people turn to government to “do something.” That always involves spending money. But as Japan shows, no matter how government spends money, it is not as effective as money spent by individuals.

Individuals buy from small business. That drives up demand for small business. That is exactly where Japan should go. To encouraging small business, moving from manufacturing to management, and funding entrepreneurs. The next Google or Microsoft could be from Japan… Or Moldova. It is only a matter of government policies not getting in the way. No matter how well intentioned.

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Posted in International Power, economy, philosophy | 1 Comment »

Economy, Up or Down?

Friday, July 31st, 2009

Dear Friends,

It seems to me that the economy should have at least started to recover. Even had the government done nothing, and the Elite’s friends had crashed and burned, the economy should have shown signs of life. Yet it stubbornly refuses to get better. Despite the almost three trillion dollars spent on TARP and stimulus.

I have even noticed a sea change in the way the unbiased media couches economic news. For eight years the unbiased media steadfastly denounced every indicator as a bad one. The unemployment rate hits four percent and it will be out of control inflation. Productivity gains were a sign the economy may slacken. Increase in overtime payments were a sign the workforce was overtaxed. Every indicator was taken as bad news.

Now they have switched gears and call every economic indicator a good one. The unemployment rate hits nine point five percent and the loss of jobs was only five hundred thousand. Both taken as signs the economic drop may be slowing. Every indicator is taken as good news yet despite the propaganda the economy continues to slow and fall into the abyss. Commercial real estate will be next edge. When sticky prices run up against fluid demand.

Even were the economy to hit a bottom it would have another edge. The governments of the world have collectively spent too much of the people’s money on pork. Had the governments of the world lowered the marginal tax rate for the people of the world the money would have been used productively.

When tax cuts were being debated economists were arguing that people would “just” save the money or pay down debt. That people wouldn’t spend the money so the government should do the spending. Keynesian in nature demand generates supply. But the problem with John Menard Keynes theory is that if the demand is government generated, government must keep demanding, else the economy goes into recession. The economic incentives become skewed to meet the new demand.

To put it another way. Demand shapes supply. In that, if there is a demand for A, then suppliers of A will shape their outputs to meet the needs and demands of the customer. The longer the customer is the same the better the suppliers of A will meet their needs and demands. But, government cannot keep demanding a quarter of national GDP every year, on top of the other obligations past Elite have thought fit to saddle the government with. Government debt will go nuclear and irradiate the currency. So government generated demand must end… Eventually.

So when government demand inevitably goes down the economy must go into a recession. To retool to meet the demands of it’s new customers. Customers that have been denuded of their money by government’s avarice. The inevitable recession will be long, due to the lack of largess in the hands of the people.

It’s also a valid fear that the people will learn to do with less. Become too thrifty. People who fear the future save for it. People who relish the future spend like a drunk. The best path, of course, is the mean. To save for the future but not so much as to deny today. But if government create’s such a long recession that people become used to saving, and not ever spending, it is hard to start the people spending again. Inertia and all that…

By the time this economic downturn has played out we will have far less money to invest in anything. Government regulation will stifle new companies, as will onerous taxation, to pay the interest on the debt. So startup money will be scarce. Delaying or forestalling new businesses startups. Elongating the recession into the recovery.

The longer the government (roof) holds up the economy (foundation) the worse the consequences… I predict the government will double down on it’s bet.

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Wise Goernment… We Have Not…

Sunday, June 28th, 2009

Dear Friends,

It seems to me that we have the least wise politicians in the last two hundred years. They toy with that with which they know nothing. (No way that could go bad).

This energy /climate change bill the house just passed will slow growth for decades. Until the year 2050 if it gets passed in it’s present form. The cap and trade part alone will inevitably drive up electrical bills around the nation. No state will escape unharmed.

To pass this giant power grab/tax increase by the Federal government at a time of economic malaise is actually stupid. Any recovery that gets started will have the caret pulled out from under it by this huge increase (legislated increase) of energy prices. The result will be a Wv-v-w-w-w–w, with each successive w smaller, recession.

I think the Elite are counting on their Industrialist friends to keep the economy moving. The Elite will punish those that don’t go along and reward those that do. Look at the example of Bank of America. If the government gets away with forcing BOA to open it’s own jugular vein, then all bets are off, as to the eventual end of the Elite’s power, to shape and mold industry. Ala command and control economy.

Illegal immigration into the United States and Europe generates societal upheaval. To have the Elite encourage it so they can have access to cheap nannies and gardeners, is tantamount to condoning it. The example of the Hyscos people in ancient Egypt shows us why unrestrained and unassimilated immigration is dangerous. Immigration pressure is always an effect of a good economy especially when coupled with liberty. Together they are a powerful draw to humanity.

Immigrants must be assimilated into society as a whole. There must be a societal myth among immigrants they need to assimilate and there must be real demands of immigrants to assimilate. This way immigrants can add their fortes to society in general. Keeping immigrants ignorant of the prevalent language generates societal friction. Keeping immigrants poor generates more societal friction. Throw them in slums and friction abounds. Add to this racism and you have a perfect recipe for societal upheaval.

Our leaders have decided before we hit the bottom of a recession, “the worse since the great depression”, to raise taxes (historical in magnitude), generate societal upheaval, and take command of the economy. Do these look and sound like the actions of wise individuals?

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