Our Upside Down World

Posted on June 14, 2012 by john

Dear Friends,

It seems to me that we are living in an upside down World. The Elite hold us to the highest standards while committing far worse crimes themselves. The unbiased media is complicit and the people of the World are groping for answers in the dark. This state of affairs cannot last long, and I am afraid, will lower the lot of every human being on the planet, eventually leading to another World war, if it is not rectified.

Jamie Dimon is questioned by Congress for loosing two billion dollars of shareholder money, while Obama faces no questions, from Congress or the unbiased media, concerning his loosing tens of billions of dollars of taxpayer money. When a CEO makes a bad decision it is the investors in that company who take the loss, when the President makes foolish bets on companies owned by political contributors, it is the American people who loose the money. As Milton Friedman said, “There is no free lunch.” When government takes a dollar from the private sector and wastes it or gives it to some political hack, that dollar is not available to be spent on a more productive undertaking… everyone suffers. When a company makes a bad business decision, that company suffers and the market opens up new opportunities for smarter companies and ideas, unless regulation prevents it.

The Pentagon is using US taxpayer money to buy Russian helicopters for the Afghanistan military, and the the unbiased media are upset, because that same company has sold helicopters to the murderous Syrian regime. The real question the unbiased media should be asking is, why not use American taxpayer funds… to buy American made helicopters? It would seem to me, that is the burning question, but the unbiased media avoid the real questions and only ask misleading ones.

Obama believes the US private economy is doing “just fine” it is the government who is starved for money. This shows one of two things, a total disconnect from the real economy and a total lack of understanding of how economies work, or, he doesn’t care how well you and I am doing, because he is the only thing he focuses on. Neither option is good for the country he has been elected to husband. If he is that ignorant of the economic system of the World, he is patently unqualified to be a anything but a laborer, certainly not President of the United States. If the latter is true, and he is that self absorbed, he is unqualified to do any job, period, and we should support him on welfare.

The convulsions in Europe are coming closer and closer together but we are being told that a solution is still possible. Spain was just given a hundred billion Euros to bail out their banks and stem the run on them. This follows Greece getting another tranche of money from the EFSF to stabilize it’s economy after going belly up on it’s debt in February! Italy and Greece are experiencing runs on their banks and France is swirling in the economic toilet. Greece is about to elect a communist government on Sunday, that will ensure the Greek people will suffer economic catastrophe, while the political leaders in Europe are intent on rearranging the deck chairs on the doomed ship. Is there any country in the Euro zone that has less than twenty percent unemployment? Yet Obama says, with a straight face, the US needs to adopt European style socialism! Is he really that stupid, or are the unbiased media that stupid, not to point out the absurdity of it?

In a sane world this would be the stuff of comedy. In the World we live in it is the norm. Our leaders hold us to the highest standards but are loathe to hold themselves to any standard what so ever. This economic crisis will cause a World wide depression, that will lead to another World War, just like the last time our leaders collectively lost their minds. History will again record it was the villains who started the shooting, instead of the villains who started the ball rolling… that were to blame. It is truly unfortunate that so much blood, wealth and industry, will be squandered by such foolish people. But since our leaders steadfastly refuse to learn from history… I guess we are doomed to repeat it.

Sincerely,

John Pepin

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Government as Gatekeeper

Posted on June 11, 2012 by john

Dear Friends,

It seems to me, when government is the gatekeeper of all the goods in society, politics filters those goods. By gatekeeper, I mean that everything and every action by the individual and organizations, must be recognized and allowed by government. As we know intuitively, government is nothing but politics, so, when the gatekeeper is government, it is actually politics that decides what good can be rightfully visited on mankind. Under this scenario, only that which benefits those in charge or the politicians who run the show, is allowed. That which is contrary to the interests of politicians, will not be allowed, regardless if it is a great benefit to the people. This is the traditional paradigm that the human race has labored under for millenia, and is the font of all that is bad in society, economics, civilization and government, that rises from the sea of humanity.

The role of government as gatekeeper is long established as the Right of Kings. This was the way it was, and still is, everywhere government is overly powerful. The government is the sovereign not the people. When this is the case we always see that those in power get the goods of society distributed to them, and the people only get those goods which the politicians or kings, believe benefits the government… (themselves).

We see the most pernicious examples in third world countries. What is normally considered corruption is fed by this mode of thinking and acting. When people need a license to establish even the most basic business we find the licensing process to be rife with bribe taking, political interference, certain people “shut out” from the process, and the politically connected have the road cleared for them… crony capitalism. This has huge negative consequences for the economy, of the World in general, and for individual countries in particular.

The economic and governing problems we see in Europe and around the World are directly tied to this. In Greece and Europe the people are like teenagers, they want all the prerogatives of adults with none of the responsibilities. They want to live in their parents, or in this case big brother’s house, while they live it up. This is the way people think when government becomes the gatekeeper. Government must necessarily grow, spending grows, control grows while the economy and liberty shrivels, all to serve the interests of politicians. But, as long as the politicians who run the thing benefit, all is considered good.

Undoing this dominant way of thinking was one of the ingenious ideas of the American revolution. The idea that people could make their own decisions, without needing to go to a government official to get permission, was evolutionary. This opened up business to those not politically connected people who were and are virtuous. This in turn introduced a whole new level of competition and entrepreneurship to the marketplace. Anyone with a good idea could start a business, succeeding on the merits of his or her business plan, without political interference.

Today, around the World we see this concept attacked, for the retrenchment of the old ways of doing business. In many US cities it is illegal to feed the poor. That is the role government has carved out for itself just like in North Korea. Unimaginably self serving, this is barely even questioned, in an age where government is the gatekeeper of all that is good. Even religion is now coming under the purview of government oversight, as we see in the Catholic Church’s bristling, under Obama’s regulating what the church must pay for and do, to be in compliance with politician’s self interest.

The deeper government goes in regulating the people and the economy… the more politics inserts itself into the corpus society. This is one of the reasons politics is so nasty today, government is the arbiter of what can be done, and what cannot be done, in the economy and society… ala Bastiat’s Law. As this gets more and more common, it is questioned less and less, and oozes insidiously into the minds of the people, until it is taken as the unvarnished truth. The answer is to open our minds to the fact that government is nothing more than the operation of politics on society and civilization… therefore the people. Political tampering in the economy is justified as a necessary evil because people are “bad at heart” ie. Self interested. But I ask you… if people are bad at heart… why do we trust politicians, (unregulated self interested people), to be the gatekeepers? Isn’t that counter intuitive? Or do politicians say it’s okay?

Sincerely

John Pepin

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Wisconsin Recall Victory of Scott Walker

Posted on June 7, 2012 by john

Dear Friends,

It seems to me, the decisive win in Wisconsin of Scott Walker in his recall election, is the elephant in the room no one is talking about. While the unbiased media are downplaying the victory, (it was on the last page in my local paper), the most conspicuous thing is, the lack of any real information or the ramifications of the election. This is par for the course for our unbiased media but in this case the silence is deafening. The reaction of the unbiased media, is far more telling than the actual election victory of a conservative, against a recall that was totally based on his policies and politics, instead of a mismanaging the State’s affairs or some criminal conduct. This bodes evil for those that seek to restore Constitutional rule in the USA. It is the criminalizing of politics.

There is a total denial of the national implications. The unbiased media have gone out of their way to deny any possible connection with the Presidential election coming up in November. They claim the results were local and the issues were local so the election has no effect on the likelihood of Romney ousting Obama. This is despite their own reporting that Republicans and Democrats sent money from every corner of the US to Wisconsin. This should be at least an indication that the election had national implications but has been totally missed by the unbiased media. Would they have reported the same thing had Walker lost?

There is very real indications of voter fraud. In Madison the voter turnout was 119% of the electorate. This is impossible without some form of fraud. There is no possible way that more votes can be cast than there are voters to cast them… unless some fraud took place. The radical left, Daily Kos, claims that same day registration was implicit in the impossible turnout. To believe that… one must have a total suspension of logic and critical thinking. People who are that passionate about an election will register before an election of this magnitude to ensure their votes count. To claim that over 100% of the electorate voted should raise some eyebrows but the unbiased media are silent. Why do you suppose they are silent in the face of obvious voter fraud? Could it possibly be that they don’t want this fact to effect purges of the dead and ineligible from Florida, Texas and California’s voter rolls?

This assertion is born out when we examine the names of people who signed the recall notice. Micky Mouse and Donald Duck are apparently eligible voters in Wisconsin. This in itself is absurd but to hide the fact is at least malicious if not criminal. As we stated in a previous blog, “The [democrats] would rather have 100 fraudulent votes cast than 1 person be disenfranchised.” This is of course ironic in that if there are 100 fraudulent votes cast then there are 100 people disenfranchised. To state the obvious… if not so obvious…

The economic news like Bloomberg Radio, seem to be blind to the fact that today’s stock market rally, could have anything to do with the Wisconsin election, even though the timing is at least coincidental. Today there was a huge rally in the US stock market. The question was asked over and over… why, but there was dumbfounded bemusement. Some claimed the FED will print more money, some claimed the lack of bad news from Europe was the cause, but no one observed that the election in Wisconsin, being a harbinger of the coming national election, gave investors hope that a Romney win is more likely and the anti business policies of the Obama administration would be overturned, for more market friendly ones.

This incongruity would be interesting if the job of the unbiased media in the US was to report news accurately and without bias. Unfortunately, we know by anecdotal as well as empirical evidence, their real job is to reelect Obama while claiming to be unbiased. They even admitted it on NPR several times after Obama’s victory over the impoverished McCain campaign. The American people, our Democratic Republic and our children, are poorly served by this perniciously biased media. Fortunately, the American people are fast waking up to this fact… as is shown by the poor ratings of the unbiased media. Maybe they too, will get a bailout from Obama, if he wins in November.

Sincerely,

John Pepin

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Limiting Supply Makes Prices High

Posted on June 4, 2012 by john

Dear Friends,

It seems to me, when government limits supply, prices are always high. This axiom holds true, no matter what country’s government does it, or what form of government it is. In the dynamic world of economics, supply reacts and is interdependent with, demand. Both sides of the demand vs supply graph effect prices. This is basic economics yet our leaders act and argue like this fact is irrelevant. When they do… they do so at our risk.

The supply demand graph is a well known theory in economics. It explains how prices are set in an economy. One line on the graph is the supply line, the other is the demand line. They chart the amount of supply of a good or service at various price levels against the relative demand for that good or service at those same price levels. Where they intersect is the equilibrium price. As demand goes up prices necessarially rise, giving producers an incentive to raise supply, to make more profit. As the producers raise supply, the price intersection on the graph comes back down, back to the equilibrium price.

When government, through regulation, taxation or political favoritism, limits the ability of the producers to raise supply in the face of a demand increase, the supply line moves and the equilibrium price is raised. The more supply is constrained the higher prices will climb. This not only effects prices but more importantly… jobs as well.

When a government constrains the ability of it’s markets to react to a rise or drop in demand, the producers of that product or service, have incentive to move to another country, that doesn’t put the constraint on the ability of the market to meet demand. This siphons jobs from the country that limits it’s markets and sends them to other countries that do not. This is why Singapore is so wealthy.

Milton Friedman said, When a firm faces competition from a better competitor, there are two possible actions it can take, the first is to go to government to get anti competitive regulation passed, the other is to adapt. Of the two, the first is the easiest most taken path, and leads to general poverty, the second leads to a vibrant economy. Anti competitive regulation is a form of constraint on the market’s ability to flex with market demands. Another example is, unrealistic or poorly planned environmental regulation. If environmental regulation gets too expensive then firms have incentive to move their operation to other more lax countries. This doesn’t help the environment, (the product good or service is still produced but with no standardization leading to a worse environment), but does create tensions in the market.

Energy is an example of an industry that has been constrained in it’s ability to meet market demands. The American government has an obvious anti energy bent, in it’s regulation, rhetoric and actions. From the Keystone pipeline through the moratorium on offshore drilling to the crippling anti coal regulations, the US government led by Mr Obama, has openly stated it’s intention to make energy more expensive. The huge amount of natural gas that has been discovered in the continental US, despite the government, has caused a plummet in the price of gas based energy. Supply has outstripped demand. Today we see States and the Federal government seeking to put an and to this cheap energy, by placing moratoriums on hydro fracturing, the means to access the inexpensive gas.

Energy is by no means the only example, food production has been intentionally lowered under the FDR administration, lumber prices were raised when the government outlawed logging in Washington and Oregon, to protect the Spotted Owl, (which, as it turns out, wasn’t being effected by logging at all, but by the encroachment of the native Barred Owls)., the list goes on in every country and throughout history. When government engages in this type of action we are poorly served. Not only in our pocketbooks, from the higher prices, but in our job prospects as well.

The price of labor is also set by the demand vs supply of jobs. So when government limits supply prices are high and wages are low because jobs are few.

Sincerely,

John Pepin

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Democracy, Who Favor’s it and Who Doesn’t.

Posted on May 31, 2012 by john

Dear Friends,

It seems to me, for people to claim democracy is the be all and end all in government, they must hold the voter in great esteem, else they don’t really esteem democracy. If one believes that democracy is a good then they must also believe in the will of the voter. Because if one believes the voter incompetent to make even the most basic decisions, or comply with the least standardization, then they must also have a hatred for democracy as well. The two go hand in hand. For someone to hold both mutually exclusive ideas simultaneously, is not a sign of intelligence… but of deceit.

Democracy is based on the competence of the voter. No matter how the voter is defined. The basis of all democracy, from Athens to America, is that it rests on the voter casting his or her ballot, for the person or concept of governance, they see most fit. The theory is that the voter, in the aggregate, networked into society, have the “on the ground knowledge” that allows us to make the right decision, most of the time.

If that voter is not only ignorant but is incompetent as well, the entire government, society and civilization suffer. When government is run by egoists the economy suffers. When society is run by ignoramuses crime is rampant, and when civilization is held in low esteem… it is soon lost. These outcomes necessarially follow these preconditions. A person who believes the people incompetent would think, for example, that no good can be done; without the direct intervention of government, that people are incapable of feeding themselves, that people are so inept they cannot work and need a dole, that people must have every aspect of their lives regulated or that people need even to be told to “buckle up,” in government paid ads on television. If a person were to hold the voter in such low esteem then they would naturally fear democracy. This fear would manifest itself in many ways, not the least of which is, by undermining true representative democracy.

We see this very thing acted out in various countries, mostly by tyrants seeking to hold power, that the people begrudge. The tyrant will stuff ballot boxes, he will intimidate voters with violence, the would be tyrant always wins the dead vote and the would be oppressor needs to control the unbiased media. All the time claiming to be a favorer of democratic forms of government. The truth is that they do… as long as the tyrant, not the voters, decide. This play is acted out all over the World. From Africa to Asia, tyrants have “free and fair” elections, while the media is one sided, there are armed gangs at voting stations intimidating voters and there are tons of ineligible votes cast.

We can reliably tell who is, in their hearts, opposed to real democracy by the way they act. When laws standardizing the voting process, to protect the populace from vote fraud are initiated, they scream and whine some voters will be disenfranchised. If they also control the unbiased media and have armed gangs at voting stations, we can reliably tell that they are against democracy, only claiming to be for it… as a means of deceit. In the last election in Russia, there was wide spread claims of voter fraud, and we know the media in Russia is reliably on the side of the governing Elite… else they meet with unfortunate “accidents.”

In the 2008 election in the USA, there were accounts of voter intimidation by armed gangs at voting stations in Chicago and elsewhere. The Black Panthers were implicated but the “Justice Department” never saw fit to prosecute their political allies. The unbiased media is firmly in the “democrats” corner, and the “democrats” seek to stop any and all attempts, to protect the voters ballot from fraud.

They would rather have 100 fraudulent ballots cast than let one person be disenfranchised…

Sincerely,

John Pepin

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Space X Makes History!

Posted on May 28, 2012 by john

Dear Friends,

It seems to me that the successful docking of the Dragon capsule with the International Space Station, is as historic an event as the orbiting of John Glenn, or Columbus discovering America. Now that the market system is applying it’s ability to utilize resources, to space, humanity will see some marvelous advancements. Capitalism will expand Mankind’s ability in space farther and faster than anyone predicts. Unless government gets in the way.

Obama has total antipathy for the market system, so it seems an interesting point that he would turn over space, to private industry. Given his ideology he should believe that the private sector will flounder. Every speech Obama makes, shows that he doesn’t think anyone can do anything, without the heavy hand of government. His main thesis is that even the individual cannot cope without government support. So it seems counter intuitive that he would open space to the vexing private sector.

Obama ordered NASA to change it’s policy from space exploration to making Muslims feel good about themselves. This doesn’t seem to be compatible with NASA’s original goal of space exploration. This along with his turning over of space to the market system, would indicate he has antipathy for space exploration as well. If he believes the private sector is inept, as his writings and speeches indicate, and his changing the goals of NASA from space exploration to a social program, then he seeks to eliminate America’s traditional leadership in space technology and innovation.

I believe this will backfire on him. No government is better able to exploit space better than the market system. With it’s built in efficiencies and ability to seize on opportunities, the capitalist system will expand Mankind’s horizon, farther and faster than any government backed jobs program, for entrenched Senators to bring home, ever could. Government by it’s very nature is unable to operate anything efficiently. The nature of government is political, and any time government sets it’s hand to anything, the outcome is colored by politics. The result of his opening space to capitalism will be a drastically expanded human presence in space.

The opportunities that rest in space are actually unimaginable. The resources are unquantifiable and unlimited. The potential for the expansion of mankind, in technology, resources, and even liberty, are enormous and are only available through the market system. As history shows, government run projects can, and usually do, run afoul of political meddling. The history of colonization of the Americas is a relevant example.

Originally the America’s were conquered and colonies set up to enrich the government… whatever government. The first colonies were constituted for the enrichment of those in political power. At the time it was kings and the aristocracy. The colonies that were established by governments were inefficient, and many people who came, starved to death. But, when people started coming for religious and economic freedom, the entire paradigm changed. With the establishment of these types of settlements the colonies became profitable.

The picture was far different in South America however. There, the colonies were entirely concerned with extracting gold and silver, for the government (Elite) of Spain and Portugal. The lot of the people there, was and is, that of oppression and poverty… except for the politically favored. The results speak for themselves. Where the private sector was allowed to flourish, the lot of the people flourished, where the government established and maintained it’s hegemony, the lot of the people suffered. Space will be no different.

Unless government recognizes this truth, if they do, the political class will seek to reestablish their suffocating control over space exploration. Until then, if we are fortunate and the industry leaders are smart, the human race has a great future ahead of us in space… And away from the wars of greedy jealousy, religious intolerance and outright hate, that has characterized our existence on Earth. Perhaps it will be in space where the next United States type Constitution will be written. More importantly, if it is, then maybe our posterity will understand and remember history… unlike the people of today. They will recognize this was the start. Because of Obama’s attempt to sabotage space exploration.

Sincerely,

John Pepin

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The Deeply Flawed Elite

Posted on May 24, 2012 by john

Dear Friends,

It seems to me, the Elite should look to the plank in their own eye, before trying to remove the mote from our eye. The absolute hubris of the Elite is dumbfounding. They are all deeply flawed, not only as human beings, but especially, as elected officials. They lie when the truth would serve them better. They attack their own policies when they run for office. They create problems and claim to be the only ones who can solve them and they hold the American people in absolute disdain. This is not only concerning it has led to every problem we face as a people, a nation and as a civilization!

Christ made this comment about people who should look to their own problems before trying to fix another’s. In this case we have people who are the epitome of egoists telling us we must reduce our standard of living. Al Gore burns fifteen thousand dollars a month in gas in his home yet he begrudges you driving to work. The hypocrisy they show is stupefying. Obama lives and acts like a monarch yet claims to be a friend of the working man? This is absurdity writ large.

The Elite lie under oath regularly yet are never held to the same standard you or I would. Eric Holder is only the latest incarnation. His lies about Fast and Furious are proven by emails released to Congress and are in the National record. Yet, Roger Clemens is facing jail time, for lying to Congress. Hundreds of human beings died violent deaths because of Holder’s actions, yet it is the guy who chased a ball around a field, is the one the unbiased media claim is the threat?

Obama claims he wants people to be rewarded for hard work and doing the right things, yet every policy he proposes and has enacted, stand in stark contrast to his stated ethos. He seeks to socialize every aspect of our lives with all the pernicious incentives this creates. He rewards his political backers at the expense of hard working men and women. He is speeding down the road to serfdom and he sees no problem with Greece type taxing and spending. Every one of his backers has a problem with paying their taxes yet he seeks to raise mine and yours. I ask you… is this not hypocrisy over matched by hubris?

Every problem we face as a nation can be laid at the feet of our elected officials. Not only Obama but we stand at the end of a long line of leaders who have lived on the bad side of Glaucon’s dilemma. Remember Glaucon in Plato’s Republic? He asked Socrates if it is better to be absolutely just, while thought unjust, or to be absolutely unjust and considered just. The Elite are absolutely unjust while seeming just. The unbiased media make sure this paradigm never fails. They support the unjust and call them just… while the truly just are vilified at every turn.

If we change Glaucon’s question a bit to, is it better to be stupid and thought intelligent or to be a genius and be considered a fool? In the case of Obama and Biden we see the answer. In the arena of politics it is better to be stupid and considered intelligent than to be a genius and considered a fool. Biden is a gaff machine, and Obama the orator doesn’t even know… how many states are in America, that he should hold his hand over his heart while the National Anthem is playing, or even what language they speak in Austria. The unbiased media are again complicit in the cover up.

If the future of liberty and of the human race were not at stake, these things would be laughable, but the whole World is on fire… largely because Obama set it. We, as self interested individuals around the World, must wake up and stop laughing at these things, and vote the fools the media tell us are smarter than us, out! I don’t know about you, but I am deeply offended when the Vice President of the United States says, someone who has never done a thing or worked a day in his life, is more qualified to be President, than a plumber. In my world view, a man or woman who is capable of an honest days work, is far more qualified then any half wit who has spent his entire life mixing it up with communists in college! One of the best Presidents the United States has ever had… was Harry Truman! He never went to college, he was hated by the unbiased media, his store went under during Hoover and FDR’s depression, but he had common sense and respect for God… Something we sorely lack in our Elite today.

Sincerely,

John Pepin

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Government Interference in the Complex System of Economies

Posted on May 21, 2012 by john

Dear Friends,

It seems to me, when distributive justice by political favor is the policy of government, as it is the Obama administration, it increases interconnectedness, while at the same time decreasing the feedbacks of the complex system, that is an economy. The increase in interconnectedness is because, as government redistributes our wealth to those politically favored people and firms, we all become more dependent on government favors, and on the largess of government… we become more connected to government and society and less independent. The other side of the coin is that when government, as a policy, eschews the market system, the feed backs that are inherent in the market system are eliminated. People stop looking to their life experiences for information, such as, where we can invest, work, produce and live, and instead we turn to the government, who has taken over this fundamental aspect of market economics. Every time this has been tried it has led to oppression, starvation and collapse. Here I will show why.

Economies are complex systems. They are made up of individuals, who are interconnected through the economy, culture, society and government, we are diverse, we learn, and we respond to the cues of the market, society and our government give us. Adam Smith explained that, it is the “invisible hand” of the market that guides us to make self interested decisions, that improve the lot of Man, without consciously meaning to. This is a reference to complexity theory without actually knowing complexity theory. Economies are complex systems in every sense of the word.

When interconnectedness is tempered with strong feedbacks a complex system has less long tailed events. Long tailed events are outcomes that fall outside the normal bell curve of likelihoods that would be expected in non complex systems. People are between three feet and eight feet tall. If we plot the heights of all people, we get a bell curve, but if someone is born who is a Tom Thumb, ie. six inches tall, we have a long tailed event. Long tailed events in economics include crashes and bubbles. When government interferes with the feedback system we have more frequent long tailed events.

Another negative result is, tempered interconnectedness by government actions, makes people loose the ability to recognize high spots in the dancing landscape of economics. Markets loose their ability to meet the needs of the people by removing the people’s access to stimuli. As a result, people and firms often find themselves unable to adapt to new and changing circumstances… economies flounder, government gets bigger, and people become oppressed.

The way distributive justice through political favor lowers the natural feedback in an economy are many, varied and pernicious. This happens because the government seeks to raise the power of the Elite by negating, to the best of it’s ability, the negative consequences of bad behavior.

Lack of feedbacks create the environment where, people can act in ways that make no sense in the real world but can continue, for a time, through government interference. Like, for example, people can spend their entire lives on welfare… not being productive, people and corporations rent seek instead of providing products that meet human needs, babies are aborted, people can avoid saving for retirement, favored companies can be unprofitable for decades, without failing, due to government favor… among others.

We see the results in Greece, where government has destroyed the people’s ability, to behave as self interested actors rightly understood. When Greece is kicked out of the Euro zone and the Drachma is reprinted, it will certainly be the largest bill in the World… because it will need so many zeros on it.

Whenever governments in the past have stepped in and all but eliminated the natural feedback’s of the markets, we have seen oppression, due to government’s need for absolute power, to mitigate natural consequences, we have seen starvation due to the inability of people and firms to recognize and respond to human needs, moreover, we always see the eventual collapse of the economy, and inevitably the governments themselves. North Korea, Zimbabwe, Greece, Argentina, and Wiemar Germany are only a few examples of this phenomenon in action. This is the inevitable result of socialistic thinking. Distributive justice by political favor, due to the effect it has on the complex system of an economy, always minimizes the feedback’s that act as Adam Smith’s “invisible hand.”

The real question is, are the people of the World aware enough to stem the tide of redistributive justice, or will the whole World become Zimbabwe in a few years?

Sincerely,

John Pepin

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Government’s War on Virtue

Posted on May 17, 2012 by john

Dear Friends,

It seems to me the governments of the World have declared war on retirees and savers. With World interest rates at or near zero the return on investment income is negative. This is a strong disincentive to save money and puts a strain on people who rely on fixed incomes. The unremitting printing of new money to buy sovereign debt is one of the primary driver of this. The disincentive to save foreshadows a bleak economic future for us and our children.

Those that save money are extremely important to the economy. It is our combined capital that provides the money for companies to upgrade their plant and equipment. The savings of the people are an intrinsic part of the money flow in an economy. Firms demand capital to upgrade their equipment or expand their operations, the workers that are hired buy the products of the market and save some money for the future, the banks aggregate the savings and lend to the firms. The circle is simple and fundamental to a market economy.

I say they have declared war because the policies of our leaders are destroying the economic well being of our seniors. Not only them but of us, and more importantly, our children. The equities markets have not advanced for a decade so they are not producing income for savers. The bond market is in a bubble due to excessive risk avoidance and national bank purchases of sovereign bonds, so is returning a negative rate of return. Lets look at the bond market for US treasuries. First if you buy a US bond you are competing with the FED. They simply print the money they need to buy as much as they see fit driving down interest rates. The Fed has purchased sixty percent of the bonds issued by the US government in the last three years, to try to balance the other disincentives Obama’s regulation, healthcare and tax policies, have created.

The interest rate you will get is, lately, under two percent. Even the under reported rate of inflation is over two percent, therefore, people who are buying bonds are realizing a negative rate of return. This is exacerbated by the printing of money to buy the bonds, because every dollar printed, steals a little piece of the dollars, savers have saved. This lowers the purchasing power of money saved and is a further disincentive to eschew immediate gratification. The result is, that the Fed is using savers own money to lower the rate of return on savings, or in other words is a double whammy to the savers.

If a saver looses his or her money in the equities market the money is lost. If a saver invests in bonds the rate of return is negative, but the, (less than two percent interest), is taxed as capital gains, further lowering the rate of return. The saver is placed in a loose loose situation, because of government policies to counter the other negative incentives the government is creating, with it’s regulation, healthcare and tax policies.

For those people who have done the right thing, went without that vacation, bought a smaller more affordable home, saved for their children’s education, drove more fuel efficient cars and all the other things the working class have to do to save money, are being punished for their virtuous actions. While those that have not saved, have spent every dime on luxury vacations, lived large in giant homes that are now in foreclosure, tossed their children on the State for their educations, and basically lived decadent lives, are being rewarded by government policies.

As negative behaviors are rewarded and positive ones are punished by government policies, we can expect more decadence, and less virtue in our societies. This can only lead to an increase in crime, increasing unemployment, more crony capitalism, more dependence on government, and a lower material standard of living for everyone… except the Elite. The old saying is; reward that which you want more of and punish that which you want less of… Apparently our leaders want more bad and less good. Judging by their policies and actions.

Sincerely,

John Pepin

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State Power, Economics, and Individual Liberty

Posted on May 14, 2012 by john

Dear Friends,

It seems to me, the harder it is to do business in any country, the lower economic output will be. When politicians come into power, they all want to increase the power of government, because it serves their egos. Therefore the politician must claim that more regulation will improve this or that aspect of economic output or minimize some negative aspect of human nature. In this, they all have the same agenda… to increase the power and wealth of the State and politicians, at the expense of the prosperity and liberty of the individual.

Have you ever noticed that the power of the State never goes down it only goes up? Politicians who espouse lowering the power of the State are uniformly vilified in the unbiased press. The press who has a dog in the race so to speak. They get to rub elbows with the statist politicians and celebrities, by backing their efforts. This is one motivating factor for the unbiased press to take the wrong side in the debate about Mankind’s freedom. Another is, the statist politician has no qualms about using the power of the State, to destroy annoying press people. In some countries, as in Russia, the State murders those media people who the egoist statist finds vexing. Therefore we cannot expect the press to paint an accurate picture of reality.

It would seem a self evident fact that as regulation goes up economic activity must go down. Like the see saw of State power versus individual power. As one rises the other necessarially goes down. The same paradigm holds true in economics. As regulation goes up economic output necessarially goes down. The opposite is true as well. As regulation goes down economic output goes up. The egoist has a personal interest in not only denying this reality, but must actively cover this truth, with lies and personal attacks. This has worked for thousands of years of recorded human history, and has resulted in a human history, lubricated with the tears of the oppressed.

A truly unbiased observer of history cannot but come to this conclusion… Every time the power of the State has increased, often for what appears from the outside to be for a benefit, the power of the individual and economic output are lowered. Every time the power of the State has been lowered the power of the individual has been raised. Franklin Roosevelt set the American standard for raising the power of the State. He even went so far as, to get the Supreme Court to find, that a person cannot grow his or her own food on their own land… because it effects interstate commerce! Never has a more pernicious law been held to be acceptable!

Obama and European politicians have enacted the very same statist policies as FDR and we have the exact same results. Stagnation in the economy, destroying the sovereignty of the individual, and widespread disheartening of the people. The examples of the power of the State being lowered, have uniformly resulted in the empowering of the individual, a dramatic rise in economic output, and the happiness of the people expanded. The dishonest politician, that argues that some negative aspect of human nature requires greater regulation, is engaging in self serving sophistry. What is set by culture should be corrected by culture not politics.

Unfortunately today, especially in Europe, the people have only one choice… the statist. Every political party, from both side of the political spectrum, stands for more power to the State. The racist right and the suicidal left all believe that more power, in the hands of ever less regulated politicians, is the answer. Nothing could be further from the truth. This sophist argumentation has resulted in the Nazi and Communist parties getting back into power in Europe. This can only lead to bloodshed, since the Nazis and the Communists are violent by their natures, and recruit from the same segment of the population.

The people of the World are only given spurious logic to mull over, while reality is hidden, with political wrangling and rhetoric. We are poorly served by our media, politicians, and especially our intellectuals, who all know better, but eschew truth for power. Until there is a real alternative in the World from the egoist statist politicians we will be forever burdened. The lot of Mankind, by every measure, will be lowered and lowered. The first step to breaking this pernicious cycle is to recognize the problem and create a viable alternative to the statist. In America the Tea Party is that alternative and in Europe there is a nascent Tea Party forming. Lets pray that it is not too late. For our children’s and grandchildren’s sake.

Sincerely,

John Pepin

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