This Supply Side Recession

Posted on November 17, 2011 by john

Dear Friends,

It seems to me that you cannot fix a supply side recession with demand side fixes. This recession and “recovery” has been characterized with huge upsets in the supply of money to the economy via the banking system, disruptions to the running of all the World’s car companies, and most of all, tsunami after tsunami of regulation washing over the banking systems and every other industry in the US. Getting it right is the most important thing the government can do right now. So many people are in need of a good job. Not only in the US but everywhere.

I explained the difference between demand side economics and supply side economics in a previous blog. It is important to understand the difference. Talking heads come on tv and spew demand side economic thinking as if it is the only game in town. Every time anyone brings up spending cuts the demand siders get red faced. They spout on about if government spending drops then demand will fall. But if, as they say, 70% of the economy is consumer spending, some of the 30% left must be corporate spending, so the economy has at most 20% liability. But we are talking about minute spending decreases not a 100% government shutdown forever. Lowering that 20% to 1-2% exposure for the economy.

The demand siders never stop. They claim demand is demand, but I put to you… Is all demand equal in economic outcome? Lets take $100.00. I could spend it on cocaine or I could buy a skill saw. Is the outcome of each purchase equal in outcome for the economy? No it is obviously not. The production of the skill saw required the coordination of literally hundreds perhaps thousands of industrial outputs. From the oil pipeline maker to the mining equipment manufacturing companies, they all had a hand in producing the skill saw. It doesn’t stop there. The skill saw is a means of production therefore it can be used to produce things that improve the lot on man in the aggregate and individually. The purchase of a skill saw has deep economic impact.

The cocaine however has far less positive economic impact. It went largely under taxed, it was produced with, (probably) with slave labor, the profits go to lowering the lot of Man and corrupting a society. It doesn’t stop there. The cocaine is a consumable and when used will almost certainly diminish the output of the person using it. So we can clearly see from this albeit drastic contrast that all demand is not equal to economic output.

But when there are real regulatory hurdles to starting a firm, especially incoming regulation, the cost of which to the new business cannot be effectively quantified, the leap is insurmountable. As the ability of the economy is eroded by the supply side cramps, and regulation, effectively stopping or even slowing the expansion of supply, then at best, the economy can muddle along. No amount of demand can start a supply if government has made it impossible. Until a tipping point is reached. At that point, if the profitability is so great it offsets the legal implications, then underground firms will open. As in the cocaine trade.

But that isn’t the demand that government spending creates is it? Government demand is specific and requires reams of paperwork. As a result the company that is best at filling out paperwork gets government contracts not the best company for the job. The incentive systems government always set up are always pernicious. They are the epitome of my saying, “The distribution of the goods of society by political favor instead of merit.” What ever money is taxed and spent this way performs as poorly for the economy as the demand for cocaine.

But some might argue that under the Obama administration the number of government workers making over $100,000.00 a year has more than doubled. That creates demand. I have to admit that it does create demand when government workers make double the wage of people in the private sector. The demand is not economic however it is sociologic. The demand is for government jobs not productive real jobs in the real economy that pay far less.

So, we are in a supply side recession, or at least a slowdown. The Elite have been throwing demand side fixes at the economy. Fixes like TARP I, TARP II, QEI, QEII, TWIST, and several stimulus packages, they have done nothing, but driven up inflation. Ronald Regan, repaired the supply side recession in his time with supply side fixes, and it worked in spades. Lets face reality here. Government spending does little for the economy but regulation hurts it a lot! Cut spending and cut regulation! If we want to get America back on the right track we need to follow things that have worked in the past not things that have failed. That is the way to a prosperous future.

What kind of future do you want for your kids… Perpetual joblessness and despair (ala Jimmy Carter and Barack Obama) or low unemployment and a bright future (ala Ronald Regan and Margret Thatcher)? Demand side vs. supply side it is that simple.

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Energy and Alternatives; Straight Talk

Posted on November 14, 2011 by john

Dear Friends,

It seems to me that a dangerously large fraction of society is utterly ignorant of our energy situation. This ignorance leads to actions which are very counterproductive. These counterproductive actions make it all the harder to maintain our level of energy usage let alone ramp it up so the whole World can improve their standard of living. The truth is, if we don’t open up sufficient energy supply so the entire World can benefit, we will loose the benefit we have here in the West.

Part of this ignorance is, of what is and what is not, possible. People think we can just develop this or that technology and voila! We are off fossil fuels. Unfortunately this is not possible. There are alternatives which are more economical in certain situations but there is no more compact way to store energy than in hydrocarbon fuel. The more dense the fuel the more energy it stores. Gas having the least and wax having the most. (By volume).

There is no other way to store so much energy, safely, in such a small space than with hydrocarbon based energy. Once we accept this fact we can then move on to a productive line of reasoning. How can we produce hydro carbon based fuels such that the environmental impact is positive and the cost is sufficiently low so that all the World’s inhabitants can take advantage.

One way, not necessarily the best, is algal based oil production. Some strains of algae have a very large percentage of their mass as light oil. This oil can be used directly in diesel engines. The production of this algal oil is quickly becoming commercially viable. Producing base oil in this way, economically and commercially, regardless of location, would open up energy production to anyplace on the globe. All that would be needed, would be a commercially available algal digester, processing equipment and inputs. Inputs would be a source of carbon dioxide and biological waste.

The resulting oil could be placed directly into a diesel engine and used to make electricity, grind stone into aggregate, move a truck or whatever. The oil could also be further processed into a gasoline substitute. This technology, were it to come online, would revolutionize energy production and thereby energy usage the World over. This would raise the material standard of living of all the Worlds’ people. It would also substantially redistribute international power.

But alas it is not yet available. Solar and wind have very specific uses where they can be economical but they cannot compete with hydrocarbon based fuels for ease of portability, safety, and energy density. There are several measures available that can fill the gap and reduce the West’s dependence on Mideastern oil today.

One is coal to oil and the other is oil shale and oil sand production. The main opposition to these technologies is that they are high carbon sources of energy. The presupposition here is that anthropomorphic climate change is fueled by human carbon output. As I have said many times the climate change we are experiencing is a solar system wide phenomenon… As evidenced by Mars. As such the entire premise of the opposition’s argument against coal to oil or oil sands/shale production is invalid.

Ignorance of these fact leads well intended people to protest much needed oil pipelines and pass regulations that keep US shale oil, sand oil and coal to oil production off limits. Rhetoric like Nazi oil is routinely used against any attempt to build a coal to oil plant. Even when that plant was to be used to mitigate slag heaps left over from past coal production. Protecting the aquifer from contamination and reopening land for other uses other than to hold a pile of slag. Yet Single payer is Nazi healthcare…

The real problem, is the law of God, otherwise known as the laws of physics. These laws are incontrovertible. We have been using them to our benefit since our inception. But since we must bow to them, as we have always done, it is in our interests to use them as I have pointed out. In the future, algal based hydrocarbon production but in the meantime, coal to oil and shale/sands oil production. Standing in the way only empowers hateful people, who want to kill the good people in the World, and does far more environmental damage than the alternative. Helping this along raises the material standard of living of the World and protects us from loosing ours. There is no reason to keep people ignorant and thus threaten our very own standard of living.

Unless there is some other agenda such as political.

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The Questions Facing Us.

Posted on November 10, 2011 by john

Dear Friends,

Is it just me or are the questions facing us getting more and more scary? We don’t live under the threat of immediate nuclear annihilation anymore but due to the ineptitude or complicity of our Elite we may again soon. It is the overreaching of our government under the last few administrations, that has been accelerated under Obama, that has me rattled the most. What the government seeks to do will inevitably result in a tyranny. Powers are being discussed that would make the founders scream in anger and our children ask us… why.

While it is unwarranted to monitor someone talking to a known terrorist in another country it is fine to monitor mom and sis talking about a personal pie recipe. The laws the US government are passing and trying to get through the Supreme Court turn logic on it‘s head. There is no level of government intrusion or monitoring that is unacceptable today. Unless it is of a foreign terrorist… they have rights.

Total control of all media at the flip of a switch to disseminate information in a national emergency has implications. This new “test” of the emergency broadcast network is curious. It will give the US government the ability to cut off all communication for as long as they want. There are legal limitations but not technical. This ability is unprecedented. Now the government will be able to shut off all US media at the flip of a switch if there is a real emergency or just one the Elite don’t want us to know about…

Phones and internet are the next target under the guise of national emergency notification. The government has announced that it wants to be able to seize control of all phone traffic and the internet too. This, coupled with total control of all media, (during a national emergency) would give any coup attempt, the opportunity to keep the people in the dark, until the collaborators were safely ensconced. Then they could turn on the radios and tvs again and announce the new order.

Random GPS monitoring of citizens cell phones at governments whim. This would be a huge undertaking even in a limited form. But the ability to monitor every one of us and have the government know where we go and what we do on a daily basis would yield up wonderful benefits. Government would be able to track known dissidents to their collaborators. Government would be able to track gatherings of people possibly engaging in counter revolutionary activities. It would cost a lot though. I wonder, with the pressing need to cut government spending how on Earth will government be able to monitor all of us? I guess it’s just a matter of priorities.

The US government is intent on keeping the flow of illegal immigrants at an all time high. A large population of underclass is always helpful to would be tyrants. They are perennially angry, often have communist sympathies and are ignorant by definition. A large angry underclass has always been the pawn of the socialist. They do the hard work and remain underclass even after the revolution. If they are lucky.

The health care law is nothing but government intrusion into the lives of it’s citizens. Nothing is more intrusive than our personal healthcare information. The law seeks to change our behavior in subtle and not so subtle ways. The law intrudes into every one of our lives and gives the government the right to even more. If the government is footing the bill, why can’t it have a date certain, that after it will not cover anything. Say the same age as social security starts? Of course some like the idea of healthcare being meted out by political merit. That slope is the glarest of ice.

Not to mention the unconstitutional aspects of Obama care. The Supreme Court will be testing that slope to see if it passes Constitutional muster. The mandatory buying of insurance is what is going before them. Forcing American citizens to buy a product as a requirement of citizenship else pay a fine, is as slippery a slope as you will find, but soon we may realize we are on it.

These are by no means all the slippery slopes our enlightened lawmakers are trying to get us on. The list is almost endless. But the founding Fathers warned us that this would happen. They knew the congenital nature of Man. They tried their hardest to give us a system that would protect us from the Elite for as long as possible. Seems now is the time for us to open our eyes and use it. Loosing our liberty because we are too lazy to do something about it is pathetic. But that is what the Elite hope we will do… Nothing.

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Bourgeois Virtues Compared to Communal Virtues

Posted on November 7, 2011 by john

Dear Friends,

It seems to me that whenever bourgeois virtues are compared to communal virtues bourgeois virtues win out every time. The Bourgeois virtues are vilified by the progressive, socialist and Marxist all the time but are never defined. We are told to hate the bourgeois values and embrace the communal value system. But the two are never identified for us. I will try to define both sets of values so we can compare. We must truly understand what they are and the difference so we can make an informed choice if a choice must be made.

What is known as the bourgeois virtues are simply those basic rules that we conduct ourselves by in society. Those rules are so basic to our psyche that we don’t ever question them. No matter if we follow the bourgeois value system of the communal value system. They make up basic programming. I think the best way to understand them, is to compare them, each in it’s own.

Firstly the bourgeois virtues. The bourgeois value system is what allows the individual to function within a market based society most effectively. Like a capacitor, a coil or an LC circuit, has a resonant frequency, a market based society has a resonant system of values. These values make up the bourgeois value system. The main values are listed here and explained.

-Reliability. Reliability in every action is a basic characteristic of the winning capitalist. The businessman who is reliable, in a multitude of facets of his or her interactions, is far more successful in business than someone who is unreliable. There is a severe penalty to be paid for the unreliable in a capitalist society.

-Courtesy. Courtesy is the lubricant that allows a market based society to function. Because in a market based society an individual must necessarily come into contact with others that are different, courtesy is of the utmost importance. Courtesy was a fundamental tenet of Confucianism’s Human Heartedness. The discourteous are severely punished in a capitalist society. The discourteous does poor at business, and finds him or herself looking for a new job, often.

-Willingness to take risks. The smart risk taker is handsomely rewarded in a market system. The risk taker who has a good idea and takes the plunge often crashes. But if the society is lasses faire enough more often they will succeed. The success lifting up other risk takers and second and third tries. In America the average millionaire has gone bankrupt three times. Lack of risk taking is not severely punished in a capitalist society however. Those that want the nine to five are generally rewarded with one as they constitute an critical part of the market both as labor and as consumer.

-Empathy. To do well in business, or in any area of life in a capitalist society, one must have at least some level of empathy for others. If a salesman has empathy he or she can better meet the needs of the customer and the customer can be better served. Empathy is rewarded in a capitalist society the lack is punished. Those that display a lack of empathy better have some other extreme virtue to make up for this extreme handicap.

These are but a few of the virtues that can be called bourgeois values. Communal values are those that resonate with a socialist society. The resonant set of values that give the individual the best outcome under a socialist system. Some of the communal values are.

-Amorality. To keep a socialist system going everyone must be willing to do what is necessary for the collective. Collective good being superior to the individual’s good. Those that are amoral are rewarded under a socialist system. The dissenters must be eliminated and those that are willing to do it enjoy special privileges. Those that are moral are punished in a socialist system. Morality leads to actions that are not necessarily materially selfish. In an utterly selfish society those that are not utterly selfish are often starved to death.

-Hostility to outsiders. In a community, members of the community or tribe, have special privileges. Outsiders are always a potential source of new ideas. Ideas that may threaten the absolute power that must be in the hands of a few for a planned economy to function. Any source of ideas that are not fully compatible with the commune are blasphemous and those expounding them are to be eliminated. Brutally if an example must be made.

-Rudeness. In a communal society those that are rude get more food than those that are courteous. So we can say that rudeness is rewarded in a communal society and courtesy is severely punished. In any socialist society, because of the incentives for production, food is necessarily scarce. (Unless an outside source is available). So, if only those at the front of the line get food… Where will you find the rude and where will you find the courteous? Look at the example of a lane closure on an interstate…

-Rent seeking. In a system that has the goods of society distributed by political favor those that seek political favor are rewarded. Those that work hard are punished. Those few in a communal society that have political power, wield as a tool of that power, the ability to bestow franchise. Those that seek franchise by political favor, then, have a better chance than someone who has worked hard for it.

We see that the two systems have clearly divergent value systems. When someone calls for and end to the bourgeois values system now you know what they are calling to end. When someone calls for community you know the value system they want to install. No matter where you stand, it is my view that everyone see the truth, and keep everything above the table. Let the people make an informed decision.

I have. I am an International Capitalist. I support the Bourgeois value system… Do you?

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The Organic Nature of Capitalism

Posted on November 3, 2011 by john

Dear Friends,

It seems to me, the primary reason the market system works so well, is that a market based economy is organic in nature. In any ecological system there is a great diversity of inhabitants. The one thing they all have in common is fitness to survive. Evolution sometimes give an advantage and that organism makes the most of it. (Like an entrepreneur). Business work the exact same way. Under a lasses fair economic system, (lasses faire, but one that has, and enforces, standards), our material quality of life would be drastically improved.

Diversity in an ecosystem, is how a such a system, is able to maintain itself. In an ecosystem the many species all taking a niche, work together, one eating the other’s excrement, creating a circle for nutrients to travel. In an economic system there is a great number of different firms taking up various niches. The diversity of firms enables the flow of capital, services and goods in an economy to circle. As in the worker/business/saver/bank money circle. Capital flows through an economic system just as nutrients flow through an ecosystem.

In any ecosystem the fitness to survive is the utmost incentive. Those who are unfit are quickly done away with. Ecosystems have no heart and only seek efficiency. Economies that are run lasses faire are similar. If businesses are allowed to start easily and end easily then there will be a great deal of diversity in firms. This diversity will quickly cull any flawed business plans from the economy. Flaws such as stupid capitalism would be shown in stark detail.

Evolution can give this or that species an advantage over their neighbors. They have some advantage and they take advantage. In the short term the ecosystem is unbalanced. But in the long term even the most invasive species is tamed to a greater or lesser extent and the ecosystem is improved by it. Like when an entrepreneur implements a new idea. The idea gives their business an advantage and they take advantage. They grow their businesses until the economy comes up with a way of balancing. Another firm will open competing with them or another product that renders the old one outdated comes on the market. Creative destruction in action.

In the case of a country’s economy most of the diversity is small and medium businesses. They fill most of the economic niches. The larger the diversity of small and medium sized businesses the greater the resiliency of a country’s economy. Like a pond that has a fully filled out ecosystem can weather a drought, better than a mono culture pond can, an economy that has a fully filled out private sector can better withstand an economic downturn. Perhaps more importantly a natural pond and an economy with a large diversity in firms can bounce back far faster when conditions improve.

Oligarchal economic system are like mono culture ponds. Any introduction of a new virus will wipe out the mono culture leaving the pond dead. This can and has happened to many economies over the years. It has only been the countries that have allowed their economies the ability to evolve to meet the new needs of society that have succeeded. Governments that seek to protect local firms always harm small and medium businesses. Regulation to protect the golden haired firms, necessarily makes it hard to compete with them, or even start a business.

Socialist or planned economic systems consider a country’s economy as a fish tank. But, no matter how well a fish tank is kept, it must be cleaned sometime. Moreover, unless there is an outside source of food, a fish tank will die. It cannot sustain itself. There are some species that can manage to survive in such conditions but surviving is not thriving. Take those gold fish from the filthy tank and put them in an open pond and watch them thrive. Socialist economies must control every aspect of our lives, to hold down the necessary cleanings and they must have a source of outside funds, else they quickly fall into famine. Under socialism people don’t thrive and only few survive.

The analogy goes far beyond this. I have simply run out of space in this blog format. Economic systems mimic organic systems so closely it is spooky. Similarities are everywhere… if you only look. From micro economics to macro economic cycles, economic systems act and react, just as ecosystems. Consider the Mom and Pop Store as a micro organism, and GM as a T Rex, with every other business filling a different niche in between. Consider the way a business works, with inputs and outputs, cash flow and outlay, to any biological organism’s metabolic processes… The conclusion is; that market systems are organic in nature.

So, the only question remains, where would you rather live? An open pond, a mono culture pond or a fish tank? Others are choosing for you so you better choose fast.

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Education in a Capitalist System

Posted on October 31, 2011 by john

Dear Friends,

It seems to me, one of the places that capitalist based societies have allowed themselves to get off track, is in education. The profound ignorance of the Wall Street Protesters is only the most recent and glaring example, the outcomes as measured by standardized metrics, has declined so much that the metrics themselves have been lowered, to keep down with the academic results of US schools. Coincidental with this, we see that the role of school has undergone a profound change in the last few decades, leading to the decline we see in outcomes. Culminating in the Protests against capitalism, the very system that has enabled the protesters to live in such opulence, by historical and World standards. Threatening that very state of universal opulence and replacing it with a state of perpetual poverty.

We have to ask ourselves, what is the role of a school? Is it a jobs program? Is it a means to fundamentally change society? Perhaps it is a way to create social justice. I, and those of us who’s minds are not clouded by politically correct thinking, believe that the only valid role of a school is to teach children to, read, write, do arithmetic, history, and interpersonal discourse (rhetoric).

Now that schools in the US have been perverted into a new role, one that is counter to teaching these fundamental things, and are now simply a jobs program that doubles as a way to fundamentally change the old societal myths into new social justice. We see that children leaving them cannot read, write, add or subtract. They have no concept of history, or capitalism’s role in it, except for anti capitalist indoctrination. None of them have heard of Hayek, Schumpeter or Mises but all have read Marx, Mao and Che. They have not read any Horatio Alger but have all read My Two Mommies.

How many Protesters have any idea of the tens, perhaps hundreds, of millions of people killed, in the name of socialism, since it’s inception? But in most World schools it is not a topic that is covered. Pol Pot’s ordering that political prisoners be executed by suffocation, because of the cost of bullets, is not widely known among graduates of most schools. Those that do know, and still support it, are evil incarnate. Because moving any society in a direction, that causes an angelic little seventeen year old girl, being so polluted with hate that she willingly puts bags over people’s heads, is uniformly evil.

So now we have schools that have eschewed their original mandate for a new one. The results have been quick and decisive. New graduates are absolutely incapable of engaging in the market system. They have been taught none of the Bourgeois virtues like, reading, writing, and history, let alone promptness, reliability, ability to work with others, ability to maintain a level of concentration and self motivation. These Bourgeois values are an anathema, in the modern US government run school, and most schools World wide.

There is a theory of human behavior, it is called, looking for bright spots. It has been used to modify the profound hunger that pervades Vietnam since the socialist victory. Looking for bright spots means looking for examples where something works well among the chaos around it that doesn‘t. In the case of the US (and World) school system(s), the bright spots, are private schools and home schooled children. These are the bright spots that researchers look for when trying to modify a dysfunctional system.

In the US, society has made the decision that teaching the children is a goal that is so profound, it should be taken on by society as a whole. The funding has been this way since colonial times. Elementary schooling being funded by taxation of a variety of means. So if we keep the original funding mechanism pretty much unaltered, and change the direction of the revenues, from dysfunctional schools to the bright spots. We then husband them from bright spots into full fledged LED lighting. Shine a good education on every child and we will find that far more of them are stars than we ever thought possible in the darkness.

This can be done through the voucher system. A system where children are given vouchers that would pay for whatever school the parents thought effective. Public schools, if the parents want, or private schools if that is their choice. As is the case with an ecosystem, those that fail would be punished and those that succeed would be rewarded, so that success becomes widespread. As one of the International Capitalist Party‘s sayings goes, Reward that which you want more of and punish that which you want less of. That is the way nature has worked for a billion years, quite effectively I might add. Wouldn’t a functional system, (nature), be the best example to follow, discarding the dysfunctional one?

Depends on the goal.

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The Real Problem In Europe

Posted on October 27, 2011 by john

Dear Friends,

It seems to me that what makes the Greek sovereign debt problem, so problematic, is that no one is looking at what is really the problem. Let alone fixing it. The Elite in Europe only look to “solutions” that keep the ball rolling. They seek to “Shore up” the Greek finances and to “Reassure” the investing public that they have things “Well under control“. But no one is buying that tripe any longer. Like the buggy whip it has become redundant. Everyone knows in their hearts, what the problem is, but no one will face it.

A very good friend of mine once said “in the land of the blind, the one eyed man is king.” This situation is applicable to that saying. Economists all point in different directions; like blind men. They claim, “Revenues must be increased, no spending problem can be effectively addressed, unless you first increase revenue.” They chide, “They have to hit it hard with a giant fund in the trillions of Euros.” Some opine, “No that’s foolishness, Greece should be kicked out of the Euro zone so it can print it’s way out of debt.”

But no one says what the real problem is. Because it is too big to look at. Like the leviathan it is too scary to even consider. Great lengths are made to avoid even talking about it. Those who bring it up are labeled with the most horrible monikers. So no one wants to openly say, the problem is that the Greek government spends too much money. It sounds simple but it has deep ramifications to the body politic.

The Income tax and social welfare spending are the corner stones of welfare state capitalism. This has been the paradigm in Europe and the America’s since WWII. The welfare state was seen as a means to change the ratio of wealth or the gap between the rich and the poor. As we have seen empirically it does no such thing. It does lower the growth in GDP tremendously but has no effect on the “Gap.“ In fact, where it has been put into the most practice, it has produced the worst results. Greece is only one shining example.

But where the welfare state has been fought most, by the populace, the standard of living has increased the most. The US is the best example of this. In 2010 the GDP per US citizen was around $47,000, while in Europe it was around $30,000 and that includes Lassez Faire Luxembourg with a per capita GDP of around $81,000 per person. With further proof to our conjecture, that now the US has changed course and is running fast to socialism, we see that the dynamic economy that characterized the US has been hobbled. Encumbered by ever changing welfare state regulation and the threat of more taxation around the corner… inevitably, American companies are panicked. They are hording cash and getting as much business offshore as possible. It is virtuous behavior, (in a bourgeois way), to protect the assets of your investors. To do otherwise is corrupt.

States must face the ogre of reforming the welfare state. It must be done, because sooner rather than later it, it will collapse. The World economy will breakdown long before it totally runs out of money. If the monetary system survives a total Greek default, (they have already defaulted 50%), there are time bombs planted all over in Europe. Not to mention the ticking time bombs in the US ala Social Security and Medicare/Medicaid.

Throwing trillions more good Euros after the trillions of Euros that have already been lost is simply bad business. But there again we are not talking about businessmen are we? We are talking about politicians. People who seek power as a good above all others. To them a good deal is one that lets them keep all their power. A great deal is one that gets them more power. No matter the cost to society. The career politician will bristle at this. But I notice very few did when doctors were accused of removing people’s legs for the insurance money. For logic to be logic, it must be consistent, else it is rhetoric.

So, have rotated our one eye, and focused it on the real problem. No, the thing is not a tax problem, nor is it a question of how much largess and no, printing money is no solution either, it is the welfare state. The solution is to reform welfare state capitalism. The place to start is to throw out the much misused metric of the gap between the rich and poor. Instead measure societies by their sustainable material standard of living. If a society existed where everyone was equally destitute and another where everyone was fat but a few had more money than they could ever spend… which one would be voted for, by immigration? Which one has historically?

And no, the answer is not to eliminate capitalism, to measure socialism’s outcomes by.

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Fall of Moammar

Posted on October 24, 2011 by john

Dear Friends,

It seems to me that the killing and subsequent downfall of Libyan dictator, Moammar Kaddafi, will be a very bad thing for US foreign policy and World stability, in the long run. While nothing could be truer than the fact that Moammar deserved it, the facts surrounding his killing, are an omen of things to come. But if we are self interested, we will take heed not only at what happens tomorrow, but the eventual outcome. This will show the wisdom of what I have said here today so that maybe World War can be avoided in the future.

I thought the lesson of the Iraq War, was that it is easy to knock out a dictator, but hard to win the “peace.” If that was the lesson, (I certainly learned it), then it has been forgotten quickly. In the case of Iraq, the US had tens of thousands of boots on the ground, to ensure the “peace” would turn out in a way favorable to World stability. Even so there were politicians who openly chided that the Iraq war was un-winnable. Well, we won the un-winnable, even Obama admits it… now.

But in the case of Libya, the US has no boots on the ground, to ensure an outcome that is favorable to the Libyan people, US foreign interests and World stability. Remember that in Iraq, even with tens of thousands of soldiers there, it was a close call. It was only once the Iraqi people’s thirst for blood had been sated did the war end. The US had to await that outcome to win. In Libya there is no such stabilizing force. The Libyan people’s thirst for blood will only be whetted by killing Moammar.

Messages are important too. Moammar was the only Dictator that openly gave up his nuclear, biological and chemical weapons (WMD). He showed the UN how the AQ Khan proliferation network gave him nuclear technology and put his WMD under UN supervision. The message to dictators the World over is not to give up their nuclear, chemical and biological weapons. Doing so will buy you no UN favor and open you up to invasion and a humiliating death. Don’t think for a moment, that this message has not been understood, loud and clear, by other tyrants the World over.

With no neutral forces in place, to protect those that disagree with the Islamo fascists, the liberals will soon be killed or shut up. This will allow the Islamo Fascists, the ability to have total control over a much larger population, that may or may not agree with them. However, I suspect a large and growing majority does indeed agree with the Islamo Fascists, in Libya as well as in Egypt and Tunisia. This will inevitably result, in the Islamo Fascists getting total power, in what was, formerly, Libya.

The Islamo Fascists, have as their first order of business, to restore the Caliphate. They would love to have their capital Istanbul, (formerly Constantinople), but they will settle for any Islamic City until Istanbul is captured. With the elections in Tunisia clearly turning to Islamo Fascist parties into power, that Libyan neighbor will soon join the growing Caliphate, as well as Egypt, (being the seat of the Muslim Brotherhood). The very premise of the Muslim brotherhood is to reestablish the Caliphate or Khalipha. Overthrowing Moammar, will result in the combination of these three North African powers, into a new Caliphate, which will then launch into a war of expansion. (This is the best case scenario that I envision. Worst case would be if all of the Middle East Countries fall and join).

We already know of shoulder fired anti aircraft weapons disappearing. Once the Libyan, Egyptian and Tunisian stockpiles of WMD become part of the spoils of war, they will be quickly turned against the Two Satans, Large and Small, as well as, to further enlarge the new empire.

It is a self evident fact, that a major war of expansion, would destabilize the World. It could and probably would pull in other countries. The war and bloodshed would let loose Ares’ dogs, famine and disease, into the regions effected, and the cost to the World economy, due to higher energy prices would be huge. This one political blunder will give us a decade of human misery at the least.

Taken in the aggregate these results will lead to a very unfavorable outcome for humanity. The results could have been avoided but for the lack of wisdom of out political leaders. As I have shown, they are as easy to predict, as that the Sun will rise on the morn. No matter the message it sends to other tyrants, the soon to be missing WMD, and the new wars of aggression that will result. This lack of wisdom is being cheered, but that very applause, will have terrible cost, with of rivers of tears, from grieving parents, at their loss. That is the real toll of foolish foreign policy. The human cost; paid in blood, tears and suffering.

Posted in economy, Group Politics, International Power, media, Mercy, philosophy, Societal Myth | Tagged , , , , , , , , , , , , , , , , , | Leave a comment

Trading Hostages for Terrorists

Posted on October 20, 2011 by john

Dear Friends,

It seems to me that when it comes to trading hostages for criminals, doing it is a bad practice, but doing it with terrorists is suicidal insanity. The Poor Israeli soldier who was kidnapped is one such example. We all want to see hostages returned safely, and we all want to see people reunited with their families, but if the cost is too great for society then it cannot be done. Because the cost, we can be assured, will go up exponentially.

The first argument always made is that trading hostages for criminals is a way to insure plenty of hostages will be taken. Society will be put at greater and greater risk from the hostage takers. Anytime a risky experiment goes well, (is profitable), it causes a vacuum that sucks everyone nearby into it. One example is the Mexican situation with kidnappers.

In Mexico kidnapping is rampant. You just kidnap someone then demand a terrific ransom. Cut off a finger or two, (to show you mean business), and bank the cash. No muss on fuss. Easy peezy. The government looks the other way and you find some other shmuk to kidnap. As more people get paid off more people go into the business. It is economics 101. If a business model is too lucrative, others enter it, raising competition, thus lowering profits. But not in the Mexican kidnapping business…

Now, negotiating with terrorists, on how much they will be paid for their evil actions, is a Faustian bargain at best. Terrorists see any negotiation as a sign of weakness. Terrorists only keep a bargain as long as they want and terrorists have only malevolence in their hearts. It is like negotiating with the devil over your soul when you are sinless. He has everything to gain and nothing to loose while you have everything to loose but nothing to gain.

Not to mention the slippery slope, that once a government is cutting deals with criminals, paying them for criminal acts, where does it stop? Would the government then pay a different criminals not to engage in graffiti? What if that was commonplace and now they paid another criminal, who was engaging in serial rape, to go to prostitutes, how far down that slope do you think society would slide? Remember, if you told the average American in 1970, abortion would not only be legal but would be available on demand, in less than 10 years, in the US, they would have laughed at you. Slippery slopes have a way of being very slimy.

It is precisely that I want to see people united with their families that I don’t want to see governments trading criminals for hostages. As I pointed out before, it is economics 101, that any business model that pays is imitated. That this kidnapping worked, will cause, unquestionably, more kidnappings. Other families will suffer the loss and bereavement of a loved one being taken hostage by a fiend. Inevitably, more and more, as the business model shows it’s profitability. How long before the terrorists are taking people from the streets, torturing them on camera, and trading them back for some terrorist or another? How many more innocent will suffer for one, seemingly virtuous, action?

But it is the nature of modern liberal democracies, to do great harm to their own self interests and the interests of their citizens, for political expediency. Perhaps the terrorists are right, that the West has become weak. Not in military strength but in resolve. The terrorists best friend is the complacent politician who is engaged in teaching helplessness to their constituents. Maybe we have learned helplessness so well we will lay back and watch survivor season XII while we are being eaten, like lions eat a paralyzed wildebeest, stomach first.

So unless we are a paralyzed wildebeest then trading hostages for criminals is bad practice. This will encourage the terrorists to take more hostages, is bargaining with diabolical forces, creates a loose loose for society, is a slippery slope and assure that others will suffer. Perhaps instead, a non suicidal society, would; execute any criminals asked for by the terrorists, that have been convicted of murder, and double the sentences of those who have not. Then ask if the terrorists had any more requests. The hostage would certainly be killed but there would be no other hostages taken. The problem would be solved and society could have another few years of peace. Instead government has decided to reward hostage taking. But maybe it will turn out better this time, with the terrorists in Israel, than it did with the gangs in Mexico…

Posted in International Power, Law, media, Mercy, philosophy | Tagged , , , , , , , , , , , , , , | Leave a comment

Supply Side / Demand Side Economic Theory.

Posted on October 16, 2011 by john

Dear Friends,

It seems to me that there is great confusion about what supply side economics and demand side economics mean. I will try to explain the difference in this blog, why our understanding the difference is important, and how it pertains to the economic times we find ourselves in. Everyone who is involved with the economy of any country should take heed and understand the difference.

The media are full of possible solutions to the lack of jobs and growth in the American economy. They opine how, if only this or that program would just get the US citizen to spend a bit more, then the job situation would get better and the unemployment rate would drop. This is all sophistry, because it is based on demand side economics, an economic model that empowers the Elite but does little to create jobs. Demand side was talked about in the nineteenth century but it was John Maynard Keynes who quantified it.

Demand side is best described in the context of the aggregate demand/aggregate supply model. In this model, if aggregate demand drops below aggregate supply, then the economy dips into recession. But, as long as demand is “kept” higher than supply, the economy grows. This model suggests that if demand is kept high then the economy will grow and jobs will be added.

Supply side is best described with the Schumpeterian model of entrepreneurial based model of economic cycles of expansion and contraction. In this model, the growth cycle is started, when a new entrepreneur invents a new product, process or industry. This starts a cascade of events, new firms must be created to service the entrepreneurs’ new idea, economic efficiency improves, new workers must be trained, and old inefficient firms are destroyed. Initially the economic growth generated is fast but as the entrepreneurs’ idea matures the process slows until it stalls, and the destruction of old inefficient industries cause a recession. The lowered cost of doing business, (due to the recession), enables a new entrepreneur to bring his or her new idea into the marketplace. The process starts anew.

In demand side economic theory, as demand is increased, jobs are not necessarily created. This is due to the fact that there is always some slack in any supply chain. If there was not prices would be high. As demand goes up, firms can ramp up production without hiring new labor, but by adding overtime. If the firm believes that the new increase in demand is a short term phenomenon, due to short term government stimulus, they will shop out excess demand to firms that still have slack.

Supply side is a form of Say’s Law. An example Say’s Law would be, we know as a self evident fact, that there is a demand for a robot, call it Rosy, that is capable of performing all the tasks that a live in maid could, for $4.55 a day in electricity costs, the only holdup is the lack of supply of such a robot. That is the essence of Say’s Law; supply drives demand.

In the supply side model jobs are necessarily created when new firms are created. These new jobs are generally better paid and have better working conditions then the ones that are destroyed. In this way, the employment conditions of the working man and woman have improved, throughout the time capitalism has been in use in the Western World.

Demand side is usually implemented by government deficit spending, ala Keynesian economic theory, (but even Keynes, on his most progressive day, never believed, or propounded, that governments run perpetual deficits). The spending is seen as a way to artificially prop up demand, temporarily, so economic demand can catch up with supply. As we saw with FDR’s deficit spending and with Obama’s deficit spending, it doesn’t lead to more jobs, it leads to fewer jobs, as firms lay off in anticipation of the inevitable ending of the temporary stimulus.

Supply side is implemented by helping people start businesses. Lowering the costs of starting businesses is one of the primary ways recession leads to a fast increase in economic output. As the cost of commercial/industrial real estate become cheaper the entrepreneur has increased access to the means of fulfilling his or her ideas. Government can lower regulation opening new possible business models to the entrepreneur. The fundamental point to make about supply side is that… jobs are NESSESARILLY CREATED, when this model is implemented.

Demand side empowers government to enact oligarchal legislation and practices, (crony capitalism). The Elite are empowered to engage their rapine. Passing laws that redistribute the goods of society, ostensibly to prop up demand, but are nothing but the distribution of the goods of society through political favor. That is what redistribution is; the distribution of the goods of society-through political favor. Does anyone actually think that political favor is the most human hearted or equitable means of distribution? Honestly?

The Schumpeterian model sets up a tension in society however. With this model there is an animosity set up between the now wealthy and the soon to be wealthy. The old money seeks to stop the new money from competing with their established firms. The old money, or the present Elite, don’t want to be supplanted by people who are more virtuous. The workers in the old industries also resent the entrepreneur. They missed out on the new jobs even while there jobs are “creatively destroyed“. So the laid off worker is also part of a voting bloc, that thinks it is in their best interests, (egoists), to use the demand model and eschew the Schumpeterian model. Class warfare is simply a means to inculcate the people to demand side ideology against our own best interests.

The difference is stark and the results are even more dramatic. We have shown the supply side model necessarily creates jobs while the demand side enhances the Elite’s power. Now that you know the difference it is your responsibility to propagate the truth. To your friends, your associates and your peers. Jobs will be created and the economy improved but the Elite may loose some power over us… Oh well at least people will have work.

Posted in economy, Group Politics, media, philosophy, polictics of class envy | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 3 Comments