An Imperfect Way To fix Some Of Our Social And Economic Problems

I am concerned about the future of this country and the people who inhabit it.  I see problems on the horizons and no positive conversations being held.  Indeed, I hear a lot of foolishness but nothing that would pass for intelligent discussion.  There are a great many connections in this world that are overlooked because our focus is far too narrow.  We attack poverty by throwing money at the problem or point out the unequal incomes and opportunities cause by what some consider excessive wealth.  Others point to racism or minorities believing in white power or some fantasy called white privileged as the call to action.  Others attack the multinational corporations as the root cause or the banks or the one percent in whose hands the concentration of wealth is held.  Some believe that political power is the key and that progressive liberal ideas must be put in place by those who know how to work such ideas.  For the most part we fail to see what is relative and what is tangential to our problems.

 

There are only two states that can be said to truly exist in the world when it comes to humans.  The first is the individual and the second is the group.  We are born into this world alone.  there is no other way we come into this world except by ourselves.  And we leave that same way.  Yet we are born into a group, the minimum being a mother and a child.  Vast legions of babies do not appear at the hospital and require mothers and fathers to pick them up at the counter.  Ideally the minimum group size is three, one child, one mother, and one father.  As babies, infants, newborns, we do not exercise any choice or selection in parents or other family members.  The family group is the only group we are forced to join, there is no alternative even in the case of very early adoption.  When it comes to childhood friends, classmates, there is some choice that may be exercised, but choice of family is not an option.  One has no choice if one is to be born into a family in the Hamptons on Long Island or the ghetto called Hell’s Kitchen across from the city of New York.  Essentially, the environment into which one is born is a crap shoot.  You roll the die and takes your chances.  You, as an individual, must make something of your own life.  You may have a lot of help or you may have very little help.  That is part of the roll of the die.  But you are the variable, the difference, that cause that makes your way through life.  any help you get comes from the groups to which you will belong.  Understand this concept.  The Rights Of Man are not carved in stone anywhere in the universe as universal laws that must be obeyed such as gravity or the speed of light.  such a thing will not happen in your lifetime nor that of your children’s or your grandchildren’s or your great grandchildren’s lives.  It is from this universal truth we may proceed.

 

We live in groups in the sense that we associate with other individuals.  Very few individuals are capable of living completely isolated lives.  If we live alone, without family, we usually work in groups, and our social lives depend on belonging to a social group or two.  Yes, we hear about the loner who lives alone, works alone, has no friends and leads an almost isolated life.  But that is the exception, not the rule.  We all have our visions of goals and values and ideals.  There are two groups where we may not share too closely these goals, values, and ideals.  The first is work and the second is school, strange as that may sound.  family can be a close third but it is a special case.  I may work for a business I hate, but if I need the income and that is the only job I can find, then I will work for that business.  Again, the school I attend has its own goals and values and I may find myself forced to attend because I am not yet an adult.  Or perhaps the only post secondary school I can afford to attend has a religious affiliation to which I am opposed.  Not all of the groups we join will coincide with out goals, values, and ideals.  Friendships usually lie closer to our needs for agreement in that area of goals, of values, and of ideals.  We also join groups for special needs.  A group of fans of a sports club may have little more in common than the boosting of that team.  We may join other bicyclists every weekend to ride some route because of our common love of bicycling.  Groups give us a sense of identity.  They help define us both individually and severally.  Sometimes our economic choices help to define us by what we do not purchase.  A vegetarian or Vegan is defined by the choice not to consume animal flesh.  Being Jewish may mean eating Kosher, although not all Jews do observe that diet.  We may identify as environmentally concerned individuals by purchasing and operating hybrid vehicles.  We may also identify ourselves as different by indulging in conspicuous consumption.

 

What I have been describing are behaviors.  Group membership, for the most part, depend on sets of behaviors that are common to that group.  One way to think about these sets of behaviors is to call them acts of cooperation.  One of the thesis behind the development of human speech is that speech, the use of a more defined set of sounds, allowed greater cooperation cooperation among members of the same group.  It is supposed that it help reduce the free riding by others.  Once monkeys and chimpanzees reach about sixty members in their troop, the troop becomes unstable and breaks into two groups that go their separate ways.  Human groups can reach to about one hundred and sixty individuals before the group needs to split into two or more parts.  Language allows a larger concentration of group membership.  Business management details the span of control a supervisor may exercise effectively.  This mirrors the family group membership of nomadic peoples.  It is easier for a supervisor to get cooperation for the common goals of his work unit that it is for him to gain the cooperation of one hundred and sixty other members of the business.  This is why large bodies of political representatives are difficult to herd into common cooperative behavior.  Does the Republican Party hold a majority in the House?  Yes.  Do they all have the same exact goals, values, and ideals?  No.  The larger the group the greater the variation of those goals, values, and ideals from the average.  This is why if the Democrat Party wins more seats in the House and Senate come the next election, the approach to legislation will change significantly.  The Republican Party may have a little more unity in their common goals, values, and ideals, but they won’t have the large majority of votes.  In essence, our government is one group, not two.  and like any other group the sentiment among group members will change, moving the average sentiment to the left or right of center.  On the other hand, a failure of cooperation can lead to coercion in government.  that is when voting becomes little more than a symbolic rubber stamp for those in power.  We are forced to belong to a group whose membership we no longer want.  On the other hand, we may feel we are denied membership in the group as whole.

 

For many individuals, families, and common groups of the poor who tend to be largely urban, there is a feeling of exclusion.  No one wants to be a member of the group we call the poor or disadvantaged.  Being without income and employment automatically makes one a member even if that membership is unwanted.  But being poor is an individual experience far more than it is a group experience for the individuals in that group do not feel the positive reward of membership.  On the other hand, being members of the one percent is purely voluntary with one caveat, one must find a way to own great amounts of wealth.  My little secret is that I really don’t want to belong to the one percent.  I’ll take a million of two if one of them wishes to enrich me, but I really don’t want to hang around such people any more than I want to hang around with the poor.  I think I would find bill Gates a dreadfully boring and opinionated idiot.  Money won’t buy you intelligence and the man is an intellectual dullard.  but as long as the man pours good Scotch and I can maintain some sense of inebriation I am willing to sit and listen to him pontificate.  Of course, drunkenness has its limits on patience.

 

One of the ironic consequences of progressive liberalism is that on the one hand it has made gaining concentration in wealth much too easy and yet has made escape from poverty so much harder.  Poverty has become a trap.  Not a solid gold one, but a cast iron trap.  And that trap is called welfare.  We have declared war on it and treated it like a disease.  Our measures have done little but throw money at this problem.  sociology departments have studied it for centuries and are no closer to finding a “cure” than the local church with its aide society.  The welfare “aid” we hand out each month is no aid in the sense of help.  It keeps the individual dependent upon the various government agencies.  the fact is, we humans are marvels at creating dependency.  A charity is dependent on those who give it funds to use and disperse.  Did you ever think about the fact that those individuals who work for charities or charitable organizations as a profession are dependents upon the public and private sense of charitable giving?  If no one gave the funds, these people would not have work.  Isn’t that astounding?  Back in the old days of charity organized by religious institutions, no charity worker was paid, it was all volunteer work.  After centuries of such volunteer work the “science” of sociology was launched (it has never been a science, only a pretense to anything scientific) and social work was invented.  As work, it didn’t pay at first, but for those with wealth they could afford to indulge in this new work.  And because they had wealth or were otherwise connected with it, they could pry from the public treasury funds for their work.  this public charity work has been expanding ever since.  It now reaches into the lives of every citizen.  Let your child walk home from school alone and unsupervised and these public charity workers, now called social workers with vast legal powers unknown a century prior, will come down on you, the parent, with a force never before imagined.  No law was ever passed that prohibited your child from walking home alone unsupervised.  But there are regulations made by the state organization that is charged with this social work.  it is enabled under such legislation as aid to dependent families and other high sounding acts of stupidity, to empower state and local offices of social workers to draw up such regulations and given them police powers to enforce these regulations.  Of course it draws on the close support of that other great nebulous organization and corporate entity, Education, to complete its control over the populace.  The result is the inane decision that you, the parent, are too stupid to know good nutrition and can’t be trusted to pack in a brown bag (the old metal and newer plastic lunch boxes have been declared as weapons suitable for use in the prison break should any child want to break out of school) a nutritious lunch, as defined by the non elected office of the First Lady.  My, how far we have descended into the depths of total stupidity and ignorance.  The government is the center of our solar system and 640 social workers can dance on the head of a pin.

 

Now it’s time to roast a few economists.  Mankind has always disliked the unknown, the main reason for religion.  Give me a plausible reason for why stuff happens and what the unknown is and I’ll believe you.  But god isn’t much of an answer as to why the speed of light is three hundred kilometers per second or that gravitational power is the inverse of distance squared.  First came political science as an attempt to short cut the understanding of human behavior and government.  That has been a bust since there is no science in the study of political science.  Then came political economy, back to when economy use to be known as the manner in which an individual ran his household or his business.  Those observations by a moral philosopher, but when moral philosophy studied natural phenomena, led to speculation as to the cause of human behavior in the way they worked, acquired assets, and spent their incomes.  Then came sociology with its desire to understand human behavior on a more scientific basis.  But rather than study the individual, from whom it felt it could draw no laws and hence no mathematical equations, the focus was on groups and institutions.  We might make note that none of these disciplines fooled any educational institution to award a degree in science, they are all degrees in the “arts”, as is history and English.  None the less, when one sees a good idea one is bound to run with it.  Adam Smith observed the idea of economy of scale was a good thing.  He saw this as he watched a pin maker make pins.  By grouping the operations into common sets of movement, a pin maker could produce more pins than if he made one pit at a time.  We see this with interchangeable parts.  John Keynes took the study of economics one step further by applying mathematical formula to its study.  He came up with the idea of aggregating or grouping various products or services together.  In order to get to a more broad and hence a supposedly useful equation, you group all manner of income together so as to measure the economic output of a country.  He was thinking economies of scale.  What he got was Gross National Product.  The it was refined to Gross Domestic Product.  One of the ways to compute this number is to add the various levels of government spending to all the consumer spending, add in investment, which is savings, and add exports wile subtracting imports.  Then divide by the population and we have a number that supposedly reflect whether the economy is growing or not.  This is the consumption method of measuring an economy.  Unfortunately the variables, such as government spending can mask the true condition of the economic activity.  Increasing imports versus decreasing exports can exert an affect on the economy.  And decreasing savings can indicate problems as does decreasing or increasing consumer purchases.  Add in inflation or deflation and the resulting number changes both in importance and in its reliability.

 

Of course business really took to the ideal of economy of scales to the point that both economists and politicians have bought the idea that bigger is better.  If a little economy of scale is good, a lot must be better and total is best of all.  Or is it?  doesn’t that lead to a planned economy?  and what is the problem with a planned economy?  There is only one producer, the government.  There is only one brand of toothpaste, the government’s brand.  and how do we measure the need for tooth past as well its geographical allocation?  Ah, good question.  Unfortunately no planned economy has ever been able to successfully answer that question.  Economies of scale tend to lead to concentrations of production which can lead to interference in the market.  Price determines supply and demand.  Interfere with the price, allow a few produces to control or otherwise influence price and the market is skewed in its supply and demand feed back mechanism.  When we let economies of scale become our masters we lose much of our humanity.  the result is higher unemployment because economies of scale use fewer employees.  It also skews the credit markets.  One should never use debt to finance production unless one can gain more income than the debt reduces and the stream of income includes the continuous repayment and reduction of such debt.  In this case, debt is used for positive investment that increases the productivity and the assets of the business.  Economies of scale can lead to the use of debt and in doing so risks the increasing use for the wrong reasons and the wrong results.

 

The concentration in production to fewer multinational corporations means that competition is reduced leading to inefficiencies.  When income is assured, efficiency is one of the first items to be jettisoned from the corporation.  As corporations and banks become too big to fail they must depend more and more on markets that are restricted from competition.  Their mergers and acquisitions into greater concentrations of economic power means that wealth become concentrated.  In doing so they become less responsive to market forces.  the negative effect is that while the relative wealth is increasing among them the real wealth among the rest of the population is decreasing.  In an economy that is based on consumption, and almost every economy is, the more who cannot consume mean that the producers will begin to lose their accumulations of wealth.  One mat be a “gold bug” and hoard gold in expectation that paper fiat money will become worthless.  But if order to use gold as an exchange medium the seller must be willing to accept it for the goods or services he agrees to supply.  And if you have hoarded all the gold, then there is a problem.  One can only consume so many goods and services, after which one’s gold becomes useless.  Economy of scales is predicated on growth and the expectations of the economist is that growth is a natural phenomenon, it always occurs.  Yet that is not true.  The world’s population may still be growing but it is a finite number.  Assuming that everyone wants, needs, and can use a new automobile, General Motors could build seven billion and price them at a dollar a piece.  After everyone has bought one of the GM vehicles, the demand drops to zero.  and it no one needs, wants, or is willing to buy a new car next year, demand stays at zero.  Hence, there is not growth in GM’s profits next year.  But let us say that next year there is no gasoline or other fuel by which one might operate a vehicle.  Then GM can’t give the cars away.  Again, there is not growth in car sales for GM and no fuels sales for the oil companies.  Let’s say that no one can afford to buy an automobile nor afford the cost of fuel or the insurance to operate a vehicle.  Now we have three sectors with no growth.  The point is that consumption has finite limits.  A growing population of poor means less growth.  The only way growth appears to happen is with inflation.

 

So we have those who claim that hyperinflation is about to land on our shores while others are saying that it can’t happen here.  Well, that kind of thinking in both cases shows an over reliance of past history.  These are the generals who are trying to fight the current war in terms of the past war.  We have seen a kind of hyper inflation.  In my days of being poor and unemployed when I was eighteen, the minimum wage was a buck thirty five an hour and let me tell you, I wished for one of these three dollars an hour jobs.  four years later the minimum wage was raised to three dollars an hour and I was wishing for one of those five dollars an hour jobs.  What is minimum wage now and what would you wish your wage to be in order to be assure a few creature comforts?  The first house I ever bought was in 1973 for $16,500, a hefty price for a run down fixer upper.  do you know what that house sold for in 2007?  About $375,000.  I didn’t get the money, I sold it long before that, made very little money on the deal.  Now that house was built about 1965 and sold for about $8,000.  That means the house sold for over 46 times what it cost the original owner.  In forty two years that house rose if price by over 460 percent.  That is over ten percent per year.  Is that house really worth that much money, or is the money now paid highly inflated?  Well, another big myth is that two percent inflation is good for economic growth.  Hey, the ten percent each year is really good and one hundred must be great, right?  I have never seen any economist prove that two percent claim.  Never.  I have heard for those same economists that inflation is a tax that hits the poor the hardest.  Well, yes, quite so.  When a penny was worth a penny during the great depression, it could buy a lot of stuff.  Now, a penny isn’t even worth the copper it is minted from.  A penny won’t buy anything.  Go ahead and name one thing a penny can buy.  In 1929 if one was poor and found a penny one was very happy.  today is doesn’t even pay the poor to pick it up.

 

If I were in a graduate program for economics no adviser would approve any research that aimed to prove that concentration of wealth was the result or concentration of production and credit which leads to rates of inflation that distort such wealth accumulation.  Yet look at the stock prices of publicly traded corporation against their earning and their book values.  Do you suppose there might be just a little inflation at work here?  Now let us take a look at government spending versus government income.  a great many of the world’s governments have engaged in deficit spending to the extreme.  We have seen what has happened to Greece as a result.  The object lesson is that even governments can’t spend their way to wealth.  a major portion of the Greek government budget is welfare spending.  That is: spending on high pension benefits and other social programs where the payout exceeds the government’s income.  Socialism is great until you run out of people to pay for it.  Imagine what our federal deficit spending might look like of we guaranteed all members of our society, including illegal immigrants, an income of fifty or sixty thousand dollars a year.  True, we could tax the one percent and the ten percent, but soon enough we would run out of those income to tax.  Then who would pay for that welfare project?  Promising something for nothing has never been good or even mediocre policy.  We have created great dependency among our poor, deserving or not.  and I would also argue that we have engaged in corporate welfare spending without let up.  Why are we paying farmers and corporate farmers to grow sugar beets and peanuts when by doing so we glut the world market and have to tax our people to pay these farmers?  This is corporate welfare.  And one can show so many more programs, such as the Import Export Bank that subsides Boeing by using tax money and deficit spending (future tax money) to help “deserving poor countries and their airlines afford new jet airliners.  Oh, well, we need to support the company and the stockholders and the union workers.  Wait a minute.  Isn’t this like supporting the public service workers unions to extort ever higher wages and benefits from local, county, state, and federal governments at taxpayer expense?  Do you get the feeling that union workers are accumulating excessive wealth in relation to their services they provide?  As public employment reaches towards fifty percent of the population one must ask where the heaviest burden falls?  All non public service union employees.  That’s right, all of you employed in the private sector who never get the five and ten percent wage increases every year must pay the wages, the benefits, and the excessive retirement pensions of the public service union employees.  But the joke is on them.  At some point, very soon in the future their pensions will dry up because the tax money that is suppose to pay them is no longer there.  Bankruptcies will abound they they will yell and scream, but, like all those pensioners in Greece, there is no one left to pay on a regular basis.  Cuts will be made, permanently.  State and local spending have increase almost double, on average to income.  do you think we have problems with our insane and stupid idea of social justice?  Do you know where the monies are coming from and how long they will last?

 

One of the greatest illusions the devil ever play was to convince everyone that he didn’t exist.  One of the greatest illusions economist ever perpetrated was the free market and its associated free trade.  Markets are seldom free, there is always some interference.  We want to protect both buyer and seller from each other, an unseemly task at best.  and if markets are free from interference then what makes us think that free trade agreements will work?  All things being equal, free markets and free trade will work just fine.  Except all things are equal and never will be equal.  You know, the various taxes, union demands, and so forth sent the textile mills and other manufactures out of the New England states and into the southern states whose arms were held open and promised little interference with business.  Then came NAFTA, the trade agreement that was suppose to create more jobs through free trade.  Yeah, right, name one that wasn’t a government position.  Well, lower prices on consumer goods and industrial goods and services is suppose to be good for any economy.  Well, yes, but only if the consumers have employment that enables them to consume.  I mean, that is the point of having a consumer economy.  Back in the seventies there were a few multinational corporations.  There has since been an explosion of them to ever increasing numbers despite the increasing numbers of mergers and acquisitions.  Concentration of wealth, production, and credit.  Why hasn’t this brought the good life to the poor, let alone to the middle class?  I mean, Paul Krugman can’t be wrong, can he?  He is a Nobel winner in economics?  Oh, that’s right, Alfred Nobel never though much of economists and it was a Swedish bank consortium who came up with the prize.  I’m sure that if ever a Sadomasochist group ever became large enough and organized we might have a Nobel Prize for their group.  Oh, I forgot, economists are the same group.  My error.

 

Do you start to see the problem?  The more wealth and power we concentrate into the hands of a few the greater the problems we have in society.  When the king has all the money and wants to sell luxury condos the peasants can’t buy them.  Then the king turns to gold, the peasants melt him down and everyone lives happily ever after.  Unfortunately the masses are rarely is such agreement.  Some other group thinks it knows how to be king for a day.  An economy is suppose to be an entity where creative destruction occurs when interference is at a minimum.  Our economy no longer goes through creative destruction, but it will go through a destruction caused by its own ignorance of the consequences extreme wealth and credit creation.  so let me tell those with degrees in economics that debt is not an asset and it is not wealth.  As the cowardly lion said, no way, no how.  Credit contains that seed of destruction called debt.  Debt may destroy the opposition to increased production but it can also destroy the production as well if used in excess.  If you want to release the poor from their poverty then jobs and wages must be available.  Not everyone will avail themselves of that opportunity and continuing their welfare payments will prevent the many from even trying.

 

The only way we can begin to make the economy and society somewhat whole again is by reducing the concentration of wealth and production.  That means breaking up the very large corporations.  It means preventing multinational firms from doing business in this country as multinational firms.  It means paring banks back to the size that can be controlled as far as credit and risk concentrations are concerned.  It means foregoing the unlimited supply of credit.  Banks, including the Federal Reserve may only create one dollar of credit using one dollar of capital.  It means a flat rate income tax.  It means a flat rate tax any combination of state and local revenues can levy.  It means reducing the size of government, of reducing the number of laws and regulations that abound without constraint in this country.  It means levying import duties on goods and services.  It means an end to illegal immigration, deport them all, now.  No more work visas.  Outlaw unions as a restraint of trade.  Enforce restraint of trade against doctors, hospitals, and all other forms of healthcare.  the list goes on but essentially we go through a reset in the economy and society.  Revolutions are a forced reset of economies and societies but they tend to work very imperfectly and many times lead to unsatisfactory results.  That is the history of the world and will be regardless of the liberal attempt to create the end of history.  Unfortunately my faith in my fellow man is rather low to non existent on this point.  I think we will fall to internal revolution after a few revolts.  A revolt is a failed revolution and it usually takes a couple of attempts to get it right as far as success is concerned.  the hard part is in the details of the aftermath of creating an effective government.  The French have yet to accomplish that little detail.

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