Not-a-Lemming : government

The Economy: What Do We Really Want?

FutbolGuru — Tue, 27 Oct 2009 14:33:00 GMT

A short blurb in today's (10/27/09) Wall Street Journal stated that home prices rose in most major American cities in August. This is cited as evidence of a recovering economy. But what does this mean and is it something we really want?

Perhaps you've noticed that prices at the pump are going up. Since this indicates demand for fuel has increased it is also touted as another 'sign' that the economy is rebounding. So, we have rising home prices and rising energy costs. Traditionally these indicators lead everything else which means we'll be seeing rising costs across the board. And this means the economy is rebounding?

I'll be the first to admit that once again, my raise at my job was an embarrassing joke. And even though it is called a 'merit' raise, my supervisor apologized and tried to make everything better by informing me that due to deflation the cost of living is actually lower than it was last year. Sorry, but, wrong. I'll bet than I'm not alone in what is obviously a long term era of wage stagnation.

So, we have costs going up as a sign of a reviving economy while wages are flat since the cost of living has gone down. And while I'm supposed to be happy that the economy is recovering, to tell you the truth, I hope it doesn't. If the only fallout from an improving economy is rising prices, since this has already been predicted to be a jobless recovery - whatever that means - then I don't think I want a better economy. In fact, I can't see that an improving economy helps anybody except the people who already have most of the money. Sure, the wealthy complain that they pay 90% of the taxes, but they seem to forget that they control 90% of the money.

I think it's time for the world, and especially America, to rethink what we mean by a growing economy. If it means forever escalating prices and flat wages then it isn't really helping anyone. At the same time, government mandated market controls and other draconian measures, that have been experimented with at length in various countries, always lead to disaster. So what can we do?

The US economy is driven by consumerism, which is why the Bush/Obama bailout is doomed to fail. It doesn't address the underlying flaw in the American economy. A flaw which is based on neither our government nor our economic system. It isn't even related to our political system - though both parties tend to make it worse in their own way. Indeed, the fatal flaw in the US economy derives from a growing problem in our society. As long as people determine the value of another person based on purely material criteria our economy will continue to sputter. And you see it everywhere.

The beautiful woman is able to rise to economic security faster and more assuedly than the unattractive woman either through marriage or preferential promotion. The wealthy man progresses more quickly up the ladder as a result of his houses, cars, and golf clubs. The children of wealthy parents secure coveted spots on sporting teams. Attractive babies get smiled at more often. Wealthy children get selected for better schools and colleges. None of this is a secret which is why the beauty products business is so ubiquituous, parents engage in unethical behavior to secure preferential treatment for their children, and people will lie, cheat, steal, and do anything, to win. While I'm not so foolish as to believe that people haven't been doing this since the dawn of time, I do know for a fact that the depth to which it penetrates society varies enormously.

For 200 years America's trump card was Christianity. But not because God was biasing world events in our favor. It was because the Christian behaviors of moderation, charity, mercy, honesty, self-sacrifice, and tolerance - the classic virtues - greatly favor the performance of an economy simply because they smooth the interaction between people. It makes for good business. God doesn't even have to exist for this to be true if enough people believe it. Indeed, these are the same reasons that any culture rises to prominence - and there have been many non-Christian cultures that have shone brightly. And despite the negative view Christianity has taken of these cultures, from Ancient Egypt to Rome, it was these very virtues that worked in their favor.

But as the prevelance of these behaviors begins to fall in the general population it begins to impact the economy. At first it isn't noticeable, which but encourages more people to abandon virtue in favor expediance. This is called the slippery slope. Once you start down that path it is very difficult to climb back up. In fact, history shows that it is impossible. At some point, as more and more people abandon virtue in favor of hedonism, especially those who control the wealth, society will collapse and the economy will follow. It might not happen over night, but it will happen. I think this is where we are in America today.

Do we want the economy to recover? Who does it benefit? Answer these questions for yourself and you may see that the slippery slope isn't a slippery slope anymore but a cliff. The edge draws near. What choices will you make today?

-Futbol Guru

Bureaucracy In Action

FutbolGuru — Wed, 01 Apr 2009 13:30:00 GMT

I was looking over my posts the other day and said to myself, "Futbol Guru, you sure have become cynical." So I've been thinking about my attitude and trying to decide if I'm being fair or if I've gotten into a rut.

Well it's always possible to focus on doom and gloom. My lovely wife often accuses me of having gotten into a habit of seeing only the negative. And there is much to what she says. In fact, I am by nature a very optimistic person. I am always hoping for the best - which is a trap because "the best" rarely happens. When I tell her that she just frowns. Maybe she's right. Maybe I do tend to focus on the negative. At the same time, when you're headed for a cliff the global negative in your future tends to outweigh any local positives. I suppose there is a school of thought that prases the lemming who turns to his running-mate and comments on the beautiful weather. Fortunately I didn't go to that school.

The Obama administration continues to surprise me and I was especially astounded this very morning. And no, I'm not being cynical. On the way in to work I heard on the radio that President Obama has directed the Attorney General to drop all charges against Senator Ted Stevens, effectively throwing out his indictment. Honestly I don't know whether the man is guilty or not. I know he's an idiot and doesn't know the difference between the internet and a series of tubes but that doesn't make him guilty of accepting bribes.

What I wonder is why the government spent millions of dollars bringing the case against him, effectively handing his senate seat to a challenger from the other party, and then decided the case was indefensible. And how many other senate and house seats were affected by the bad press as a result of the scandal that apparently never existed in the first place? I really don't care anymore what party did what to whom. The point here is that the citizenry has a very good reason for their utter lack of faith in government because there are only two possibilities here. 1) An indefensible case was successfully prosecuted against an innocent man or, 2) charges were trumped up by the opposition part to gain a Senate seat. Either way the conclusion is inescapable.

Bureaucracy. What is it? We know its effect - corruption, inefficiency, and grid lock. But we don't often think about the actual causes of bureaucracy. Consider cancer as an example. We know what cancer does, and for a long time we just treated the symptoms. The patient (sometimes) survived a little longer and was (sometimes) more comfortable, but the end result was the same with or without treatment. Only now are we beginning to understand what causes cancer: mutations in cellular DNA that lead to rapid, uncontrolled, cellular growth. And with understanding new treatments are coming.

Though very similar in effect to cancer, Bureaucracy is much easier to understand. And as can be done with many things in life, to get at the root cause we will begin at the effect and step backwards until we find it. Soof the way science works, or following the money trail.

First Step Back: Bureaucracy comes from government officials making bad decisions. E.g., Let's invade Iraq.

Second Step Back:These decisions can be bad either because the official making them is incompetent, or they can be bad because they are driven by political considerations rather than attempts to address an actual problem. E.g., Lets prosecute Ted Stevens to get his Senate seat.

Third Step Back: So the people making the decisions are either a) incompetent, or b) politicized. E.g., Let's invade Iraq.

Fourth Step Back: This is where it starts getting muddy. The point in science where there are more unknowns than equations. Or where the laundered money comes back clean. How does an incompetent person get himself elected to public office? One way is to be the son of a former President (Bush). Or Senator (Gore). Or have a butt-load of cash (Bloomberg).This used to be called dynastic succession and is one of the reasons we fought a conflict called the Revolutionary War. Regrettably Dynastic Succession seems to have come back in to fashion, maybe because we stopped teaching history in schools.

Another way to get elected if you don't happen to be royalty is to say the right things, to the right people, in the right way. Like eloquently articulating the need for substantive change (aka - politics) in a melodious baritone (Obama). Or demanding a return to family values (Bush).

Once the desire for efficient government administrated by honest public servants is supplanted by politics or heredity in the minds of the people, as has happened in America, you wind up with incompetent people in positions of power making decisions for all the wrong reasons. The results are catastrophic. Invading the wrong country. Deregulation of the banking and investment industry. Laws to limit entrepreneurship. Presidents trying to run car companies. Prosecutions aimed at gaining control over government institutions. Trillions of dollars transferred from the poor to the rich. National economies at the mercy of enviro-political activists.

Where will it end? When will it end? Will we as a nation continue to run head long over that cliff, driven forward by fear and paranoia created and exploited by those who would profit from our deaths? Or will we, as a people, come to our senses and curtail the power of the parties. We can do it. The internet has taken the power of information away from the media and given it to the people. This very blog is a manifestation of freedom in action. But will we use it? Lord knows we could all use something to give us hope. I'm tired of being cynical. But then again, maybe I'm not cynical. Maybe I'm just reporting the truth.

-Futbol Guru, http://mises.org/community/blogs/not-a-lemming

Changing Perspectives: Conclusion

FutbolGuru — Mon, 23 Feb 2009 16:42:00 GMT

We tend to forget that government, politics, and economics are not the same thing. The word politics and the phrase political party don’t even occur in the U.S. Constitution or the Bill of Rights. Nor is the word economy even implied in either of these documents. In fact, George Washington, the founder of our nation warned strongly against political parties and said little if anything about economics. Government are the structures by which a society is administered, how it’s laws are made, enforced, and adjudicated, and how officials are installed and removed from office. Politics is the way that groups of people leverage their numbers to wield authority and shape policy. And economics refers to a system by which goods and services are created, traded, and disseminated throughout a society. Naturally these structures are inter-related in how they are manifest and some are more tightly coupled than others but they are not equivalent to one another.

Capitalism is an economic structure based upon leveraging capital to increase its value. It is not related to either a representative form of government or the political parties which vie for control of a government. Nor is it directly related to the concepts of freedom and liberty. In an ideal system capital is invested in an enterprise with the result being an increase in value of that enterprise beyond the sum of the original value plus the investment. For instance, upgrading an assembly process might allow a manufacturer to produce more of a product at a higher quality than before so that more of the product can be sold. Profits rise and value increases. Its only relationship to freedom is the concept that the money belongs to the owners and investors so the profits belong to the owners and investors.

Free market capitalism is perhaps the simplest, most basic and pure economic system with its natural checks and balances based on supply and demand. That, however, doesn’t mean that it can exist under any set of conditions. Indeed, capitalism, like any other system, requires the right conditions to thrive and always walks a fine line between sliding into either feudalism on one side and fascism on the other. As soon as business owners and investors begin to view themselves as isolated systems there is a danger that feudalism will arise. On the other hand, when a free-market capitalist economy stumbles, the first response is often protectionism and government bailouts which can quickly lead to fascism. Either way the result is the same, a rapidly shrinking middle class and the disappearance of avenues from the lower to the upper class.

For market capitalism to thrive there must first be capital, resources, and a market. If there is no money, nothing to invest in, and no consumers there is no value. But these basic conditions are not the whole story. Simply investing capital and reaping rewards is no different than Pharaoh’s use of corvee labor or southern plantation owners prior to the Civil War. That was capitalism, too, but here in the West we generally consider it a bad form of capitalism because over thousands of years great men and women realized, and often died, for the idea that humans should be treated better than animals. And that is backed up in our Constitution, the Bill of Rights, the Declaration of Independence, and the writings of the founding fathers. What they realized is that there is a form of capitalism that can benefit everyone. A limited form of capitalism that lets the benefits of technology and the struggles of man to be shared by all who are willing to participate.

So how is this capitalism different than pure capitalism? Most importantly it recognizes that business concerns are not isolated systems but are part of a larger community. Not the community of businesses, but the community of employees, citizens, and states. After all, without employees, consumers, and a stable government, any kind of enterprise becomes extremely risky. When a rising tide lifts all boats those without boats drown. Community-based capitalism means that those with the largest boats throw life rings to those without. It is of course the job of the swimmers to grab take the life ring, but without this act, capitalism becomes feudalism. When the acquisition of personal wealth (aka, greed) becomes the principle occupation of a business owner or a group of investors, flowing success down to the masses is the first thing to be cut, people start drowning, and the system fails. And in the end, leaving government to throw the life lines only makes things worse.

Community-based capitalism also requires the people engaging in business transactions to follow a basic code of ethics and honesty. Investing is founded on agreements. When agreements cease to be honored in both word and spirit, mistrust and animosity are the natural result. When an investment is made a product is the natural expectation, whether that product is a good, a service, or even some kind of financial instrument. When no product is received, and no product was ever planned on the part of the business owner, or the product was so risky as to have been misrepresented, the system fails. When this happens investors become cautious and owners become protectionist. While those at the bottom of the system feel this failure most immediately, it nevertheless affects everyone and the economy stops growing.

There are other conditions necessary for capitalism to thrive but arguably none is more important than the concept of reward. It is deeply ingrained in our psyche that hard work and honest ambition should be met with increasing success; the rising tide. While this can’t be guaranteed, a boat with a hole in it is no good at all. Most people start with little or nothing. The only way they can move forward is through help from others, whether that help is direct investment or simply being given a chance. This isn’t charity to the poor. This is recognition of talent and ambition and a helping hand to realize potentials. New blood is the life blood of any enterprise. That is why America has stayed so innovative, the constant arrival of literal, new blood. It is just as true in business. True innovation almost always comes from the outside, because attacking problems in a unique way almost always comes from a different kind of thinking. Not everyone is ambitious and innovative, and most people realize when they aren’t, but for those who are, they must receive the help they need to succeed or they will simply stop trying at some point and a key driver of community-based capitalism is lost.

We’re a capitalist nation but we tried to be different. And for a long time we were. I’m not so foolish or idealistic as to believe that prior to 1950 American business was kind, charitable, and generous. However it is incontestable that the spirit of community that once pervaded this land is gone, or is only a faint glimmer of what it was. When someone starts an enterprise it is always hoped that riches will be the result, and this is natural, but should riches be the only desire? The idea of building something of lasting value that also serves the larger community seems to be gone to have been replaced by building a business as fast as possible, selling it for as much as possible, and moving to the beach. Not only does this mindset ignore the hard work of the employees who also built the business, the government that kept the economy stable while the business was growing, but most importantly it minimizes the many relationships formed over years of hard work – which often have no relationship to the business itself. Because when you move to the beach your friends don’t usually move with you, though they probably helped you along the way if only for emotional support. Undoubtedly the high divorce rate in America stems from this same phenomenon; if a relationship isn't profitable, it is cast aside with no more thought than a book that failed to deliver as hoped. And since this has been the plan all along - acquire, cash in, unplug - what does it say about the value of relationship and community? When greed is the only metric, money is the only thing that matters, and that is a very good way to describe relationships in modern America; money is the only thing that matters.

When money is the only thing that matters, honesty and ethics are nothing but inconvenient liabilities. As long as things are done legally – which generally means that the contract was written by a very slick lawyer – a business owner can retire with a ‘clean’ conscience. No matter that the financial system of the entire nation has been destroyed and countless boats have been torpedoed, no matter that untold resources have been sucked from a community, the beach house, college for kids, and vacations are secure. The elimination of greed and dishonesty as vices, and the elevation of them to a twisted virtue, has done more damage to this nation than any other single thing. Whether it is toxic mortgage assets, cashing out and pulling out, or driving the automotive market with unsustainable products, greed and dishonesty have crippled this nation. The only thing more damaging is that those responsible have been allowed to keep their winnings only making them, and their practices, all the more enviable.

So why should I, or anyone else who is ambitious and innovative, work hard for a reward? There was a time when nepotism was looked down upon. It happens sure, and it’s only natural to want to leave something for the family. But when that legacy eliminates the just-as-natural cycle of hard work and reward, innovation will pay the price. But cashing in and pulling out can’t happen as fast when there are other boats in the picture. Far easier to make the anchor chain of others so short that their boats flood and sink. After all it is very easy to say that, “Success isn’t a guarantee,” and wash one’s hands of the matter. And this problem is only exacerbated by those who’ve enjoyed their success through dishonesty or cronyism. Those who’ve cheated are not generally disposed to helping others, and those who’ve been granted their lordship have no empathy for those still struggling. In fact, they usually feel they’ve lifted themselves by their own bootstraps and advise others to do the same.

Dwindling access to resources. Wealth hoarding. Lack of community. Dishonest and unethical behavior. More work for ever less or no reward. The failure to punish those responsible for fraud and waste. Toxic politics. Corrupt government. Public money used to sustain the dying enterprises of swindlers. Nepotism and cronyism. Hedonism. Materialism. Selfishness. Paranoia. Relationship abandonment. The conclusion is only too obvious. The conditions for healthy capitalism no longer exist in America.

The Return of Feudalism

FutbolGuru — Fri, 06 Feb 2009 16:09:00 GMT

They say things come to you in the shower. That doesn’t usually happen with me. More often, during the act of climbing into bed. Then I have to get up and write the idea down, for experience has taught me if I don’t write it down, no matter how Earth-shattering the thought, it will be gone the next morning. But this morning while I was shaving a light bulb went off.

There used to be something called a ‘Retirement Plan.’ You’d go to work for a company and they would begin a retirement plan. Basically they’d put a little money aside each month and when you were old and gray, they’d start siphoning it back to you. It would come agonizingly slow but at least it was there. Sort of like serfdom in the old Feudal systems of Europe. In exchange for work, the Lord provides care and protection.

But retirement plans became expensive. And people clamored about not having any personal control over ‘their’ money. Companies took the opportunity to eliminate the costly retirement plans in favor of giving executives larger bonuses. But our government, always looking out for the little guy, said there had to be something for the workers. (They must have known even then that Social Security wasn’t going to be there.) So they came up with the 401K. You have the option to place a portion of your income, pre-tax, into an investment vehicle over which you have ‘control.’ Some companies even put money in there for you. How nice. It can then grow with the market. Sounds good on paper. Or does it?

Think about what’s actually going on here. The portion of 401K provided by your employer isn’t a gift. It is money that could have just as well come to you in the form of compensation. Sort of like FICA which the government takes for your retirement plan. You pay 7.5% and your employer picks up the other 7.5%. Of course they don’t ‘pick it up.’ They pull it out of funds you earned for a total of 15%. So 15% of your income goes to FICA retirement. Then your company, or you, puts some money into your 401K, in my case 15% for your, uh, retirement. That’s 30% of my income for retirement. Keep in mind that all this cash is flowing monthly into the stock market, continuously, like a river. Even now.

I can’t get to any of this - my - money right now. The Social Security System has no ‘fund’ so there’s nothing there to get. And my 401K isn’t available until I’m too old to use it. I can take it out but I pay a huge penalty, close to half. So it isn’t available to use in my productive life for things like, starting a business, paying for college, or stimulating the economy. So while you can’t use your money to grow your life, there are others who can use your money to grow their lives. This may seem like swindling, but this system was set up by laws.

Yes, you heard me right. While your income isn’t available to you, it is made available to other private citizens in a process protected by U.S. law. Consider the following argument.

Keeping your 401K in a ‘safe’ money market account produces virtually no growth so isn’t a viable retirement plan. So you move it into mutual funds. Mutual funds then make the money available to companies to use as investment capital through the purchase of stocks. These mutual funds are administered by investment banks and other institutions which, as we have all seen, almost without exception, pay their executives ridiculously huge bonuses even though they lost all the money you had been forced to put aside for retirement. So while the money your earned can’t do you any good, it supports a lavish lifestyle for others.

That’s bad enough, but there’s an even more chilling revelation hidden in this web of deceit. One of the strongest arguments against socialism is always the exorbitantly high taxes needed to pay for social services. On the order of forty to fifty percent in some countries. But we’re already paying upwards of 30% for retirement alone! Add income tax and that jumps to 45%. Health care comes out of our checks too, which easily pushes the rate to 50%. State and local taxes drive it north of 60%. In California it’s more like 70%.

Friends, we’re socialist already. But it gets worse. Far worse, because for most of us, there are no social services to be had! The hallmark of the socialist state – the safety net – is missing. While other socialist countries provide retirement and health care – even if it isn’t the best – the middle class in this country has neither. Social Security is insolvent and our 401K’s are worthless. Health care is only available while you’re working. So while we’re socialist, we’re not. We have the high taxes, but not the services. Where did the money go? I hear some Wall Street execs took home in excess of 2 billion dollars in compensation last year.

In fact, we’ve come full circle. We’re back to feudalism. Bad feudalism. In a good feudal relationship, the Lord expected work but provided protection. As long as he wasn’t a cruel, greedy bastard, the system worked surprisingly well. When he was a cruel, greedy bastard the Lord rolled in lavish excess, stopped providing protection, yet demanded the serfs continue to work. The serfs starved and complained but the Lords had lost the fundamental human element of compassion so simply shut the gates on their castles.

The question is, what are we going to do about it? America isn’t feudal Europe. In feudal Europe the people had no rights and the wealthy class had no accountability. We still have rights and there is still accountability. For now. But for how much longer? Those in power have already shown their disdain for good government and good business in favor of hoarding wealth and land. They passed laws which made your money available to them and not to you. They know they have swindled us and that we’ve done nothing about it. When people behave badly without consequence they grow only more bold. Why should they not feel that they are fundamentally entitled just because the masses are still restrained by the concepts of law and ethics? Concepts which they have found to be inconvenient or never had in the first place. Will they win in their latest ruse to increase their fortunes by asking us to buy things we don’t need, made in a country not ours, to ‘jumpstart’ the economy and get money they don’t need flowing back into their coffers?

I’m not a fan of socialism, but it is better than what we have now. And unless we the people take back not only our government, but our economy, we’ll wind up with even less. What is that going to take? There are those who say that the Tree of Liberty requires blood and sometimes they are right. But it hasn’t gone that far yet. Not even close. And in fact, the solution is much simpler, won’t cost a thing, and would actually save us money.

All that in between lifting the razor to my face and pulling it down my cheek. I guess you can have a thought in the shower.

-Futbol Guru, http://mises.org/community/blogs/not-a-lemming

AMC and the Dodo

FutbolGuru — Wed, 07 Jan 2009 15:28:00 GMT

AMC. American Motors Corporation. Does anybody remember that one?

They actually made some pretty cool cars. The Javelin and AMX come to mind. Forward thinking for the time, the AMX was a two-seat sports car with a 401 C.I.D. engine. Fast, good-handling. It actually competed well with GTOs, Camaros, Mustangs, Firebirds, Chargers, and other stallions from the muscle car era. Look it up. There’s a following.

Of course there was also the Pacer, the Matador, and who can forget the Gremlin – aka, the Garthmobile. I still can’t decide if it was the ugliest car ever made, or something that could be turned into the ultimate sleeper. But with declining sales in the seventies and AMC’s ill-fated merger with French manufacturer Renault, the company was doomed. In 1987 they were acquired by Chrysler, primarily to get their hands on Jeep, and that was the end of AMC.

I bought one of those Jeeps. It was a 1989 Grand Wagoneer. The one with the wood-grain. Jeep was owned by Chrysler then but the Grand Wagoneers were still manufactured in the same Kenosha facility formerly run by AMC and staffed by former AMC employees and using AMC parts. Still, the Grand Wagoneer was a pretty amazing vehicle. Designed in the early ‘60s, it was powerful, strong, and safe. My wife and two young sons walked away from being T-boned by a semi in one. After pounding the rear fender off the wheel I drove it home.

But the Wagoneer had its flaws. The design was post-World War II so didn’t take advantage of more modern manufacturing techniques. It was never upgraded and once while working on it, I found mounts for the original headlight configuration buried deep beneath the grill. Quality control was poor – always AMC’s Achilles heel. Aerodynamics weren’t part of the equation when it was designed so fuel efficiency was poor. Extremely poor. And it used an older engine design. Much older in fact.

The V8 family engine block used by AMC was originally a World War II-era Packard design. It had a high nickel content that minimized cylinder wear, which was good, but used antiquated casting techniques, which was bad. And it far pre-dated the concept of emissions controls. I don’t even think the original Wagoneer had a PCV valve. So as laws began to change in the late 60’s, placing ever tighter restrictions on automobile exhaust, AMC/Jeep attempted to comply by hanging ever more crap on their V8s to meet them.

By the time I bought my Wagoneer there was a veritable spaghetti explosion of vacuum lines, solenoids, EGR ports, and sensors under the hood. Troubleshooting even minor problems was nearly impossible given the labyrinthine maze of rubber, copper, and metal tubes. AMC, strapped for cash, had never invested in updating either the engine, or the control systems, simply patching and re-patching what was hanging on an already obsolete engine design. The result was disaster, and even pulling off every bit of smog control hardware resulted in a poorly performing vehicle. I know from painful experience that this is true.

Anyone who drove cars during the 70’s remembers that all four American car manufacturers had problems like this, hence the market penetration of better designed foreign automobiles during this period. Fortunately the advent of computer controlled engine management systems and redesigned engines allowed the other American manufacturers to begin competing again. AMC couldn’t make the capitol investment and the rest is history, along with the Grand Wagoneer.

So what’s the point? The point is, the American economy is that Grand Wagoneer. The economy itself is a World War II-era design. It depends on massive consumption by a rapidly expanding, export-based economy. And for many years, like AMC, it was functional and even profitable. But the world in which it formed no longer exists. And the US is no longer an export economy. So over the years, as our economic growth has sputtered, our government and corporate leaders have levied continually more restrictions, regulations, and stimulus plans in order to keep the pistons firing. And now, quite literally, in perhaps the most poignant part of the analogy, economies themselves have been levied with emissions controls. Instead of changing, our economy has become that Packard-based, AMC V8 hidden beneath layers of vacuum lines and marginally functional pollution-control hardware. The result is an economy that runs like crap, can’t be diagnosed, and is unresponsive to repair. Sure there are times when it seems to perform. Through vigorous maintenance and upgrades I kept my Wagoneer running for years. I replaced engines, transmission, carburetors, manifolds. I once redesigned the entire air conditioning system. You name it. But oh, the time I wasted lying on my back in the driveway. And the money I threw away. And the gas mileage was always crap. Life has been much better since I deep-sixed that puppy and went with something more modern. I have a life again.

How long will out politicians call for stimulus plans to revive the economy? How many trillions will we waste on vacuum lines, feedback carburetors, and exhaust gas recirculation before we retool the engine for modern times and redesign the control system from the ground up? AMC paid the ultimate corporate price for their refusal to upgrade. A refusal that turned into an impassable barrier. Has our refusal to fundamentally change our economic engine gone too far? Have we wasted so much capitol on upgrading an obsolete system that we lack the resources and will to build a new one? Have we passed the point of no return? I don’t know the answer to that question. But I do know the answer to this one: Every day that passes without fundamental change is one day closer to the impossibility of change. And nature has shown without exception that when systems lose the ability to adapt they become extinct.

-Futbol Guru

I'm Not One of Those

FutbolGuru — Fri, 02 Jan 2009 03:17:00 GMT

It has become unfashionable in some circles to speak out against the rich. Of course it is a hobby on the left, and it is not at all uncommon for a wealthy congressman or actor to rail against excess, such as former South Carolina Senator Ernest Hollings’, famous statement that, “There’s too much consumin’ goin’ on.” Whether he’s right or wrong, his statement smacks of pandering, and for the most part middle-class Americans have been conditioned against openly criticizing the rich. We are free in this country and part of being free is the freedom to make tons of money and live the way we want. Who’s business is it to question how much money another person makes, even if it rises into the billions betting against our own economy and helping raise oil prices? In fact, speaking out against the rich is generally considered a sign of envy or jealousy and the speaker is often cast as less ambitious/intelligent/or otherwise lucky as the one he’s attacking. Across a large segment of society it has become un-American to speak out against wealth. It is even labeled as communist or socialist.

But it is exactly what I’ve been doing on Not-a-Lemming. Especially in my previous post. And I’m no communist or socialist. Most people who know me would call me a conservative. So how can I claim to be a conservative while at the same time bashing the rich in the land of rugged individualism? Can a conservative do that? And please don’t confuse the term ‘Conservative’ with the party ‘Republican’ or the orientation, ‘Right’. They are not now, nor have they ever been congruent even if their intersection is not the empty set. I can do it because I’m not bashing the rich. I am a staunch capitalist and am strongly in favor of innovation and the entrepreneurial spirit.

I got an iPod shuffle for Christmas. Actually I bought it for myself when I was shopping for my kids. It is one of the most amazing little devices I’ve ever seen. I’m no technophobe and have been aware of, and owned, iPods since their inception. But I remember a world before iPods. A world of transistor radios that rarely worked and clunky cassette and CD Walkmans that chewed through batteries like a teenage druggy burning through an inheritance. I now have a tiny device just a little larger than a postage stamp that can deliver hours of crystal clear music. That is innovation! That is legitimate wealth. Kudos to you Mr. Jobs. Live however you like. You’ve earned it, sir. And you’ve given back.

On the other hand, I live in a town supported primarily by government money. If our spigot ever dries up, this place with shrivel like lettuce in Palm Springs. A lot of people in this town start businesses, grow them, sell them, and get rich. Then they walk around with their heads in the air, literally, and puff about their innovation, sacrifice, and entrepreneurial skill. Except they built their businesses entirely on government money. Sure there were some long days writing proposals for government contracts, but for the most part their was no real personal investment, and the seed product of the business was almost always taken (some say stolen) from a competing company when the new business owner quit and took it with him. And these business owners invariably feel they earned it entirely through their own hard work and rarely give any of it back. Choosing rather to spend their windfall of fancy cars, second homes, and glitzy vacations.

Now Mr. Jobs has a pretty nice home, and I’ll wager that he’s got some nice cars too. And maybe even vacations from time to time, but there is a fundamental difference between what he does, and what these tax-suckers do. And now we’ve taken it to an entirely different level. A level which makes government contractors look like Mother Teresa. I’ll say it again as I’ve said it before, $750,000,000,000. And who acted like we were obligated to give it to them? Banks! Banks that took trillions (that’s $1e12 for you geeks out there) of investor money and evaporated it on bad loans in get-rich-quick schemes. They literally held the international monetary system hostage when they adopted an attitude that said, “Okay, don’t give it to us and see what happens.” How dare those bastards! And after losing our money!

This isn’t capitalism. It’s bad socialism. Perhaps even closer to Hitler’s fascism where the government propped up major industries to keep the war going. Yes, it is banks getting the money, but what about the executives that got them into that position? The failed executives. Did they give back their six-figure+ bonuses? Did they lose their mansions and second homes and personal bank accounts? Did their children have to drop out of the Ivy League schools they are attending? Will they be going on vacation this summer? Are their garages still filled with Mercedes and BMWs? Are their pension plans empty?

These people remained rich, and that is wrong. It is wrong because I’m NOT a communist. It is wrong because I’m NOT a socialist. In Soviet Russia party members became fabulously wealthy by diverting public rubles to their own accounts. All it required was a law. In socialist nations, the upper-class administrates public concerns which pay their salary out of the till. The same people who happen to run the government. And now that is America, too. I'm not saying they aren't entitled to it if they have worked for it. I'm just saying they aren't entitled to 14% of the GNP if they haven't worked for it. Especially after it was their poor management and lack of fiscal responsibility that got us into this mess in the first place.

Furthermore, I can think of no greater depressing effect on innovation and entrepreneurship than the bank bailout and the likely auto bailout. It has gazed straight into the eyes of the middle class and said, “fuck you.” I don’t apologize for the expletive. Expletives have their place, and this is it. This isn’t railing against the rich. This is railing against thievery. This is railing against communism and socialism at its worst. What incentive do I have to continue working night after night on actual products I hope to one day sell to actual people, when those who have figured out how to put their hand in the public till and pull out a dollar seem to have such a higher success rate? America was the land of innovation because innovation was rewarded. But how much longer will that be true in this climate? Especially when it is noted that those who actually earned money are far more willing to capitalize others than those who stole it. As the ratio of earners to thieves tips ever more in favor of the thieves, who for some reason feel they deserve their privileged lifestyle, actual seed money will become less, and less available. Innovators will leave for other places with fewer regulation and more favorable populations, and America’s monopoly on innovation will wither.

It is already happening. Europe, as it emerges from the effects of two world wars is gaining momentum. China, momentarily set back by the economic downturn, will regain her feet. And America, with capitol tied up in the hands of thieves, will seem increasingly less attractive to the talented and ambitious. It’s happened before.

So I reject any and all assertions that I am un-American, or communist, or socialist, or even jealous. I am a capitalist American who believes in fair play, equality of opportunity, and reward for innovation. You want to find a communist, go to an investment bank. He’ll be hiding in the closet under a pile of taxpayer money.

Next: Partners in Crime

-Futbol Guru, http://mises.org/Community/blogs/not-a-lemming