The Anti-Capitalists in the Gulch
The traditional story is that farming is everyone's bread and butter. Bankers and speculators produce nothing, but skim their profits from the suffering of others. The Garden of Eden is populated only by a mythical middle class of retail grocers, doctors, lawyers, and plumbers ("engineers"). No one is poor; and no one is rich.
And no one has friends in city hall or Congress - though the streets are, indeed, cleared of snow; and anyone who destroys a skyscraper eventually meets a Navy SEAL team.
The claim is made that in our glory days, the middle class produced the most wealth, but now in our evil times, the middle class is being crushed between the rich and poor. We like that narrative. We never question it. We never define the terms, never identify the individuals in aggregate.
The fact is that the richest 1% produce about 30% of the "wealth" if we measure that only by income. If we understand "wealth" to be capital, then the picture is much different.
"Eighty-seven percent of upper-income Americans -- those making $75,000 or more annually -- own stocks, as do 83% of postgraduates and 73% of college graduates. Sixty-four percent of Republicans hold stocks, compared with half of Democrats and independents. Men are more likely than women to be stock owners. Those aged 50 to 64 are the most likely of any age group to say they have money invested in the stock market." -- http://www.gallup.com/poll/147206/Sto... (And the poll shows that this is these are lowest numbers in in 15 years.)
Now, we can decry the recession. Indeed, I do. But I also know from US economic history - the stuff of numismatics, which is the touchstone of economics - that the so-called "Great Recession" (1873-1896) was a time of great growth, expanding opportunities, new inventions and new technologies: the 1890 census was completed because of punched card tabulators, i.e., the root and rock of computing machinery.
Everyone loves silver dollars, especially those fat-faced Roman ladies from George Morgan. But the Morgan Dollar was inflation money. And it was, indeed, good for gold - if you wanted... which, apparently no one did, in gross violation of Gresham's Wild Conjecture. (http://necessaryfacts.blogspot.com/20...) The fact is that, like now, the US economy continued to "contract" even as more money was pumped into it. But life got better for everyone. The world of 1896 was 23 years cleaner, safer, better fed, better housed, more educated, and entertained. Just like now.
How was that possible?
The fact is that back then, just like now, the richest 1% were just barely capably of making the smallest incremental improvements in financial management and creative investment. Using their influences with governments, they cut their own taxes, creating foundations that funded huge astronomical instruments, and even rockets for exploring the upper atmosphere... as well as hospitals, universities, and libraries...
They did not have to do that. They could have held it all in cash and swum around in it. Henry Ford wanted to. He was incensed to discover that he could not go to a bank and withdraw "his" money ($3 million at that point) in small bills and coins right from the vault. The bank did not have it. They had stocks, bonds, real estate, insurance policies,... Including stock in his firm and those of his competitors, because the market is inscrutable, even for those who like to think they can control it. They know that. So, they hedge their bets.
The commodities markets are driven by producers. Co-operatives of farmers buy and sell long and short futures contracts on the very products they bring to market. It is how they even things out over the calendar year. Meanwhile, about 90% of other investors buy on enthusiasm and sell into their misery. And they do that voluntarily.
Very few of us billions of others actually do that. We do play sports for fun. So, we know why athletes earn what they do. Most of us would rather be in a room full of spiders than to be on an stage in front of an audience. So, we know why movie stars are millionaires. But very few of us actually buy and sell anything, except our own labor -- and most people want to sell it once for life.
Therefore, they call bankers gangsters, and denounce "crony" capitalists for the friends they themselves do not have - even though city hall and the halls of Congress are wide open to any and all.
If you do not want to go yourself, you could hire someone. In this market, you can find any kind of a lobbyist for about $100 per hour, and a good one for about twice that. You can collect that kind of money from a living room full of football fans. But it is easier to condemn the rich.
And no one has friends in city hall or Congress - though the streets are, indeed, cleared of snow; and anyone who destroys a skyscraper eventually meets a Navy SEAL team.
The claim is made that in our glory days, the middle class produced the most wealth, but now in our evil times, the middle class is being crushed between the rich and poor. We like that narrative. We never question it. We never define the terms, never identify the individuals in aggregate.
The fact is that the richest 1% produce about 30% of the "wealth" if we measure that only by income. If we understand "wealth" to be capital, then the picture is much different.
"Eighty-seven percent of upper-income Americans -- those making $75,000 or more annually -- own stocks, as do 83% of postgraduates and 73% of college graduates. Sixty-four percent of Republicans hold stocks, compared with half of Democrats and independents. Men are more likely than women to be stock owners. Those aged 50 to 64 are the most likely of any age group to say they have money invested in the stock market." -- http://www.gallup.com/poll/147206/Sto... (And the poll shows that this is these are lowest numbers in in 15 years.)
Now, we can decry the recession. Indeed, I do. But I also know from US economic history - the stuff of numismatics, which is the touchstone of economics - that the so-called "Great Recession" (1873-1896) was a time of great growth, expanding opportunities, new inventions and new technologies: the 1890 census was completed because of punched card tabulators, i.e., the root and rock of computing machinery.
Everyone loves silver dollars, especially those fat-faced Roman ladies from George Morgan. But the Morgan Dollar was inflation money. And it was, indeed, good for gold - if you wanted... which, apparently no one did, in gross violation of Gresham's Wild Conjecture. (http://necessaryfacts.blogspot.com/20...) The fact is that, like now, the US economy continued to "contract" even as more money was pumped into it. But life got better for everyone. The world of 1896 was 23 years cleaner, safer, better fed, better housed, more educated, and entertained. Just like now.
How was that possible?
The fact is that back then, just like now, the richest 1% were just barely capably of making the smallest incremental improvements in financial management and creative investment. Using their influences with governments, they cut their own taxes, creating foundations that funded huge astronomical instruments, and even rockets for exploring the upper atmosphere... as well as hospitals, universities, and libraries...
They did not have to do that. They could have held it all in cash and swum around in it. Henry Ford wanted to. He was incensed to discover that he could not go to a bank and withdraw "his" money ($3 million at that point) in small bills and coins right from the vault. The bank did not have it. They had stocks, bonds, real estate, insurance policies,... Including stock in his firm and those of his competitors, because the market is inscrutable, even for those who like to think they can control it. They know that. So, they hedge their bets.
The commodities markets are driven by producers. Co-operatives of farmers buy and sell long and short futures contracts on the very products they bring to market. It is how they even things out over the calendar year. Meanwhile, about 90% of other investors buy on enthusiasm and sell into their misery. And they do that voluntarily.
Very few of us billions of others actually do that. We do play sports for fun. So, we know why athletes earn what they do. Most of us would rather be in a room full of spiders than to be on an stage in front of an audience. So, we know why movie stars are millionaires. But very few of us actually buy and sell anything, except our own labor -- and most people want to sell it once for life.
Therefore, they call bankers gangsters, and denounce "crony" capitalists for the friends they themselves do not have - even though city hall and the halls of Congress are wide open to any and all.
If you do not want to go yourself, you could hire someone. In this market, you can find any kind of a lobbyist for about $100 per hour, and a good one for about twice that. You can collect that kind of money from a living room full of football fans. But it is easier to condemn the rich.
Criticism of looters is good. Prosecution of looters is better.
More relish from a master of relish.
When the Revolution was over and the Federal government was formed - in part to buy up that paper - the final tally was that about half of the former colonies had managed their finances well; the others did not.
The Man Who Found the Money: John Stewart Kennedy and the financing of the western railroads by Saul Engelbourg and Leonard Bushkoff (Michigan State University Press, 1996) tells of cyclic issuing of stocks and bonds, bankruptcies, reorganizations, state-ordered or court-ordered receiverships, all for the creation of the greatest railroad network in the world. They did not do it with gold bars and silver coins. Entrepreneurship is risk, by definition. And the laws had to be invented because no precedents existed. Most of our law about intellectual property still rests on medieval concepts about farming. Industrialization was a social revolution.
... (promoting products to customers that you are shorting and all the while pretending you are protecting the widows and orphans) ...
I have no idea what you are attempting to say there. Do you refer to the shorting of products, or to the shorting of customers?
Shorting your own products is perfectly acceptable. Farmers do it all the time when they put and call long and short on their own inventories. That is how the futures markets work. It is what they were made for. Otherwise you have everything worth nothing at harvest and unavailable at any price ten months later. I agree that shorting the customers is bad: it is wrong to not deliver what you promise.
The votes given to the comment (at 6 now) show that it is easy to feel consonant with the sentiment: government intervention in the economy is bad. Your heart is in the right place, I will grant that. But the actual application of those feelings has played out quite differently in history. it is freezing outside right now. My home is at 70F and I am about to make a cup of coffee. All the gold in Tenochtitlan, all the silver in Cuzco could not have achieved that. It was done with paper promises, legally valid in government courts.
I admit that some of them are very clever, but clever thieves are still just thieves.
No one can be trusted to create the only legal tender of the US (and the world's primary currency) from nothing and to charge interest and fees on that free "money" without limits. Not government and not a cartel of businessmen. Such concentrated power gives the cartel the ability to destroy nations and productive enterprises if they do not do as they are "advised." The "anomaly" that you observe is a direct result of legislation created by the banking cartel to remove the regulations that previously prevented the "anomaly" from occurring.
https://en.wikipedia.org/wiki/Gramm–L...
I favor free markets over statist created cartels, specifically the banking cartel created in 1913 by government agents corrupted by bankers.
If you bothered to read and understand the work published on the topic (other than banking cartel propaganda), you wouldn't ask such irrational questions.
So what is your financial interest in defending the banker cartel?
“At the time we started Genentech, there was no such thing as genetic engineering. The risks were enormous.”
A quarter million invested in Genentech in 1976 became $47billion when sold to La Roche in 2009. Five million invested in Intel became $90 million. $1.4 million invested in Tandem Computers in 1974 became $3 billion when Compaq bought the company in 1997.
I was told by a guy at Salomon Brothers, "We’ve heard the pitch, but you did not go to Harvard Business School.” -- Don Valentine, founder of Sequoia Capital, investors in Apple, Cisco, Oracle, Electronic Arts and LSI Logic.
http://necessaryfacts.blogspot.com/20...
"Bob Swanson was 29 when he provided the money for Prof. Herbert Boyer to start Genentech. Like all overnight successes, the real story is more complicated, with deep roots. Bright, accomplished, and motivated, Swanson had obvious potential – and a string of failures to show for it. "
http://necessaryfacts.blogspot.com/20...
"Our last contacts were a trio from the Austin Technology Incubutor: Mike A. Sandoval of the IC2 Institute, Dr. Lydia V. McClure, an Accenture Venture Partner with Texas Venture Labs at the McCombs School of Business, and Michael R. Pierce also an Accenture Venture Partner. Earlier this year, the ATI announced the launch of two companies, Savara Pharmaceuticals, and Terapio, which markets the RPLI76 protein as a countermeasure to radiation exposure and chemical threats. About 30 companies are now in the incubator, including Alafair Bioscience, Integrated Medical Systems, Inc., Admittance Technologies, and Xeris which makes ultra-low volume biopharmaceuticals in auto-injection pens."
http://necessaryfacts.blogspot.com/20...
It is not all one-way streets:
Dr. Thomas Kodadek closed by summarizing his experiences. “Work on important projects, not widgets. Incubate for as long as possible in the university before taking your work to the market. Angel investors are better than venture capitalists. Focus early on the people you bring in to start the organization.”
http://necessaryfacts.blogspot.com/20...
There's a lot of money out there. And, as right above, many paths to success. That is why the Austrians continue to argue "what is entrepreneurship?" No formula exists.
The International Banking Conspiracy is just another boys' club. Adam Smith said that rarely does a group of tradesmen gather for dinner than the conversation turns to methods of restricting the markets for their own benefit. Once you get rid of the "banksters" on whom will you turn next?
Go read the book before you offer responses that do not address the issue.
You do respond with relish.
Debt is the seed of civilization. Read about how numeracy and literacy were both invented through the use of clay tokens that represented promises to pay in the future. Keywords: Denise Schmandt-Besserat; Sumerian clay tokens; the origins of writing.
Read the book Creature from Jekyll Island.
Either you do not understand this topic or you have a financial interest in defending the looters.
If you can refuse it, it has no compulsion.
"The pertinent portion of law that applies to your question is the Coinage Act of 1965, specifically Section 31 U.S.C. 5103, entitled "Legal tender," which states: "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues."
This statute means that all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise. For example, a bus line may prohibit payment of fares in pennies or dollar bills. In addition, movie theaters, convenience stores and gas stations may refuse to accept large denomination currency (usually notes above $20) as a matter of policy." -- https://www.treasury.gov/resource-cen...
Mike, you are illustrating how you perceive that the world works. Come right down to it, you are a pragmatist.
FF, you are an objectivist moralist. You were born too soon (or too late) for this world. Like in Atlas, I love to adhere to your principles, but at the same time must deal with the real world, which is Mike's world.
Can I survive in Mike's world while using FF's morality? I try, but I fall off the wagon now and then. I'm glad I'm retired.
So..Here are my questions for each of you:
Mike, you obviously are a Rand fan. How do you reconcile yourself with Objectivism?
FF: Can you strictly adhere to the basic principles of Objectivism and still prosper in the world as it is today?
Gulch People really want to know.
It took me a while, working with my son, but I did manage to get there. He showed me his example, so I had to return mine. We fed off each other and learned from one another.
My cynicism remains!
It's more than possible to maintain Objectivist principles and live a very comfortable life. You'll probably have to comply with some regulations and licensing that shouldn't exist, but obeying the law isn't un-Objectivist, even stupid ones. At some level of success, however, you're likely to run into resistance that was created by government, likely because of "encouragement" from your competitors. At this point honoring Objectivism may be become very difficult because you will have to participate in a very non-Objectivist system and seek special deals, favoritism or even outright alms from your government servants.
In those cases, however, you only have constrained choices. Without real freedom we may consider it perfectly reasonable NOT to consider seeking special deals, favoritism or alms from government servants as abandoning Objectivist principles. If you believe that strict adherence to Objectivist principles would require a person to "go on strike" instead of dealing, that's OK too.
Particularly at what you enjoy , or/and love doing.
This is one of the "juiciest" discussions I've participated in the Gulch. A lot to absorb, a lot of insight to achieve.My brain might need a higher capacity processor to get it all.
Here in Connecticut we have a dairy co-op called The Farmer's Cow. They appeared probably 20+ years ago and made a big splash because their milk cartons were so darned cute with illustrations of Holstein cows. Then I read a feature article about how they came to be.
- A bunch of independent CT dairy farmers wanted to create a co-op to maximize efficiency for marketing and milk processing. Fair enough, sounds like a good idea. They determined that CT had a burning need for local dairy. Hogwash, we're loaded with local dairy, successful companies such as Garelick, Moser farms, Mountain Dairy and Guida. All companies that had made it on their own over the last 150 years.
- Co-op applies for grants to develop a marketing campaign, which results in some effing cute milk cartons that people really love. They hype the local dairy story like they're the only ones and thank Zeus that the CT dairy farm won't go extinct. It was a lengthy, sickening article describing how a bunch of farmers forced CT taxpayers to create subsidized competition with existing local dairy farms! Nobody seemed to notice that state government was playing favorites while touting the creation of something that was already abundant (local dairy farms). And not only did they create their marketing materials and collective identity by taxing the citizenry (and their competitors) but they won awards for their brilliant campaign!
- The initial grant wasn't the only one but I can't remember any more details.
I was so mad I swore never to buy a single Farmer's Cow product, and I haven't, and every time I get the opportunity I spread the sickening story out in front of all who will listen.
I'm willing to permit you to simply obey all existing laws and comply with licensure and regulation and still retain your Objectivist principles unsullied (even though a hardcore might insist that striking is required). You're not allowed to use the system to manipulate any law or regulation to the detriment of a competitor or potential competitor. And you're not allowed to sue anyone for intellectual infringement, only tangible fraud or theft.
If it can't be done as a thought experiment then don't bother; I agree that it's not worth a lot of research time, just a fun discussion. Assumption and speculation are allowed and encouraged but it would be nice to state them!
http://www.greentechmedia.com/article...
How about we make it simple and decide in how many more of these four year fiascos should they be given...one ......more.....chance. I'm thinking the amount it takes to be not voting but being told who the new Fuhrer of the Socialist Party is going to be. Your idea has failed miserably in every one of these charades and done nothing to effect change in the desired direction. But .....while it's still available flushijng your vote to the left is still a somewhat limited but available freedom of choice item.
It's also your responsbility.
Please examine Cruz's resume.
Not perfect, but a possibility. If he gets in, will he be corrupted like all the rest? Who knows? Michael, I'm not being a Pollyanna and I understand full well Timelord and your attitudes and I'm not really disagreeing with you very much. Everything you say is true, but I'm holding out for a tiny thread that says, "not quite yet."
Of the current candidates who might somehow bribe or extort their way to an endorsement, It's challenging to decide who will destroy the country fastest.
- Hillary is smart, extremely well connected, knows the game inside and out, is significantly more vicious and dangerous than a Tazmanian devil, lives for power and money, has no fixed principles so she can't be counted on to support or oppose any law or policy, is incapable of telling the truth and is outright evil.
- Bernie Sanders is a deluded idealist whose ideals are immoral, I don't think he's that well connected in DC, he does know the game but doesn't seem to play it well, doesn't seem to be vicious (but I don't trust that impression), doesn't live for power and money at the level of most politicians, has very definite principles that he'll stick to and roughly 25% of them likely agree with the libertarian position - while the other 50 - 75% are diametrically opposed, always tells what he believes is the truth (deluded, remember?), and is evil on the scale of a minor demon.
- The Donald Trump confuses me. I don't watch reality TV because it's not reality and I don't like what it actually is, I can't bear to watch any of these not-debates because they reduce me to screaming at the TV in anger and disbelief (both major parties), so that means all I know about him is from the headlines and background noise. I love the chaos and confusion that he sows by saying what he means, even when I disagree with him, which is a lot. I don't get the impression that he's evil like the Clintons, he might not have murdered anyone. I'd almost like to see him win just to watch Progressives' heads explode, except what came next probably wouldn't be worth it. He seems to be a pragmatist so his principles are hard to predict.
- Ted Cruz occasionally says something I agree with and I appreciate his Trump-lite candor. He actually said, right before the Iowa caucuses, that he doesn't believe in subsidies of any kind for anyone at all. Alright, hoorah! But then god! He's certifiably insane with regard to his mystical beliefs and he insists that everyone should follow his rules. He believes, against overwhelming evidence (maybe not conclusive, who knows) that homosexuality is a choice. Go ahead and debate DNA vs environmental causes vs at least 5 other serious theories with supporting evidence - and have fun at it. But they all agree that it's not a choice and it's extremely likely to be a scientific fact that sexual orientation is imposed on a person before they are born, regardless of the actual cause. But Ted refuses to let scientific proof ruin a perfectly good religious belief no matter how badly it's been disproved. (e.g. there is absolutely Zero archaeological evidence that the Jews were ever enslaved in Egypt or crossed the Red Sea or wandered in the desert.) {Ted must really touch a nerve, look at how I rambled on about him!} By gum, if some dude wrote it in the bible then it must be true! Even the bit about unicorns! Even outside of religion he's said some pretty stupid stuff, unforgivably stupid. He's also a war monger. I submit that he's evil but nowhere near the same category as Hillary.
So that's it, four truly horrible choices. Hillary is the worst because she will be able to spread death and destruction from day one. Between Uncle Bernie Greenjeans, The Donald Blowhard Trump and Ted I didn't go to a school on this plane of existence Cruz, we're TOTALLY EFFED!
Likewise from FFA so +1.
Democratic collectivist systems favor those who can talk well, a skill not related to production. Yes city hall is open to all. Those who want more individualism and less collectivism want to reduce the power of city hall so we do not have to hire lobbyists to live and to produce. Constrain city hall to only doing the jobs it should, border protection, maybe clearing snow and such.
Why was Spain made poorer by every shipload of gold and silver, as you comment below? Was that true of every shipload of copper, or seed corn? Was Britain more productive, and Spain less so, because Spain was good only at finding gold and compelling people to mine it for them and Britain was good at technological successes like steam engines and factories, or was it entirely that Britain debased its coinage more aggressively? This does not square with my understanding that Britain was on some form of the gold standard from the time of Isaac Newton in 1663 until 1931, with a brief suspension during WWI, even if they did issue paper notes. Did the Enlightenment open up Britain to middle-class endeavours while leaving the upper class predominantly bound to the land, leading to the great economic expansion of the 19th century, on both sides of the Atlantic?
If your point is that wealth is reinvested and therefore, to quote Hello Dolly, is like manure, spread around, encouraging young things to grow, you get a hearty thumbs up from me. If your additional point is that most investors, especially small investors, are saps, buying on enthusiasm and selling into their misery, amen to that. [When your gardener or the cabby says he's buying a $500K house with nothing down, it's a hint that the market is a teensy bit over the top....]
It is indeed easier to condemn the rich, particularly if you've never done the heavy lifting to get anywhere close to their exalted realm. I love the story about the man who accosted one of the Gilded Age moguls [JD Rockefeller?] and demanded "his share" of said mogul's fortune. He was handed a dime.
I don't like the revolving doors between Wall Street, K Street, and the White House, with the Fed keeping interests rates lower than low, impoverishing savers and seniors, while banks reel in money hand over fist over hand over fist. But ultimately the power is, or was at one point, with the people who voted in legislators who started treating other people's money as if it were their own, to engage in philanthropy with extorted tax dollars and staying in power [excuse me, in office] by robbing Peter to buy votes from Paul.
p.s. Hope to see you back at Meetup sometime soon.
The reason that looting the Americas made Spain poor was that it took more resources to get the gold and silver than they bought on the markets in Europe. In fact, Europe experienced precious metal inflation, which compounded the problem. While "thaler" coins were known from European mines in the 1500s, before the Spanish Dollar, the common coin was a "groat" of 4 or 6 pennyweights, usually debased. Silver was hard to come by. Small change was a problem. Thus silver pennies were cut on the crosses to make farthings. Then came all that stuff from America. It was no different than Weimar paper, really.
What gave it value - the silver more than the gold - was that Chinese merchants wanted it, and for it, would sell tea, rice, silk, and all the rest to Europeans.
What made Britain successful was the small size of its government. They beheaded two kings. Parliament hired the new ones - I guess they sent their "headhunters" looking for a new CEO!
The Bill of Rights of 1689 let people own firearms, and otherwise limited the government (the king, actually; not so much Parliament).
Although the Church of England was the lawful church, they stopped burning people at the stake over religion. That created or allowed an intellectual diversity.
But in a few decades, England's coinage was again in disarray, despite Newton's 30-year tenure at the Mint. The wars did it, the colonial wars, the Napoleonic Wars. Losing our Revolution. It all bankrupted their nation. When they got back on their feet, they went to a gold standard.
BTW - in the meantime, merchants created a splendid array of tokens. The story of the Birmingham Button Makers is told by free market economist George Selgin.
The movie "The Big Short" shows how widespread the financial corruption was (and still is). The financial disaster of 2008 and beyond originated with irrational government policies, but it was implemented in all its glory through massive fraud perpetrated by thousands of willing participants in the private sector.
Everyone thinks that lobbyists can buy votes with money. Money is good stuff. No one refuses it. But once I take your money, if what do with it gets me unelected, then we are both out of business.
In 1992, I ran for Congress as a Libertarian. The incumbent sat on the House Transportation Committee. He brought lots of highway construction contracts to the district. Detroit is the motor city. Michigan has great roads. Our county certainly did thanks to him. Also appreciative were the construction companies, and their employees, and the families of those people. He got re-elected, of course. Do you want to do without good roads?
I mean, sure, I want them all privatized. I think that without the government roads, we would have personal airships ... maybe even teleporters by now. But the system works the way it does for many reasons. Among those are the common sense advice based on fact offered by lobbyists to elected representatives who seek to improve their status by improving their districts.
You can rail against the system. Can you write a Constitution to prevent it?
See my two essays on Unlimited Constitutional Government.
http://necessaryfacts.blogspot.com/20...
and
http://necessaryfacts.blogspot.com/20...
So why are we thinking of re-electing them? Do we really prefer living without a the Bill of Rights or arrest by mere suspicion instead of probable cause? (Now enlarged to add suspicion of support of....)
Fair boggles the mind. 85% voted for it. Of the elected officials.
An intelligent lobbyist will not waste his or her money or influence trying to convince a legislator to do something that will get him or her unelected. But that lobbyist’s influence and campaign contributions can wield enormous influence on issues where the legislator’s constituents either don’t care that much or are evenly split. A huge majority of a legislator’s agenda is taken up with such relatively mundane issues, and it is on these issues that legislators are most susceptible to the money and influence of lobbyists.
It's self evident that they at least recently have caused our biggest problems along with the creatures in government.
We forget, in the face of it all, that these functions done well, are necessary in a successful capitalistic system.
Alan Greenspan wrote "The Assault on Integrity" for Capitalism: the Unknown Ideal edited by Ayn Rand, with essays by Ayn Rand and others. Capitalism depends on integrity, which you fail to see in the people you condemn.
I'm confused about your positive attitude towards store owners vs your disdain for brokers. The only difference is that a store owner takes on additional risk by assuming ownership of a product that may or may not sell quickly - or at all. He has cost of goods, overhead, carrying costs, lost opportunity costs, but I don't see how he creates any value at all that a broker doesn't create. In fact, using a broker rather than buy/hold/resell should result in lower prices to the buyer because the broker doesn't have overhead/carrying/opportunity costs that have to be marked up and passed on.
When it comes to stockbrokers, there's no difference between him and a grocer; the fact that it's an intangible good doesn't matter. A corporation generally only benefits from the stock market when it issues new shares. (Let's ignore all the crazy details of issuing equity and how investment banks are involved, it's an unnecessary distraction.)
ABCWidget issues stock and I buy it from them. They get the capital they need and I get nothing - unless they pay a dividend or the value of the company increases. If I require income I should have bought bonds instead. If I want my capitol back the only way I can get it is to find a buyer for my shares. If I'm lucky they're worth more than I paid. Without the stock broker I'd have no idea who I'd be able to sell 500 shares of ABCWidget to. He is absolutely adding value and I don't begrudge him the commission. Without him my capital is tied up at a time I've decided I have a better use for it.
It's sad that I can't remember the proper definition of wealth, so I'll ask this: Who creates wealth?
- You said farmers. They take some kind of stock (plant or animal), grow it larger adding labor and nutrition, and then sell the more valuable end product.
- How about ABCWidgets? Who is it there that's producing the wealth, the owner, the employees, the investors?
- How about at Microsoft, where they don't produce things you can actually touch. The take skilled thought and turn it into software that (hopefully) benefits the world. At what point in the process and by whom was the wealth created?
- Is there wealth created when groundskeepers produce optimal golfing conditions? When an author writes a book? When a mechanic changes your oil and rotates your tires?
The problem with that is the equal and opposite claim of socialists that the USSR (China, Sweden, Cuba, take your pick, or take them all) is not "really" socialism, but "state capitalism." True socialism has never existed because it was not allowed by the capitalists. Lenin was in the employ of Wall Street. That is the Myth of Jekyll Island.
The writings of American Marxist theoretician Daniel De Leon are the basis for the Socialist Labor Party. They were opposed to the Bolsheviks.
Of course, we lump them all together, socialist-this, socialist-that, fascists or syndicalists left or right,... Just as they lump all of us together: corporatists, banksters, Austrians, Chicagoans, Keynesians, conservatives, libertarians, Objectivists...
Some libertarians dislike the word "capitalism" because they claim that it was invented by Karl Marx. They claim, also, that "capital-ism" is the control of society by those who hold capital. They offer free enterprise or personal enterprise or free market or open market, to make it clear that they do not want society to be controlled by anyone.
Similarly, our information age, as a consequence of the industrial era was possible only because of the rationalism, empiricism, humanism, and secularism of the Enlightenment. But it was not a "pure" Enlightenment because it had elements of religion in it.
And this is not a "pure" information age because we have failing schools, ignorant masses watching "reality" television ...
Calls for perfection are a fallacy in debate.
That is the specific problem with the topic you posted, Mike.
First, you are lumping together people that loot from producers with the real producers.
Then you lump together people who hate capitalist producers (e.g., Bill Clinton hates Hank Rearden) with people who love producers, but hate people who manipulate government to loot from producers, (e.g., banksters like Goldman Sachs, Bank of America, Morgan Chase, et al.)
The distinction is perfectly clear, but you don't acknowledge it. There is no reason in your argument. Cui Bono?
Who are really the richest 1%? They are those who's labor capital (sometimes represented by dollars) is the greatest. This will always be those whose ideas can spur industry and encourage the labor of others to work in parallel. It enables the entire system to grow. These are the elite among the producers.
There are actually two fundamental problems with government getting involved in the market. #1 is that the government must remove from the economy (taxation) what it puts back in, and there will always be inefficiency in that removal process that does not exist in a free market. #2 is that all the government is really doing is picking winners and losers. For every winner they pick for a government project, there is a loser as per opportunity costs.
A thing is valuable to you for its marginal utility to you.
The labor theory of value is easily contradicted by digging a hole and filling it back up.
Intellectualism is a kind of labor. Whether it is productive or not depends on much else. Some ideas lie dormant for years. The square root of minus one is an example of that. For millennia, its very existence was considered nonsense. Then it was admitted to be an "imaginary" number. Then, it was needed for describing alternating current and lighting up our cities.
Since the mythic age of Greece, a "chimera" has been an impossible animal. Within a century, we may well see lions and horses with wings. Today, here and now, the word "chimera" is a concept in genetic engineering. The fact that a marrow transplant can change your blood type is "chimeric."
The labor theory of value is easily contradicted by digging a hole and filling it back up. "
You contradict yourself right there. I can find utility in the process of work where you do not. It is not up to you to determine what qualifies as utility for me.
Farmers dig up holes and fill them back in all the time. It's called plowing. What they are in fact doing is loosening up the soil to increase its fertility by making it easier for a plant's roots to take hold. Does that not produce utility?
I can dig a hole and fill it back in with a fence post. Does that action have no utility?
I can even dig a hole and fill it right back in with the very dirt I pulled out of the hole. What have I gained? The exercise of my body and the affirmation that I can in fact perform physical labor. Let's say that I am recovering from cancer and this is one method of rehabilitation and improving my stamina. Would you say it has no utility?
Now you may argue that it is not efficient, but there again, it is because you see your goal where I see mine. So if you were trying to persuade me that Smith is incorrect, you're going to have to present a different argument, because this one isn't in the least bit persuasive.
For all the labor put into them, if they have no marginal utility for you, they have no value for you. Marginal utility for you, not labor invested, is the source of value.
"How much will you pay me to go into my yard, and dig a hole, and then fill it up or maybe not?"
The issue is not whether or not you think there is utility in the matter, but whether I do. You may very well evaluate such an activity as being of no value and that you would not pay someone to do it. That is completely within your right. You have zero right to tell me, however, how I should valuate such a project. You may be willing to pay $50 million for a yacht on which to sail the ocean and enjoy yourself. Given the same $50 million, I may choose instead for a private jet. Is one of us right and the other wrong?
Government consists mostly of legalized theft. For reasons having to do with the public good problem of economics, most lobbyists (and bribes) are going to be paid by people who want this theft redirected to benefit themselves, not abolished or even reduced; and those actions are rights violations even when they don't increase the total amount of theft (and they usually do).
Furthermore, bankers in particular steal in many ways, and would steal even if the government allowed more people to enter that industry and compete with them. One way is that they make loans designed to force borrowers to eventually default. It happened to a friend of mine -- he had never missed a house payment, but when the value of his house fell in a recession, the bank decided they wouldn't let him refi when the balloon payment came due. In the long term it is perfectly predictable that this sort of thing will happen -- business cycles exist; therefore writing that type of loan without agreeing to refinance it indefinitely is fraud. But so far the courts let banksters get away with that.
No. Mike, you're full of BS.
You, not surprisingly, take the lower interest rate/lower monthly payment plan with a balloon payment. At the end of five years, you probably still owe $75,000 out of the original $80,000 but in the interim the value of the house has declined to $60,000. Please explain to me why I was guilty of fraud to write a mortgage with a balloon payment where I refused to refinance indefinitely? Much can change in 5 years. You could be unemployed. You could have allowed the house to deteriorate. You could have made it a rental and allowed the tenants to trash the house. We could be in the trough of a business cycle. That last is not your fault, but neither is it my fault. Had you asked if I would refinance the loan indefinitely, even under any of those scenarios, you know and I know that the answer would have been No {and what where you smoking when you asked that question, anyway}.
Any contract is a delicate dance between what you want and what I want, what you are willing to give and what I want to take, and vice versa. Particularly in states where home loans are non recourse -- that is, where the bank's only option is to reclaim the house and try to make itself whole on the mortgage, and cannot pursue the borrower for the deficiency between the outstanding balance on the loan and what is realized in the foreclosure -- the banks need to do all that they can to ensure that the value of the asset exceeds, by a comfortable margin, the outstanding balance on the loan.
The solution you propose -- to mandate that balloon-repayment loans are guaranteed to be renewable, indefinitely, would have at least two certain results. First, such loans would become almost impossible to obtain, and your friend would have had no alternative to a fixed-term standard 30-year mortgage at a much higher monthly payment -- which might have priced your friend out of the market and could have been the better solution for him, not that he would have been happy when he wanted to buy a house. Second, mortgage rates would rise across the board, for all borrowers, to compensate for the increased risk on those indefinitely renewing loans.
If your response is that you are not proposing a government mandate, but rather only that the original loan documents were fraudulent because they did not include, as the bank's standard loan offering, an indefinite renewal provision, I would reply that the bank is in business to make money for its owners, and such a provision is risky and therefore inadvisable. Any bank that offered those loans would become very popular for the short period of time before it went out of business, buried under the avalanche of people who need indefinitely-renewing loans because they trash their houses and buy at the top of the market.
I suppose it's like voting. You have the privilege of voting for their choices. No matter which choice you are only rubber stamping 'feel good' baskets of no consequence to convince yourself you had 'choice.' Had they just announced the winner and be done with it the result would be the same.
Of course, I don't expect bankers to actually commit to refinance forever. I expect that enforcement of the rule would mean they stop offering loans that end in balloon payments. But if bank managers were personally liable for bank failures, as they ought to be (and were in Scotland in Adam Smith's time), they would not want to write loans that risky anyway.
It's not just bankers that know that periodic recessions will happen, we ALL know that periodic recessions will happen. And if we're not old enough or savvy enough to know that, well, we have no business taking out mortgages. Caveat emptor. And let the games begin.
But the barber could buy soap and when the bill arrived pay it later -- so much later that 2-10-EOM was printed on invoices: "Take a 2% discount if you pay by the 10th of the month, or else pay it all by the end of the month." So, how come bankers do not get that by law? Because so many laws are based on anti-business prejudices inherited from the Middle Ages and previous times.
Shariah Law of the Muslims forbids compound interest. They did not get from their Martian overlords: they got it from Moses and found it validated in Aristotle. The Greeks considered it "unnatural" to make money on money. One reason that Julius Caesar reformed the calendar was to take it out of the hands of corruptible priests who were bribed to put off the end of the month, the time at which loans were due.
When it comes to the bourgeois virtues of trade and commerce, we have a long way to go to get them codified into law and understood by the common culture.
(I don't know why you got a Zero, aside from being wrong. Your ideas are found within the mainstream of libertarian economics. Wrong though they are, they are worth discussing in order to get to the truth. So, I plussed you back to One.)
MEM replied: "Murray Rothbard and others would agree with your that any fractional reserve banking is fraud."
FFA rejoined: "Mike, I said nothing about fraud at all. i did not say fractional reserve banking is the sole problem."
You surely did. Moreover, my reply was quite clear: the barber writes himself an extension of credit - "creating money" - every time he pays an invoice by mail rather than paying cash on the barrelhead. That is the part of the essential nature of capitalism: credit exists because good living makes us optimistic. Capitalism brought that better standard of living about.
Even more, Salmon P. Chase created a gold-backed nation-wide system of independent banks, limited by law to lending out no more than 90% of their reserves - and some still went bankrupt, in 1903 a lot of them... But when barbers and pharmacists and piano teachers can't pay their bills, it is a different matter entirely. In fact, some people blame the bankers for that, also.
Again you didn't read and understand.
You continue to make off topic arguments and insisting that I am wrong without reading the source material I referred to and without even comprehending the simple statements I post.
Fractional reserve banking is much older than the federal reserve, but those instances were significantly different than the banking cartel legislation written by banking cartel members. Prior to that legislation, each bank had to maintain confidence in each bank's non-legal tender IOU's (i.e.,the credit created by the bank.) Banks had to compete with other lenders who also had to maintain confidence in their own IOU's. Customers who accepted the banks IOUs had to believe in the worthiness of the bank that issued them. If the bank made significant bad loans the reputation and the value of the bank's IOUs would degrade and not be acceptable for payments. In the free market with competition between lenders, this limited the volume of IOUs that the banks could issue, limited their potential profits, and placed the owners at risk and responsible for their poor decisions. The federal reserve act places that risk on the taxpayers and eliminates competition from non cartel members, destroying free market banking and giving immense unearned counter-productive power to the cartel.
Banknote reporters (competing publications of various reliability) told bankers and the public which notes were good and which were suspect. They also informed about known counterfeits.
While it is true that many banks actually were legitimate businesses, it is also true that many were fraudulent from the get-go and some were so with state charters supposedly attesting to their credit worthiness. At least one of the banknote reporters was accused of being behind counterfeiting operations. Counterfeiting was so prevalent that in some cases today, the only evidence we have of a bank is the fake notes, not the genuine ones. That was possible expressly because of the widely de-centralized nature of banking.
I wrote two articles about "Levi Loomis and the Bank of Singapore." The first research was later turned into a graphic short story. I can put it up on my blog. Singapore was a wildcat town and bank in Michigan. They attempted to defraud Levi Loomis, and in fact, the entire town, as Loomis eventually held most of the notes issued in Singapore. Loomis finally met the bank's clerk by sticking a gun under his nose and taking him to a magistrate. The wild and unbridled nature of 19th century banking is what led to the gradual creation of the central banking system.
The national banking system created by Salmon P. Chase was backed in gold. Banks were limited to issuing 90% of their assets as bank notes. And still, some failed.
I can direct you to actual Clearinghouse Scrip created by banks in the so-called "Panic of 1907." And I can show you hundreds upon hundreds of examples of Depression Scrip created by local authorities when President Roosevelt closed the banks.
The history of money is richer than the anti-bank populists would have you believe.
Read the Creature From Jekyll Island.
Stop repeating irrelevant data in your irrational defense of the looter banking cartel.
By pivoting your argument to fractional reserve lending, you are changing the argument from one directed to the identifiable practice of loans with ballon payments to one that indicts the entire banking system, from largest to smallest. Although MikeMarotta characterizes the thrust of your argument as macro economic, the text of your argument is wholly micro -- that the terms of the bank loans are fraudulent, and that those terms are fraudulent whether the loan is from Wells Fargo or the Frontier Bank of Texas. Those are two different arguments, and they still do not explain why, even in a system of fractional reserve lending, a loan practice is "fraudulent" when it refuses to renew loans indefinitely, even when the value of the asset securing the loan has declined in value. "Fraud" is a clear concept: it is a deception deliberately practiced in order to secure unfair or unlawful gain. Was your friend prevented from reading the loan documents that stated that there was a balloon payment? Did the bank guarantee that the value of his collateral could only go up, not down? If so, then he was defrauded. If he merely thought that he had a good deal on the interest rate [or that he could flip the house before the balloon payment came due] he was not defrauded, he was foolish.
See my reply to cranedragon below. (https://www.galtsgulchonline.com/post...)
But most (all?) recessions are preceded by bubbles, and those take a few years to happen and can be spotted if you know what to look for. I got out ot the stock market 3 years before the dot-com bust of 1999 because I knew it was coming. Of course I panicked too soon and lost some potential profit, but I'd rather be safe than story.
One of the biggest signs of a coming crash is when brokers start advising people, "The rules of the market have changes. There are no business cycles any more."
Still there is another side to this. Objectivism does not target the poor or the rich, rather it targets those who collect more reward than value they create. This certainly can be a person working for $12/hour and putting in a $5/hour job. It can also be a banker who figures out a way to sell poor value real estate holdings as high value investments. In either case I am concerned because the person who creates wealth (money) without creating a commensurate value is picking my pocket. One of the chief drivers of inflation is the expansion of the money within a society without a corresponding increase in value. Inflation means to me that the money I have, and the money I make has less value. Ergo when someone collects more money than value they are creating, it is paid for by everyone else in society.
It's especially bad if the salvation comes in the form of destruction of everything to eliminate decadence, leaving only the righteous Utnapishtims remaining to create a better world.
The flood myth is common, but no one seems to find this one to be a much better world after all. We still have no shortage of sin and injustice and dishonoring of the gods to go around. Plato's version from Hesiod is that we devolved from the Golden Age to the Iron Age. Perhaps the Objectivist version of Hesiod is that 19th century capitalism was "the Age of Heroes."
Compared to what went before, it certainly was astounding. That granted, though, if we brought forward from then to now any great thinker or achiever, they would be pleasingly amazed, not dismayed. It would, indeed, be like Edward Bellamy's Looking Backward. We still have problems, but among them is that fact that Americans spend more on healthcare than Europeans and do not have much more to show for it. We have one case of Ebola and everyone goes nuts. In the year 1918, over 100,000 Americans died of influenza. That was normal.
My thought is this wouldn't happen in the absence of force. If a pharmacy charges more for a bottle of water than another vendor but I pay it willingly for convenience, they're giving me the same value as I'm giving them. If one of the products they sell is medication that requires a license, prescription, etc, that forbids a willing buyer and willing seller from coming together under threat of force, that's where someone collects more value than they provided. Initiating force is the cause.
Didn't do much for wealth re-distribution when the wealth was 2/3rds value and immediately went for higher priced necessities. Looks like everyone got forked on that deal and it isn't over yet? What's the debt service on 19 trillion? What's that same figure subtracted from GDP to find NDP?
If you find someone picking your pocket it's either a hand marked I'm from the Government We're hear to help you or it's from some very very large banks, BA leading the pack, marked I was sent by the government to help you.
Still want to vote them back into office?
Whose paying the invevitable freight on this one? Grandpa and Grandma up front followed close by what WAS your retirement account. TANSTAAFL and their going for another round. You might start collecting hot dog recipes.
I believe that without the War Between the States and the consequential creation of the national banking system, banking would have sorted itself out, as did the railroads and telegraphs and, for that matter, medical colleges, as well as tailors and machinists, and everyone else.
The root cause of the federal legislation was as much a popular demand from below as any kind of conspiracy from above. Agreed, like the railroads, the banks cartelized under the federal government. Not only did they not resist, they sought it. But they did not dream it up on their own. And, it took the actions of a representative Congress to make it happen. And - more to the point - it had started a generation earlier at the state level.
I point out also, that even in Texas, the city of Austin runs the electrical power and water distribution system. (Houston does not. There you have enough choices that you need a website to sort them out.) The calls for government controls come from many sources. Anyone with something to gain will ally with someone else with some other agenda if they can agree on the controls. But they cannot get it done unless "everyone else" (or most of us) go along one way or another, either actively or passively.
What was lacking then was a fully consistent theory of capitalism, based on egocentric ethics, founded on rational-empiricism (objectivism) in epistemology and metaphysics. We have that now.
"Most of us would rather be in a room full of spiders than to be on an stage in front of an audience." I'd rather sleep on a bed of nails for a year than be in a room full of spiders. Two things would be required for me to survive that horror, a flame thrower and a year in an institution where everything was padded.
Bill Gates?
George Soros?
Warren Buffet?
Mark Cuban?
John Allison?
Fred Smith?
Ed Snider?
(Oh, ... how about Peter O'Malley? It was Peter O'Malley who told Ed Snider about Atlas Shrugged.)
But, you know, it could be a symptom of bread-and-circuses that our greatest capitalist heroes make their money in sports. Or it could be something else: the simple maturity of our culture from primary production to entertainment.
It is a fallacy of collectivism that only factory work and farming are considered "moral," while art and entertainment are decried as "decadent."
Michael Jordan
Penn & Teller
John Mauldin
Lacy Hunt
Marc Faber
Doug Casey
Porter Stansberry
Bill Bonner
Nick Vertucci
I probably have others but I can't dredge up their names right now.
Fred Smith owns FedEx. He is a Rand fan.
Ed Snider owns the Philadelphia Flyers, Spectacor Sports Network, and other businesses. He funded a lot of Ayn Rand archiving and publicity of Ayn Rand in the 1990s. He discovered Atlas Shrugged via Peter O'Malley who in addition to a hockey team, owns the LA Dodgers which he inherited from his father Walter O'Malley who owned the Brooklyn Dodgers.
See his speech at the 50th Anniversary of Atlas Shrugged here:
https://www.youtube.com/watch?v=jb88q...
What does this line mean, though: "But very few of us actually buy and sell anything, except our own labor -- and most people want to sell it once for life."
I know of an anarchist - Bob Black - not liked as a person, but admittedly insightful about some things, who pointed out in a book he published that socialists and capitalists both want you to work for them. It does not matter much who owns the factory if it is not you. Or so he claims. Clearly, some bosses are more humane than others. You are better off at General Motors than at Volga Motors.
The best world would be one wherein we all own our factories - 3D printing, home genetics, information work, all of that, as well as the traditional carpenters, plumbers, etc., who always were self-employed, not wage-workers.
I have enough faith in the market that I believe the jobs will come back anyway -- but that most of the new jobs will be off the books, in the shadow economy. And this is why I say the US is becoming a banana republic. Once we're working off the books, we all become criminals and have to expect to start bribing officials. Which is the beginning of a slide into a meaner form of civilization that may be irreversible -- a form where the law is not to be trusted by anybody. What once made the US worth protecting was precisely that its people did not have to live that way.
I agree we're in grave danger from all the things you mention in the secon paragraph: the underground economy, the need to bribe or donate to get anything done, leading to loss of rule of law and a meaner form on interacting with one another (i.e. whips and guns instead of dollars).
Four food banks with every two week policeis. Two a week invest $1.50 each way on the bus fare times six bags of food twice a week for $3.00 or $12.00 per month for 24 bags of food and related household products sometimes was one helluva a good return especially as it was non reportable and non taxable. Immediate need satisfied for a portion thereof created a form of wealth and no controls on bartering or trading nor even selling outright.
Tongue firmly back in cheek ask me if it bothered me morally.
go ahead ask me.....
not as long as the amount was less than that the government owed me anyway.
I viewed it as reclaiming that which I had produced stolen and reclaimied in a Robin Hood manner.
Extend that to medical and housing assistance etc. why it's a wonderful growth industry and particular suited to the times.
heh heh heh heh heh or in spanish ja ja ja ja.
The capable always rise to the top. No matter what.....
Then i took my retirement pay and moved to Mexico and points south immediately gaining and now more than regaining the 35% loss in buying power, rejoined the middle class and have nor moral qualms whatsoever.
Objectively speaking it's a second career made for retirement ....and unfortunately required when you retire
As for moving south of the border i did that to recoup the 35% loss in buying power in a nation that had turned it's back on it's own Constitutiton and no longer had the right to expect loyalty. that nation and those of you who helped that effort not even recognizing ghe importance of Dec 30th nor bothering to talk about it you helped destroy. How many drops did you make? In your life? Yet after ignoring all the imiportant issues you discuss banking systems of the 1800's and not the system that has replaced the Bill of Rights. Of what good are you? the system is there to be exploited that much is clear. No one believed me I proved it. Not just the moocher system but the political system. It takes more than discussing philosophy to accomplish anything. Discuss that for a few days. List those efforts. Then explain why you ignore the events of Dec. 30th.
And continue to discuss rights you no longer have.
I would guess to quote a Heinlein saying. The number of your drops is zero.
I would guess iyou will vote for the left as do most of the pontificators here ...if they vote at all. What use is objectivism if not applied?
You weren't worth fighting for and we never took an oath to fight for you which is a good thing. Our oath was to the Constitution and with it the Bill of Rights . The one you ignored while it was shit canned in favor of commenting on banking systems of the 1800's.
I pity you and all who are saying ' what happened on December 30th?"
the food went to shut ins and others that could not get to the food banks. the lesson in how the system really works went over peoples heads.
I live in Mexico primarily because I prefer it to a fascist police state being handed to a dictator who did away with civil rights along with 85% of your elected officials.
Seig me no heils Comrade I do not serve the party....