People may wonder why I don’t typically engage in long, circular internet arguments. That’s because I’ve been there and done that many times. I was engaging in pointless digital arguments long before the internet was a thing, much less a cool or hip thing where everyone lived. This old fashioned debate involved BBS discussions dialing up to single systems and browsing for a little while and leaving. It’s very old, and very repetitive….even when the arguments are over Gigabit fiber.
Don’t get me wrong, it’s a fun and educational exercise to throw thoughts out there and see what sticks, or to try a certain flavor of rhetoric and see who likes and doesn’t like it. But after awhile you start to realize that it’s the same old thing over and over again. There really isn’t much new out there. And it’s pretty rare to actually see someone change their mind.
So, it’s only really interesting now when something actually does change. A couple key things have here and there. Thus, I’m noting them.
The first thing is Europe. I tend to fall on the libertarian/conservative side of pop-political thought, and for years my friends on the more liberal/progressive end had one wild card they could always play:
“Well look at Europe! At age 5 they give everyone a free puppy! And they get 7 months vacation and retire at 45! Everyone is in a union! And they get free healthcare and college and Europe isn’t blowing up!”
You don’t see people saying that much anymore. That’s because the bills are coming due in Europe and it’s not pretty.
Stop one is Greece. Turns out all these progressive, populist ideas are expensive. You have to borrow a bunch of money. Eventually you can’t borrow anymore so you have to print the money.
Only Greece can’t print money because it uses the Euro, not it’s own currency. But Greek debt is so big they can’t leave the Euro because has it’s own set of problems. But if people lend to it they want them to cut back spending and social programs (austerity). But people are now dependent on this spending and social programs, especially the elderly. But austerity is actually making it harder to pay off debts. But you can’t trust the Greek government and they need an independent monitor. But that means they aren’t sovereign anymore.
That’s alot of buts and they just keep coming. But at the end of the day, the Greek populist economy is unsustainable and many people are going to be hurt because it was tried. If “solution” means “everything’s going to be just fine”, then this is an unsolvable problem. It’s not going to be fine even though they announce a groundbreaking bailout package every few months. It’s clear that the math just doesn’t add up and the next time will be worse until Greece completely defaults–unable to pay it’s people or it’s external creditors.
Meanwhile, the very same mathematical situation is rumbling in several other European countries. Math is also setting up shop here in the U.S. too…although the endgame will be much different.
So consider it noted: you don’t hear many people referencing Europe’s populist utopia anymore. Europe is actually experiencing the very difficulties that many people warned about.
So the “Occupy” movement is currently the darling of the media and internet. Criticism, support and comparisons abound. Some compare it to the Arab Spring, but until they are walking into bullets or disappearing in a large government building somewhere there’s really no comparison. There are also many who have billed it as a progressive tea party, which of course makes the tea partiers mad.
But from my perspective, I don’t see any more coherency in the Tea Party message than in the Occupy message. The were just as many contradictions there (“Government out of our lives, and hands off Social Security!”) as there are in the various Occupy displays. But the Tea Party was able to affect elections and congressional votes, and that’s what counts. I doubt the Occupiers will have that success, but if they do it will be just as pointless in the long run.
Both groups miss the point of what’s wrong with our country. The problem isn’t less or more capitalism or government. The problem is we have eliminated great gobs of free market capitalism. There is a huge difference.
Capitalism is about ownership and profit. Free market capitalism (FMC) is about competitive ownership and profit by free players in an framework ruled by supply and demand. Economic freedom comes from free market capitalism. Plain ol’ Capitalism oppresses just as well as any government (because ultimately they becomes one and the same.)
In the two governing groups, we know where Democrats stand when it comes to FMC. Generally they will do whatever they can to try and engineer reality for the greater good or to solidify their own control. But when you look close, Republicans have done just as much to destroy FMC for the smaller good or to solidify their own control.
Whereas Democrats are always pushing policies that benefit large, established government; Republicans are always pushing policies that benefit large, established businesses. Republicans love increasing the power of monopolies via Intellectual Property, Patent, and copyright laws. They love big banks and telecom companies and tweaking the rules under the direction of the big players. They love big agribusiness and subsidies. They pass laws that benefit those businesses, talking about how these capitalist measures will increase jobs and benefit everyone. The problem is, they won’t. When you institutionalize big business, it’s no better than institutionalizing big government.
Laws that benefit big business (capitalism) are just as destructive to equality, employment, and Democracy as laws that benefit big government. What we need is more free market capitalism.
The first response to this will usually be from progressives and how free markets (lacking in regulation) actually caused our current crisis’. Up next I’ll discuss why the opposite is actually true. Regulation created this mess.
Kinda sad…if you’re one of those people into thriving economies of liberty and democracy.
I maintain that all of this talk about “when things get better” and “when the economy improves” are missing a key component: how?
I believe our economy is:
* Too dependent on government spending (Thanks Dems!)
* Way too biased toward established mega-business (Thanks Reps!)
* Gutting it’s manufacturing base (which results in over-dependence on consumption and debt)
* Way too engineered by elected officials. (Thanks everyone!)
All of these characteristics work toward one result–”bye bye growth”.
Now granted, growth has it’s own set of problems. But our economic model currently depends on it, and before you change that you better understand the implications. But it’s kinda hard to get that picture when several generations have only had half the pieces to the puzzle.
It looks like the Rep’s are going to make significant gains in Congress, partially due to this mess and partially due to the President’s Quixotic health care efforts.
This will not improve anything. It will just result in more anti-growth policies of a different tact. Meanwhile, the sea keeps receding towards the debt tsunami just over the horizon.
Not that Obama has violently overthrown the bourgeoisie with his rag-tag band of suicidal Democrat proletariat workers, it’s not uncommon to hear that we are now in a “socialist country”. I would submit that this is not the case.
First of all, a socialism and/or communism generally have a policy of seizure and redistribution that applies to people who have already been born. In our case, most of of the money we’ll be spending (over the long haul due to interest) will be paid by future generations (either directly or via inflation). This is not socialism. It’s a pretty brilliant new conflict theory, but not socialism.
Second, socialism generally has a plan. Our government is clearly making this stuff up as it goes along…although like soc/communism there are people getting mega-rich in the process.
So while I don’t think we’re anything close to a socialist nation, I do think we are definitely entering an era of a “Command/Control” style economy.
All cats are animals, but not all animals are cats. Similarly, socialist economies are generally command/control economies, but not all command/control economies are socialist. So it’s a fallacy to to think that just because our government is increasingly legislating the minutiae of our economy, that this style must be socialism.
But they are legislating the minutiae of our economy. And it won’t be long before everything is defined in the lawbooks.
Want an example? Check out the laws on credit/debit cards. That’s right, the same political entity that told King George to go jump, who wrote the Bill of Rights, expanded our country and enshrined our freedom in Constitution and Law…is now writing a law that will make it possible for merchants to require minimums for credit card purchases.
This is a law. Think about that….not a regulation. A law. And it’s digging down into the nitty gritty details of how even the most basic transaction can occur.
Everywhere you look, energy, healthcare, telecom, the automotive industry, banking….everything, is slowly being installed into an economic framework wholly defined by laws. Very soon (if not already) we will be working in an economy that is set up and functionally defined by politically designed laws that are very difficult to change, much less eliminate.
If this had happened earlier, by law we’d still be riding horses.
Back in middle school (during the cold war) we actually learned about how these command/control style governments were bad and how free market capitalism was going to kick their tail. Apparently not all middle schools were teaching this.
When you combine the looming energy crisis, the eventual debt disaster of the Federal Gubmint, and the collapsing market efficiency of our command/control economy, it’s pretty clear we’re headed for a really dark period of American history. Hey, it happens. Let’s just hope there is some sort of eventual rational response that doesn’t end up in a huge, terrible war.
A decade or so ago, when comprehensive health care policy began to really take center stage, it was not uncommon to hear something like “well look at Europe, they have a centralized government sponsored health care system, and none of the doomsday scenarios have come true!”
This point was notably absent in the most recent healthcare debate. This was primarily because there wasn’t really a debate–more of a rapid expenditure of political capital to ratify a bazillion pages of text as law–but it was also because Europe had actually started wobble pretty badly economically.
One person on Facebook tried to use that argument a few months back, and I said something to the effect of “If you read what’s going on over there, actually it is starting to cause major problems…it’s starting with Greece and will continue to Spain, Portugal, and throughout Europe”. And here we are. Europe is facing it’s very own collapse, and there are rumors that they will announce their own massive bailout this week….a bailout that will rival the U.S. bailout in 2008.
Basically what’s happened is that European countries have bankrupted themselves due to Socialist utopian policies (with a little bit of corruption tossed in). And I’m not just shouting “socialist” for effect here…that’s the name of the ruling parties. They call themselves that. Over there they don’t mind the term.
Granted, such a collapse would not be completely due to health care. Health care is only one of the policies that is bankrupting them. But the lesson is clear. Populist/utilitarian and government-centric policies can use debt to skirt the economic concept of scarcity for awhile, but sooner or later debt won’t work. Then you have:
A) a bunch of people who lent money to a supposedly secure and trustworthy government who now have nothing to show for it
B) an economy dependent on government spending that suddenly disappears.
C) a bunch of people that require government to survive (literally)
Then everything goes crazy while the socioeconomic and political layout is up for grabs. Riots in Greece are just starting.
The EU is a little different in that no individual state controls the money. This forces the situation to resolve more quickly because the country can’t just print money to pay the debt. Thus they have to either restructure their entire worldview or find someone else to foot the bill for a little longer.
The UK will last a bit longer with the pound because it’s their own money. They’ll try to fix things internally and it won’t be so obvious.
Like the U.S. bailout, a European bailout will simply kick the proverbial can down the road with more and more debt. The clock is ticking on all this. The can will hit the wall.
Last night we went to our daughter’s future school for information on enrollment for next year. We were extremely impressed, and are really looking forward to our daughter’s experience there.
During the presentation we were asked several times to vote for a tax extension on April 27th.
The tax extension will extend a property tax from 17 to 36 additional years, which will enable them to refinance debt that was originally used to build a substantial chunk of very advanced (and apparently effective) educational infrastructure. They talked about the cash flow, and that refinancing would free up 6 million dollars for new teachers, etc.
So it seemed like a great idea as presented, but this is not the freewheeling, borrowing times of the 1990′s or early 2000′s where debt was no big deal. As our effectively bankrupt county illustrates, refinancing debt can get a municipal governments in a heap of trouble. The City of Hoover is obviously a tighter ship than the county, but it’s still a dangerous world for governments and debt.
There are plenty of things a government can do to raise cash and hire teachers. But are they all good things? I wanted to find out exactly what the numbers were with this refinancing. Are we being asked to make great short term choices at the expense of long term flexibility? Or is the rate environment so favorable that this is a no-brainer? Are we shoveling more debt on future residents or is it a wash?
Unfortunately there’s not much of information out there. The only number you see consistently is the increased cash flow (approximately 6 million dollars per year), and that’s troubling. In the world of debt you can easily make a boneheaded long term decision for increased cash flow.
The only numbers I saw were these from this article:
The school system spends about $16 million per year making payments on that debt. On a per-student basis, Hoover schools spend more on debt service than any other system in the state, Craig said.
The school system’s debt now is scheduled to be paid off in 17 years. With an extension of the 24-mill tax, the system could stretch out that debt over a 30-year term, lowering payments to an estimated $10 million to $13 million per year during tough financial times.
(first of all, that 10-13 million dollar figure illustrates some spin of the message. It looks like saving 6 million per year is the high estimate and 3 million is the conservative estimate).
Other than the sample ballot, I can’t find any further info on the tax at the hoover web site.
Using this info as a blunt estimator, the cost of refinancing is as follows:
Current total payments (17 years X 16 million) = 272 million dollars
Optimistic extension estimate (30 years X 10 millioin) = 300 million dollars
Conservative extension estimate (30 years X 13 million) = 370 million dollars
So there you have it….extending this debt will cost anywhere from 28 million more dollars to 98 million more dollars over the term. Assuming this info as presented is reliable.
One thing should be clear, the city wouldn’t be saving any money. They’d be lowering the payments.
The problem I have is that this is a pretty broad range of figures. And it’s a large amount of additional money at the conservative end of the estimate. I’m also not comfortable with the presented 6 million figure (which seems variable), since we really don’t know what the final cash flow will be.
Lastly, the assertion that the money will be used for teachers is questionable…it’s my understanding that the money can be used for anything the city wants. As I said, we were very impressed with the school and staff and clearly we should give them every tool we can to educate our chillun’s.
But are we taking tools away from future generations with this decision? I realize dumping junk on future generations is the American way, but if that’s what we’re doing we should at least know how and how much before we vote.
I guess this is just a large amount of money to be throwing around in a small municipal vote during a severe recession. It could have significant implications down the road, and I don’t think we’re being given complete information. We see the catastrophic results that can occur. I hope this choice is being made in an intelligent way.
(“But I thtilll…love technology….)
One nice thing about technology is that it tends to operate on a survival of the fittest principle. Not survival of the prettiest (Apple) or survival of the best marketing (MS) or survival of the cheapest (Linux)…but survival of the fittest.
“Fittest” contains that whole basket of factors that individually miss the point. It’s more fun to think about why each of the factors are and are not important, then see how it plays out in reality.
In fact, one could argue that free-market/capitalist driven technology is the ultimate arena for observing the concept of “the fittest”. It is the perfect arena for science, because if the science doesn’t work…the widget is not long for the world.
Unlike Darwinism or “Natural Selection”–largely an academic concept subject to the same religious bias and political shenanigans it’s proponents like to ascribe to religion–market driven technology requires science to be right for it’s very existence. A quantum computer isn’t going to be purchased if the understanding of quantum mechanics is not correct. A hose must be compliant with fluid dynamics. And people aren’t going to purchase an airplane ticket if the wings don’t work.
Unless you’re B.A. Baracus, who just “ain’t gonna get on no veiled creationist plane, Hannibal!”
But this post is not about that. It’s about Facebook, and it’s about my attempt to post on something other than the world-eating doomed collapsing economy.
If you really are, or want to be, my friend, drop me an email, write me a letter, give me a call, stop by for a visit — you know, like a friend would.
This is one of those fascinating phenomenon to me. People love to criticize the impersonal nature of the current social networking fare, then cling to older technologies that are just as impersonal, if not more.
Is email any less impersonal than Facebook? Is a telephone call? How is a letter more personal?
And this one’s a doozy when you really think about it: How are our normal personal interactions (“hey, how are you?; fine, you?”) any deeper?
Any technologist has to develop some keen senses on resistance to change. It’s difficult to determine if a system is having problems, is poorly designed to interact with humans, or if said humans are just not diggin’ the fact that they have to change their habits. For the life of me I can’t find any criticism of social networking that’s not in the “not-diggin’-change” category.
In contrast, my relationships have been greatly enriched by the application of this technology. Latest example? My wife and I just discovered that a neighbor 3 doors down from us has cancer. This man was a substitute teacher of ours, and actually paddled me in 8th grade (long story…big misunderstanding). We’ve lived in this neighborhood for 9 years and didn’t even know he lived there!
So whatever Facebook is doing, the technology is turning out to be fit enough to blow away alot of junk from prior technologies. I’m still waiting to hear or see any decent criticism.
In the last b’journal entry I mentioned “black box”. The term “black box” has several meanings but one definition is a “closed system with little understanding of what happens inside”. You feed something into these systems and something comes back out. You don’t know how it works, it just does it.
Our economic system has become a black box. The grand economic theory behind the whole thing is to shove a bunch of borrowed money into the black box, and then um….”when things return to normal” and “when the economy improves”.
Part of this is because the system is so complex. The other part is that it’s been tremendously successful and we just didn’t have a reason to try and understand it anymore, particularly when it’s so profitable to squabble over the output.
So how did this happen over the last few decades? Here’s my take.
Since the 40′s, nukes have freaked everyone out. Anyone who could do serious damage was too afraid to do it. Mutually assured destruction kept everyone relatively calm. The losses and pain of WWII left everyone with no appetite for another global conflict (this time with nukes), and Vietnam convinced people that regional conflicts aren’t all that nice either. Until fairly recently, if conflict was necessary people got in…got out…and moved on.
This provided a great economic environment where even military spending built stuff.
Energy was amazingly cheap. I’ve blogged about this before, but oil is awesome. There is no source of energy like it. It contains huge amounts of energy in an easily accessible form. No matter what people say, nothing can compare. For 2-5 dollars in production cost you can pull it out of the ground and turn it into many thousands of dollars in value. Thus, the more oil you burn the more wealth your society creates. And in the last 50-100 years we really got our oil burnin’ on. People think that burning oil is a symptom of economic growth, but I think it’s a huge, huge cause of it.
As a result of these 2 factors, the industrial age hit full swing. We all got used to it’s luxuries. Then two additional things happened.
First, we had several generations who (in the aggregate) grew up in this new world and never knew what it was like to live in poverty, fear, and/or scarcity. Wanna go to the beach? That’s 2 hours in the Chevy. Wanna live in a house? That’s a 20 minute commute and security is not a concern. Go to Highschool or College and employment is assured. Every year our economy will grow and that means a cost of living adjustment and a raise. Invest enough money and this growth will provide a relaxing retirement for you and your spouse. And if you’re going to murder someone just don’t do it in the front yard because that’s a violation of the neighborhood covenant.
As we got used to this setup, we forgot the economic mechanism of our prosperity. (Spiritually, we decided we didn’t need God because hey…this setup showed alot of promise.) We saw the future of plenty, and they don’t have God or price tags in Star Trek.
Second, we got greedy. Capitalism became about giving stuff to large, established businesses. Populism became government jobs and benefits. We sold off our manufacturing, then mortgaged everything else with personal, corporate, and government debt. When that ran out we changed the rules to allow for risky numbers games called “finance”. When that collapsed we went to the last hope…government debt. This debt is now growing at unsustainable levels which are only possible because there’s no other “safe” place to put money.
So here we are…a few hundred million people used to a world of constant economic growth, cheap energy, and easy money. All three of these are very much at risk, and the loss of just one would be catastrophic to this world view. The only thing keeping this going is government debt, and that’s not going to last.
If we look very closely at our assumptions about the world, we’ll find that they are based not on any understanding of the way it works. Almost all of them are based on how the world has affected us–extrapolated into the future. We better pop the hood on this thing, and quick. Sooner or later the phrase “when things return to normal” might not have that same zing to it.
Recently I watched a History channel special on the dust bowl of the 30′s. I already knew of it from my younger education in Iowa–which had slightly more interest in things Agricultural–but it was interesting to see such a detailed look.
One of the quotes bugged me a bit. It said something like “Herbert Hoover decided to take no action, deciding that the free market would correct the situation”. That’s not a direct quote, but it was something like it.
This was very irritating because it matched so much of the rhetoric today. People want to blame the free market for our predicament, and people want to see the free market as our savior. The problem is that the free market is completely irrelevant when government operates at this scale.
You see, just moments before this quote the program had been outlining the effects of The Homestead Act, in which any citizen could get 160 acres if they promised to improve the land. When all the good farmland was taken, they upped it to 320 acres. To sweeten the deal, they’d give you a train ride out to the land so you could get started.
So almost 100 years ago the Federal Gubmint decided “this is the way things should be”. Then it began minting Gubs–creating a massive relocation of capital, wealth, and people…resulting in…surprise!….Disaster. Then the free market is supposed to clear that up?
It’s just like today. The government decided that “this is the way things should be”, and they create massively distorted, multi-trillion dollar entities like Fannie Mae and Freddie Mac. Then disaster strikes and it’s the result of the “Free market run amok” and “tremendous lack of regulation and oversight”.
Here’s something that everyone must understand. When our increasingly huge government decides “this is the way things should be” then creates and deploys massive chunks of policy and capital, that’s not a free market. But here’s something else. The free market can’t clean up the situation either.
The only answer to a massive, government created bubble is to let it explode, cause the damage, then try to find some sort of free market resolve in the effort to start anew.
I know the free market is not perfect, and there are roles the government has in that world. It’d be nice to actually try to enumerate them and solve these issues instead of pretending we have a free market.
We’ll have no shortage of government-formed bubbles to practice on. The carbon credits market will be a bubble. Whatever our government decides on health care will result in a bubble. And then there’s the massive, unsustainable bubble in Federal debt. That may just be the one that takes the whole thing down.
First, let’s eliminate the faux reason: It’s not about party. All parties have proven completely irresponsible when it comes to spending.
It’s also not about the president. As we’ll see, the president simply cannot control spending. And this is the problem.
The Executive branch is supposed to send a budget to Congress, and have it approved. But that’s not the way it works anymore. It may occasionally occur if all the branches are controlled by a party, but it is not administratively true any longer.
Nowadays, the president sends a budget to Congress, who employs about 100 people to stand there and laugh at it. Then Congress passes whatever they want, although it has to have enough reckless spending in it that the President will look cruel and heartless if he doesn’t pass it. This is pretty easy to do.
Any cursory look the news coverage surrounding spending will confirm the dysfunctional (and some would say unconstitutionally excessive) role by Congress in spending. They don’t talk about the president. They talk about Senators and Reps.
How did this happen? Congress seized the power over the budget in the mid-seventies, about the time they created the CBO. If you look at the Federal debt numbers, that’s when it started and it hasn’t stopped since.
We are now so dependent on this spending that the President is powerless to control it. The last real effort was George Bush Sr. in 1990 or so. The response to the prospect of a government shutdown made it clear that the electorate would hammer any President who tried to limit it’s relentless spending growth.
Now we’re stuck. Our economy and lives are becoming so dependent on the Federal credit card that any effort to get to a balanced budget would lead to immediate collapse, either through a gaping hole in GDP (spending) or a massive confiscation of cash (taxes). No, there’s not a combination that would be any less destructive.
Unfortunately, this can’t continue forever. All debt bubbles collapse. This will be no exception.
I’d say we passed the point of no return in 2001, ironically under the watch of a government dominated by a “fiscally conservative” Republican party. However, we’re going to accelerate to the eventual destination under Dems via healthcare and stimulus.
Hey…at least the Dems have a category for their crazy spending. It looks more purposeful than the Rep’s “Random stuff we’re spending on while nobody is looking” category. The only Rep category that was arguably worth it was “defeating the commies”.
Anyway, there may still be time if we all suddenly wake up and realize that “our guys” and “our parties” and “our entitlements” are the problem. Heh.