Archive for the ‘centralization’ Category

The Tyranny of Debt

May 7, 2015

“(T)he United States waged a long war upon the ground, that governments are instituted to secure, and not to bestow, the freedom of property.” John Taylor, Construction Construed and Constitutions Vindicated, (1820), Sec. 1.

“To live securely happily and independently is the end and effect of liberty… All men are animated by the passion of acquiring and defending property, because property is the best support of that independency, so passionately desired by all men… as happiness is the effect of independency, and independency the effect of property; so certain property is the effect of liberty alone, and can only be secured by the laws of liberty; laws which are made by consent, and cannot be repealed without it.” Thomas Gordon, Cato’s Letters, No 68, (1721).

 

Against Exploitation

“Private property is the bulwark protecting the individual against exploitation by others,” Herman E. Daly wrote in Beyond Growth. “A property owner has an independent livelihood and need not accept whatever conditions of employment are offered.”

Indeed, Daly taps into the very essence of private property with these sentiments. If there is one single element of Marxism that presses the hardest against the individual’s freedoms, it is the question of property. While it is true that in a perfect world – wherein everyone’s sincerity of altruism would be above question – a society based on communal property may indeed be a workable framework.

But this is not a perfect world, and as sure as the sun rises in the east, there will always be those individuals who would eye the control of communal property as a means to power. In fact, we find in history that state control of property defines every major establishment of communism in the world. And while contemporary Marxists will contend the communism of the USSR and China does not represent “real” Marxism, it is fair to level these criticisms against Marxism until such time its followers show us a society in possession of a complete sincerity of altruism.

It is for this reason, and others, that the tenant of private property continues to hold in free societies, at least for the foreseeable future. But there is another insidious threat to private property, one that Daly did not recognize in his statement above (but does so elsewhere in his works), and that threat is indebtedness.

The Big Lie

Today, “free” societies everywhere are populated with a large number of home and property owners, but only a small percentage outright own this property lien free. Almost all of it has been purchased with the help of a mortgage. And within this reality rests The Big Lie, that is, we live on the illusion that we are “homeowners.” Yet, unless we hold title to our property lien free, it is very difficult to align this illusion with reality. And so, to tap Daly’s passage again, encumbered homeowners are forced to “accept whatever conditions of employment are offered.” (more…)

Profit Maximization is Self Annihilation

April 21, 2015

“Some states (i.e., nations – ed.) have lost their liberty by particular accidents: But this calamity is generally owing to the decay of virtue. A people is travelling fast to destruction, when individuals consider their interests as distinct from those of the public.” – John Dickinson, Letters of a Pennsylvania Farmer, 1768

 

Profit maximization is self annihilation or, PM = SA in economese, should one feel the need to mathematize the phenomenon, but profit maximization first emerged not of mathematical modeling, or validated by empirical evidence, but by commentary that tickled the vice of greed.

In 1970, Milton Friedman wrote an article for The New York Times, “The Social Responsibility of Business is to Increase Profits.”

And with that commentary, Friedman kicked off one of the most singularly damaging ideologies that would go on to send the global economy over a cliff.

In this writing, Friedman argued for the singular focus of business to be profits. This myopic view of business endeavors completely ignored the negative externalities that could unfold from such a concentration and, being an economist, Friedman should have understood the concept of negative externalities.

No doubt he did, but only in areas of economic theory that supported his ideology. That’s the beauty of neoclassical economic theory, the orthodox teachings of most economic departments today: With its mathematical elegance and a priori thinking, one can make neoclassical economic theories say anything one wants. For the uninitiated, such theories appear “scientific” thanks to the abstruse mathematics. And while the mathematics provides a patina of science, in fact neoclassical economic theories are diametrically opposed to sound scientific endeavor, as a conclusion is assumed before a hypothesis is empirically tested.

And that is exactly what Friedman does in this perennial favorite of C-suite management: he assumes the conclusion, otherwise known as “begging the question.”

Ignored in his argument is that a singular, obsessive focus on profits completely discounts the reality that profits are a means to an end, not an end unto itself.

The ultimate goal of business – yes, and even economics – is social welfare. Business and economic institutions reside in a society to serve the needs of that society’s individuals, its citizens.

For those in the audience who are thinking, “Uh oh, here comes the corporate social responsibility speech,” or for the lesser minds who enjoy clinging to hyperbole, a case for “socialism,” guess again.

A singular focus on profit maximization not only destroys markets, an economy or other macroeconomic entities, it also destroys that other twin-obsession to profits, “shareholder value.”

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Decentralizing economies.

December 3, 2014

Over Thanksgiving break, a vandal scrawled the following graffiti across an exterior wall at Indiana University’s Kelley School of Business:

“Fuck Capitalism.”

It may be a convenience for a graffiti artist to use “capitalism” as a monolithic term – just as “socialism,” “communism” or “anarchism” are treated in the same fashion – but it is indeed small minded to maintain this monolithic treatment within serious discussions. There is – surprise – more than one type of capitalism, and the time to discuss the alternatives has arrived, now.

The attempt to erase the "Fuck Capitalism" sentiment, added to the Kelley School of Business in November 2014, was in vain.

The attempt to erase the “Fuck Capitalism” sentiment, added to the Kelley School of Business in November 2014, was in vain.

The arguments against (centralized) capitalism are numerous, and the examples of the dysfunctional nature of centralized capitalism – as it has emerged over the past couple of centuries – are readily found. But I remain supportive of (decentralized) capitalism because I believe there is something intrinsic in the nature of humanity that desires recognition for one’s efforts.

Sadly, this “recognition” has been translated by centralized capitalism to mean one’s salary, but that is a very empty translation. We can live in trendy neighborhoods, drive expensive vehicles and join the exclusive clubs but at the end of our lives, on our deathbeds, we realize we were just another anonymous gnat on the ass of the universe. The world, at large, does not know us, appreciate us, or can even comprehend what in the hell we actually accomplished while manipulating spreadsheets on our computer monitors. Centralized capitalism – with the exception of the very few – renders us anonymous, insignificant, and isolated.

Decentralized capitalism holds the potential to render us valuable, as being significant, as holding meaning… within a local community, within a local economy. I may be nothing more than the village butcher, baker or candlestick maker, but I provide an invaluable service to the local residents of my neighborhood or village. I am recognized for my work, and the value I bring to a community. Such recognition, value and sense of dignity cannot be bought with a paycheck. (more…)

The Evil of Asymmetrical Information

December 3, 2013

I find it interesting that during the Global Financial Crisis, banks, the Federal Reserve, Congress and government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac implicitly blamed borrowers for the mortgage-default debacle by their actions, such as the Fed’s preference for helping lenders rather than homeowners, Freddie Mac betting against the homeowners and banks pressing the Fed to curb borrowers’ rights. Yet, when it came time to consider new regulatory action to prevent future mortgage debacles, the Fed wanted to strip homeowners of their right to fight foreclosures, and the only legislation with teeth came in the form of tougher scrutiny for borrowers, not banks.

What was, and continues to be, missing is a means to disseminate full disclosure of what, exactly, the home buyer is signing. That bright, shiny home is too much of a temptation, and all rational thinking goes out the door. Papers are pushed across the table, everyone is grinning, pens go to work signing, and keys are handed over. A new homeowner is born, and the poor son-of-a-bitch hasn’t a clue as to what he or she just signed.

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The Quiet Constitutional Crisis Behind the 2nd Amendment

April 9, 2013

The following post discusses the original intent behind the Second Amendment. Readers should hold their assumptions, read carefully, and check their conclusion jumping until the end.

Introduction

The rhetoric over gun control legislation is heating up, yet from no corner of the political spectrum do we hear discussed the underlying constitutional crisis that precipitated this ongoing debate, one that America has lived with for over a century. Unfortunately, the accusations and aspersions thrown from either side towards the other generates more heat than light, and it is nigh time to investigate the original intent of the Second Amendment. Although many alleged constitutional authorities have waxed obliquely on the reasons behind the insertion of this amendment, James Madison left little doubt as to why the arming of citizens was a critical civil liberty. His reasoning can be found in The Federalist No. 46.

I find, however, that far too many Americans do not understand the intent of the Bill of Rights, much less the intent of the Second Amendment, and so it is here I must begin. I suspect this reality arises more from the degraded state of our high-school education in civics than from anything else. For those who are comfortable with their understanding of the Bill of Rights, you can safely skip to the next section. (more…)


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