poetics.info » Economics

On America’s Ruling Class

Allison Taylor — Thu, 02 Sep 2010 17:02:40 +0000

If you missed this powerful essay by Angelo Codevilla, “America’s Ruling Class — And the Perils of Revolution,” I highly recommend it. I learned yesterday that Dr. Codevilla, a professor of international relations at Boston University and a senior editor of The American Spectator, has expanded his article into a book, The Ruling Class: How They Corrupted America and What We Can Do About It, which you can order at Amazon.com. (You can also pre-order it on Kindle.)

The title of Codevilla’s essay and book is derived from the growing anti-establishment sentiment among Americans, now furious at Washington politicians who continue to ignore their voices. Most people I know want to vote all the bums out in November. I think this helps explain the recent primary victories of Rick Scott in Florida (over establishment favorite Bill McCollum in the gubernatorial race) and Joe Miller’s victory over incumbent Sen. Lisa Murkowski in Alaska.

Other Evidence that Americans are turning on the establishment is found in the waning audiences of the progressive media outlets, which are losing viewers, money, and credibility faster than the bedbugs are reproducing in NYC. Unfortunately, CBS’ ratings are not dropping as fast as Americans are losing their rights, but the backlash has begun. Nov. 2 is coming.

The first wave of this anti-establishment sentiment came in response to the $700 billion “Troubled Asset Relief Program” (TARP) legislation, which passed in 2008 despite a huge public outcry against the bill. Codevilla notes that that public objected to TARP “by margins of three or four to one.” Discussing the public’s epiphany, Codevilla writes:

When this majority discovered that virtually no one in a position of power in either party or with a national voice would take their objections seriously, that decisions about their money were being made in bipartisan backroom deals with interested parties, and that the laws on these matters were being voted by people who had not read them, the term ‘political class’ came into use. Then, after those in power changed their plans from buying toxic assets to buying up equity in banks and major industries but refused to explain why, when they reasserted their right to decide ad hoc on these and so many other matters, supposing them to be beyond the general public’s understanding, the American people started referring to those in and around government as the ‘ruling class.’

Codevilla’s work is important because it helps identify and expose the fraud being committed against the American people. Most Americans now realize the government is acting as the destroyer of our economy. They realize government is a non-productive (and often incredibly inefficient) entity whose only means of getting money is through taxation, printing fiat money, or selling government securities to be paid back with future taxes.

I personally believe that Ayn Rand has a lot to do with this awakening. The intellectual elite will never admit this–they will even condemn her as they did in a recent NRO article, “The Greatly Ghastly Rand”–and maybe not all the Tea Partiers even know about her explicitly. (Some do, because I saw “Who is John Galt?” signs at the Tea Party rally I went to in Orlando.) Still, her influence here and abroad is undeniable. Her literary classic, Atlas Shrugged, first published in 1957, remains a top-seller.

Seeing the events in the economy unfold today, I am reminded of a passage she wrote in her 1974 essay “Egalitarianism and Inflation,” (from Philosophy: Who Needs It):

While the government struggles to save one crumbling enterprise at the expense of the crumbling of another, it accelerates the process of juggling debts, switching losses, piling loans on loans, mortgaging the future and the future’s future. As things grow worse, the government protects itself not by contracting this process, but by expanding it. The process becomes global: it involves foreign aid, and unpaid loans to foreign governments, and subsidies to other welfare states, and subsidies to the United Nations, and subsidies to the World Bank, and subsidies to foreign producers, and credits to foreign consumers to enable them to consume our goods–while, simultaneously, the American producers, who are paying for it all, are left without protection, and their properties are seized by any sheik in any pesthole of the globe, and the wealth they have created, as well as their energy, is turned against them, as, for example, in the case of Middle Eastern oil.

Needless to say, left unchecked, government’s economic meddling and expansion does not end well. But, as the ruling class are beginning to realize, you should never underestimate the American people.

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Embracing Corporate Obsolescence

Allison Taylor — Tue, 24 Aug 2010 19:47:53 +0000

Change is an immutable force. Some of us embrace it, some of us resist it, but no one escapes it. In today’s Information Age the speed of change is accelerating at such a dizzying speed that it’s rewriting the rules of business.

“Corporate bureaucracy is becoming obsolete,” writes Alan Murray, in his WSJ article, “The End of Management.” Businesses built to thrive in the Industrial Age must now adapt to the Information Revolution. Murray observes:

Corporations are bureaucracies and managers are bureaucrats. Their fundamental tendency is toward self-perpetuation. They are, almost by definition, resistant to change. They were designed and tasked, not with reinforcing market forces, but with supplanting and even resisting the market.

Yet in today’s world, gale-like market forces—rapid globalization, accelerating innovation, relentless competition—have intensified what economist Joseph Schumpeter called the forces of ‘creative destruction.’ Decades-old institutions like Lehman Brothers and Bear Stearns now can disappear overnight, while new ones like Google and Twitter can spring up from nowhere. A popular video circulating the Internet captures the geometric nature of these trends, noting that it took radio 38 years and television 13 years to reach audiences of 50 million people, while it took the Internet only four years, the iPod three years and Facebook two years to do the same. It’s no surprise that fewer than 100 of the companies in the S&P 500 stock index were around when that index started in 1957.

Hangzhou, China

Access to information 24/7 has unleashed a new era where ideas can be developed, tested, launched, succeed and fail all in the span of less than ten years. Innovations and new information can spread in seconds via new channels, rendering age-old companies or even entire industries obsolete. To paraphrase D.H. Lawrence: Cool, unlying life is rushing in and institutions are curling up like burnt paper. Industrial Age corporate rules simply no longer apply.

We all knew this day was coming. In 1970, Alvin Toffler, opened his seminal work, Future Shock, with these prophetic words: “In the three short decades between now and the twenty-first century, millions of ordinary, psychologically normal people will face an abrupt collision with the future.”

“Future shock,” as he called it, is a “time phenomenon.” It is “a product of the greatly accelerating rate of change in society.” In terms of technological innovation, where knowledge is fuel, change is measured as the span of time from idea to practical application — that is, “time-to-market” or “time-to-takeoff.”

Toffler used a study by Robert B. Young at the Stanford Research Institute to illustrate the speed of innovation and the diffusion of technology:

Young found that for a group of appliances introduced in the United States before 1920–including the vacuum cleaner, the electric range, and the refrigerator–the average span between introduction and peak production was thirty-four years. But for a group that appeared in the 1939-1959 period–including the electric frying pan, television, and washer-dryer combination–the span was only eight years. The lag had shrunk by more than 76 percent.

Another futurist, Ray Kurzweil, in his book The Singularity Is Near, asserts that the “rate of paradigm shift (technical innovation) is “doubling every decade.” (This was in 2005.) For information technologies, he says, “there is a second level of exponential growth: that is, exponential growth in the rate of exponential growth.” He illustrates his point:

Thus, the twentieth century was gradually speeding up to today’s rate of progress; its achievements, therefore, were equivalent to about twenty years of progress at the rate in 2000. We’ll make another twenty years of progress in just fourteen years (by 2014), and the same again in only seven years. To express this another way, we won’t experience one hundred years of technological advance in the twenty-first century; we will witness on the order of twenty thousand years of progress (again, when measured in today’s rate of progress), or about one thousand times greater than what was achieved in the twentieth century.

As Kurzweil points out, all this rapid evolution is not necessarily dystopian or utopian. Human traits can never totally be submerged even as we gain more control over the universe and ourselves. Reality, its existents, and reason remain absolutes. We will never be infallible or omniscient, and there is no historical inevitability when it comes to man-made things or events. Much of our future will depend on the value of our ideas and on our ability to remain free and defend against overreaching government power or despotic movements. Heavily regulated or government-run industries will always lag behind the technology curve, bogged down by their bureaucratic, self-perpetuating natures.

In a sense, we are all becoming businesses of one, each with our own unique brand, yet we are part of a vast, interconnected community. No one is quite sure what the new “Wikinomics” will look like. As our lives improve and last longer, we only know the economic rules will keep changing. Like businesses, we will have to adapt—fast.

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The Topsy-Turvy World of Paul Krugman

Allison Taylor — Tue, 29 Jun 2010 19:53:18 +0000

In case you are not familiar with Nobel Prize-winning economist Paul Krugman’s take on our current fiscal crisis, he thinks the only way to avoid a longer recession (or possibly a Long Depression) is to have government spend our way back into prosperity. “Spend now, while the economy remains depressed; save later, once it has recovered,” he writes in his NYT article. “How hard is that to understand?”

It’s very hard, Mr. Krugman. In fact, it’s impossible to “understand” because the idea is irrational. For people who do not live in a topsy-turvy world where apparently money can be created out of thin air and has no basis in reality, it’s impossible to “understand” how spending more in the face of a massive, mind-blowing deficits is a good idea. When you are broke, you do not need to spend more. You need to stop spending and produce more. People being productive create money. Governments that arbitrarily “stimulate” the economy with future money that doesn’t exist create inflation, not prosperity.

I’m heartened to see that there is a growing backlash in the media (and among voters) against Keynesians and statists, like Krugman, who believe the only way out of a recession is to increase consumption.

Finally, voices of reason are pointing out that it was government intervention into the economy — (artificially low fed rates, a policy-driven housing bubble and government sponsored entities, Fannie and Freddie) — that got us into this mess in the first place and thus it cannot be government that gets us out of it. The following is an excerpt from today’s Investor’s Business Daily editorial:

The world is going to hell in a handbasket, Krugman suggested this week, thanks in large part to its refusal to follow his advice to the letter.

Actually, he has it exactly backward. Krugman was among those who encouraged the new Obama administration and the Democratic Congress to spend massive amounts of money early on in a kind of Keynesian frenzy to shock the moribund economy back to life.

It didn’t work. With a stimulus — a deficit, that is — of nearly 11% of GDP, our economy is barely growing, while unemployment remains shockingly close to 10% of the adult working population.

Even the European leaders are realizing that we have finally “run out of other people’s money” — Margaret Thatcher’s famous observation on the inherent problem with socialism. Obama’s insistence on implementing socialist and Keynesian policies is yet another power-grabbing tactic and a threat to liberty.

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Gary Kaltbaum Let’s Loose: Government Needs to Get Out of the Market’s Way

Allison Taylor — Fri, 20 Feb 2009 08:46:04 +0000

Part II: Why Obama Scares Me

I’ve been remiss in my blogging but that doesn’t mean I haven’t been following current events closely. I’m in shock. I can’t believe how fast the Obama Administration is moving toward a socialist economic system. I’m outraged that the Bush Administration set the stage. It seems like yesterday I wrote that Obama scares me, and while I was working to gather up evidence to show why he is a hardcore leftist, i.e. as hardcore as his cohorts, Rev. Jeremiah Wright, Louis Farrakhan, Bill Ayers, et al; he came into power and starting passing horrible, stupid laws.

I wanted to think that maybe he had risen to power pretending to be a liberal but that he might actually govern pragmatically. I was hoping for this because even though a pragmatist is dangerous, at least a pragmatist is not necessarily consciously evil. But the events of the past few weeks leave me no choice but to conclude that Obama is dangerous for this country. He is, as Robert Tracinski said, “[N]ow preparing to lead the left’s effort to reconstitute itself in the first serious way since the Fall of Communism.”

I am very concerned now. I am not afraid yet. Fear will come when as a writer I am silenced with threats. I do believe we are at a tipping point, though; and, we are perhaps nearing a state of censorship, if not now, then in the next three to five years for sure.

So, why am I so afraid of socialism as an economic policy? What, after all, is wrong with socialized medicine or free health care for all? Why not redistribute wealth to the less fortunate?

Because it is a bad idea and it never works. And, worse, wherever socialism is tried, it leads to total bankruptcy of body and mind. Socialism destroys life. It sucks the life out of people until they are rioting in the streets or standing in line for a loaf of very expensive bread. It expands insidiously, like inflation, until there is no entrepreneurship, innovation or passion left.

Socialism, like any truly bad idea, is anti-life because it goes against human nature. With socialism there is no justice. Socialism brings out the worst in people, not the best, as with capitalism. With capitalism, I work and I keep the fruits of my labor. If I want to give my money to you because you are struggling, nothing in a capitalist system stops this transaction. When government steps in and forces me to give up my money to countless, nameless, faceless others, it is nothing more than a Ponzi scheme intended to extract money from my bank account into the public coffers so that politicians can use that money however they want. Socialism is legalized theft; it is slavery. Slavery is bad.

Tonight, I happened to be listening to one of my favorite radio personalities, Gary Kaltbaum of Investor’s Edge. A great show if you are into economics and markets at all. Gary went into a rant during part of the show, and his words summed up my thoughts on these recent events and Obama pretty well. The only thing he left out was Greenspan’s treason in all this.

Here is an excerpt from his February 19th show: (His full webcast is here.)

So, I will ask the same question that I asked when George Bush and Hank Paulson came out with the TARP — otherwise known as ‘Taxpayers Again being Raped by Politicians’ — Hey, Barack, why do I, Gary Kaultbaum, handsome and buffed…have to pay for somebody else’s mortgage? Why? Why do I have to pay?

Hey, George Bush, why do I have to pay for GM, and Chrysler, and Citi-puke and Goldman Sachs and Lehman Brothers? Why?

Somewhere along the line, ladies and gentlemen, there has got to be enough of us, because I got news for you, 95% of us pay our mortgages! And we vote! Do any of you know they have taken $1.5 trillion bucks out of this economy to pay off crooks? And now a scamulous-stimulous plan that does nothing for nobody except a bunch spending pork bills that should be in separate bills to be voted on, shoved down your throats with scare tactics by Obama and his people just like the Bush people did his scare tactics with that stupid TARP plan.

Have any of you gotten it yet? That since their proposal of the TARP we’ve gone from 11,388 on the Dow to 7,465? So forget my opinion, forget everybody’s opinion. How about the market? This thing is screaming! This market is screaming at the Bush Administration and now the Obama Administration. It’s screaming, ‘Get the heck out of the way! Leave us alone! Stop creating money out of thin air and destroying what is left of what we have!’

And I heard Obama today with this Canadian Prime Minister, the next move is they’re going to fight ‘global warming.’ What global warming? The last decade was the coldest in god knows how long. What are these people reading? They’re insane! All of them! And we all sit there, and I’m so worried now that they’re going to tip us over! Obama said this is just the beginning, not the end! So you know what’s next: 50% tax rates! You know, we used to have 80% tax rates! They’re going to destroy us! All in the name of sacrifice. I’ll tell them to take sacrifice and stick it!

I work my butt off to earn the money that I make, and I pay a ton in taxes! And they want more, to give to GM, who has mismanaged their company for god knows how long! To give to Citigroup! Criminals! These are criminals! They committed crimes! Out in plain sight! And nothing!

Blah, blah, blah, blah, Barack Obama…65% approval….Not in my household! Yeah, I’m the guy that has lost no money in this bear market, but I want bull markets! I want to meet people throughout my day that are happy and are loving life and are creating jobs and are working hard and realizing that when they make a dollar they’re going to keep a lot of it!

And I watch this Barack Obama, ‘change and hope’, this guy’s talking about the end of the world every minute of every day! And don’t get me started on George Bush again — he’s gone — the numskull that he was!

Y’all out there better start listening and get off this politics thing, Democrat/Republican — put them all on the bottom of the ocean and that will be the good start! I am going to get louder and louder about this! Hopefully, somebody’s listening! Before the Dow goes to a 1,000!

Thank you, Gary, for saying this. (Read more by Gary at http://www.garyk.com.)

Make no mistake — a socialist agenda like the one Barack is leading is nothing more than a power grab over everyone’s freedom. If you do not have economic freedom, i.e., the ability to choose how you make and how you spend your own money, you have no freedom at all.

And, when a society loses freedom, especially freedom of speech, it gets ugly. By ugly I mean you see more and more violence. In a full socialist system, we all work for the State, and the State controls us. During the transition from freedom to statism, people get angrier and angrier because they sense the injustice of it all. They start to resent that they have less money, but they don’t understand why they make less, why there are fewer jobs, or why things cost more. They start lashing out. And then government uses that violence as an excuse to grab more power.

Is this what we want? Because we have to decide that answer now. Time is running out. We are at a tipping point. We have two years to vote back in supporters of a free market and to vote out the Democrats, who are obviously more interested in saving crooks and supporting their own elitist agendas than worrying about the average person working for a living. When inflation hits because they are printing money, it is going to be ugly.

Margaret Thatcher once said, “Socialism works until you run out of the other guy’s money.”

We’ve run out of money. We are broke. To start down the path to total socialism (and nationalism) now is really to destroy America and to begin down the path to totalitarian dictatorship with all the bloody implications of that prospect.

Does that sound like hyperbole? Ask yourself why they (Bush and Obama) use scare tactics to move their policy changes along so swiftly. Have you ever seen such speed in Congress? No, they are seizing on the moment, i.e., the housing bubble burst that they created with their crookedness and lies; and they are making a good old-fashioned power grab. A power grab just like Barack Obama’s Chief of Staff, Rahm Emanuel, has opined he doesn’t want to miss: “You never want a serious crisis to go to waste. And what I mean by that is that it is an opportunity to do things that you think you could not do before.”

The Democrats never thought they could get socialized medicine or nationalized banks in this country. Now, with majorities in both the House and the Senate and control of the executive branch; they are like kids in a candy store, frothing at the mouth over our money. And they just got $1.6 trillion or $1.7 trillion of it, give or take a few billion.

The actions of the current administration are clear: They do not have your best interest at heart. And I mean any American, regardless of ethnicity or religion. People who want power over people don’t care what color you are. They just want to take your money and give it to other people while they surreptitiously scrape a few million or billion off the top for themselves. They want to create a massive, helpless social welfare class so that they can create an even more extravagant ruling political class system for themselves.

I agree with Gary Kaltbaum — throw them all into the ocean. Vote out anyone and everyone who does not fight against these so-called “bailouts” and “stimulus packages.” Vote out anyone who talks doom and gloom. Vote in anyone who supports more freedom, freer markets/less regulation, capitalism, and more self-responsibility.

Don’t let it go.

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Peter Schiff’s Economic Predictions (Videos)

Allison Taylor — Fri, 30 Jan 2009 05:36:54 +0000

The video below shows Peter Schiff, an investment advisor at Euro Pacific Capital, making predictions over the past few years about the current recession and real estate bubble. He was absolutely right, in stark contrast to the other advisors who were recommending Merrill Lynch and Goldman Sachs stocks. No one wanted to listen to his arguments then. In fact, they ridiculed him.

Some people are still criticizing him today, probably the people who don’t want to admit that they were wrong — or that the U.S. economy is in shambles and that deficit spending and printing money will make matters worse. Schiff’s critics are the same people who want to believe that America can spend its way out of debt. They are the same people who thought housing prices would never fall, the same people who think deficit spending and inflation are good things, the same people who scoff at the idea of returning to the gold standard, and the same people who think we need socialized medicine. (For what it’s worth, Mr. Schiff supports returning to the gold standard and abolishing the Fed.)

To all critics of the free market and the Austrian School of Economics, I offer one of my favorite Ayn Rand quotes:

When I disagree with a rational man, I let reality be our final arbiter; if I am right, he will learn; if I am wrong, I will; one of us will win, but both will profit.

Let’s learn from Peter Schiff. I don’t want to see America fail. But if we are ever going to get out of the economic mess we are in, we have to face reality. We have to go back to sound, fundamental principles. The Fed should not be running our economy. We need free markets and less regulation, not more. We cannot keep spending beyond our means with impunity. We are broke. We need to do what broke people do — stop spending, save, and produce things that people will buy.

If you enjoyed this video, you’ll also enjoy this interview with Mr. Schiff at Mises.org, dated April 2008, and you’ll probably enjoy watching these videos at Common Sense Investor.

HTs for the Schiff video: Leitmotif’s blog and Diana Hsieh of Noodlefood. Thanks!

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