Capitalism/financial crisis rule of thumb

I've written much on this subject but tonight want to just give you a rule of thumb as a basis for discussion of where we should go and what we should do to fix the incredible mess.

If you read in my previous post the excerpts from FDR's inaugural address, it will be helpful for you to understand the point I am about to make.

Somewhere between FDR's time and today, modern society has, to their error and peril, redefined citizens of this country as "consumers."

In other words, the entire national psyche has stopped thinking of people as individuals (and communities) who "have lives" and replaced them with an image of "consumers."

In fact, this view of people as being only consumers has been codified into every business structure, particularly large businesses and corporations, by government laws and regulations, by the tax code, and by the coarse culture at large (e.g. news, entertainment and advertising).

The concept of "jobs" is one of the battlelines drawn in the sand regarding the question of whether people are living human beings or consumers. Those who tend to think that people are living human beings tend to, like FDR, focus on the vital importance for everyone who wants and needs a meaningful job to have one. That is because jobs are the activity that human beings engage in, in order to continue to live.

Those who oppose emphasis on jobs claim they do so because "job creation programs do not work," but they are actually revealing their almost robotic programming that people are not people but "consumers." That is why they parrot over and over "let the market decide," and "the government is not good at fixing problems" and "we must have 'free markets.'" They believe, some of them sincerely, that they advocate the "American dream," but instead they are part of the American nightmare.

Young people in particular, do read almost any literature from the time of the 1930's and 1940's, from FDR's time, and keep what I said in mind and you will be struck by the difference. FDR sniffed that very bad change in the wind, which is why he was so harsh in criticizing immoral business practices, such as exploitive banking. Yet even he who was so visionary would not have foreseen a time such as today where American society and each other so often think people as simply being "consumers," no longer concerned with the dignity of day to day life, including a job.

This country will die a miserable death if we do not regain an awareness of people as individuals with needs for living, not needs for spending. People need the basics, what I have called sustenance portion of capitalism, and that includes good and lasting jobs. It is then the excess, the surplus of their labor where they can engage in the activity of consumerism. That is totally different from the current situation where people self manipulate and manipulate each other as beings that are only open maws of consumers. I do not understand how any scholarly or thoughtful "free market" advocates do not understand that the reduction of humans and their lives to the definition of "consumers" is just as bad as if the government and each other viewed humans as potential military draftees and that was their sole identity.

Work with me on that analogy. To better understand how human beings and their lives have been enslaved and chained into the identity of "consumers," think about what our country would be like if we did not have an active military draft, but that every human was viewed as having value only as a potential military draftee. We would have physical education programs for our kids that emphasized combat skills and readiness. We would rewrite the curriculum of our schools to produce good potential soldiers. We would have recruiters everywhere extolling the virtue of service, perhaps one located in every classroom in every school. The recruiters would point out during studies those skills and world events that are the most interest to potential soldiers and the best role models. What would entertainment be like? Movies that pine for the draft and glorify it. Fashion? Clothes that reminded the wearer that they could be called to service at any time. What would the job pecking order be like? Jobs that would support a draft would be highly esteemed, while those that had nothing to do with the draft would be viewed as low status. Cars could be designed like small tanks so that civilian drivers could "get used to" the feel of a tank, or another war machine or vessel, "just in case."

So do you see how the mindset of the people when they surrender the idea that they are citizens and human beings and are instead "a verb" has totally dire consequences? In my analogy the humans in that scenario are no longer people-citizens-but a verb (actually an adverb), "ones who might be drafted." Today we are no longer humans but we are a verb, an adverb, a noun and an identity based on one manic activity, which is to "consume."

President Obama is entirely correct to focus on jobs as the cornerstone of recovery. Yes, jobs programs can be messed up, but the identity of the human beings is correct and sound, unlike in this nightmare of a consumer driven economy and worse, as self identity as consumers. Even faith has become far too consumer oriented, where "product" is packaged and consumed. This is a disaster, one that is based on a total misunderstanding of genuine capitalism (as I've explained in many previous posts; if you are new just follow the capitalism and financial crisis labels for more of what I've previously written).

I cannot overemphasize and just repeat my draftee analogy the problem with human beings and their lives being viewed as simply variations of consumers. This is not semantics because as I show in my analogy, an erroneous view of humanity cascades and infects all aspects of individual life, curtails freedom and demeans the individual and their local communities. That, by the way, is another byproduct of the trend away from supposedly "inefficient" local business to multi corporation "centralized" banks and other service providers or product producers. When locally owned business dries up and vanishes you have people who view multiple states, the entire country, and even globally humans as being "current consumers" and "potential consumers." They are no longer people living lives and living in communities. They are only consumers of your products. So any genuine job revitalization must be understood as a local resource that enables local residents to have good ongoing lives, not fill the coffers of people who are far away and again, just view job creation as a way to stimulate consumption for their own benefit. That is a complicated topic that needs its own post. My point remains to you, however, that jobs are not just "the way that those consumer-robots can start spending money again."

I hope you have found this helpful. Before it is too late would be nice.

Human health perspectives, case study, analogy

There is one really crucial point that I want to convey in this particular blog post. Humans have barely begun to scratch the surface of understanding the complexity of their own physical, mental and emotional biology and part of the problem is that they do not sufficiently understand that they evolved to be a certain way that is not at all reflective in the modern life style.

In other words, the human organism, both body and mind, is structured and functions the way it is because it lived a more natural life for millions of years. Technology and enforced social structure at first provided an evolutionary and survival advantage to humans, but now the balance has tipped so that much of the routine activities one takes for granted each day are actually contrary to how the human body and mind evolved.

Let's use an analogy, one that is a bit of a stretch, but everyone can relate to it. Thing of the human body, mind and emotions as an automobile. Roads existed before automobiles did, since they were the result of footpaths, by both humans and animals, and eventually were widened and paved to support horses and wagons. Thus when the internal combustion engine was discovered (first for trains that ran along their own roads, called tracks) and cars were developed, they used the same roads and were even called horseless wagons. Cars were developed to automate a function that already existed, which was to move along a pathway and transport people on land.

Suppose that over the past hundred years that the waters of the ocean rose so much that just about all land was under at least a few inches of water all the time. Humans have a huge investment in cars and they'd still work, so obviously everyone would have to get used to driving cars around through water all the time. A new set of problems would arise, so people would tinker with cars, perhaps making bigger tires so the chassis would be farther up and more out of the water, for example. But people being stuck with cars would continue to use devices that were designed to run on dry roads in the new theoretical water covered world.

Problems would spring up (no pun intended) because cars were not originally designed to be in continually wet surfaces. What happens when the exhaust pipe is under water? Will the engine quit when hit by a wave? Cars can float away and capsize in just about a half a foot of rapidly moving water. Would traffic reports now report local tidal action on the roads rather than traffic jams?

OK, so now let's assume that several generations of mechanics were born and raised knowing only the water covered world, not the dry land masses that cars were originally developed for. When they sit around and talk about cars, how much would they understand about why cars are developed the way they were? They would not understand it much at all.

For example, they might look at windshield wipers and say, "Why did they put them 'up there?'" They should have put a propeller under the car so that it can move better through the water. They would not understand that there was no 'water to move through' except from puddles of rain and that visibility, not boat type of safety, was the only need for wipers or "propellers."

So much of how cars were developed would seem baffling or like egregious oversights to these young mechanics who never knew the dry world where cars traveled at most through rain. The most incredibly obvious thing to those of us who drive cars in the normal world would seem weird, mysterious, or stupid to the young mechanics who modify and fix dry world cars that operate in the wet world that is constantly covered with several inches of water, day in and day out.

Likewise the humans of the past hundred years understand very little about the millions of years of life that the human body and mind evolved for and lived within, and wonder why the body "breaks down" or "works the way it does" as it tries to make do in a world that is not structured now the way it was evolved for.

The most obvious example is the daytime biological clock. Humans were evolved to wake with the sunrise, perform all of their work, child rearing and recreation activities before sunset, and then have quiet evenings with low or no lighting and then sleep. Huge chunks of the human DNA and chemical balance evolved in that simple formula of concentrated physical and mental effort during day light hours, and long periods of sleep at night time, with low light and reduced activity in the evening, since only natural star and moon light or some candle, oil lamp or fireplace light was available.

Now, think of all the ways that the natural body is now forced to be unnatural in the modern world. List them for yourself so that you can use this as a comparative exercise: if human bodies were evolved to be active from sunrise to sunset, with diminished visual and mental activity in the evening, and a long period of overnight sleep, how many ways do we break that formula today?

Working shifts comes to mind, but do not focus on that too much since there have always been those who were "night watchmen" and others who had to adjust to different work schedules.

Instead, think about how desk jobs and school enforce physical laxity during the day while only moderately stimulating the mind. Instead, people are forced to be mentally stimulated more in the evening (homework, bill paying and electronic media usage), just when they are supposed to "wind down" in low light and stimulation conditions. What is elevated during the day? Corrosive stress hormones and other chemicals. When humans farmed and hunted they were not in a continual state of arousal. There would be the need to react quickly to prey or to a sudden weather condition or mishap, but in general people only got the occasional as needed "adrenaline shot." Now we have seething people everywhere in a constant state of stress arousal but having to contain it, whether it is due to economic crisis, child care crisis, oppressive and stressful workplace, and physically sedentary jobs or classrooms where kids are even drugged into being "non hyperactive" and thus "compliant."

Virtually everything about modern life, both the infrastructure and the mindset, are in opposition to how the human body, mentality and emotions have evolved and are naturally programmed and sustained. Life was difficult and often brutal for much of human history, but humans thrived and increased. Why? Because life was still structured to leverage human strengths and evolutionary "talent." But now modern society is infested with "secret weapons" that work against the human body, mind and emotional well being. All humans are consistently overstimulated while having at the same time to suppress much of the over stimulation in order to conform to the expectations of the job or activity AND at the same time they have less physical activity during the times in the day when they are supposed to, according to their own genetic evolution and profiles.

This is the heart of the physical and mental health crisis in the world today.

Here's an example. Can you believe there is a mental disorder called "SAD," "Seasonal Affective Disorder?" This is when people get depressed due to low light levels and so forth during the winter. In other words, people who still respond to the world naturally are diagnosed with an illness, while those who seem on the surface to not mind or respond to seasonal changes are viewed as the "healthy" ones.

Think about it. People who experience SAD are the ones whose bodies are correctly saying, "Hey! The seasons have changed and the body and activities should change accordingly." Yet we no longer have intensive work summers followed by harvest and then reclusive winters as did our ancestors. We are supposed to be jolly and carry on with our "work" or studies or other activities no matter what the season, what the daylight or how our bodies try to recapture their survival skill rhythms. People used to be thrilled at the short days and dark wintry season because they weren't busting their backs working in the fields. The crops were in and they were tucked and hunkered down for a low activity season. They didn't get "depressed" or the 'winter blues!'

Much of the global epidemic of depression is from the feeling of inadequacy-no matter how much one 'achieves'-because so much of modern activity is forced into slots that down in the soul feel unnatural. People are forced to live less in sync with reality and more and more in an artificial and enforced timetable of activities and expectations that are contrary to the body's natural evolved survival traits. Look at the war against "fat." I mean, no one used to be "fat" in the way that it is meant today. Fat is the body trying to do the right thing in circumstances that have become miscued regarding the daily activities that humans were evolved to partake in. I cannot believe how much people are now warring against their bodies even as they try to do the best that they can.

Think back to the dry land cars that are now forced to operate in wet land. What if the modern mechanics who only know of wet land but have to maintain the dry land cars got "angry" at the parts of the dry land cars that don't seem to work "optimally" in wet land? Rather than being grateful that dry land cars worked at all in the wet land environmental crisis, they were enraged at the dry land car parts that weren't totally "perfect" for wet land? That is what humans are like with each other and with their children, and now our children have learned to be enraged at themselves because they don't "measure up" to the insane expectations of modern life. Rather than being grateful that the dry land cars kept on working in the wet land crisis of change and their complexity and ruggedness praised and understood, people are made to feel "at war" with the dry land cars and their original makers. They learn to hate themselves even as they successfully drive their dry land car. They put their dry land cars in situations where they must break down (like drive them into a lake) and then gloat with anger and self loathing.

It's a real mess; I'm not going to lie to you. I see one moronic health research study after the other and wonder if people are ever going to understand themselves before they have completely come undone. Defiance of natural body rhythms, day and seasonal activity, lack of sleep, over electronic stimulation and the corrosive effects of social stress have damaged the human race far more than any, and I mean any, of you realize. And whenever people have warning signs you view it as something to warp even more in the "cure" rather than understand what is really going on. The refusal to work together to make congenial, honest and natural work, school and social activity settings that are mutually supportive is one of the most destructive of the changes in society.

This is another reason why so many have become less than tuned in with reality. The human mind is able to look at an object that is partially hidden by another object and infer what it looks like in total. For example, if one dry land car is parked partially blocking another dry land car, even though you cannot see the entire dry land car in the background you know that it is complete and looks the color and size, blah blah blah based on what you can observe. Human brains are evolutionarily designed to constantly "fill in the gap." Thus when you flood it with partial over stimulated images of unreality (TV, Internet, video games) the brain works to make real and false connections. So, for example, you see accurately the porn, but you then create an inaccurate mental linkage regarding reality of day to day priorities. Where once a man would feel pride and pleasure centers at having a good wife and happy healthy children, the man feels pride and pleasure center at seeing hot women lesbian kiss.

I'm not being droll and I'm not exaggerating. I'm explaining that just as too many killings in the TV and movie entertainment media have enforced unrealistic based brain circuitry, so too has overstimulated "reward" fragments of input, such as porn, overcoming the survival traits and the self esteem regulatory mechanisms that evolved in the human animal over millions of years. It then becomes lose-lose. Humans lose the joy that they used to obtain from natural cycle activities, including marital love, and they never gain what they are now programmed to crave in the new addiction. They lose what they had, or could have had, and never gain the theoretical "new world" continual gratification. That is why all addictions are called "progressive," not because they are liberal (LOL), but because they are the pot of gold at the end of the rainbow that does not really exist and is only further and further out of reach, and so more and more addiction activity results in less gratification and/or more destruction of the norm.

I'm not just ranting and in fact, just yesterday it was on the news about how something like twenty-five percent of people view porn on the Internet at work. Again, this has nothing to do with being a prude. I'm saying that such activity is depression and stress increasing because it is contrary to the biological and genetic evolutionary structure of human biology, mentality and emotional health. Humans are not evolved to be continually self stimulating during all hours of the day and rather than a "release" or a "diversion" or an "enhancement" of one's "sex life" (or a substitute for not having one) it becomes a barrier to both having a real life in that regard and also becomes a biological and emotional/mental hindrance to health and ultimately satisfaction. Simply put it is making artificial and corrosively stressful what should be a naturally flowing goodness for every human being.

So as the population is seething and overly stimulated and stressed (often at their own choice), you wonder why there are sudden heart ailments even among the young, cancer, bipolar, depression, autism and all sorts of woes and ailments at levels they have not been seen before? Remember that as I blogged just yesterday humans are also consuming in their food, water and through their environment untold numbers of chemicals that have detrimental effects. Again, the human body is a marvelous thing and can withstand a lot of cleansing (that is what the liver is for, no "detoxing" regimes please!) But it is not evolved to withstand constant dosing of strong chemical cleansers, other people's medications in the drinking water, preservatives and food additives and the emitting of fumes from so much plastic and other artificial building material surfaces.

It's like the angry wet land car mechanics so resent the success of the "badly designed" dry land cars that they now throw acid on top of the car since "that's the modern way to live." It's a mess and I wonder when people are going to wake up and be more generous and kind about their own bodies and minds and each others'. I hope that the car analogy helps because like I said, it is a bit of a stretch but one that everyone can easily grasp and understand. Sigh.

Capitalism/financial crisis with history excerpt

Today I want to explain a kind of catch bag of economic concepts. While I am fully aware of professional terminology such as “the fundamentals” and “money velocity,” I’m not going to use them for the reasons I’ve explained previously, which is they are definitions used to describe warped and skewed capitalism, not genuine capitalism as it first emerged in its true form. I had the misfortune of working with highly paid and arrogant bank economists and I observed first hand that their education, and subsequent “Unreal Greed Street” job experience, hardened their misunderstanding of the origins of their own profession. Also, I obviously am not trying to train the people who read my blog to do more of the same of what has not only not worked, but was incorrectly crafted in the first place. However, I mention my background so that I can reach out to economists who genuinely do wish to do well and help the country-and all of the people and also, by implication, those in the world who depend upon the health of the USA to ensure their own. There are so many well formed ideas that I have, and so much background information that I would need to convey, that this is why I decided to lightly touch on a number of topics rather than go in depth in any one of them today. I know both the financial experts will get what I am saying nonetheless, as will those who have been following what I’m teaching as concerned citizens. I especially want at this time to reach out to local governments (states, cities, towns, counties, parishes and so forth) in order to help them cope and be heartened that there is a reasonable approach to solving our problems, one that is still firmly grounded in the Constitution.

So here I will introduce and explain a number of topics, in no particular order, just as they occur to me today, having been on my mind for many years.

The first is to understand money (in the form of currency, not theoretical measures of wealth) and how to properly assess the best uses of it. The trouble with money, and let’s use the American example of the dollar bill, is that like I’ve explained previously, people jump too quickly to thinking about some end goal without considering how the dollar bill has made its way there. Think of a dollar bill in an analogy (you knew one was coming, didn’t you?) Let’s think of a given dollar bill as an old fashioned antibiotic, such as penicillin. I’m not selecting penicillin as a hidden symbol of the dollar bill being less effective or out of favor, but because penicillin was the world changing discovery that first allowed humans to treat themselves successfully against infection. Likewise the use of standardization of currency was a wonderful development that allowed humans to do many things they could not otherwise do. Also I’m not implying that only the sick need a dollar bill, LOL, (though it seems like only the sick are the money managers, but that is a whole other problem!) I want to use the analogy so everyone can understand how a dose of money works its benefit throughout the economy and just as importantly, how it does not work as a magic cure all for every situation.

When doing some important financial planning task, such as trying to stimulate a local economy, there is a concept of looking at how quickly a dollar bill moves within that area, and whether it stays in that area, and how many hands touch and presumably benefit from it. This is a wise concept but one that has been totally misapplied and has become misunderstood. Would be economic planners sometimes think that if a dollar touches, let’s say ten local merchants, that it has done more “good” for the “local economy” than a dollar that touches two or three local merchants. But that is not always true. Using the penicillin analogy, if the penicillin touches ten local merchants, but only one of them was sick, what was the benefit of that? It’s almost as though the genuinely sick merchant was lucky to get a touch of the penicillin dollar bill. Suppose the dollar bill that touched “only” two or three merchants, however, was targeted to touch those that who were genuinely sick. Therefore the analogous penicillin dollar bill proved the wiser investment where it touched “only” two or three genuinely “sick” merchants than the dollar bill who touched ten merchants, only one of whom was “sick.” Economists, local planners and the hidden money plutocrats and mandarins who pull the strings behind the scenes both innocently and deliberately misunderstand this concept and abuse it accordingly. So my first lesson is that money that does not touch the right hands and settle in the right places does not perform its function.

Now, before I hear the howls of those who accuse me of wanting to “redistribute wealth,” you are totally wrong and I am not saying that. I am telling you how to invest your money properly, not trying to take it away from you. I have seen over the decades people make what they think are both wise and compassionate investment and charitable donations, and who might as well have burned the money in the parking lot, because they did not understand what I have just explained. I’m not trying to “redistribute your wealth,” I’m trying to be the wise investment planner that you never had as your partner. So whenever one assesses a dose of penicillin dollar bill, do not be tempted by visions of that dollar bill going from let’s say gas station to grocery store to bank account to paycheck to buying some home furnishing and compare it to some other use of the dollar bill and immediately conclude that since the first use, to use a baseball analogy, “touched five bases” that it is automatically more “stimulating” to the community that let’s say a dollar bill that went into a much need school repair. In the latter case, that dollar bill might only have moved “once,” from the payer hands to the contractor payee (and to keep the comparison pure, let’s assume the contractor sent the earned dollar out of state and had brought supplies in from out of state), nonetheless that dollar bill might have had a cascading economic benefit that was as if one hundred dollar bills “magically” appeared. The wise penicillin dollar bill might have kept a few more kids in school who might have dropped out and turned to crime, it might have stimulated more after school scholarly or sports activities for a dozen other kids, it might have avoided some insurance payout due to decaying school conditions, and thus avoided a future loss, etc. I know for a fact that hardly anyone understands and uses that concept of measuring a penicillin dollar impact on a local community or in fact in any given fiscal problem. Instead they retreat to the standard talking points, which over time they have come to believe, which are, to list just a few, “trickle down,” “keep the money local,” “stimulate local business,” “give back to the community” and so forth. Thus both the left and the right totally misunderstand how to properly gauge and manage the best impact of any penicillin dollar in either their personal planning or their community, or national, fiscal spending.

I’m reminded of one of President Grant’s stories from his memoirs and will repeat it here because you will see how that mindset crept into society as it happened. Here Grant sees himself as the average educated white man who understands money (this was in the beginning of his Army career), so please do not read this with the usual prickliness about racism, but consider that he thought he was actually observing an ignorant practice by the local Native Americans. That is one of the problems with today (I first observed it in my Ivy League university in 1971-5), which is that people refuse to read any further and learn from historical literature if they think the author was, despite the context of the times, “racist” or “sexist.” So if you want to own your own mind you need to learn to read without wincing and prejudging the observations that people made during certain times in history, period.

OK, so think about the penicillin dollar when you read this.

When I was stationed on the Pacific coast we were free from Indian wars. There were quite a number of remnants of tribes in the vicinity of Portland in Oregon, and of Fort Vancouver in Washington Territory. They had generally acquired some of the vices of civilization, but none of the virtues, except in individual cases. The Hudson’s Bay Company had held the Northwest with their trading posts for many years before the United States was represented on the Pacific coast. They still retained posts along the Columbia River and one at Fort Vancouver, when I was there. Their treatment of the Indians had brought out the better qualities of the savages. Farming had been undertaken by the company to supply the Indians with bread and vegetables; they raised some cattle and horses; and they had now taught the Indians to do the labor of the farm and herd. They always compensated them for their labor, and always gave them goods of uniform quality and at uniform price.

Before the advent of the American, the medium of exchange between the Indian and the white man was pelts. Afterward it was silver coin. If an Indian received in the sale of a horse a fifty dollar gold piece, not an infrequent occurrence, the first thing he did was to exchange it for American half dollars. These he could count. He would then commence his purchase, paying for each article separately, as he got it. He would not trust any one to add up the bill and pay it all at once. At that day fifty dollar gold pieces, not the issue of the government, were common on the Pacific coast. They were called slugs.

Now, here is what Grant meant by saying the Indians would pay for each item. Suppose you went to the grocery store to buy milk, bread, meat, a carrot and an apple. You let the check out clerk total your purchases and you pay once the total, receiving change. However, the Indians would have the clerk ring up the bread, and then pay for the bread, ring up the milk, and then pay for the milk, ring up the meat, and then pay for the meat and so forth for the five full separate transactions. Grant said it was because they did not trust the clerk to add up the total correctly, but you know, do you not see now, that it was more than that. The Indians maintained control and value judgment over each item piece by piece. The value of each individual item was not hidden in the total. It’s not that they just didn’t trust the adding up of the total (and I bet they had good reason to not trust in many situations!) Even if someone could prove that the clerk was always honest and that the total was the same as each price individually, they still would have stuck to the individual payment of individual items. This is because despite being “ignorant” they instinctively understood both a benefit and danger of capitalism. The benefit of capitalism was money they could trust (even though the slugs were not minted by the government, they were based on the gold standard) and so they readily accepted as wise that development of capitalism, which was a trustworthy standard means of exchange of a precious metal. However, they instinctively recognized that a danger of capitalism was the tyranny of the “sum total” mentality. When one manages money using sum totals, the meaning and wisdom of individual purchases is hidden and indeed lost. We all experience this feeling ourselves when we “throw a few things in the grocery cart” and then find a higher price than we expected at checkout, just because we no longer pay attention to either the individual item’s merits of purchase or the running sum total. Now, imagine an entire people, and entire world, that only looks at sum totals of millions of individual decisions, never analyzing the impact or the wisdom of any one of them. That is what I call the tyranny of the sum total.

So I’ve introduced to you here two concepts that it is important that everyone genuinely understand. One is the need to examine alternatives when deciding how each “dollar bill” is used in order to truly discern the best usage, and not to implicitly assume that frequent rotation through a lot of hands is “good” when in fact it is often what I call a “shallow” use of money. Money that is used shallowly is flash money, usually paid for transitory goods and services that is usually justified as “adding salaries to the community” yet does not “stick” to any place in the community where it can genuinely generate on its own “new dollars,” almost out of thin air. The second concept is the tyranny of the sum total, which we see everywhere from the problem of the bloated and still ineffective Federal budget, all the way down to a business man or woman accepting a plan from one of their staff that is “bottom line” and has not been examined not just for accuracy but more importantly for more substantial individual choices of expenditure and alternatives that could be more meaningful.

It is critical that today’s money managers, no matter how great or small your budget or investment pool, look at each item, rather than the sum total, and act as though you had never heard of such a thing, and need to be persuaded anew that this is a necessary or wise usage of funds. That’s the third concept that I want to introduce which I call “what if” financial analysis. It’s different from the concept of “valuation,” the “value chain” or “value analysis” because it constantly questions the chain of production and assumptions itself, rather than valuing the pieces of production that one takes for granted and never questions. People are incredible creatures of habit and easily slip into both information overload and what we call in the vernacular “being on auto pilot” in our decision making. A lot of this is not malicious, but those who have ruined the economy are guilty of this kind of thinking themselves and at the same time exploiting it in others. Here are some examples so you know what I mean.

The entire problem of providing social services and welfare is an example of sides that hardened into two alternatives (“provide welfare” or “make them work”) and the result is a horrible and at times dastardly mess. This is the tyranny of sum total thinking that totally lacks “line by line” “what if” thinking. Welfare is an example of “one miserable disaster fits all” sum total planning. I don’t need to list how many ways welfare as it is constructed today has failed individuals and society as a whole, especially the children. Yet whenever someone mentions that welfare is the nightmare that it seems as though we will never wake up from, the “other side” can’t wait to jump in and have a hardness of heart that is shocking. Both sides are “wrong” because both are enslaved to sum total mentality combined with a lack of visionary and genuinely well intentioned “what if” analysis of real alternatives within the system. It would take me about one hour to list ten different scenarios for providing necessary services for the needy, tailored to the actual context of the needy that we are discussing (their community setting, for example) rather than assuming that throwing penicillin dollars, to go back to our analogy, hits the right hands. Yes, in one hour I could give people a list of at least ten alternatives that they could select from that would address a particular welfare based problem or case study. Yet no one even tries to come up with a third alternative these days, they just fall into arguing their two sides, each atop an ignorant sum total tyranny. Welfare as it is structured today is a disaster, and so is the touted “put them to work” “alternative.” I cannot believe how willfully ignorant humans seem to have become and what miserable failures everyone has become at analysis and problem solving based on both wisdom and compassion.

I have just paused for a minute in order to resist slipping into one of my rants about the freak show society. What triggered it was what a woeful spectacle “job creation” has turned into, and I dearly hope and pray that with the new administration they recognize that meaningful jobs are not just the means of getting a paycheck for producing more garbage to throw into society as the “product.” In other words, I totally support the vision that the new administration seems to have of real jobs related to infrastructure and schools, for example, rather than enabling shake your money maker entertainment “jobs.” Entertainment is a vital sector of the economy and you might be surprised to hear that I do not oppose entertainment such as casinos, on principle. But the incredibly shallow output of much of American “entertainment industry” rather than infrastructure entertainment, such as Boys and Girls clubs or local sports and music programs is shocking. So when one argues that people need to “get a job,” its more than just a job because in this economic crisis, those who can make these decisions at the federal, local, corporate, agency and individual levels must make some wise decisions based on alternatives, for once. Here is an example.

Suppose that I have one hundred penicillin dollar bills, and I want to create a business so I can earn a good living, create some jobs and help the community. I decide to manufacture violent video games because it will “provide the poor with good jobs.” Huh?

That’s not free market, despite the fact that both the left and the right will argue that, saying “Well, if the public didn’t want violent videos they would not buy them.” Yeah, but you could have thought about creating a business that is genuinely “free market.” How about if I had used the one hundred penicillin dollar bills to open a Boys and Girls after school club where they could apprentice making video games under ethical teachers? I could have generated salaries (the teachers), made money (by selling the supplies), and gotten dozens if not hundreds of local kids to learn skills (video making and also business and creative skills) and best of all, THAT is free market. After all, suppose you had a thousand students in your business lifetime. Many would not go into that career but it was character building. Some might have become young entrepreneurs themselves in civic areas since you did not bind them to just learning the lowest common denominator of product. For example, one of your students might have developed an idea for a video game that teaches local kids how to discover areas of pollution in their community and how to be a genuine activist! A few might go on to make violent video games, LOL, but that is free market in truth, not brainwashing. Maybe you would not be a video game millionaire. But see, that’s the problem with the mindset today. I referred to that in earlier blog postings as being the “make a killing” mentality instead of the “make a good living” mentality that capitalism is genuinely founded upon, and needs as its basis, not greed, or it is doomed to dismal, crushing moral and fiscal failure.

I’m just painting a vivid example but one that is not too far off of the mark.

I’ll say “it’s a wrap” on this particularly posting, having introduced three economic concepts, and there’s of course much more, but these are essential to reorienting the thinking that is killing this country. I hope that you have found this helpful. To summarize:

1. Always analyze the flow of dollars and do not assume anything about the benefit of any particular dollar volume, location or frequency without examining purported benefits and alternatives thoroughly, especially looking for dollar usage that beneficially “sticks” and generates new dollars.
2. Beware of the tyranny of the sum total and wherever possible examine each item, questioning if a better usage or placement of dollars is possible on that “line by line” basis. Use "what if" analysis to generate alternatives for even what one thinks are obvious inherent portions of investment.
3. Genuine free market means the open ended creation of both jobs and skill sets that are wisely discerned and targeted for maximum benefit and both economic and civic worthiness.

Capitalism/financial crisis tutorial Part 13

Here I will teach you to understand that the definition of "capitalism" is not the stock market.

As I listen to commentators and their analyses and opinions, even the ones I respect make a very fundamental flaw. They mistake one tool of capitalism-the stock market-as actually "being" capitalism. That is not only false but it is dangerous and exactly why the world is in this mess. The stock market is not capitalism. In fact, capitalism can flourish in a country where "stocks" and the 'stock market' were never even invented.

Let me repeat the true definition of genuine capitalism. Capitalism is the selling of surplus goods and services in order to obtain cash. By surplus I mean goods and services that are beyond what an individual or family needs for its own survival (subsistence). Thus a farmer who sells corn beyond what he needs to feed his own family, in order to obtain cash, which he can use ("invest") to buy more goods and services for his family is a capitalist. Thus, if you had a country that was comprised only of people who grew their own food, made their own clothes and built their own homes, and then sold "extra" of whatever they made in order to raise cash by which to obtain other goods and services would be a totally capitalist country.

That simplistic and pure form of capitalist country would be, therefore, a genuinely capitalist country without banks, loans, interest earned or paid, corporations, financial instruments (such as stocks) or the market in which they are bought and sold (the stock market). You can have a totally pure and successful capitalism without a single bank, stock or interest payment in the entire country.

This is one reason that Communists used to call western countries and their people and allies "capitalist tools." They actually correctly saw that the tools that people invented to support their theoretical (but warped) capitalism have taken over, becoming the "definition" of capitalism and smothering the flourishing of genuine, traditional capitalism. In other words, westerners actually think that capitalism is defined by one and only one of its tools, the stock market. Communists were able to laugh at capitalists and make insults based on that truth, without even realizing how right they were, LOL. See, Communists (not to go too far astray on a political tutorial, but bear with this diversion for a second, because it is constructive) actually in their heart of hearts remained in touch with a truth of genuine capitalism that the western capitalists themselves actually forgot and abandoned once they surrendered themselves to "make a killing" capitalism rather than "make a good living" capitalism. The original Communists actually held onto one of the foundational necessities and "ideals" of pure capitalism long after actual capitalists forgot and abandoned it. That is the idea that there is an individually worked but collectively shared mechanism for elevating all people to a good subsistence level, and then creating surplus to raise everyone equally to greater and greater standards of living. Of course Communism is such a disaster that it did the exact opposite of what they "aspired to." But this is why Communism had such a charm for many people, because it correctly observed a fundamental flaw in the advanced forms of "capitalism" that had replaced true fundamental capitalism. Maybe some day I'll blog about where Communism went all wrong, but all you need to do is observe how Russia and China are self correcting the misassumptions and abuses of Communism to understand its flaws.

That's one reason I always had a real giggle over some of the standard insults by Communists. No one, either the insulter or the insulted, realized some awesome insights contained in the insults. Forbes used to tout their motto as "Capitalist Tool," derived from that insult, thinking they were being really clever. The laugh is on them, though, because Forbes, like all westerners, are subservient to "capitalist tools," just like robots who have taken over their makers. So even the great champions of "capitalism" do not realize that they have genuinely and honestly forgotten what true capitalism really is and how to both achieve and maintain it. Everyone, wealthy, middle class or poor, educated or uneducated, thinks that capitalism=stock market. That is totally an error.

The stock market, if one truly understands capitalism and applies the definition that I have provided, is simply one place and one method where "cash is obtained for surplus." Thus, westerners have taken one method and one place where the subsistence guy sells his surplus to obtain cash and now declared that this one market place is capitalism. They no longer even acknowledge the existence of subsistence and surplus nuance (or reality) in the economy, which is the actual definition of capitalism. All they call "capitalism" is the raising (or losing) of cash in the stock market. Ye gads, it is no wonder that both the average person and the so called experts have messed up this economy so badly. Yes, the average person must share blame with the masters of the universe, though I'm not trying to be mean, but if everyone "buys into" a false and greed oriented definition of capitalism, everyone must share the blame when it doesn't work the way it should, and it eventually, like a snake, recoils and bites both the handlers and the supportive bystanders.

Thinking that capitalism equals the stock market is like a person who believes in a fad diet that is comprised of eating one and only one food, every meal, every day. Not only is that in error, but the person who eats only one food forever will suffer illness, breakdown of the body, and death. Likewise, "capitalism" that is comprised of only the "stock market" causes the entire concept and reality of capitalism to become ill, have breakdowns, and, indeed, die.

Whether you own stock or not, each and every American is enabling this "single food" perception that the stock market "is" capitalism in total. Why? Because all of selling, buying, marketing, and operations of every man, woman and child and their life necessities and pleasures are run by the "robots" of "how much stock dividends pay." I know, I've seen it from the inside. No one makes sane decisions about job creation, hiring, firing and product development anymore. Virtually ALL decisions in the USA and much of the Western world is made by total consideration of how much people will make on the stock market as a result. It used to be that all the average person had to worry about is whether people will make a wise investment or a foolish one based on having enough information and the good will of people who are the decision makers. However, some years ago companies went into actually provoking foolish seeming decisions in order to manipulate stock movements and thus either gain after losses or in collusion with "competitors."

Here is an example. Many of you have heard about "derivatives." I first met developers of derivatives when I worked for a certain bank, JP Morgan. At the time, less developed countries (LDC's) were in a debt crisis. Western countries had lent far more to the poor countries than the poor countries could ever pay back. There was a great pressure in the world for "debt forgiveness" (something we still hear about as an issue today). So I learned that a group of derivatives developers found a way to be helpful and well meaning in this regard. They developed a financial "instrument" that packaged debts that could not be repaid and sold them for a fraction of their face value. In other words, they invented the means by which debt could be forgiven and the remaining debt transferred into a capital raising tool that was discounted to levels that the LDC's could handle. So "derivatives" actually came about as a method for handling certain risks and where "special handling" is needed, and thus they have a good purpose and a place in the market.

But not too long after that an "invent a new game at the casino" mentality took over those in charge of derivatives. They not only invented new derivatives for bizarre reasons, but they "created" the "need" for the derivatives in the first place. For example, imagine if the LDCs became poor because some banker envisioned making money by inventing a derivative for that reason. That's not what happened in the LDC case, but I want to use that so you can envision more easily what happened next. Developers of "new sources" of profit in financial institutions started looking at ways to if not cause a crisis, imagine or invent one, and then sell those derivatives to investors just as if they were inventing a new game of risk at the casino. So "good" derivatives became polluted by derivatives that were invented to create and then "manage" "risk" that was often unconscionable to take in the first place. This will help you to understand the frenzy in "mortgages based" derivatives that have imploded and tanked the economy. People invented ways to "make money" by taking both deliberately and sometimes accidentally and stupidly stupendous "risks." Some purely looted, knowing full well that someday the derivatives market in their area would collapse. They don't care because they took the money and ran several years ago.

Depressing, no? Yes.

So you see, whether you are an auto company, a fast food company, electronics manufacturer, software developer, or what have you, you rarely make a decision based on true capitalism anymore, the capitalism that allows the poor to join in everyone to raise their standards of living and their family prosperity. You rarely think about what jobs our country needs, what products we need, and how to keep prices low, and what is for the greater good, and how, in return, you and the rest of the company executives "make a good living." You look at how to make a killing and what is for the best of the holy and sacred "share price," "dividend," or your "off the book profits" (such as derivatives). And if you are the average person, you bought into that mentality and enable it, some of you willingly, but many of you have been coerced into a corner, because that's the reality in which we operate. You try to be good and have a savings account, but almost like magic someone makes a decision somewhere that raises prices and you have to drain your savings and live on charge card. Trust me, I know, and it ain't an accident. Like I explained in a previous tutorial, if this were true capitalism you should be able to buy a good house for $17,000 just as you could forty years ago. After all, doesn't "progress" bring about new inventions and techniques to do faster and better what used to be expensive and laborious years ago? Of course. For example, when my family flew to Germany in the 1960's economy tickets cost over $3,000. What would you think if over forty years the plane ticket prices went up to $12,000? Well, why have you accepted that regarding housing, food and fuel? True capitalism is the enemy of inflation and serves only to elevate the numbers of people who share in "making a good living," not elevating the prices of making that good living from year to year, decade to decade. True capitalism creates jobs, and does not export them (they may very well create additional jobs that are in other countries, but those are net additions, not subtractions from the domestic job force). The "Harvard Business Review" might as well have been "Satan's Journal," starting in their 1980's with their "capitalism on crack" ideas like "re-engineering" and other devices to eliminate domestic jobs.

I hope you find this helpful. Autopsies are often very instructive, though not very timely.