Friday, August 29, 2008

The Sovereign Individual

Most of us never really think about it but our system of government rests on a base level assumption that the individual citizens of this or any state are sovereign.

Sovereign, what does that word mean? According to Merriam-Webster's dictionary it means: "one possessing or held to possess Sovereignty," or more specifically, "one that exercises authority with a limited sphere," or finally, "an acknowledged leader."

In the case of the United States of America the Preamble of the Constitution acknowledges the supreme power or authority of the people who come together to create the government. The Preamble says in full:

"We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America."

In addition to that implicit acknowledgement of the supremacy of the individual as the source of authority to sustain the legitimacy of the state, there is two other very important amendments to the Constitution appearing in what has come to be known as the "Bill of Rights:"

Amendment Nine reads in full:

"The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people."

Amendment Ten reads in full:

"The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people."

Taken together those three brief passages acknowledge the supremacy of the people as the ultimate source of power and authority delegated to the government.

Over the past couple of hundred years the pendulum has swung pretty far away from the assumptions implicit in those statements. Now the state has come to assume more and more power, the people are currently (even after the dreaded Bush tax cuts) paying about 300% of what serfs paid the Lords when power was delegated to ruling families via the "Divine Right of Kings" under which system the people were mere vassals of the state. Today the vast majority of people meekly submit to various indignities: Random searches, SWAT team raids, drunk driving traffic check points, presumed guilty till proven innocent audits by taxing authorities, significant limitations on free speech (especially on college campuses--making a mockery of the term "academic freedom"), random drug testing and even partial disrobing in order to board an airplane.

The question is how much farther can the pendulum swing before it begins to reverse course?

The evolution of technology mentioned in The Rainmaker's most recent post might be indicative of a shift in power and a return of power (sovereignty) to the people.

This shift was predicted back in 1997 by James Dale Davidson and Lord William Rees-Mogg in their book "The Sovereign Individual," which The Rainmaker has read and heartily recommends. Davidson and Rees-Mogg aren't sure that the concept of the nation state is viable. They point out that governments spouting patriotism tend to manipulate citizens into supporting social policies, monetary policies, wars and ever more intrusive government creating a swarm of unintended consequences that eventually can destroy the state's viability. When the book was written in 1995/1996 and even when the book was published this theory seemed like a stretch.

But times change and at about the same time the book hit the shelves a guy named Zimmerman released an encryption program for computer files and communications called PGP ("Pretty Good Protection"), which may prove to be the death knell of the modern nation state. Actually the more likely result is a more level playing field between the state and its citizens.

PGP together with online currencies can empower a Sovereign Individual to take real steps to assure his or her privacy, financial independence, physical safety and political liberty. Thus the equilibrium that was disturbed in the United States during the 100 years between the creation of the first national bank and the eventual imposition of the Federal Reserve System/United States Income Tax inducing the pendulum to swing towards ever greater state power at the expense of individual liberty might be checked and the pendulum could be starting to reverse its course towards greater individual Sovereignty.

The outcome is unclear. Stay tuned.

Tuesday, August 19, 2008

Technology and the State

According to Martin Van Creveld in "The Rise and Decline of the State," techology plays a crucial role at each end of the spectrum. Beginning in 1300 AD and continuing until 1975 the state was enhanced by technology; however, beginning in 1975 and continuing until the present the trend has been for technology to be more problematic to the state.

Advances in such diverse technological areas as printing, weapons, medical treatment, sanitation, farming, communications, media and transportation all served to enhance the state for most of the past several hundred years.

Yet in the past 38 years technoligical progress in many areas has appeared to damage the state's viability:
  • Transportation: The development of the shipping container, piggyback rail cars, and jumbo jets capable of hauling large amounts of freight dramatically enhanced trade. As trade increased the interdependence of states upon each other, lowered individual state's freedom of independent action as well as each states economic independence. Increased efficiency in the shipment of data is equally challenging. For example, in the era of global currency trading that approaches $4 trillion each day, it is now difficult if not impossible for any state or group of states to actually control the value of any state's money.
  • Media: The ability of the nightly news to deliver graphic images of the costs of war in real time or to show either the brutality of local police or the crackdown on disidents in totalitarian (or for that matter "democratic" societies) as well as the media's ability to deliver images of the "good life" all combined to be inherently subservisive to the power of the state. The advent of decentralized media delivered via the Internet has challenged the major media outlets and in many cases reduced their news coverage ability to the point that they are becoming little more than celebrity news services.
  • The Internet: Originally the Internet was built as a means of networked communication assuring a state's liklihood of surviving modern war and weapons systems. More and more, especially with the development and implementation of encryption tools, the Internet has become the preferred means of linking political dissidents, coordinating asymetrical warfare (terrorism) and facilitating tax evadors/political drop outs. This evolution has become perhaps the most significant challange to the power of the state in centuries.
  • Weapons: The proliferation of weapons of mass destruction, coupled with demonstrated state inability to reliably account for much less control the proliferation, theft and use of those weapons of mass distruciton is a real threat to the state. If the state cannot maintain is monopoly on violence to protect its citizens, what good is it?
  • Entitlements: The use of entitlements based on bad economic models to buy loyalty or at least silence dissent is becoming a significant problem to industrialized western democracies who are faced with the inability to keep the promises they have made. In France successive governments have been paralyzed by general strikes and violence in the streets when they have attempted to rationalize benefits by bringing them to sustainable levels. This is likely to spread until eventually the state is unable to survive economically. Already citizens of the European Union who live in Germany are refusing to accept Euros they can see (by reading the currency) are created in less frugal member states such as France and Italy.
  • Immigration: States are demonstrating an inability to control and secure their borders throughout the world. Poor people, oppressed minorities and political dissidents as well as skilled workers and tax fugitives are voting with their feet. Cultural conflicts undermining the cohesiveness of states are becoming more prevelant, whether between native born and muslim immigrants in Western Europe or illegal immigrants and the native born in the United States.
  • Medical Science: Advances in medical science are significantly lowering infant mortality, increasing life expectancy and lowering birth rates. The demographic consequences of these trends are already a major threat to the viability of states such as Italy and Japan. However it's not just industrial societies that are experiencing lower birth rates. Virtually every state is experiencing this phenomena, even fundamentalist theocracies in the Islamic world and traditionally Roman Catholic societies in Mexico, Central and South America are seeing significant declines in the birth rate. Thanks to the "One Child" policy, the demographics in the People's Republic of China are making it a state with one of the most quickly aging populations populations on the planet. The implications of this are not widely understood yet but the result will likely be increased political instability around the world.

It is impossible to predict with any certainty where these trends will take civilization and whether the state is doomed or will be able to adapt. Next, The Rainmaker will consider one potential scenario, the rise of "The Sovereign Individual."

Saturday, August 16, 2008

The Decline of the State

"The state, which since the middle of the 17th Century has been the most important and most characteristic of all modern institutions, is in decline. From Western Europe to Africa, many existing states are either combining into larger communities or falling apart. Many of their functions are being taken over by a variety of organizations which, whatever their precise nature, are not states." This was written by Martin van Creveld, a Professor in the Department of History at the Hebrew University, Jerusalem in his book "The Rise and Decline of the State," published by the Cambridge University Press in 1999.

Who could have imagined as they sat in Number 10 Downing Street at the end of the 19th Century that within 100 years the British Empire on which the Sun never sat, would be reduced to Great Britain and Northern Ireland or that there would be serious talk in Wales and Scotland of secession.

Who could have imagined as they stood atop the Kremlin watching the annual May Day parade in 1980 that in a little over a decade the USSR would be no more and the Berlin Wall would be dismantled by the people of a united Germany?

Czechoslovakia and Yugoslavia are no more. Belgium is in the midst of dividing itself. Ethnic groups such as the Basques and Kurds are eager to part ways with Spain and Turkey. Russia is busily dismantling Georgia, birth place of Joseph Stalin.

How many Americans are aware of the current movements in Vermont and Hawaii to secede from the United States?

To our south Mexico has been fighting for a decade or more to hang onto Chiapas, while Sonora and other northern areas find more and more in common with Arizona, New Mexico, California and Texas. In western Canada and the northwestern United States there is a growing affinity.

In "The Untied States of America," Juan Enriquez visualizes alternative realities in which the United States could grow to as many as sixty states or shrink dramatically from the current fifty within a generation. His speculation is twenty years after a similar analysis by Joel Garreau gave us "The Nine Nations of North America."

And, in his book "The Black Swan" Nissim Nicholas Taleb describes the disintegration of his country, Lebanon.

What is behind this uncertainty regarding state stability? According to the analysis by van Creveld, the state rose to dominance as it became able to achieve a monopoly on violence and the supply of money while becoming a nanny to its citizens.

The primary function of the state in van Creveld's formulation was to wage War on other states. War requires the ability to raise money, tax, organize and mobilize. War also provides an emotional bond and unifying force to bind the state. War necessitates the state. As Randolph Bourne famous essay points out in its title: "War is the Health of the State." Another meditation on this premise is "The Report from Iron Mountain" most probably written by Leonard Lewin and published in 1967.

In the context of creating an emotional bond and a unifying force to bind the citizen to the state, the Olympics are a distant second to War if for no other reason than that the stakes are so much more sane.

Once the expense of War gets to a certain point it becomes advantageous for the state to take control of the medium of exchange and store of value, the money. This enables the state to disguise the true cost of warfare as well as the true cost of the state by the convenient device of debasing the money. Eventually the costs became so high that money became decoupled from any objective measure of value. The ability of a state's money to continue as a medium of exchange is really a function of the willingness of the populace to accept the paper. Put another way, modern state money is really a confidence game.

Simultaneously, in order to demonstrate a value proposition sufficient to justify the state--while keeping the natives satisfied, stifling dissent and creating loyalty--Bismarck came up with the idea of the welfare state. His original system of Social Security, subsequently copied around the world, used the false mathemetics of the proverbial Ponzoi scheme to create the illusion of real and sustainable financial benefits for the individual citizen of the state.

A brilliant analysis of the rise and operation of the American welfare state is, "Dependant on DC" by Charlotte Twight. The Rainmaker suggests you explore Twight's book in depth if you doubt any of the assertions made here about the welfare state.

However, in the last half of the 20th Century the underpinnings of the state became more stressed.
  • Beginning in 1945 the advent and use of nuclear weapons made the prosecution of the state's primary function--War--a more difficult, expensive and risky proposition. Use of these ultimate weapons was effectively denied to Superpower states such as the United States and the USSR, each of which suffered unexpected military reverses in Viet Nam and Afghanistan, but neither deployed nuclear weapons.
  • Beginning in the 1970s the inherent unsustainabilty of the welfare state became apparent. For a time most states attempted the expedient of raising the taxes on workers to sustain the vaunted "Social Safety Net," but eventually with payroll taxes approaching 40% in Western Europe the carrying capacities of modern state economies maxed out, resulting in economic stagnation. The people became ever more aware that the welfare state was at best an empty promise and at worse a fraud designed to exploit citizens.
  • Beginning n the 1980s the decoupling of state monetary systems from real value led to a series of inflationary spikes, speculative bubbles and collapses continuing into the 21st Century demonstrating to more and more people that currencies of nation states are often worth even less than the paper they are printed on and are really mechanisms to impose hidden taxes on citizens while hiding the true cost of government.

Finally, in the early 21st Century the planet's remaining Superpower became involved in a War with a shadowy group of terrorists that were able to resist the massive power deployed against them, evading defeat, capture and punishment for longer than the Axis powers were able to survive after Pear Harbor. In an effort to mobilize and motivate its citizens the government of the United States embarked on a concerted program of increasing state power, eroding civil liberties and symbolic measures such as forcing travelers to remove clothing and surrender toiletries in order to instill fear and justify loyalty.

The Rainmaker believes that as we move deeper into the 21st Century the relevance and power of the state will continue to wane. States in one form or another will probably continue to exist for the foreseeable future, but they will be a shadow of their former selves sooner rather than later.

Thursday, August 14, 2008

Olympics and a Preview of Comming Attractions

Is there anyone else who has watched no part of the Olympics?

The Rainmaker has not seen a single instant of Olympic video. Of course even our concerted effort to avoid Olympic coverage has not been sufficient to escape some print coverage of the games.

The whole Olympic movement serves to perpetuate nationalist identity that is really obsolete as the world enters the 21st Century. Actually the more relavant measures of community are much more local and much more global. The "national" is really much less significant.

To appreciate The Rainmaker's point, read "The Untied States of America" by Juan Enriquez.

More about this over time. But to really appreciate the upcoming conversation read the book.

Monday, August 11, 2008

Trivial Pursuits

Who cares who John Edwards slept with? Why do I need to know about Dick Cheney's daughter's sexuality?

Somehow Barack Obama's "rock star status" makes a difference one way or the other regarding his qualifications for the Presidency, but not to me. And somehow Paris Hilton's assessment of John McCain is relevant, but I don't get it.

Oh yes, don't forget that Jackson Browne is an expert on nuclear power...right! Bono is a proverbial paragon of virtue and an authority of all manner of public policy issues from AIDS, to hunger as well as economic development in Africa...and I've got this great bridge in Lake Havasu, Arizona I'd like to sell you!

Although I hasten to point out I have no problem with celebrities who have political opinions when put their money where their mouth is and run for office. People like Ronald Reagan, Jesse Ventura and "The" Arnold--whose last name I can't spell and don't want to look up, because you will all know who I mea--are fine by me. For the record, if I had lived in Texas last election I would have supported Kinky Friedman for Govorner. I am still disappionted that he lost.

Here's a news flash for you, Elvis and Princess Di are still dead. Yet every year we have to endure another meaningless retrospective on their lives. Well both Elvis and the Princess have left the planet and I don't need to read about or watch another television special on his excesses at Graceland or whether the Royal Family had her killed. Geez.

My favorite was this past Sunday in the Washington Post when what must have been two full pages in the newspaper were devoted to a meditation on Madonna's observance of her 50th birthday and what that means not only to you and me but also to modern civilization.

And, please...if I ever hear the name Monica Lewinsky again it will be too soon!

In the immortal words of Rhett Butler, "Frankly my dear I don't give a damn!"

And so it goes.

Sunday, August 10, 2008

The Yellow Brick Road Part Three

While the price of crude oil has risen in terms of these national currencies, it remains relatively stable in terms of gold. Crude oil is not becoming intrinsically more expensive, rather, the purchasing power of these national currencies continues to diminish. In fact the price of crude oil has remained essentially unchanged for decades when measured in terms of gold. Measurements of other commodities against national currencies and other precious metals will resemble this chart.

When measured against gold, most western currencies saddled the the high cost of maintaining a social welfare safety net for their populations are losing purchasing power due to government's deficit spending. In the United States that trend is exacerbated by excessive military spending relative to other countries. If Asian currencies were charted the result would demonstrate a less extreme loss of purchasing power due to cheap labor, higher savings rates and relatively lower expenditures for military and social welfare segments of their economies.

When measured against other western currencies the U. S. dollar is losing its purchasing power at a faster rate. The Rainmaker believes that much of the discrepancy in relative purchasing power between the dollar, pound and euro is largely due to two factors. First is the incredibly bad PR associated with the current American Administration. Second is the fiscal policy of the United States that is incurring record deficits to simultaneously fund two wars, entitlements and the financial sector bail out of the week.

What's next?

Candidly, it's probably going to get worse before it gets better. It will take time to replenish all the money collected and misspent by a succession of administrations out of the Social Security and Medicare Trust Funds. These surpluses have been squandered over more than a generation. That bipartisan breach of fiduciary duty by our elected leadership can't be fixed over night. Given that not one of the major candidates for President throughout 2007 and so far in 2008 has been willing to admit there is a current problem is not cause for optimism. These problems will probably take as long to fix as they took to create. And, the repair work won't even begin until our elected leaders are willing to admit that there is a problem.

How can we protect ourselves, our families and our livlihoods?

The advice is deceptively simple. Work hard, reduce risk, get out of debt, save and put part of your estate into precious metals. Work with your financial advisor to design a personal strategy that maximizes revenue, reduces risk exposure, increases savings and diversifies a portion (how big a portion you should discuss with your financial advisor) of your estate into extractive industries as well as gold, silver and platinum. Follow the yellow brick road.

Friday, August 8, 2008

The Yellow Brick Road Part Two


Had the gold standard not been abandoned in 1971, nobody today would be talking about the rising price of crude oil or gas at the pump. Why? Simply because the price of crude oil would not be rising. The chart above relates to the price of crude oil compared in dollars versus gold. Charts for virtually any commodity, for example coal, corn or beef would relate similarly to any precious metal such as platinum or silver.

What has gone hay wire with America? Why do we feel we have run off the road into a ditch? Is it really all about fall out from the aftermath of Septemeber 11, 2001 and the wars that followed? Or could there be a deeper problem?

Perhaps there is another explanation that doesn't involve just the events since September 2001 but goes deeper into the basic structure of the American and world economies and how modern nation states structure their currencies. What does it all mean?

To understand what it means one must be clear about the question, or really to understand what is "it?"

The meaning isn't so difficult to decipher if one approaches the problem from the proper perspective. Is the intrinsic value of oil or an overnight stay in London that much higher than it was a decade or a year ago? In a word, NO! Or, is the intrinsic value of the dollar that much lower? In a word YES! So, what is the explanation?

This is what The Rainmaker believes "it" means.

Let's begin with what the journalists would call "deep background," which comes in two parts.

First, for more than four generations America's elected leaders, business leaders, our friends and neighbors as well as (perhaps especially) our bankers from the Federal Reserve on down to the community bank next door have busily squandered America's inheiratance. This represents a moral crises involving our leaders and ourselves. The cure starts at home with each of us living within our means, saving, accepting that there really isn't any such thing as a free lunch and building a better future one day at a time by making the right decision in the present. Then America's leadership must focus on the real problems and leave the side shows of lifestyle choice, culture wars and celebrity politics behind forevermore. Until these changes are made the decline begun back in 1913 with the passage of the Federal Reserve Act and the Federal Income Tax, will continue.

Second, the American dream has captured the imagination of people around the world. Chinese, Indians ane Brazilians--as well as the rest of the world--all want what we've got. Their economies are cranking up to deliver the goods. However, those countries, not to mention the Japanese, Koreans, Taiwanese and Chileans have a built in advantage in the sense their economies don't have to finance the American military industrial complex, supporting troops garrisoned in more than 100 countries around the world and spending more on the military than all the other countries in the world combined. Nor do those countries sustain a social welfare safety net for their workers. These aspiring Chinese, Indians and Brazilians--and all the rest--are driving demand for commodities, especially oil, creating shortages and posing a serious threat to the relative value of the dollar. In short, goods and services are going to continue to cost more in dollars and dollars are going to continue to be worth less and less against other currencies until and unless we get our act together.

The Rainmaker does not believe that this is a problem unique to the dollar. Why? Read on!

Well to really grasp this one must understand that while the dollar's slide is an American phenomena it is also the symptom of a more serious global problem. Why? Well the dollar, like most national currencies is backed not by real wealth but by debt created by national banks secured only by the full faith and credit of the nation. The Federal Reserve, a privately owned institution, loans currency into existence and the United States (actually the tax payers) guarantees those loans will be repaid. Taxes levied on the income of individuals and corproations pay the debt service. The dollar isn't backed by precious metals. The dollar is backed by our capacity to pay taxes.

One can make the argument that the dollar is not nearly as weak as it currently seems (June 2007) and the current valuation, especially against the Euro is really a function of the incredibly bad PR associated with the current Administration. In fact the fundamentals of the Euro are in many ways worse than the fundamental foundations underpining the dollar. European countries have much more significant entitlement problems, less productive work forces, lower savings rates and higher taxes than Americans. This should eventually enable the dollar to rebound against European currencies and make London hotel rooms a little more affordable.

However these arguments don't hold against the Asian competition.

So, what is the real story? The bottom line is that most all national currencies are ultimately secured by the ability of the national government to collect taxes sufficient to carry the debt due the national bank issuing the currency. How can one judge the severity of our currenty problem? The answer is to look at commodity pricing and currency valuation compared to gold.
Please return to the chart at the top of this piece and look at it again with this analysis in mind.

Is this a problem unique to the United States? Or does it involve other national currencies as well? We'll explore that topic in Part Three of The Yellow Brick Road.

Thursday, August 7, 2008

The Yellow Brick Road Part One

After the tornado deposited her in the wonderland of "OZ," Dorothy looked at her faithful dog and said, "Toto, we arent' in Kansas anymore!" When gold recently broke through the $900 per ounce barrier, flirted with $1,000 per ounce and then retreated back to the high $800 per ounce range, its price performance seemed to correlate positively with the dollar hitting new lows against the Euro. It's a strange new world made even more confusing by the advent of $4 a gallon gas at the pump. Americans everywhere seem to feel the same confusion as Dorothy as she realized she was in a strange new land.

This may be a strange ecnomic landscape and nothing we counted on seems safe anymore, but what does it really mean to us as we live our daily lives?

During the last half of the twentieth century, we Americans grew up believing in the inevitability of our day to day reality. What was before would always be. The dollar was the "go to" currency of choice in a world of change and uncertainty. America only fought just wars. American "know how" would always save the day.

However, during the first decade of the twenty first century Americans look around and nothing seems quite so safe any more. The September 2001 attacks were a shock. The failure to find "Weapons of Mass Destruction" in Iraq after the intelligence community assured the President the presence of WMDs was was a "Slam Dunk" and their discovery inevitable, was disheartening. The subsequent failure to "win the peace" in Iraq after such an easy and triumphant invasion was hard to believe.

The seeming financial fall out of the cost of the wars, such as the credit meltdown hammering the banks and mortgage companies, the stock market stagflation, sticker shock at the gas pump and the economic malaise all seem surreal. The fact that the dollar seems to be weaker against other currencies, notably the Euro, and that a decent London hotel now costs $800 per night is simply unbelievable.

What does it all mean? What will happen next? How do we protect our families and ourselves and our business investments in the clinches, which are apparently the fall out of September 11th? This is now what most of us believe to be the relevant question.

But perhaps there is another explanation that doesnt't rely just on the events of September 2001 and has to do with funny stuff like currency management, going deeper into the basic structure of the American and world economies and how modern nations structure thier economies.

Next, the Rainmaker will explore those alternative explanations or our current unfortunate reality.

Monday, August 4, 2008

Live Long and Prosper

Nothing can compare with good health to assure happiness. Too often we are too dense to appreciate that fact, but eventually it is a lesson we all learn.

A few days ago we offered a serious suggestion, "Wellness Tokens," as a means of creating incentives to motivate more of us to "do the right thing," and assure our good health. Many of you have suggested we amend the label to "Wellness Dollars" in an effort to make the program more accessible to more people more quickly. OK, so be it. The Rainmaker will now refer to these tokens as "Wellness Dollars." So let it be written, so let it be done!

In the meantime in our ever diligent search for useful/actionable (sort of sounds like jargon but it's not meant that way...promise) information we stumbled across some anonymous research on the web that explains the sorry state of American health in the first decade of the 21st Century.

Here it is. The Rainmaker hopes you find it as instructive and useful as we did:

"After an exhaustive review of the research literature, here's the final word on nutrition and health:
  1. Japanese eat very little fat and suffer fewer heart attacks than Americans.
  2. Mexicans eat a lot of fat and suffer fewer heart attacks than Americans.
  3. Chinese drink very little red wine and suffer fewer heart attacks than Americans.
  4. Italians drink excessive amounts of red wine and suffer fewer heart attacks than Americans.
  5. Germans drink beer and eat lots of sausages and fats and suffer fewer heart attacks than Americans.

CONCLUSION: Eat and drink whatever the hell you like. Speaking English is apparently what kills you, but the U.S. Government is trying to correct the problem."

And there you have it. The secret to health and long life is to stop speaking English. The Rainmaker thought you would want to know.

For those of you who find this a tad politically incorrect, The Rainmaker offers the following piece of wisdom: "Lighten up."

For the rest of you:

"Viva mucho tiempo y prospere!"

"Longs de phase et prosperent!"

"活长和繁荣."

"生きている長い繁栄し."

"Длинние в реальном маштабе времени и процветают."

"Longos vivos e progridem."

"살아있는 긴 번영한다."

For all the native speaking purists who find fault with those translations, all The Rainmaker can ask is that you cut a little slack, the objective here is merely to extend the life span a tad by learning to be a little less reliant on English.

For all the "English First" types who find this whole exercise offensive; all The Rainmaker can do is ask that you leave us a little something in your will.

Sunday, August 3, 2008

Where the Jobs Are

Have you ever read Ayn Rand's "Atlas Shrugged?"



It's an amazing book about the productive members of society becoming discouraged and fed up as their labor is appropriated to carry the rest of society.



There are interesting aspects of our society today that indicate we are getting closer to the reality Rand found so disturbing that she wrote a book about what might happen if the producers who earn their way decided they have had enough.



Eventually the producers withdraw from society and move to Galt's Gulch, founded by the infamous John Galt, one of Rand's heroes in "Atlas Shrugged." Remember the graffiti from a few decades ago asking "Who is John Galt?" Others wrote "Where is John Galt?"



As Wikipedia describes Rand's social commentary:



"Rand's heroes must continually fight against the 'Parasites', 'looters', and 'moochers' of the society around them."



"The looters are those who confiscate others' earnings "at the point of a gun" (figuratively speaking)--often because they are government officials, and thus their demands are backed by the threat of force."



Yesterday the Washington Post carried a story describing the increasing levels of unemployment in virtually every productive sector of the economy as reported by the Bureau of Labor Statistics. It's not a pretty picture on the whole.



For example in July of 2007 there were 7.63 million Americans who earned a living through construction, but in July of this year only 7.17 million jobs were available in that sector. The total employment declined 6% in one twelve months.



In the manufacturing sector the total employment declined 2% from 13.8 million jobs in July 2007 to 13.5 million one year later.



15.3 million Americans worked in the retail sector this July, down 2% from the 15.48 million who had jobs a year earlier.



Only 200,000 Americans lost their jobs between July 07 and 08 in the transportation industry; a mere 4/10 of 1% decline.



Both the financial sector (banking/real estate) and professional services sector (lawyers, managers and administrators) had an even smaller relative decline of 2/10 of 1%; losing 120,000 financial services jobs and 400,000 professional jobs and ending up at a total employment of 8.21 million and 17.91 million respectively. Perhaps Bear Stearns really was an anomaly.



There was however some good news, at least if you aren't an Ayn Rand aficionado. In the 12 months ending July 2008 four of ten sectors experienced job growth according to the Bureau of Labor Statistics:


  • The biggest percentage gain--4%--was in Education, gaining 120,000 jobs and ending at 3.08 million workers.

  • Next in job growth performance during the year was the health care sector with a 3% gain, ending July with 370,000 new workers for a total workforce of 13.33 million Americans.

  • The government sector (federal and local) hired an additional 350,000 Americans, realizing 2% job growth.

  • The leisure and entertainment sector, which includes hotels, also posted a 2% gain. As of this July 13.68 million Americans work in this sector, 210,000 more than last July.

So why would Ayn have a problem with 1,050,000 new jobs? It's simple really, except for the 210,000 new hires in leisure and entertainment, the other 840,000 lucky new hires in the remaining three growth sectors don't really produce anything.


Ayn would call them parasites, looters and moochers. All these areas (even the medical sector due to Medicare and Medicade) are highly dependent on tax transfer payments from the working stiffs, entrepreneurs, investors etc. who cause real growth.


Ayn presumably wouldn't have a problem if the taxes paid by the construction workers, manufacturers, retailers, transportation workers, financial workers and professionals paid their taxes voluntarily, but of course that isn't the way the world works. She would also have problems with the fact that the benefits, especially retirement benefits accorded government workers (think: Thrift Savings vs. Social Security, retire after 20 years vs. retire after 45+ years if ever, etc.) are so much better than what the rest of society can expect. But, that's another story.


If you want to know where the jobs are, there is the answer. The bottom line is you are less likely to get laid off if the paycheck is funded by taxes collected, as Ayn would say, at the point of a gun.





Friday, August 1, 2008

Choices

It has been said often: "All politics is local."

But that's wrong. In fact, I believe that really, "All politics is personal."

Consider that most of us support a politician or a policy or a program because we think the candidate or the policy or the program is best for us and our family.

For example most folks know Social Security and Medicare are bankrupt and believe those programs need to be fixed, just so long as it doesn't interfere with our monthly check. When the money is gone "they" will think of something.

We choose to vote for people running for office based on their perceived ability to "bring home the bacon." Although we tend to be highly critical of politicians we appreciate the new road, the new post office, the prescription drug benefit and the defense contract for our town.

We are all concerned about global warming but we bought the SUV and drove to work alone in spite of Al Gore's scare mongering until the price of gas made us believe it's too expensive to drive that SUV. Now we are eager to authorize more drilling not because we think we can drill our way out of the energy crises in the long run but rather because we want those gas prices to come down in the short run.

We all make choices we believe to be in our enlightened self interest and we tend to ignore the consequences of those choices.

The politicians, the manufacturers, the media, the retailers and the service industry all respect our choices and do their best to cater to those choices. So, we get the government, business, media and service we ask for each time we make a choice. Although we hate to admit it we get exactly what we deserve.

But the consequences of our collective choices are piling up and at some point rather sooner than we all expect or hope, the bill will come due.