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Wednesday, October 26, 2011

Martial Law

The Occupy Wall Street movement is growing in momentum, as it should.
The core point behind it is to peacefully assemble in a show of solidarity with everyone else whom the corruption in our political system and greed in our financial system has inflicted harm upon.
The point of this is NOT to overthrow the government but, rather, to show those whom we (those assembled and those not assembled) have given power to for the expressed purpose of protecting our interests that the people are unhappy.

The sad outcome of this is that the politicians are disturbingly quiet on the issue. They have the power to diffuse the entire situation by calling for all of the assembled protesters to write them and call them. They could have diffused the situation by opening their ears and eyes and inviting a dialog on what we, their constituents, think is wrong. Instead they remain quiet. Their quietness on this issue is tantamount to trying to hide from it and trying to pretend like nothing needs to be done. They are, in essence, telling us that they do not want to listen to our concerns because we do not matter.

The way to solve this problem is to vote AGAINST the incumbent in the upcoming election. Regardless of your political affiliation vote for the incumbent's opponent. If enough incumbents are removed from their elected offices then, and ONLY then, will the people in power decide that they are responsible TO the people whom elected them.

I titled this post "Martial Law" because without the change being instituted at the upper levels we will receive martial law. Up until yesterday the OWS movement was mostly a peaceful movement with occasional incidences of violence being perpetrated by the LEADERSHIP of the NYPD. Yesterday that changed. Yesterday brought incidents that are reminiscent of the "Bonus Army" break-up in the 1930s. Yesterday brought the dawn of wide-spread police violence against protesters. Yesterday the police department and Sheriff's department in Oakland, California fired upon the OWS protesters with rubber bullets and tear gas. Flash-bang grenades were used on the crowd. There is even footage of one police officer deliberately throwing a flash bang grenade into the very center of a group of people who had stopped to assist an injured protester.

I dislike police. I always have. I see the uniform of a police officer and my first reaction is to move as far away from it as I can. I have NEVER seen them as a helpful force whose purpose is to protect me and I have, with few exceptions, not experienced police who were polite, respectful and competent enough to do their job correctly. I am not a criminal and I have never been arrested for anything. I have SHOULD have no reason to dislike the police as much as I do but it is incidents like what is happening in Oakland and New York right now that reinforce my opinion of the police.

This is a sad situation where the small percentage of the police on the streets are ruining the reputation of the blue uniform for the remainder of the population. This, ironically, is in parallel to the core problem that the OWS movement is protesting. The entire OWS movement is protesting a situation where a very small percentage of the people have ruined the economy for the rest of the planet and we've had enough with it.

The sad part is that most people don't even understand the full reasoning and depth of what they are angry about.....

If you are reading this and you are in a city where the police are abusing their authority then film it. Film it and submit it to the local media and the national media. Submit it to YouTube and any other outlet you can. Most importantly submit it to the police department's chain of command AND the management of the municipality. Submit it to the town council and be sure to enclose a letter saying that your vote will be against everyone currently seated unless action is taken against the police officers who perpetrated the crimes AND their supervisors for allowing the behavior.

This is a country of the PEOPLE not of the police. Don't let us become a police state under martial law. It will be worse than anything a terrorist regime could ever do to us.

Thursday, October 20, 2011

The Pendulum Swings.... Always

Economics is an interesting social "science."

It has few hard rules and a complex feedback mechanism that makes nearly every mathematical function for prediction and modeling a circular reference.

The one hard and true thing we know about an economy is that it is based on the MOVEMENT of money. If one outlines that reality on a spectrum it looks something like this:

The very nature of an economy makes it very hard to predict how an economy will run and even harder to steer an economy where one might want it to go. All that we know is that we want the economy to be as close to the green zone as possible for maximum growth and earnings potential for everyone living within the economy.

The unpredictability of how to steer an economy is at the heart of the current issues with the economy.
It is at the heart because the lack of predictability makes it very difficult to determine how much government is needed to regulate the economy and in what areas.

Too much regulation will stifle the economy (at best, choke it completely at worst) but not enough regulation leads to a completely free market with no controls.

Governmental structures vary from completely oppressive regimes that micromanage EVERYTHING to a complete lack of government (anarchy) all exist. We have, throughout history, discovered one true and steadfast fact about the differing governmental structures: neither end of the spectrum works. Extremism in managing the government is destined to be a complete and total failure.

This same realization regarding extremism also exists in the managing of the economy. On one side of the spectrum above lies a shrinking economy and on the other lies complete prosperity. The spectrum model above, however, is not the only way to view the economy. One can easily convert the economy spectrum above into a pendulum that aligns with the political viewpoints of "liberal" and "conservative."

That new chart looks like this:

When one does this it becomes apparent that pushing an economy too far in either direction bring catastrophic effects to the economy as a whole. If the government generates too much interference then the economy suffers and, as a result, so do ALL of the people who depend on it. The opposite is also true; if the government does NOTHING to regulate the economy (or simply not enough) then the anarchistic free market will consume the forces of economic development and generate new controls that end up limiting the growth (or even generating shrinkage) in the economy.

The current situation, where the government regulation has been allowed to relax on many financial transactions and policies, has allowed the top 1% and the megacorporations and megabanks to direct monetary policy in such a way as to direct raw capital into the control of people whom already possess more than enough. When their aggregation of wealth exceeds their growth in expenditure they generate a situation of economic shrinkage by sequestering wealth.

As was stated above the economy depends on the MOVEMENT of money. If the money hits a savings or investment account and stops moving then it generates a shrinkage in the economy. This means that ALL savings damage the economy of the time in which the savings are saved BUT the aggregation of super-wealth creates a permanent level of damage because the money rarely comes back out. With the average person the savings eventually come out (emergency spending, retirement spending, buying that long-sought-after-thing, etc) creating a boost to the economy equal in scale to the original damage. As the population distribution is mostly flat (there are a couple of significant variations that can affect this) the saving in compared to savings out levels across the majority of the lower 99% are fairly steady... the problem occurs when the savings in of the top 1% starts to grow because their savings out levels rarely go up.

I think I have made my point on this. Excessive wealth accumulation is as damaging to the economy as governmental controls. It is as damaging to the free market as regulations. It is the root cause of the current economic crisis. It removes economic opportunity from everyone who is not accumulating wealth.

Wednesday, October 19, 2011

Shortcomings of the OWS Movement

The second major shortcoming of the movement lies in the fracturing of the American populace.

This fracturing is evident in the people who are arguing over the movement itself. It is also evident in the divergence of behavior between the protesters and the police forces that are monitoring their situation (particularly the leadership of the NYPD).

The longer the situation is able to fracture the people of the country the longer it will damage the average person.

On the plus side, the gathering has generated a specific level of quiet from the politicians. The politicians whom have lost all touch with the very nature of the lives of the people they allegedly represent. The flip side to this fracturing is that it is highlighting the divergence in the lives of the ultra rich and the average person.

So, this one shortcoming is also the core strength of the movement.

That is something that the detractors of the movement should keep in mind when they are stating that the movement is not making any difference and cannot make any difference. It can: the politicians see that the people can be a cohesive unit. They see that we can be a single voice. They see that we want a change. They see that we view THEM as a part of the problem. The core reality is that the more people who get involved in the movement and/or support it from afar the greater the power of the movement through the reduction of the fracturing of the populace. The smaller the fracture among the general populace the greater the fracture between the populace and those whom the movement is protesting. The greater that fracture the more valid the movement will be proven to be.

If you are unsure of whether to support the movement or not based on its lack of a cohesive agenda then consider the reality that the greater the number of supporters the less the specific agenda will be needed.

Politicians do not fear their populace but if the ENTIRE populace is screaming for change they may begin to do so for fear of being not-re-elected.

Tuesday, October 18, 2011

The Shortcomings of the OWS Movement

The more I think about the OWS movement the more I see some shortcomings that will need to be addressed for anything to come out of this.

The first is the lack of a specific agenda.
At the moment the core message of the movement is to simply inform our political representation that We, The People, are ANGRY about the economic developments of recent years and that we really want SOMETHING done before it is too late. This is a fantastic STARTING POINT.
The longer this situation continues the greater the need for a cohesive request to be made of our law-makers. A cohesive request to benefit the people and to stop the pendulum swing in the direction of bankrupting the masses in favor of sequestering wealth with the already super-rich.

Sadly, I have no ideas on how such a cohesive action could be made. The current movement, by its very nature, is a chaotic yelling match. It is many voices yelling a variety of specific messages that, at times, conflict with each other.

I would like to see a new political party come to the forefront on this. Perhaps not one that gain office but one which would be able to speak for the masses and voice the concerns of the many rather than providing sound bites that protect the wealthy or pretend (this is important as many things that APPEAR to help the many are actually ineffective) to benefit the masses. I would like to see some sort of group emerge who the government fears and whom the average person hears from daily if they pay attention to any media. I would like to see a group appear that does not advocate for an increase in spending while advocating for a decrease in taxation. I would like to see a group emerge whose sole point in existence is to provide a reasonable voice to the government on actions that will benefit the WORKING people of this country. Not benefit the people who choose to under-work (or not work at all) and certainly not the people who earn a living by exploiting those less fortunate than them. I want to see a group emerge that creates sound bites and proposes plans that are based on the mathematics of revenue collection and general expenditures and examines rules for the social hand-out systems to propose better ways of streamlining those systems.
Sadly, I believe that there are several groups whose purpose is to do exactly what I have outlined, but they are all ineffective are reaching the mass audiences.

Perhaps, if we are lucky, the groups whose purpose is to make things better for the average working person will, in fact, start having their voices heard by the core media.

Monday, October 17, 2011

Social Systems and Hand-Outs

I have recently had my views on welfare and social handout systems challenged.

I find that that creates a PERFECT opportunity to write about the general views I hold on these systems.

First of all I believe that EVERYONE should work to their ability. EVERYONE should carry their own weight in the world. I believe that there should be no place for people whose lives are spent leaching off the hard work of others and whom choose to not participate in being a productive member of society.

There are, however, exceptions to this scenario. ALL of those exceptions revolve around the idea of a person requiring outside assistance due to circumstances beyond their control.

For example I know of several people with crippling illnesses. Most of them are still being productive members of society on a schedule that is considered normal for the average person. Most of these people will lose their ability to maintain that schedule over time. As their ability to support themselves decreases below a threshold of self-reliance I feel that society should tend to them because they had been active participants in society. Their inability to retain that status is not their CHOICE, but an unfortunate event that could happen to anyone. This applies to diseases, genetic defects that end up crippling people and people whom suffer from tragic accidents. There is one category of people whom I would exempt from this exception. That category is people who are seriously injuring doing something incredibly stupid that they shouldn't have been doing in the first place.

I also know of many people whom choose to NOT participate in society according to the rules of supporting yourself. These people are people whom I do not think should get support and help from my tax dollars. These people are people who have taught their children to expect handouts and that welfare and food stamps are their RIGHT and a valid career options. These people sicken me. I, personally, have met MANY people who fall into this category. Granted, most of the people I have met in this category do currently reside in one of the poorest counties in the country AND probably have no means to make their situation better but the reality is that they are not even trying AND they are teaching their children to live the same way.

I have also met many people who are not, by the standards of the system currently in place, abusing the system but, in my mind, they are. One of these categories is people who use (what used to be referred to as) food stamps to purchase goods that are NOT essentials. The idea behind food stamps is to provide a family the means to have their basic nutrition when they cannot afford it on their own. One major limitation on this is that they cannot use them to purchase hot foods; one major failure in the hot foods exemption is that it is defined by the temperature of the prepared food. When I was working in a convenience store with a sandwich station in it I sold a great many cold sandwiches to people on food stamps because the cold (but still prepared) sandwiches were NOT exempt but the hot ones were. I sold sandwiches to the same individuals on a daily basis. I sold a volume of sandwiches to individuals who did NOT work that was greater than the double the volume of prepared foods I could afford on the wages I had working in that store. While this falls within the rules of the system it is, as far as I am concerned, an abuse of the system. Similar to this are the people who use their food stamps to purchase "slush puppies" or candy bars or lobster or steak or soda or chips or fresh salmon. All of these behaviors and purchases I am mentioning are from direct experiences I have had selling the items (because I had to) or because I directly witnessed the behavior in a grocery store. I am not generating random examples of POSSIBLE misuse.
Another, completely different misuse of our social support system that falls COMPLETELY within the rules of the system is the collection of unemployment by seasonal workers during the off season. I have worked season jobs. I have had jobs that disappeared during the off season. I replaced those jobs with other jobs for the remainder of the year. It is one thing to not have a replacement for a seasonal job one year but completely another to not bother seeking a replacement because one knows that they may collect unemployment for four months during the "off season" and resume their job when the "on season" starts again. I do not find this behavior acceptable, yet there are many people who do it because the system allows it.

Do I believe that the abuse of the system lies in the majority of the people who use it? No. Many people will try to inform us that the abuse is a very small statistical minority out of the whole. Those people may be exactly correct but they are not including the abuses of the system that fall completely within the rules of the system itself.
I believe that the true level of abuse of the hand-outs systems are larger than the proponents of those systems want to admit and greater than any statistics can show. I believe that, until we change the rules of the system we cannot see how wide the abuses actually are.

I also believe that if we were to start gathering data on the "legitimate" uses of the system that I feel are abuse we would find the numbers are MUCH higher than the number of people who are blatant abusers of the system in the ways that the news media demonstrates.

This is my view on social systems that generate free hand-outs. I welcome your opinion. I welcome you to challenge my thoughts. More importantly, I welcome you to make observations and see for yourself how often the subtle abuses that are within the rules of the systems happen. If you watch closely at the grocery store you can see the use of food cards among other patrons.... look at what they are buying. Is ALL of it a core staple nutritional item or do they have ice cream and cookies?

I've paid attention. I've made up my mind based on direct observation and NOT based on what I hear on the news. I've based my opinion on the usage of the system by people whom I know well whose COMPLETE stories I know. Even among them I see abuse at varying levels.

Sunday, October 16, 2011

The Common Factor

I've been thinking a lot about the commonality in my viewpoints on things social and political.

At first I didn't see a pattern (other than finding that both the extreme right and the extreme left are filled with idiots who are more interested in protecting perception than actually helping anyone). This morning I discovered the general pattern.

That pattern is that I dislike any situation where the inappropriate behavior of a small percentage can ruin the entire experience for everyone else.

My views on social support systems can be reduced to that viewpoint.
My views on rules put in place to limit fun can be reduced to this.
My views on excessive safety requirements can be reduced to this.
My views on the Occupy Wall Street movement are entirely reduced to this.

Any time there is a small group of individuals whom are acting in such a way as to ruin whatever activity/situation for the remainder is a situation where I dislike the small group AND their behavior.

When I find a problem in the world and voice my discontent on it it, almost invariably, can be reduced to the simple statement of "Group X is doing behavior Y and the end result is that everyone else pays for it."

I encourage everyone who reads this to examine their reactions to the world and see if you, too, have a pattern to your preferences. If you do, does it hold true? Does that pattern of preference, if corrected among the entire population, allow for the world to be a better place?

I certainly hope so. I wouldn't want a world where correcting behaviors leads to a worse situation than allowing them to continue.

Friday, October 14, 2011

More on Occupy Wall Street

There has been a lot of discussion on the facebook pages of friends of mine regarding the core reasoning behind the Occupy Wall Street movement.
I appreciate it when people challenge my views because they force me to reinforce my ideas with critical analysis and research.

I have one friend who is obviously very much against the entire movement and believes that the root causes that people are upset about are manufactured. This friend has challenged many of my positions on the movement and, as a result, I have done more research including crunching some solid numbers.

This post is all about those numbers.

One of the major tenants of the 99%'s complaints is that the value of their income is decreasing with each passing year.
One of the major counter arguments against this opinion is that in the past 20 years the minimum wage has gone from $4.15 to $7.25 an hour. This amounts to a raw 75% INCREASE in the raw number value. The people who disagree with the OWS movement demand an explanation about how a 75% increase in the raw figure can possibly be considered a decrease in effective wages.

Here is how:
The first thing that one must acknowledge is that $4.15 in 1994 is equivalent to $6.25 in 2011 money (You can check for inflation-corrected values here). $7.25 is higher than $6.25 so it still APPEARS that the minimum wage is a better deal to those confined to it for their incomes.

But they are not better off because the costs of living NOT rolled into the CPI exceed the increase in pay.

Here are the core comparison points that need to be considered when examining the minimum wage differences between 1994 and today:

1. The number of people on minimum wage in 1994 for whom the minimum wage was their primary household income is different from the people today for whom that is a reality. There are more people today trying to earn a full living for their families on minimum wage and fewer trying to merely supplement the household income on that pay scale. Lower pay works great for supplementary jobs (and jobs of people whom are not supporting themselves) but it is hardly a means to generate wealth for the primary "breadwinner" of a family. I will readily admit that I have not done the research to back up this perception, but I do believe that research will support the assertion that more primary incomes are on minimum wage now than ever before.

2. In 1994 there were still many companies that provided pensions for people who had worked for them for the duration of their careers. This was a no-cost benefit that the companies provided as a reward for loyalty. This was in the age of people working for a single employer for their entire career. Those days are gone. Pensions are almost entirely extinct and people must contribute to the retirement plan in order to get anything out of their employer toward retirement. This means that a benefit has been removed from the base pay of 1994 and it has been turned into a cost. This affects the effective pay on both ends: decreasing compensation AND increasing cost of living.

3. Health care costs have risen far faster than many other things in this country. The CPI accounts for some of this change, but it does not account for other aspects of it. The raise in the cost of health care is an added adjustment for many. Furthering this is the growing trend for employers to provide smaller and smaller percentages of the healthcare package as a benefit. If one includes ALL increases in cost of healthcare as part of the CPI-adjusted purchasing value of the dollar one still must consider whether or not a particular subject had full coverage provided for them in 1994 but must pay a portion of it now.

4. New costs that are considered essential have appeared in society. In 1994 the idea of going without electricity or a home phone was ludicrous. People assumed that everyone had both of these items and to NOT have them meant you were excessively poor or truly eccentric. Today the home phone has migrated to a cell phone, electricity is just as important as it was in 1994 (more so) but there is a new core utility: internet service. Many people can still get by without this new utility but children in school are finding that their schools are relying more and more on internet-based tools and content to save money on supplies and textbooks. To have a school-aged child in 2011 without home internet access is just as irresponsible as having no telephone was in 1994. This is a NEW expense and, therefore, the CPI does not incorporate it into the adjusted buying power of the dollar.

5. A budgetary affect that occurs only for people who have children is that of school supplies. When I was in school there were a great many supplies supplied by the school. In 2011 economic conditions have forced many schools to scale back on the supplies that they have available to students at no charge. Each and every piece of paper, pencil, pen, etc that a family has to purchase for their school-aged-children that they did not before is a new cost that is not included in the CPI. This new cost varies widely by school district and age group so it cannot be a standardized item that is applicable to all.

6. Additional government fees and regulations applied to the individual. An example of this is the state in which I live. In this state there is a car inspection. There has ALWAYS been a car inspection for the entire duration of my life. I currently possess a vehicle that will not pass inspection this year. The estimated repair cost is $2,000 for one of the problems and an unknown amount for the other. in the mid 90s I drove cars that were in worse condition that the one I am referring to now. I drove them and they passed inspection each and every year. The inspection criteria have both gotten stricter AND been more highly enforced. The reasoning for this is that each inspection attempt generates a fee (which has more than tripled in size since 1994) regardless of the pass or fail status. Each failure generates a list of work that MUST be completed to pass inspection. That work generates a sales tax. The net story is that the state has increased the fee AND made passing more difficult in a way to force more business to automobile service providers AND generate more tax revenue. The end result is that many people are driving cars without valid inspections because the "bogus" safety violations are NOT a danger to anyone and are too costly to fix. This is a cost that is NOT rolled into the CPI because it is an increase in the volume of car repairs required and not simply an increase in the cost of the car repairs themselves.

7. There is also the factor of the average debt load of the average college graduate. Those entering the work force from college now are bringing an average debt load of approximately $23,000 with them. Compare that to the rates of approximately 10 years ago and you see a nearly 77% increase in the volume of debt that people START their professional lives with. That increase in debt means an increase in debt payments which, in turn, is a decrease in the available money for other living expenses. At 5% interest for 15 years this increase in debt load translates to an increase of $79 in monthly payments. This alone is approximately equal to $.49 / hour in pre-tax income. That, alone, is nearly half the surplus generated by the new minimum wage as compared to the equivalent buying power of the minimum wage in 1994.

When you add up all of the factors listed above it rapidly becomes apparent that the $.90 hourly discrepancy between the effective $6.25 per hour and the actual $7.25 per hour is completely consumed by new expenses and items not covered by the CPI adjustment.

I am a solid example of this situation. I checked the factors listed above (salary, retirement planning, healthcare provision, etc) along with the expected time at work for the job I held in 2003 and the job I hold now. I did the inflationary adjustment on the 2003 figures. The end result is that my post-healthcare, post retirement planning, post taxes current income is a 49% reduction in buying power as compared to that of the position I held in 2003. Is my current gross pay higher? Yes but the effective purchasing power of my money is significantly less after all of my critical expenses are adjusted for.

One of my friends who is critical of the movement directed me to a "fact checking" article that did its best to normalize all of the tax revenue data for all income earners in this country. The end result of that article was the claim that the top 1% (who own 40+% of all the wealth) pay their fair share of the income taxes at 32.1% of the taxes and that that means that they are only earning 32.1% of the income. That article, at best, is reporting the figures on the IRS-labeled taxable income; at worst it is blatantly warping the data to misrepresent the wealth distribution. Either way, the math is just-plain-WRONG. In a situation where there is a volume of wealth and a means to both increase and decrease that wealth (income and expenditures) each and every year the net volume of wealth of any population group will asymptotically approach the income value for the group. If the income is below the wealth holdings then the holdings will decrease over time until they equal the income level and vice-versa. I believed this to be true and then I build a spreadsheet to prove it (the non-pretty version is here). If you adjust the starting amounts (currency, not percentage) for each of the population group's starting cash, income and outflow you will quickly see that if the income % is above the owned percent then the owned percent rises and if it is below the owned percent the owned percentage falls. You will also see that for any one group's net ownership to go up another group's wealth must fall by an equal amount. This is a VERY simple model but it is effective at demonstrating the core principles at work.

These are the reasons that the bottom 99% are unhappy. These are the seeds that led to the OWS protesting. These seeds have been properly cared for and watered to germinate into the full protest movement against the upper class because the actions of the upper class over the last decade have generated a greater squeeze on the already tightening budgets of the middle class. When pensions are being cut and life-savings are being drained from corporate holdings while the CEOs are taking multi-million dollar bonuses there is a HUGE problem. When bankers are developing schemes to trick (yes, stupid) investors into borrowing more money than they can afford to pay back and then foreclosing on their homes and making them homeless there is a problem. When corporations are making bad business decisions and losing all of their customers only to receive a handout from the government because they are "too big to fail" while smaller companies have to make it on their own there is a problem. When mega-corporations are receiving bail-outs from the government and the executives in charge of the companies are still collecting salaries that are many times that of the average worker there is a problem. When one of the richest men in this country (Warren Buffet) is stating in no uncertain terms that the loopholes in this country's tax codes allow him to pay a much smaller percentage of his income in income taxes than ANY employee he has while he has the greatest level of disposable income in the company there is a problem.

I am not advocating that all of the wealth be evenly spread out for that would result in a larger problem than we have. I don't care if the top 1% own 40% of the wealth. I care that the remaining 99% be able to live and survive on what they have. I want the taxation to be applied equally for all, regardless of what income bracket they are in. I want everyone to have their chance to work hard and save and make their own lives better. I want an end to people getting further behind the harder they work because that leads to a self-perpetuating system of poverty that the masses CANNOT escape without a violent revolution (see the French Revolution and half the current conflicts on the African continent for details). I want to avoid a situation where the ultra-wealthy have sequestered money above their threshold of being able to reasonably spend it because that capital gets locked away and ceases to power the economy. The economy requires money MOVE. Once people reach a threshold where they cannot spend all of their income their savings rocket upward and the volume of money that is poured back into the economy decreases.

When greed runs unchecked the problems of society get magnified and destabilization occurs. Greed has been running unchecked in this country since about 1986. It has finally caught up with us.

There are MANY historical examples that closely mirror the current situation that all lend support to the feelings behind the OWS movement. The times leading up to the Great Depression, Germany after WWI, the economic crunch in the mid 1800s in the US (broken only by the HUGE inrush of capital from the gold rush in the Rockies), the economic conditions that led to the revolution in Russia (allowing communism to take root), the economic conditions that led to the French Revolution, the banking crisis in the 1300s that destroyed the European economy so completely that we suffered the 400 years of the Dark Ages.... the list continues onward. All of these historical events have economic forces that drove them, all of them have similar scenarios to where we are today in this country.

Monday, October 10, 2011

Regulation versus fear of regulation

I am a Libertarian.
I dislike the idea of big governments.
I dislike the idea of the waste generated by bureaucracy.
I dislike the idea of rigid rule structures that CANNOT meet all the unique circumstances among the population.
I hate the idea of loopholes in rule structures that allow people to go free.
I believe that the larger the government, the worse things are for the people governed.

All of that said I can truly say that there is one thing I fear more than large government and that is the complete lack of government at all.

This is because the complete lack of government allows for the total and complete exploitation of the people by any powerful entity. That entity could be an individual, it could be a violent gang of thugs or it could be a large, multi-national corporation.

The one thing that government is truly excellent at is generating fear among the corporations under its control. This is because the giant, unwieldy nature of governmental regulation is terrifying to any organization that wants to earn money. The larger the government the more terrifying the thought of it regulating your business. The more technically-based the company the more terrifying the slowness of government regulation is.

The LAST thing companies want is for governmental regulators casting their eyes in the direction of the industry that a particular company works within. The way most industries avoid government regulation is to self-regulate. They operate under the philosophy that they may misbehave to a specific line but if they step over that line their freedom to operate will be impinged greatly through forced rules by the government. This is the reason that companies are so completely against "Net Neutrality" regulations by the government. This is the reason that the MPAA has a ratings board to rate movies. This is the reason that the video game industry has a self-ratings system.

This system works well to minimize the exploitation of customers by companies through fear of the government. What happens when this fear is not present? Economic crisis.

Each and every time there have been insufficient governmental controls on the banking and finance industry the end result has been economic chaos. The result is that the bottom 99% of the population end up losing more and more of the money that represents their hard work and the rich become even richer. Each and every time the government has failed to act on this particular industry's failure to self-govern the people who are crushed under the weight of the industry leaders' incomes are impoverished.

This is the cause of the financial crisis that launched the Dark Ages (Italy, 1300s), this is the cause of the French Revolution. This is the cause of the recent Icelandic revolution. This is the cause of Occupy Wall Street.

Is the fix governmental regulation? I hope not because that will take nearly as much capital away from the middle class but, instead of depositing it into the pockets of the top 1% it will grind it away in the inefficient bureaucracy of the regulations.

A far more effective tool to manage the financial industry would be the true and complete fear of governmental regulation. We need to generate a situation where the fear of governmental regulation is so terrifying that the people in charge of the financial industry actually behave themselves and treat their customers with some modicum of respect and fairness. I believe it would be great if the regulations presented ideas to the effect of wronged parties are compensated for and the bankers who did the wronging were bankrupted in the process. I am certain that this would strike fear into the hearts of the financial industry's leaders; fear great enough to avoid such regulations from being enacted.

What's the benefit of generating more government? Safety from greedy corporations? What is the drawback? Greedy politicians and terrible waste.

The fix for the greedy politicians is to craft a government where, by design, the politicians are afraid of the people they serve rather than the other way around and for the same reasons that the corporations should fear the government.

What keeps the population in line if the government fears them? The fear that the government won't always fear them.

The fear chain in society should look like this:

Corporations fear the government which fears the people. The people fear losing their livelihoods, financial independence and freedom.

The government can destroy any of the things the people should fear and corporations can destroy two of those things. There needs to be no action on the part of either a corporation nor the government to enhance and increase those fears. The very idea of a governing body should generate the fears automatically.

So, people sacrifice the complete freedom and independence for the protections against bullying entities and, in exchange they have a government. The government needs to heed its people in exchange for its survival and it's job is to protect the people whom it should fear.

It is a simple system. Perhaps too simple, perhaps not.

A system based on checks and balances of fear might work far better than anything we have in service today.

What we have today is a system where many key people in the government are tied to the wealth generated by the financial system. The financial system does not fear the government because the people in the government benefit too greatly from the existing financial system.

The change that Occupy Wall Street is clamoring for revolves around the imbalance created by these ties.

The change is coming; the question is in what form will it arrive? Hopefully the government and financial industries will awaken to realize that they are both in danger if they don't change to serve the majority of the people rather than the minority.

Sunday, October 9, 2011

The Root Cause of "Occupy Wall Street"

The idea of a finances-based revolution is not new. It actually happening is also not new.

The Occupy Wall Street movement is the beginning of such a revolution in this country.
If we, the people, are lucky it will end with policy change within our existing legal structure; if we are not lucky it will either end with no change or with a complete governmental collapse. Either of these outcomes has potential to be far more beneficial to the majority of people but carries greater likelihood and potential for far worse outcomes.

To understand this movement one must first understand that there are three main components to wealth: wealth itself, rate of increasing wealth and the rate of change of the rate of wealth increase (for mathematicians: these are obviously connected through calculus as the rate of increasing wealth is an integral of wealth itself and the rate of change of the increase in wealth is an integral of that).

If you take any ONE of these factors for an individual at any given point in time you have a very small picture of their financial health. If you take any ONE of them over a span of time you have a much clearer picture of the trend of their financial health. When you add all three factors, over a period of time, you get a solid picture of the financial health of the subject. But what will that picture MEAN? Nothing. Wealth is an abstract concept and, because it is abstract, it means nothing unless you have a frame of reference. Therefore one needs to match the same data sets within the same time period to other subjects for any of the data to have actual MEANING. The larger the data set the greater the potential meaning.
Now that there is an understanding on what this data means there can be a presentation on the data that has driven the people to occupy the symbolic center of banking within the US and protest the way that the bottom 99% of people have had their financial lives drained.

Without doing an exhaustive review of many difference sources it is difficult to get a full picture of any of these data sets and, even then, many of the sources appear to be in conflict with each other. This is because wealth is an abstract concept that is open to some interpretation AND people are reluctant to fully divulge their financial information. The end result is that only a general picture can be built across the full population.

In all four categories below I was interesting in links with data charts and graphs far more than links with large blocks of text. I admit that I did almost no reading unless I found data on the charts that conflicted with my current understanding of the greater picture.

1. Wealth in the US
Estimates range on this but generally all show approximately half of the financial wealth of the USA being owned and controlled by the top 1% of the population.

Here is the google search I used:

Here are a few links I looked at:

2. Growth in Wealth in the US
The pattern here becomes clearer. Growth of wealth is increasing in all sectors of the USA, but the rate of that growth is not equal. The top 1% have their wealth growth growing faster than any other. To put the growth of wealth into perspective one could cross-reference the cost increase for living in each of the salary ranges listed to see how limited the growth actually is for several ranges.

Here is the google search I used:

And here are some articles that I looked at that were useful:

3. Change in the Rate of Growth in Wealth in the US
This is the most disturbing of the figures for it shows how quickly the growth rate is changing in favor of exterminating the wealth of the poorest 9% of the population. The faster this is the faster the existing middle class will be destroyed and the harder it will be to build a healthy financial future for anyone who is not born into one.

Here is the google search I used:

All of the relevant links for this data point have already been shared above.

4. Current Snapshot of Wealth Distribution in the US Versus Other Countries
There are lots of ways to examine distribution of wealth. When one examines the per-capita wealth of a nation one will get a figure that usually does not represent the average person in that country. Distribution of wealth within that country as compared to the distribution of wealth in other countries coupled with the per-capita figure show a better picture. For example, a country where the top 1% own 75% of the wealth of the country will misrepresent the per-capita more than a nation where the top 1% control only 25% of the wealth. The more out of balance the internal distribution, the more the per-capita figure is out of alignment with the average person in the country.
There are not very many ways to compare this quickly and concisely.
Here are some links to graphs that demonstrate CEO pay versus that of the average worker:

Here are some additional links for reference:

It is important to note that some of the figures on wealth divergence are very similar to those seen just before the Great Depression. In a time where all of the wealth is locked up in the hands of a small number they purchase what they need, supplying jobs to only the suppliers of those goods. If no one else has any money to purchase goods or services then no one can hire anyone to provide those services (e.g. and earn money to purchase those services). The economy is a lot like streets in a city in this regard; as long as everyone keeps moving everything works well but when things stop moving gridlock occurs and no one can move anything.

These four data components demonstrate that the wealthiest people in the US have altered the wealth-accumulation patterns in their own favor at an ever-increasing rate. There is a finite amount of wealth (the economy runs not on the volume of wealth but rather on the movement of that volume) which will grow, but it grows at a rate that is much smaller than the rate of monetary movement. The end result is that as the wealthiest people leverage the markets to grow their wealth more rapidly they are, in essence, stealing the potential to do so away from the people who need the monetary growth the most. This process is flattening the middle class from both ends and will, eventually, wear it down until it no longer exists. If you are reading this you are probably a part of the middle class. Most everyone you know is probably a part of the middle class. Think about how difficult it is for you to get ahead financially. Think about what $100 / month invested into low-yield savings account would do for you if you could leave it there for 30 years. Now think about a slightly higher-yield account of some sort and how that would benefit you in 30 years. If you were able to bring home an additional $100 / month (after taxes) and then you took the initiative to save it think about how much money that would be when you retire. Now think about the factors that are preventing you from either saving that money now or preventing your employer from paying it to you. Now look at the pay-divergence chart above. Where do you think that extra $100 per month that you could be saving has gone? And that $100 / month that I could be saving? and that $100 / month that all of your friends and acquaintances and family members could be saving?

I do think it is important to note that the current US wealth distribution closely mirrors that of the overall world wealth distribution. But, as pointed out above, that is not the complete picture. How fast each group is gaining wealth in comparison to the other groups is more important than that current snapshop. What is more important than the current rate of change is the change in that rate. The US market is changing in favor of the wealthiest 1% gaining an ever-increasing share at an ever-increasing pace. At the current rate, if nothing changes, the US wealth distribution will not mirror that of the world for very long; it will continue to aggregate its wealth into the top 1% until it is able to affect the worldwide average instead of being a point on the spectrum.

I am not a communist. I am not a socialist. I think Capitalism is the system that has proven, time and again, to be the best at managing market forces. The problem with it is that it also breeds greed. And greed is what allows us ALL to become stupid with money and to allow situations to occur where 99% of a population are put into a financial depression because the other 1% want more and more for themselves and are willing to take it from anyone. Capitalism, unrestrained is as bad as any other means of managing an economy. Bloated government interfering with the economy is no better than a complete lack of controls.

The real conundrum is how can we fix what we have now in such a way as to provide the proper governmental controls to prevent the 99% from being "robbed blind" by the 1% while still allowing the market to work smoothly to meet demands where possible? I think that the only answer there is to have smart people in government. Smart people who want to make things better for everyone rather than people who want the power and respect of being a Senator or Congressperson. Smart people who will work toward fixes rather than fighting along party lines just to prevent the other party from getting a good idea credited to them first......