Cut Government Spending?

This in response to a comment by a Facebook buddy about just cutting government spending by 2%  across the board.

Just cutting spending by government 2%, or any other amount, would put us back in recession.  This happened in 1938, when we were finally coming out of the Great Depression and Roosevelt agreed to spending cuts and we fell back in deeply until the greatest stimulus program in the history of the world (aka WWII) put us into the greatest economic expansion of any nation any time.  This lasted for almost 30 years until Reagan began removing some of the government regulations of the capitalistic markets.  From that time (late 1970s) the  wages of American working people have actually SHRUNK while the income of the rich people have gone through the sonic marker.  What trickled down was not prosperity - let’s just say that Trickle Down has Petered Out. What we really need right now is a massive governmental spending spree – let’s begin with our infrastructure.  Rebuild some of our crumbling bridges, repair some of our highways and run light rail through major cities and between them.  Then watch our nation really prosper.

Promotion of Economy under Capitalism

Nations are composed of many elements.   They are created out of their own education systems, their military, religions, art, sports, architecture, economy, transportation systems, sciences, literature, natural resources, government, and perhaps many others.  Most nations blend these elements into an interrelated pattern of contrasts and beauty with each supporting, enhancing and helping to define the others.  One component may lead for a while, with others providing strong support, then another may come forward with the support and help of its people.

However, one of the determinant characteristics of capitalism is that ALL of the components of that nation must become secondary to its one lead item:  The Economy.  In the words of James Carville, “It’s the economy, Stupid!”  ALL other components of a capitalistic nation have to give way to the Economy.  

Furthermore, the value of all other factors are judged only in economic terms.  The value of the nation’s education system is determined by how well it prepares its students to get a job and make money, the value of a work of art is determined by how much money it is worth, the value of a sports team by how much money it made and the players by how much money they are paid, scientific explorations are judged by how much money they could make.   In every case the value of any endeavor is rated by how much money it might return.  

In a capitalistic nation the money always rises to the top.  The purpose of capitalism is the accumulation of capital.  The wealth of an organization or a city or a state or a nation, if it is capitalistic, will always continue to be gathered together into fewer and fewer hands.  The workers will still be paid, but their pay will be determined by their employers.  They will have less and less input in that matter and begin to assume more and more the status of servants.

How then can we use capitalism?  First, it has many points of value.  Capitalism is necessary to fund large operations, like maintaining ports, building airliners, automobiles and many other important aspects of modern society.  But it must be contained by at least two other forces.  

One, there must be room for a vibrant, strong and powerful free enterprise system.  This provides an outlet for people who may be dissatisfied with the corporate culture, or who have a brilliant idea, or just want to prepare and sell products or services they can produce themselves.  

Second, government must control capitalism – not by controlling the corporations, or the industries, or the workers, but by controlling the market.  Government must protect the operation of free enterprise people, the real entrepreneurs, and keep the corporations from constantly devouring each other in a "Cannibalistic Market".    

This won’t be easy, it won’t ever be “finished” or “completed”.  This will always be a continuing procedure requiring constant input and endless communication between the factors involved.  New technologies and new problems will constantly appear and need to be integrated and built upon.  But this is the only way to develop a vibrant and growing economy into the future. 

Health-care Marketeers.

A sad but instructive story about how poorly the current American health-care system uses the "Market" to "regulate" the costs of providing care to "consumers".  This was recently shown on PBS.

http://www.pbs.org/healthcarecrisis/uninsured.html

More Problems With Electronic Trading

Was this a result of High Speed Trading issues?  Probably not, but it sure is suspicious.  One can't really find the fingerprints of market manipulation there yet, but still the feeling persists that "adjustments" are being performed by someone.


http://www.nasdaq.com/article/4th-update-exchanges-route-away-from-nyse-as-issue-affects-trading-in-216-stocks-20121112-01280#.UKGN7aX9J5g

A Little History of High Speed Trading

Thomas Peterffy, originally from Austria, apparently was in on the beginning of High Speed Trading.  He now says it is doing more harm than good, and would like to see some regulation.

Here is a comment on him from NPR, and it is an introduction to a forthcoming book  "Automate This", by Christopher Steiner.   http://www.amazon.com/Automate-This-Algorithms-Came-World/dp/1591844924       ". . .in this fascinating, frightening book, Christopher Steiner tells the story of how algorithms took over – and shows why the 'bot revolution' is about to spill into every aspect of our lives, often silently, without our knowledge."



http://www.npr.org/blogs/money/2012/08/27/159992076/a-father-of-high-speed-trading-thinks-we-should-slow-down?utm_source=NPR&utm_medium=facebook&utm_campaign=20120827

End of Nation States? A Prolipsis in Hungary

"The Economist" magazine highlighted a supposedly threatened abolition of nation states being imposed by capitalistic organizations from other countries

http://www.economist.com/blogs/easternapproaches/2012/04/hungarian-euroscepticism?fsrc=nlw%7Cnewe%7C4-18-2012%7C1428025%7C37139760%7C

Andrea Hossó, a Hungarian-born economist who works in London's financial district, wrote a blistering attack on the "bullies of Brussels" for the Daily Mail,

Hungary, Ms Hossó says, is facing "colonisation" in preparation for "a political environment favouring the abolition of nation states."

Checking into that article in the Daily Mail we read

http://www.dailymail.co.uk/debate/article-2127652/The-new-imperialism-How-Brussels-bullies-Budapest-conforming-European-values.html 

In order to better understand the picture it is necessary to look back into the economic history of the past twenty years. The economic transition of Central Europe from planned to market economy has been hailed a great success. Uncontrolled privatization went nowhere farther than in Hungary. Successive governments heeded the advice of foreign advisers and international organizations  deeming the speedy and often very cheap sale of assets to foreign companies the best way to 'catch up' with Western economic development.

Looking around twenty years later Hungarians find a bizarre economic landscape dominated by a handful of big foreign companies and huge shopping malls with barely a single local name or product. Whole sectors have been wiped out and quite a few remaining ones are almost wholly foreign-dominated. Unemployment is high, the huge external debt inherited and inexplicably taken over from the Soviet era is ballooning fed by intercompany loans from Western companies to their Hungarian subsidiaries. Economic growth is languishing, foreign companies’ profits are repatriated and little is recirculated into the local economy.

When the current government came into power in 2010, it found a country in tatters with a dramatically increased external debt burden and huge swathes of the population sinking into inexorable poverty where families – educated, working people – have difficulties paying their utility or dental bills.

In its efforts to reduce debt and thus vulnerability, the government decided to introduce some measures designed to return the economy to growth. Amongst these measures is the temporary windfall tax  on the financial, retail, energy and telecoms sectors, which had been exceptionally profitable.  Such taxes are not without precedent, and banking sector taxes have since been introduced in various European countries. 

However, nowhere have they fallen mostly on foreign shoulders because nowhere else is foreign ownership as dominant as in Hungary. Both the IMF and the EU mention  Hungary’s 'unorthodox' move taxing mostly 'foreign' companies but fail to mention that these foreign companies have literally taken over almost whole economic sectors. It seems that it is not so much the imposition of windfall taxes but the fact that foreigners have to pay these that they find objectionable.

The rarely mentioned fact is that foreign companies in Hungary have got used to generous tax holidays and financial incentives, and a generally lax operating environment. The special taxes have raised the spectre of a new situation where these privileges and the usual level of excess profits might be reduced.

A sweeping offensive of pejorative news and punitive measures is creating an atmosphere where financial markets become inaccessible and the country can be forced to return to the status quo: economic conditions favouring foreign capital and a political environment preparing the abolition of nations states. 

Read more: http://www.dailymail.co.uk/debate/article-2127652/The-new-imperialism-How-Brussels-bullies-Budapest-conforming-European-values.html#ixzz1sSHfZAmk

Errata Capitalism

Errors are published here when they are noticed.  A modification will be transmitted to correct the original copy.

Cover photo:  The Moon “Felix” over Catlandia .  ©John Womack, 2012.  All rights reserved.

Page 93.  End of second paragraph.  Should read: “Our light rail, trains, subways, and bus systems are limited to very large cities.  We pretend we don’t really want them because they are not cost effective, and they can’t return a profit to investors.  Because of our abandonment of rail transportation, America is being left behind by every developed nation in the world.  Ayn Rand would be very unhappy.”

ALEC

The suddenly spotlighted “Stand Your Ground” laws that are sprouting up all over America, along with efforts to eliminate state government unions, movement toward private prisons such as CCA, attacks on Planned Parenthood and even questions about contraception all indicate some central direction behind these powerful efforts to control government in the United States.  The question remained, who is behind all this?  Now finally comes a finger pointing.  Whose finger?  Paul Krugman’s.  He doesn’t mention the Koch brothers, but they appear to be the forces behind the cover of ALEC, which Krugman is beginning to remove.  The finger points to the American Legislative Exchange Council or ALEC, which now numbers at least 2,400 state legislators as members across the United States.   ALEC has been associated with attempts to privatize functions normally performed by government.  ALEC wants to turn those operations into profit-making work.  Theoretically, taxes will go down but  people will pay more for services previously provided by government employees.

http://www.nytimes.com/2012/03/26/opinion/krugman-lobbyists-guns-and-money.html?_r=2&hp

http://savannahnow.com/bluffton-opinion/2012-01-11/norquist-alec-and-koch-brothers#.T3CguHgh95g

http://www.indyweek.com/indyweek/a-primer-on-alec-its-influence-and-its-presence-in-north-carolina/Content?oid=2666829

http://www.prwatch.org/news/2012/03/11356/arizona’s-alec-leader-wants-your-boss-make-decisions-about-your-contraception-cov