A 4th Of July Tribute - Economic Colonialism Versus American-Style Capitalism. Don't Blink Because The World Is Changing Before Our Very Eyes
"The revolution of America presented in politics what was only theory in mechanics. So deeply rooted were all the governments of the old world, and so effectually had the tyranny and the antiquity of habit established itself over the mind, that no beginning could be made in Asia, Africa, or Europe, to reform the political condition of man. Freedom had been hunted round the globe; reason was considered as rebellion; and the slavery of fear had made men afraid to think." - Thomas Paine, 1791 in The Rights of Man
This will probably be the last post for 4th of July week. But before we get to details, I want to highlight a link from my link list. It goes hand in hand with this post and with the celebration of freedom over tyranny. No better time than today to re-acclimate ourselves to what freedom means. That would be Thomas Paine's The Rights of Man. The weak cliff notes Wikipedia overview can be found here.
A friend sent me a Joseph Stiglitz article a few weeks ago. I thought it was relevant to this week given it is the 4th of July. I have grown to develop an appreciation for Joseph Stiglitz since this crisis started. Plus he's not considered an insider amongst the elite or the economics community. His report card says he rankles egos and doesn't play well with others. A plus from my perspective when talking about cronyism. I believe in playing well with others when there is a functional team. But when it comes to the elitists who trashed the economy, those charges are simply ridiculous attempts at marginalizing dissent. The elitists don't want the voices of reason to drown out their voices of corruption. A perfect example of this was my post last week on banksters attempting to subvert the voices of the American people.
I want to make a critical distinction as it pertains to the Stiglitz article. (Link at the end of this post. I highly recommend it.) His perspective on today's environment is very accurate but the world in which we live is a very gross mischaracterization of what truly represents American-style capitalism. The topic of American-style capitalism is going to be the basis of my post. What better way to celebrate freedom over tyranny in this week honoring Independence Day?
We have made a clarification before when others have cited the end of American-style capitalism. To the contrary, this environment is a reaffirmation that American-style ideals must return to the economy. Instead, what Stiglitz writes about is corrupt European-style colonialism that has infiltrated our economic model over the last generation. Enabled through the revolving door of political & business interests and corruption associated with corporate personhood. We now see much of American economics reflecting the corrupt European statist model that actually led to the American Revolution. Well, what it really led to was a swell of destabilization of tyranny across the entire colonial European continent and the subsequent Age of Enlightenment. We effectively see our modern-day economic model rooted in a historical context which led to a revolution of ideas and ideals which formed a basis for our country. Ironically, it is now our society that has become the source of tyranny. Yet we should anticipate the outcome will be no different. We are simply in the early stages of a new age of enlightenment two hundred and fifty years after the prior instance. And if you are reading this, you are hopefully part of the new movement seeking truth, honesty and reason over elitism and tyranny.
Successful American-style capitalism for the vast majority of our existence has been defined by the antithesis of European-style colonialism. It has been defined by what I would generally define as both entrepreneurial capitalism and worker capitalism. Yet both are under attack from monied special interests today. These forms of capitalism more closely align with our ideals of democratization of economic opportunity and meritocracy as opposed to the feudal system of tyranny imposed by contexts of European-style colonialism - give the masses enough opportunity to create stability while the elitists steal anything and everything they can from society. That includes our jobs, our wages, health care, pensions, Social Security, etc.
In America this art has been perfected by elitists blaming the economic collapse on socialism, worker's rights, bloated government and the fact that workers now have to compete against people around the world willing to work for a fraction of our pay and benefits. It is in fact monied interests that are to blame for this collapse. A collapse that has now jeopardized the social structures provided to citizens and the very foundation of our society. The problem is not the social structures themselves as is often cited by the monied interests seeking to perpetuate their theft. You see, Social Security, health care reform, pensions, entrepreneurialism and worker-involved capitalism threatens the elitist's ability to continue their theft of society. Elitists living off of the government dole see these democratically-enacted structures as competition for the limited amount of capital available in society. So, in the mainstream media, pensions, health care and Social Security are portrayed as overly burdensome plagues by unwitting media and yes-men beholden to the very tyranny threatening the livelihood of these yes-men.
Our uniquely American capitalistic ideals are what made this country the land of economic opportunity for the world's underprivileged, hungry and poor - the world's latent and suppressed human talent. Those living under the tyranny of European-style colonialism, communism, outright dictatorship and anarchy. Yet throughout history uniquely American ideals have continually been subverted and abhorred by the elitist class seeking to control economic opportunity and wealth.
Elitists aren't the most capable people in society. In fact, most don't have the intellectual capital, desire or work ethic to compete on merit and gain the status in society that control and tyranny affords them. Why compete when it's so much easier to control? To heist?
How many kings and queens throughout the history of Europe had the intellectual capacity, desire or work ethic to compete against the common man on a level field of opportunity? Most would be slopping hogs were they required to compete in a democratized economic model. The same holds true with modern day hog-slopping politicians and elitists. Economics has morphed into a game of power as opposed to economic meritocracy. The cream seldom rises to the top. The well-connected does.
How would the world be different if democratized access to capital were afforded the children in Compton or East Los Angeles with the same opportunity as those on Wall Street? American society would become substantially more entrepreneurial, have greater discoveries and advancements in the arts & sciences, have greater self-sufficiency and substantially greater economic vibrancy because opportunity would be democratized. All of this would require ever less involvement of government services that often have the perverse outcome of creating the opposite effect of what is desired. That is the America which used to exist for many. That is the America we must rebuild. But, this time we must rebuild it for everyone regardless of race or creed.
The ideal economy would obviously be one where every citizen works for themselves. That we are all entrepreneurs. This would truly transcend the democratization of economic opportunity and self-determination. Obviously, that is not possible for many reasons. But, we must see a return to entrepreneurialism and greater economic self-determination for everyone. Not just by franchising McDonald's but by encouraging and allowing Americans to once again create and own much of the capital-forming and capital-producing businesses in the United States. Policies should be skewed to allow this transformation to take place at the expense of the monied monopoly interests in the economy. And that includes much more than banking but the monopolies that dominate all industry. And that includes the monopoly of special interests in Washington.
As it pertains to the future of the economy, I wouldn't be too wedded to the idea that we are going to return to what we have seen in the past. We may see something similar to historical examples of American-style capitalism or we could even see economic models turned on their head in many instances. That could actually involve portions of the economy working under economic models much different than today's capitalism. While this may be hard to imagine, that is simply because the monied interests are trying to re-ignite the rear view mirror image that served them so well. And given elitists aren't the creative and entrepreneurial elements of wealth-creation in the economy, you shouldn't be looking to them for hints of the future for they will surely fail in re-igniting the past. Remember, the elitists believed the world was fine and still believe we are experiencing a normal but deep recession. They told you finance was the future of the economy. They were happy destroying the economy from their now precarious perches of private equity, hedge funds, lobbyist firms, political consultancy, business schools and Wall Street. All control points for subverting the free flow of capital in the economy. They were and are wrong. In fact, their particular economic future is extremely precarious at best and nonexistent at worst.
We have talked about the fact that the world is returning to a self-funding economic model. No one seems to be acknowledging this yet but the signs of this can be seen today if you know what to look for. If we extend this concept to the concentric rings of our economy at the national, state and local level, we could easily very unique and different economic models arise from the ashes. An example might be localities embracing cooperatives or similar structures to rebuild economic opportunity at the local level. This would have a two-fold effect. One, as a local counterbalance of employment and economic opportunity to monopolies of both power and economic interests. Two, to create sustainable economic opportunity which can never be replaced, sold or consolidated by monied interests in some far away office. Examples might be energy-based cooperatives in the tens of thousands of American communities. Or even food cooperatives. Community-based businesses that democratically serve all of the people. Remember, the competition of capitalism improves the breed but what improves the breed even more is innovation. A locally-owned or even community-owned energy cooperative employing innovative solutions not beholden to national banks, national monopolies and shielded from international competition would provide tremendous sustainable economic development. Whatever the business or the structure, even newly created ones, economic localization is the future as globalization busts. This may seem as though I am grasping at straws but in fact I am not. We are going to effectively be rebuilding the economy from the ground up. And that is why, as I have written for quite some time, we are returning to a local banking model, why we have discussed the introduction of sustainable economics and why we have fervently advocated State's Rights. Because regardless of what Washington wants or thinks, power is going to eventually flow out of Washington as the economy grinds further into the abyss for two primary reasons. One, people will finally realize Washington doesn't have the power to solve their problems so they must find their own solutions. That means empowerment of local and state economies at the expense of Washington. And two, because the money bubble that fueled the Washington bubble is going to burst and with it Washington's undue influence on the economy. That means all of the lobbyists, politicians and banksters caught up in the Washington party are unwittingly watching their economic future disappear as I type this. Like lambs to the slaughter. The economy will rebuild itself in a manner that passes around the choke points of corruption and economically-limiting policy.
I always try to put the most thought-provoking remarks in the close of my posts. Mostly because I suspect many readers tire of long reads in our world of short attention spans. Haha. So most will likely miss this part. Here goes.
I want to circle back to a post I had some time ago where I commented that the role of government should be to always inject inefficiencies into the market. I said at that time you may want to think about that remark and we would take an opportunity to discuss it at some point in the future. The latter half of this post provides a good foundation to do just that given the topic at hand. All of this reordering of the economy I refer to above really entails injecting inefficiencies back into the market - a role government should be always and actively playing as we wrote in that prior post. Economics is no different than any other cyclic process. That is, permanent efficiency or order is simply not sustainable. So, by government not actively checking the ever increasing efficiencies achieved in the economy, they ultimately create a self-fulfilling prophecy where even greater disorder is created out of efficiency or order. This eventual disorder is likely proportional to the energy used to artificially subvert the economy's natural state of disorder over some specific period of time. (That is why the volatility and scope of this crisis is still substantially underappreciated. These forces have been building for decades. And the debt bubble is a symptom not the problem as we will show in a later post.)
So what exactly do I mean by these statements? The amount of energy consumed to create the unnatural effect of efficiency or order that we saw develop over some period of time will now likely be released to restore the natural state of disorder of the economy. And, let's be clear. U.S. firms are far and away the most efficient of any on earth. Ruthlessly so. We showed a graphic, I believe back in late 2006, which validated this fact of economic efficiency - a graphic of the earnings bubble we were seeing in the economy. The earnings bubble was a sign of tremendous efficiency or order in the economy. A substantial amount of this efficiency achieved in the American economy was a result of the endless drive to maximize economies of scale and remove competition from the market place. In other words, larger and larger companies buying every competitor in site to become even larger. Larger and larger companies squeezing inefficiencies out of their business models. And the energy used to create these economies of scale subverted the natural state of disorder in the economy. This happened in industry after industry as regulatory laws on the books were thrown aside as politicians of both parties embraced a market-based perspective as it pertained to monopolies. In other words, the natural and continual free flow of capital in the creation and destruction of thousands upon thousands of businesses representative of competition for new ideas, new products and new customers was subverted by an ever increasing state of efficiency in the economy. Put in terms of our original remarks about injecting inefficiencies in the market, a vibrant economy was subverted by lack of government enforcement of injecting inefficiencies into the economy.
I wrote back in 2006 that many who lived through the Great Depression believed monopolies contributed substantially to the economic crisis of that time. Those remarks received no interest. But, now I'm guessing people can actually appreciate what I am now writing because of what they see today - a continual subversion of American-style capitalism by monied interests that have gained this control over the economy by achieving great efficiency.
You see, we know that disorder in the economy must be ever increasing. Well, I'm not sure anyone in economics knows this but they should. So, let me rephrase that last statement since economics most assuredly is not a science nor are most economists ever to be confused with scientists. Disorder in any cyclic system is ever increasing. The fact that this process has been subverted for decades implies this crisis has been building since well before 2001 or 2002 when most people believe its foundation was built. You don't see history's greatest economy brought to its knees because of five years of economic mistakes as is foolishly argued by most everyone. (2001-2006) But, since the government has been loathe to undertake any efforts of consistently injecting inefficiencies into the economy, ie, enforcing anti-competitive and anti-monopoly laws, and we have now seen what appears to be a pinnacle of economic efficiency over this past cycle, the market is now going to inject the natural reorder of disorder back into the market regardless of what government or monied interests so desires. And it is going to be substantially more painful and difficult than anyone imagines. Yet, were government policies to embrace this reordering process, the U.S. could pull out of this crisis relatively rapidly. The only thing standing in the way of government embracing this process are the very monied interests which created this cataclysm in the first place. The world is full of great ironies.
Let me summarize these points of economic efficiency with a final comment. This is why I generally don't like conspiracy theories. There is generally a reasoned explanation for most everything that is happening today. Those telling us this Bilderberger Group or some ruling global secret society caused all of this chaos for personal gain is utter nonsense. As are the ridiculous notions that these secret societies are going to determine how long this down turn lasts. This is no different that the annual Davos summit of elites that we have railed against. That elected officials attend a conference outside of view of their constituents is anti-democratic. Yet, these clowns were partying like it was 1929 before this crisis started. And we highlighted that very fact and the impending doom while these clowns lived the good life. The forces of nature are far more powerful than a roomful of elitist idiots who are so consumed with greed and control that they would be king would we let them. This conspiracy is utter nonsense and involves the assignment of intelligence and ability where it doesn't belong. Do rich people get together and connive? Of course they do. But they sure as hell don't control the world.
Maybe we'll write more extensively of the above topics and/or the transformation that lies before us but we have planted plenty of seeds on here for the last four years. The road map has been laid bare if you have been with us. It's easy to follow. But for now I want to enable your creative juices on the topic since Stiglitz's highlighted article is so germane to this discussion.
Tomorrow is a new day and with it will come new ways of thinking. Ways which will refocus American society and more importantly the American economy. And as I wrote in one of my very first posts on here four years ago, that means hell to pay for emerging markets that have relied heavily on American wealth and capital for their development.
What we witnessed over the last few decades as it pertains to the world economy is not coming back. And the sooner politicians quit trying to stimulate that dead economic model and society quits waiting for it to come back, the sooner we can do what Americans do best. That is, getting down to business and solving problems. Job one is rebuilding our economy. From the ground up. The more time that is wasted trying to reflate what no longer works, the greater this crisis becomes. The market has decided and if we would simply listen, it is guiding our future. Instead, it's going to get a lot worse while monied interests do everything in their power to resurrect what has served them so well. What is now dead. In the end the markets will ultimately fix what monied interests and politicians don't have the will or desire to fix. It'll just be a more painful process but we'll get to the same outcome. And in the end future changes in the economic model will only move to weaken Wall Street and the monied interests. What's good for America isn't necessarily what's good for Wall Street. Ben Bernanke, Hank Paulson, Timothy Geithner, President Bush and President Obama would do well to take note of that fact in their policy decisions. Goldman Sachs and other Wall Street bank business models are in serious, serious, serious trouble.
Enjoy your 4th of July festivities. It may feel as though we are reliving the days of our Revolution. And to a certain extent we are. But, unlike history, our Founding Fathers have graced us with a new tool to accomplish the same outcome without the need for bloodshed or violence. They have instead graced us with the ability to initiate a bloodless coup every two years simply by voting. The human mind and its ideas and ideals are much more powerful than any weapon. And that means the shape of our future lies within the very mind that is reading this. Yes, that would be you. You will determine the shape of the American economy. The politicians don't hear you. But, they will. All in due time.
Now to the Stiglitz article. This month in Vanity Fair, Stiglitz again hammers home the demands for constructive change and a repudiation of colonialism.
Vanity Fair actually has a compendium of excellent articles on the economic morass which grips the world.
This will probably be the last post for 4th of July week. But before we get to details, I want to highlight a link from my link list. It goes hand in hand with this post and with the celebration of freedom over tyranny. No better time than today to re-acclimate ourselves to what freedom means. That would be Thomas Paine's The Rights of Man. The weak cliff notes Wikipedia overview can be found here.
A friend sent me a Joseph Stiglitz article a few weeks ago. I thought it was relevant to this week given it is the 4th of July. I have grown to develop an appreciation for Joseph Stiglitz since this crisis started. Plus he's not considered an insider amongst the elite or the economics community. His report card says he rankles egos and doesn't play well with others. A plus from my perspective when talking about cronyism. I believe in playing well with others when there is a functional team. But when it comes to the elitists who trashed the economy, those charges are simply ridiculous attempts at marginalizing dissent. The elitists don't want the voices of reason to drown out their voices of corruption. A perfect example of this was my post last week on banksters attempting to subvert the voices of the American people.
I want to make a critical distinction as it pertains to the Stiglitz article. (Link at the end of this post. I highly recommend it.) His perspective on today's environment is very accurate but the world in which we live is a very gross mischaracterization of what truly represents American-style capitalism. The topic of American-style capitalism is going to be the basis of my post. What better way to celebrate freedom over tyranny in this week honoring Independence Day?
We have made a clarification before when others have cited the end of American-style capitalism. To the contrary, this environment is a reaffirmation that American-style ideals must return to the economy. Instead, what Stiglitz writes about is corrupt European-style colonialism that has infiltrated our economic model over the last generation. Enabled through the revolving door of political & business interests and corruption associated with corporate personhood. We now see much of American economics reflecting the corrupt European statist model that actually led to the American Revolution. Well, what it really led to was a swell of destabilization of tyranny across the entire colonial European continent and the subsequent Age of Enlightenment. We effectively see our modern-day economic model rooted in a historical context which led to a revolution of ideas and ideals which formed a basis for our country. Ironically, it is now our society that has become the source of tyranny. Yet we should anticipate the outcome will be no different. We are simply in the early stages of a new age of enlightenment two hundred and fifty years after the prior instance. And if you are reading this, you are hopefully part of the new movement seeking truth, honesty and reason over elitism and tyranny.
Successful American-style capitalism for the vast majority of our existence has been defined by the antithesis of European-style colonialism. It has been defined by what I would generally define as both entrepreneurial capitalism and worker capitalism. Yet both are under attack from monied special interests today. These forms of capitalism more closely align with our ideals of democratization of economic opportunity and meritocracy as opposed to the feudal system of tyranny imposed by contexts of European-style colonialism - give the masses enough opportunity to create stability while the elitists steal anything and everything they can from society. That includes our jobs, our wages, health care, pensions, Social Security, etc.
In America this art has been perfected by elitists blaming the economic collapse on socialism, worker's rights, bloated government and the fact that workers now have to compete against people around the world willing to work for a fraction of our pay and benefits. It is in fact monied interests that are to blame for this collapse. A collapse that has now jeopardized the social structures provided to citizens and the very foundation of our society. The problem is not the social structures themselves as is often cited by the monied interests seeking to perpetuate their theft. You see, Social Security, health care reform, pensions, entrepreneurialism and worker-involved capitalism threatens the elitist's ability to continue their theft of society. Elitists living off of the government dole see these democratically-enacted structures as competition for the limited amount of capital available in society. So, in the mainstream media, pensions, health care and Social Security are portrayed as overly burdensome plagues by unwitting media and yes-men beholden to the very tyranny threatening the livelihood of these yes-men.
Our uniquely American capitalistic ideals are what made this country the land of economic opportunity for the world's underprivileged, hungry and poor - the world's latent and suppressed human talent. Those living under the tyranny of European-style colonialism, communism, outright dictatorship and anarchy. Yet throughout history uniquely American ideals have continually been subverted and abhorred by the elitist class seeking to control economic opportunity and wealth.
Elitists aren't the most capable people in society. In fact, most don't have the intellectual capital, desire or work ethic to compete on merit and gain the status in society that control and tyranny affords them. Why compete when it's so much easier to control? To heist?
How many kings and queens throughout the history of Europe had the intellectual capacity, desire or work ethic to compete against the common man on a level field of opportunity? Most would be slopping hogs were they required to compete in a democratized economic model. The same holds true with modern day hog-slopping politicians and elitists. Economics has morphed into a game of power as opposed to economic meritocracy. The cream seldom rises to the top. The well-connected does.
How would the world be different if democratized access to capital were afforded the children in Compton or East Los Angeles with the same opportunity as those on Wall Street? American society would become substantially more entrepreneurial, have greater discoveries and advancements in the arts & sciences, have greater self-sufficiency and substantially greater economic vibrancy because opportunity would be democratized. All of this would require ever less involvement of government services that often have the perverse outcome of creating the opposite effect of what is desired. That is the America which used to exist for many. That is the America we must rebuild. But, this time we must rebuild it for everyone regardless of race or creed.
The ideal economy would obviously be one where every citizen works for themselves. That we are all entrepreneurs. This would truly transcend the democratization of economic opportunity and self-determination. Obviously, that is not possible for many reasons. But, we must see a return to entrepreneurialism and greater economic self-determination for everyone. Not just by franchising McDonald's but by encouraging and allowing Americans to once again create and own much of the capital-forming and capital-producing businesses in the United States. Policies should be skewed to allow this transformation to take place at the expense of the monied monopoly interests in the economy. And that includes much more than banking but the monopolies that dominate all industry. And that includes the monopoly of special interests in Washington.
As it pertains to the future of the economy, I wouldn't be too wedded to the idea that we are going to return to what we have seen in the past. We may see something similar to historical examples of American-style capitalism or we could even see economic models turned on their head in many instances. That could actually involve portions of the economy working under economic models much different than today's capitalism. While this may be hard to imagine, that is simply because the monied interests are trying to re-ignite the rear view mirror image that served them so well. And given elitists aren't the creative and entrepreneurial elements of wealth-creation in the economy, you shouldn't be looking to them for hints of the future for they will surely fail in re-igniting the past. Remember, the elitists believed the world was fine and still believe we are experiencing a normal but deep recession. They told you finance was the future of the economy. They were happy destroying the economy from their now precarious perches of private equity, hedge funds, lobbyist firms, political consultancy, business schools and Wall Street. All control points for subverting the free flow of capital in the economy. They were and are wrong. In fact, their particular economic future is extremely precarious at best and nonexistent at worst.
We have talked about the fact that the world is returning to a self-funding economic model. No one seems to be acknowledging this yet but the signs of this can be seen today if you know what to look for. If we extend this concept to the concentric rings of our economy at the national, state and local level, we could easily very unique and different economic models arise from the ashes. An example might be localities embracing cooperatives or similar structures to rebuild economic opportunity at the local level. This would have a two-fold effect. One, as a local counterbalance of employment and economic opportunity to monopolies of both power and economic interests. Two, to create sustainable economic opportunity which can never be replaced, sold or consolidated by monied interests in some far away office. Examples might be energy-based cooperatives in the tens of thousands of American communities. Or even food cooperatives. Community-based businesses that democratically serve all of the people. Remember, the competition of capitalism improves the breed but what improves the breed even more is innovation. A locally-owned or even community-owned energy cooperative employing innovative solutions not beholden to national banks, national monopolies and shielded from international competition would provide tremendous sustainable economic development. Whatever the business or the structure, even newly created ones, economic localization is the future as globalization busts. This may seem as though I am grasping at straws but in fact I am not. We are going to effectively be rebuilding the economy from the ground up. And that is why, as I have written for quite some time, we are returning to a local banking model, why we have discussed the introduction of sustainable economics and why we have fervently advocated State's Rights. Because regardless of what Washington wants or thinks, power is going to eventually flow out of Washington as the economy grinds further into the abyss for two primary reasons. One, people will finally realize Washington doesn't have the power to solve their problems so they must find their own solutions. That means empowerment of local and state economies at the expense of Washington. And two, because the money bubble that fueled the Washington bubble is going to burst and with it Washington's undue influence on the economy. That means all of the lobbyists, politicians and banksters caught up in the Washington party are unwittingly watching their economic future disappear as I type this. Like lambs to the slaughter. The economy will rebuild itself in a manner that passes around the choke points of corruption and economically-limiting policy.
I always try to put the most thought-provoking remarks in the close of my posts. Mostly because I suspect many readers tire of long reads in our world of short attention spans. Haha. So most will likely miss this part. Here goes.
I want to circle back to a post I had some time ago where I commented that the role of government should be to always inject inefficiencies into the market. I said at that time you may want to think about that remark and we would take an opportunity to discuss it at some point in the future. The latter half of this post provides a good foundation to do just that given the topic at hand. All of this reordering of the economy I refer to above really entails injecting inefficiencies back into the market - a role government should be always and actively playing as we wrote in that prior post. Economics is no different than any other cyclic process. That is, permanent efficiency or order is simply not sustainable. So, by government not actively checking the ever increasing efficiencies achieved in the economy, they ultimately create a self-fulfilling prophecy where even greater disorder is created out of efficiency or order. This eventual disorder is likely proportional to the energy used to artificially subvert the economy's natural state of disorder over some specific period of time. (That is why the volatility and scope of this crisis is still substantially underappreciated. These forces have been building for decades. And the debt bubble is a symptom not the problem as we will show in a later post.)
So what exactly do I mean by these statements? The amount of energy consumed to create the unnatural effect of efficiency or order that we saw develop over some period of time will now likely be released to restore the natural state of disorder of the economy. And, let's be clear. U.S. firms are far and away the most efficient of any on earth. Ruthlessly so. We showed a graphic, I believe back in late 2006, which validated this fact of economic efficiency - a graphic of the earnings bubble we were seeing in the economy. The earnings bubble was a sign of tremendous efficiency or order in the economy. A substantial amount of this efficiency achieved in the American economy was a result of the endless drive to maximize economies of scale and remove competition from the market place. In other words, larger and larger companies buying every competitor in site to become even larger. Larger and larger companies squeezing inefficiencies out of their business models. And the energy used to create these economies of scale subverted the natural state of disorder in the economy. This happened in industry after industry as regulatory laws on the books were thrown aside as politicians of both parties embraced a market-based perspective as it pertained to monopolies. In other words, the natural and continual free flow of capital in the creation and destruction of thousands upon thousands of businesses representative of competition for new ideas, new products and new customers was subverted by an ever increasing state of efficiency in the economy. Put in terms of our original remarks about injecting inefficiencies in the market, a vibrant economy was subverted by lack of government enforcement of injecting inefficiencies into the economy.
I wrote back in 2006 that many who lived through the Great Depression believed monopolies contributed substantially to the economic crisis of that time. Those remarks received no interest. But, now I'm guessing people can actually appreciate what I am now writing because of what they see today - a continual subversion of American-style capitalism by monied interests that have gained this control over the economy by achieving great efficiency.
You see, we know that disorder in the economy must be ever increasing. Well, I'm not sure anyone in economics knows this but they should. So, let me rephrase that last statement since economics most assuredly is not a science nor are most economists ever to be confused with scientists. Disorder in any cyclic system is ever increasing. The fact that this process has been subverted for decades implies this crisis has been building since well before 2001 or 2002 when most people believe its foundation was built. You don't see history's greatest economy brought to its knees because of five years of economic mistakes as is foolishly argued by most everyone. (2001-2006) But, since the government has been loathe to undertake any efforts of consistently injecting inefficiencies into the economy, ie, enforcing anti-competitive and anti-monopoly laws, and we have now seen what appears to be a pinnacle of economic efficiency over this past cycle, the market is now going to inject the natural reorder of disorder back into the market regardless of what government or monied interests so desires. And it is going to be substantially more painful and difficult than anyone imagines. Yet, were government policies to embrace this reordering process, the U.S. could pull out of this crisis relatively rapidly. The only thing standing in the way of government embracing this process are the very monied interests which created this cataclysm in the first place. The world is full of great ironies.
Let me summarize these points of economic efficiency with a final comment. This is why I generally don't like conspiracy theories. There is generally a reasoned explanation for most everything that is happening today. Those telling us this Bilderberger Group or some ruling global secret society caused all of this chaos for personal gain is utter nonsense. As are the ridiculous notions that these secret societies are going to determine how long this down turn lasts. This is no different that the annual Davos summit of elites that we have railed against. That elected officials attend a conference outside of view of their constituents is anti-democratic. Yet, these clowns were partying like it was 1929 before this crisis started. And we highlighted that very fact and the impending doom while these clowns lived the good life. The forces of nature are far more powerful than a roomful of elitist idiots who are so consumed with greed and control that they would be king would we let them. This conspiracy is utter nonsense and involves the assignment of intelligence and ability where it doesn't belong. Do rich people get together and connive? Of course they do. But they sure as hell don't control the world.
Maybe we'll write more extensively of the above topics and/or the transformation that lies before us but we have planted plenty of seeds on here for the last four years. The road map has been laid bare if you have been with us. It's easy to follow. But for now I want to enable your creative juices on the topic since Stiglitz's highlighted article is so germane to this discussion.
Tomorrow is a new day and with it will come new ways of thinking. Ways which will refocus American society and more importantly the American economy. And as I wrote in one of my very first posts on here four years ago, that means hell to pay for emerging markets that have relied heavily on American wealth and capital for their development.
What we witnessed over the last few decades as it pertains to the world economy is not coming back. And the sooner politicians quit trying to stimulate that dead economic model and society quits waiting for it to come back, the sooner we can do what Americans do best. That is, getting down to business and solving problems. Job one is rebuilding our economy. From the ground up. The more time that is wasted trying to reflate what no longer works, the greater this crisis becomes. The market has decided and if we would simply listen, it is guiding our future. Instead, it's going to get a lot worse while monied interests do everything in their power to resurrect what has served them so well. What is now dead. In the end the markets will ultimately fix what monied interests and politicians don't have the will or desire to fix. It'll just be a more painful process but we'll get to the same outcome. And in the end future changes in the economic model will only move to weaken Wall Street and the monied interests. What's good for America isn't necessarily what's good for Wall Street. Ben Bernanke, Hank Paulson, Timothy Geithner, President Bush and President Obama would do well to take note of that fact in their policy decisions. Goldman Sachs and other Wall Street bank business models are in serious, serious, serious trouble.
Enjoy your 4th of July festivities. It may feel as though we are reliving the days of our Revolution. And to a certain extent we are. But, unlike history, our Founding Fathers have graced us with a new tool to accomplish the same outcome without the need for bloodshed or violence. They have instead graced us with the ability to initiate a bloodless coup every two years simply by voting. The human mind and its ideas and ideals are much more powerful than any weapon. And that means the shape of our future lies within the very mind that is reading this. Yes, that would be you. You will determine the shape of the American economy. The politicians don't hear you. But, they will. All in due time.
Now to the Stiglitz article. This month in Vanity Fair, Stiglitz again hammers home the demands for constructive change and a repudiation of colonialism.
Vanity Fair actually has a compendium of excellent articles on the economic morass which grips the world.
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