Capitalism and Christianity

There is a basic decision that has confronted humanity for ages and has never been resolved. It is simply, do we let the strong dominate the week and accumulate wealth and comfort while others struggle just to exist, or do we allow all to benefit from the goods produced.

Capitalism is largely based on the premise that human avarice will result in greater innovation and production resulting in a larger overall level of wealth and theoretically benefiting everyone. Some refer to this as the trickle down theory, where those who accumulate the wealth will spend it on goods and services provided by others. The theory makes no pretense about trying to equalize wealth and in fact openly allows for some to fall below the subsistence level. The Western version of capitalism has attempted to provide a "safety net" for those who are unable to survive on their own. Of course now some are arguing that the safety net is being abused and has led to an increase in "lazy" people who don't want to work since we "take care of them". What is the primary inequality of this system and has always been is that we may all enter this world naked and screaming but we don't enter it on an equal basis. Born into the right situation your chances of success are often not related to your relative level of effort as much as the fact that wealth opens many doors for you. Yes, some born into poverty manage to overcome their background and some born into wealth descend into abject poverty, but these examples are generally the exception, not the rule and most do not end their lives in significantly different social circumstances then they were born into.

The other concept, which has become associated with communism to many but is really more an early christian concept as well as a concept of many other religions, simply put to love thy neighbor and share the good things of this world. This concept condemns avarice and rewards compassion. However you view it, those who accumulate more are expected to help the needy.

Many in our society claim to embrace both of these concepts, ignoring the economic implications of Christianity and also ignoring the moral implications of capitalism. This is a rationalization that cannot stand up to scrutiny.

Ignoring History

History ignore tends to repeat itself. In 1937, the Depression ended up being extended when we decided that we needed to cut back on Government spending. This stopped a nascent recovery in its tracks and led to another round of misery that only ended when the second world war broke out.

During that same period, Germany got out of its depression by some massive Government spending on infrastructure and military buildup.

Now, the best way to reduce the deficit is to grow the economy. When the economy grows, we create jobs. People with jobs pay taxes while people without jobs consume taxes. This is an extremely simple equation. Of course the best outcome is for the jobs to be generated by private industry, but in order of precedence a private job is best, a public job is second and no job is last.

Economics can be extremely complex but it is also extremely simple. Assuming that we can produce enough goods and services to supply the needs of the population, the issue becomes providing a means for the population to consume those goods and services. So, we can produce cars, but if no one buys a car there is no reason to. This is a basic function of supply and demand. Increased demand leads to increased economic activity which leads to increased jobs.

The idea of Government stimulus is to prime the pump. It has been doing that, but the country is faced with a number of structural issues that have to work themselves out. So while the stimulus has stopped the decline in GDP and started some growth, we are not yet at the point where private demand is so great that the withdrawal of Government stimulus will not have a devastating impact.

The deficit is certainly a problem, primarily because the interest on it is an expense that must be paid. However, until the economy has passed the tipping point, where demand and jobs are self sustaining, focus on the deficit is misplaced.

Lets not ignore history.

Politicians and America

There was a piece in the New York Times today that discussed the fact that while most Americans support Democratic policies, they distrust Government so much that they vote for people who run against Government even if they don't like their positions. This is of course an oversimplification of the actual article and the link to the article follows.
http://www.nytimes.com/2011/07/31/opinion/sunday/tuning-out-the-democrats.html?nl=todaysheadlines&emc=thab1

The premise of the article is extremely plausible and ultimately explains much of what we see going on today. Clearly very few Americans want to see the Government default, yet we have elected officials who seem to want that exact thing. Most Americans support Social Security and health care for seniors but we have elected officials attempting to dismantle those programs. I could list any number of similar situations to illustrate the point but I believe it is somewhat self evident.

Certainly, in my own experience, and I would like to point out that due to my work and other factors, I generally interact with fairly well educated people from liberal/democratic states. Still, I hear opinions expressed about policies and Government that are simply wrong. Some of this comes from the political ads that bombard them and others from the media which likes to point out the foibles of society. It should be noted that while there is really no excuse for an FAA controller to fall asleep on the job, this is the exception, not the norm. Unfortunately, it isn't news to report that in any given day no controllers took a nap on the job.

The media has us convinced that Government doesn't work, doesn't care and doesn't represent us. We have accepted this as a social theme. We love the country but hate its Government. Of course we shape that very Government even if we are told it is controlled by special interest groups and big business. Sadly, our belief in how evil Government is leads to apathy or protest votes instead of a reasoned consideration of the issues before us.

Consider some of the potential candidates for the next election. We have celebrity candidates who take positions that are really illogical in many ways. Right now we have a congress that is refusing to provide the Government with the ability to pay its obligations because the self same congress has authorized over the years to many obligations. There is actually an easy fix, if is the budget and appropriations process. It is not to cut off funds by refusing to allow the Government to raise money to pay its debts.

We look at this and have been convinced by the rhetoric that budget cuts and raising the debt limit are related. They are only related because some radicals think they can blackmail the system. Those very same radicals are welcome to attack appropriation bills and go on record with the cuts they want. By using the debt limit as a smokescreen, they are hiding from individual accountability.

Ultimately I have a strong belief in common sense and I hope the majority of us are so appalled by the current insanity that we remember the real issues in 2012.

The wonder of Politics

The stated purpose of this BLOG is to try to make sense of things. I haven't written in it in over a month for many reasons and perhaps one of them is that it is becoming harder and harder to do just that.

There have always been many different opinions about things and at any given time there are plenty of issues that become befuddling because of the intransigence of those who hold them. However, we are facing a potential crisis in this country which in all honesty shouldn't even come close to being a crisis because certain individuals in office have taken positions that do not allow proper functioning of the Government.

I am talking about the debt limit issue that may very well lead to the depression some elected officials seem to desire. First thing we need to understand is that the debt limit is something unique to this country, most countries have no such limitation. In fact one might wonder about why congress, which approves all spending then puts a limit on how we finance this very same spending. Second, we need to consider the deficit. As economic times improve and our military adventurism also declines, I believe they are related, we will see increase revenue and decreased expenditures. Whether that change in and of itself will bring us to a surplus does not seem likely, it would take a robust amount of growth to do that, but it would diminish the problem. Of course actions that prevent prosperity or lead to a new recession or possibly a depression will only lead to a bigger problem.

Growth is the means to mitigate the problem and recession increases the problem. The problem we have now is related to the fact that we had the worst recession is many decades and are barely out of it. There are other contributory factors, but if we hadn't had the recession we would not have seen the explosive increase of the last few years. Remember, during the Clinton administration we actually had a budget surplus.

We are now faced with a situation where an artificially imposed limitation that has no impact on what congress approves or doesn't approve is possibly going to create a situation that will cause a recession, increased interest rates and tremendous worldwide distress.

Yo have to love Politics.

The 'Success" factor

Each of us comes into the world in basically the same way, but not in the same condition. Some of us are born into families that through a combination of luck, hard work and other factors, can provide the newborn with something close to a guaranteed successful future. Yes, the wealth and privileges can be wasted and/or lost, and we see those examples, but really, the vast majority of people born into wealth go to good schools, get good jobs and manage to pass on to the next generation the advantages they received.

Others enter this world on the opposite end of that spectrum. They are almost predestined to failure, although of course similarly some of them break free of the path they are led down and achieve success, sometimes in spectacular fashion. Once again, we should not forget that this constitutes the exception, not the rule.

Then we have what is often referred to in this country, the middle class. They aspire to improve their station and certainly may have an opportunity to do so in greater numbers than the poor, but they can descend as easily as they can ascend, and the economic problems we face from time to time are most likely to dislodge these people from relative prosperity to near abject poverty.

One of the things we like to consider as an American characteristic is the fact that so many poor immigrants improved their status in this country and oftentimes had second and third generation progeny that clearly entered the great middle class. They of course were able to do so because they had aspirations and access to schools that helped them develop new skills.

There has always been a difference between our poor immigrants and our American poor. You don't emigrate because you have accepted you lot in life. Immigrants are here because they want something better than what they had. They push their children to become someone. Certainly, some of our native born poor also exhibit these characteristics but if you simply consider statistics, the percentage of any population with these aspirations may be a determinable number. Say it is 25% (purely for example purposes). Those born into poverty in this country will have a 25% chance of having the "SUCCESS" characteristic. However almost 100% of voluntary immigrants will have the same characteristic. They wouldn't have emigrated voluntarily without it. This is one of the reasons that the behavior in refugee camps is so diverse from the behavior of immigrant groups.

Of course, just having aspirations does not guarantee success, at least not on the first try (see the number of small businesses that fail) but trying is much more likely to result in success than not trying. Yes, we have some who win the lottery, but of course many of these same people end up losing their winnings rather quickly, but in general trying to succeed if the first requisite to actually succeeding.

Taking care of Humanity

I like to think that all people share a core set of values, the primary one is that we need to take care of our fellow humans. After all, we are all brothers and sisters when you come right down to it. Yes, I understand that in the more immediate period, many of us are trying to better our own individual situation and scarcely think about others. I also understand that a certain percentage of us, either because of an actual mental defect, will never care about anyone but themselves. However, the vast majority will take actions that are in the best interest of all of us.

As you see the natural disasters that seem to be happening more frequently recently, we see a great outpouring of humanity trying to help those immediately impacted. This is one of our greatest qualities and one that is an evolutionary necessity, since none of us could survive on their own.

However, what I don't see are people willing to look at less immediate disasters and focus on our future survival. I don't mean the deficit, because let's get real here, we will find a way to pay it, even if it is via inflation. The ongoing discussion over a economic oddity is hardly the stuff of disasters. However, it does seem clear that we are having an impact on our world that endangers the future well being of our species. What is the saddest part of this is that it is both solvable and reversible. Not easily mind you, but doable.

We emit great amounts of various pollutants into our atmosphere. Ultimately, the atmosphere will adjust, after all every one of these pollutants came from this planet, but these pollutants will impact other areas that may impact us! Now, some will argue that there is doubt about these impacts or that there are other causes for these changes, but the choice isn't about whether we are the only cause of the glaciers melting, but about are we contributing.

Further, it should not be an issue that not spewing noxious gases into the atmosphere is inherently better then spewing those very same gases.

It should also be obvious that there is not going to be a simple magical solution that saves us from the hard work of addressing this problem. Simply put, the more each of us reduces our pollutant contribution, the better the situation is.

Clearly there are big issues such as use of gasoline to fuel our vehicles that probably need to be addressed also. However there is plenty of opportunity for each of us to do something, and I think that has a great potential if we simply take action after action and make choice after choice that improves the situation.

We need to start.

Path Forward

Things have been busy and I haven't put anything on here since the end of February. While I believe the main purpose of this is for me to journalize my thoughts it is a very useful tool for that purpose.

There is so much going on that need to be talked about that it isn't easy to decide where I want to start. I guess since the economic issues tend to be my primary focus I'll start there. We are currently playing politics with the Debt limit and while I think everyone agrees that we need to make some fundamental changes in the way we spend and tax, not raising the debt level is simply unacceptable and will lead to a tremendous impact to the economy. This is so unacceptable that any party that is seen as responsible for this will be dooming themselves in future elections. So we will watch the Republicans threaten and all the Democrats really need to do is stay reasonable and wait. It reminds me of some positions taken in a misguided fashion by totalitarian regimes who later paid a heavy price.

We have three things we need to do to solve our current fiscal deficit.

First, we need to increase growth in this country and the first thing that will help that is to switch from foreign oil to domestic energy, gas and coal and eventually renewable. The jobs and related taxes from this type of effort will be a stimulus for the economy and will protect us into the future.

Second, we need to review spending, and this includes all spending. However, the reductions cannot be at the expense of our social obligations. Republicans like to throw the word socialism around and almost always inappropriately. However, the issue is not socialism but social conscience. Of course the wealthy and upper middle class can do perfectly well without Government help. However, if you believe that all citizens are entitle to adequate health care and at least some minimal financial help after a lifetime of working and paying taxes, we can not now gut Social Security and Medicare. Yes some changes to make the programs more affordable may be necessary, but don't fall for the idea that we can transfer all the responsibility to so many of our citizens who are not able to handle it. We don't have a time machine so we have to deal with the present situation and not discuss the failure of both parties to take appropriate measures in the past.

Third we can not ignore the revenue side. I believe we can make fundamental changes to our tax system that will lead to a more competitive business environment and more revenues. We need to encourage business in this country by making sure we don't impose hidden taxes as well as the public ones. Perhaps the greatest hidden cost is the cost of health care that we make employers in this country pay. Most of our competitors finance health care via the tax system making this not a direct business cost. I have heard a lot of silly things related to health care and I don't hear anyone dealing with this fundamental issue.

I hope to discuss these issues more in the near future.

Productivity Fairness

Its just about the end of February and while its a bit premature, I feel Spring is almost here. Spring is time for renewal as we see the cycle of nature continue (at least outside the tropics).

Oddly, the Arab world seems to be in the midst of their own renewal, one that doesn't happen every year. Its hard to figure out exactly what the result of all that turmoil will be, but its probably safe to say that it won't result in any new utopias.

Looking around the world we are faced with a dilemna. We have mastered significant technology and can produce goods and services more productively than ever before. This is wonderful news, but it has one major downside. This productivity results in many once productive people becoming, as the British say, redundant.

So as we have improved productivity, the result has been that the benefit has accrued to a smaller number of people and many others find themselves unemployed with no good prospects.

Think about it. In general we produce enough food and have fairly adequate distribution systems. We can't get the food to some people and others simply cannot afford it but the food exists. Similarly for manufactured products, we don't have a shortage. In fact generally we produce too much. Even as some third world countries expand their standards of living, the demand will not requre the employment of all the redundant people.

The only real answer, and one that doens't seem all that likely right now, would be to distribute productivity gains differently, reduce the hours for workers while increasing their hourly wage to compensate. The current distribution goes like this. If a workforce of 100 people has a 10% productivity gain, the company profit increases and 10 people are let go. The 90 remaining people do not directly benefit, except they got to keep their jobs, and likely because of the firings didn't get much in the form of a pay raise. The alternative would be to reduce weekly hours for all by 10% and continue to employ all 100 workers.

Now in this simplistic equation, I have ignored the fact that the competitive marketplace forces some of the gains to be passed along as lower prices, and the reason this tactic is not tenable is that firms who tried it would become non-competitive.

Of course, if all firms operated this way it would level the playing field, but you know someone would undercut the prices.

So how is the world going to employ all the redundant people?

Where we are

If you take a bit of time to consider how we are evolving as a nation, there are a number of trends that are very obvious. The amount of labor required to actually produce goods keeps decreasing as we deploy more and more technology and other productivity improvements. In the product delivery cycle, we need less people to produce just about everything, need to store less of it as we have improved logistics, need less people to sell it as we have improved on-line commerce. Where you used to get significant information from salespeople who might even visit you, now that is becoming unnecessary as more and more information is available on the internet.

The people who we do still need in this cycle need to have more skills than they once did. They need to be machine operators or tech gurus, able to provide value. Those with the right skills are in demand and since I think they will remain that way. Yes we will improve training, but the creative thinking the new society requires has always been in short supply and there is no reason to believe it will become commonplace.

We have also seen the same developments in the service industries which actually account for more jobs in this country than the goods producing industries. Lower skilled service level jobs are disappearing as artifical intelligence get better and better. When I was younger, to open a broderage account required actual interaction with real people, and was a bit time consuming. Further, transactions also required actual interaction to give your order to a broker. Now, we have tools that allow you to open an account, fund it, make trades and get informaion without actually talking to anyone. I assume that at some point a person is involved, but I guarantee one person can handle an exponentially greater number of accounts than in the past. The so called robo signing crisis in the Mortgage industry is simply an example of our judicial system failing to keep up with technology. Inevitably, the laws will adjust to the new way things get processed. And yes, some mistakes will be made, but trust me, there will be fewer mistakes than we used to have using people, although technology does have the capability to make outrageous mistakes that most people would never make.

So, all these trends tell me that we need less, more highly skilled people. What then about the people who simply don't fit. Now don't get me wrong, there will always be some jobs for relatively unskilled people in many areas that don't lend themselves to technology, although think about things like traffic enforcement where we now manage to fine people without actual human intervention using cameras. Creative people will find ways to transform more and more things to be more productive. We clearly will be left with a percentage of the population that simply don't have the skills required to fit.

The only real opportunities for many of these people is become true service providers. I believe we will see, in fact I think we already see it, a world where we find it easier and cheaper to buy services that require little skill but do requrie time. Shopping, cleaning, chores are areas that at one time were handled by servants. Most of us are not going to hire servants per se but you can hire companies that will shop for you, clean your house, do your chores in a sort of on-demand way, making it affordable for many more of us.

Logical Decisions?

One of the things that is clear that when emotions get enflamed people make decisions that are not in their own best interests. As a retired federal employee, I stay in contact with that community. Now let me say that in general, these are people with good guaranteed pensions and assuming they made the right decisions at retirement affordable health care. However, last year, it seemed more and more of them (certainly not all) became emotionally connected with the tea party movement and joined the “get rid of Obama socialism faction”.
Now, however you feel about Obama’s policies or whether they had a socialist tendency, one thing was always abundantly clear. He was going to be better for federal workers and retirees than the alternative. Now, of course if you believe he was going to lead to the total collapse of civilization as we know it, opposition is logical, but I don’t think that was the general belief. So, assuming the expressed opinions of these people reflected their votes, they would have voted for tea party type candidates.
Now they are faced with federal pay freezes and attacks on their benefits and interestingly, despite their votes for exactly those things, they seem surprised. Additionally, they are blaming Obama. Now, while Obama is still the President and has to make tough decisions, does anyone not understand that he is forced to accommodate the new majority in the House?
One is almost face with an inescapable conclusion that the animosity towards him is based on something other than reality.

America’s Future

In every era there are people who are "Chicken Little's" convinced that the sky is falling. They always feel that this time is different, these challenges are unprecedented, and that basically we are facing a doomsday scenario unless we take some sort of drastic action.

Of course they have always been wrong in the past, and I suspect will always be wrong in the future. The primary reason they are wrong is their belief that people are, well stupid.

If we are engaging in a destructive behavior, and we all do to some extent, we will change that behavior when it becomes obvious to us it doesn't work. Now, consider all of our current problems. We have a large deficit. Why? Well in addition to some tax cuts enacted when we had a surplus we decided to engage in two significant combat operations and subsequently had a major economic collapse. We clearly could have predicted the problem if we had thought about it, but politics led to the policies that led to the deficit. Now, the deficit isn't a good thing but does it mean that the country is about to collapse? Hardly! Of course we have a bunch of new politicians who ran against Government but now that they are in office seem to think that Government action can solve this problem. Let's get real. The deficit will be reduced as the economy improves. This is a double edged solution as we get more tax revenues and need to spend less on our social requirements. Does that mean the Government shouldn't take action to reduce spending? Of course not, but without an economic recovery it won't solve the problem and if we overdo it, we will jeopardize the timing of the recovery.

What we are most likely faced with for the next decade or so is an adjustment as America weans itself from foreign oil and becomes more self sufficient in energy production. This will create hundreds of thousands of jobs and help reduce unemployment, while reducing our trade deficit, increasing the tax base and helping to stimulate the overall economy.

Actually, if we really wanted to stimulate the economy, we should open the doors to a much greater number of young immigrants who will seek the American dream, work hard and help support our aging domestic population.

America is a very rich country. We have abundant resources and create a tremendous amount of wealth each and every year. We have recently been exporting a lot of that wealth, and that has to change, but the best way to do that is to encourage domestic industries.

There needs to be a debate in this country about what constitute basic Governmental obligations. In the modern world the population of a country is dependent on services that in our pioneer days were simply not feasible. Realistically we have many people alive and productive today who would be dead in the 18^th century. We have people living longer and to a large extent, because of the evolution of our societal values, no longer supported by an extended family structure.

The good old days had some good things, but make no mistake about them, people died younger, worked longer and suffered from things we just wouldn't accept in today's society. The number of people in this country who ever lived or worked on a farm is a small percentage and getting smaller all the time.

America's future is not a return to the little house on the prairie; it is a modern internet based technological society that is part of the entire world. We should embrace it.

Congressional Theatre

We witnessed the public spectacle that the new congress will be for some period of time got started yesterday with a reading of the Constitution. Now, the version read left out parts that had been amended over time and I don't really care about that since the whole thing constitutes waste and abuse since I would like to think the congress should be conducting business instead of theatre.

Of course saying there is waste and abuse in congress is probably unnecessary since they have so much of it. They did cut their own budget by 5% but are now going to engage in some additional play acting related to repealing the Health Reform Bill.

Now we have a lot of people who were elected because a certain portion of the public was angry and went out and voted. Remember that the turnout was typically low for a mid-term election so the mandate is really the feelings of about 25% or so of the American public, many of whom I firmly believe were caught up in the concept of "throwing the rascals out".

The cause of our economic problems is unrelated to the Health Care Reform and probably unrelated to anything the current Administration has done. What the current Administration failed to do was get us out of the mess we were in, and it is questionable if there is really anything that would have accomplished that in the first two years.

The good news seems to be that the economy has picked up some steam recently; however, it is still easily derailed. The new crop of congressmen may be the cause of the next train wreck if they don't actually get to work and stop posturing.

Solutions, not Blame

We think of the New Year as something of a natural event. After all it highlights the fact that the earth has completed another revolution around the sun. Of course the date we pick to celebrate this event is arbitrary. In ancient times, it was often celebrated in the spring to commemorate the fact that there was a rebirth of the world, symbolized by new growth. The spring is clearly a more logical choice, but our use of January goes back to the Romans and has been incorporated into our modern calendars.

We like to reflect on the New Year and consider areas that we could improve. Many of us do this individually. We also see many articles about things we can do better as a society, or ways to improve our finances, lose weight, meet members of the opposite sex, etc., etc.

The general idea is that reflection can lead to improvement, if we consider what didn't work and what did. However, human nature being what it is, you can most likely reprint the very same self improvement articles/blogs every year since we continually make the same mistakes.

There is one thing that we, as a society, could do that would help improve our future and the future of our children. That would be to adopt a forward looking approach and not a backward looking one. Unfortunately, it is much more common, because it is generally much easier to assign blame than it is to fix a problem.

Now clearly wrongdoing should be punished, but honest mistakes are not wrongdoing. When you consider the spill in the Gulf, the majority of the coverage both at the time and afterward was about how someone was at fault. I read an article the other day that depicted the last moments on the rig before it exploded and while interesting it ignored what was the real issue. The failures to act were the result of what proved to be poor decisions. Poor decisions are unfortunately something that humans do. Of course had the specific scenario been anticipated and if enough information had been available, perhaps an action could have been initiated to prevent the explosion and much of the resultant spillage. However these actions were drastic and the fear of overreacting is often the greatest fear of all.

What should happen now is that lessons learned from the event should help improve future training and improve future decision making. Hopefully this is going on at all the major drillers and it should make future drilling safer, not foolproof, but safer.

We usually don't know when catastrophes are avoided. I often read criticism of our anti-terrorism efforts as being ineffectual. Of course the criticism is usually voiced by someone with a vested interest. What matters is the absence of terrorist acts. Yes, our countermeasures incorporate reactive strategies, based on known terrorist attempts, but these strategies have prevented a repeat of 9-11 for almost ten years. The terrorists haven't taken a vacation but clearly we have become a more difficult target. Could we be better? Of course we could and suggestions to improve our efforts could be valuable, but criticism for political or economic gain is unproductive.

We are faced with plenty of problems to solve. Instead of spending so much unproductive time trying to blame someone, we need to focus on solving our problems.