It's funny isn't it, how nothing natural changes, except the seasons, and always in the same way, but man goes thru these artificial cycles that he creates simply by cyclicity and in them he suffers want when, outside his artificial world of exchange there is the natural plenty. The sun never stopped shining, rain still falls, crops grow and cows give milk. All is there for the taking and may be won by man's simple labour, of which he should always have natural energy to give.
Nature has learned how to change and recreate, and always stay in harmonious flux. But even in nature whole regions will metamorphose into deserts, because of winds, oceans currents, and inexorable climatic pressures. In a way, economies can be become deserts as well I guess. If we analyse resources, uses, the energy necessary to create the flow of them, then perhaps we can see what creates the dearth out of man's created marginal method of subsistence. The average man lives on very little excess. He creates scant wealth over and above his needs for sustenance. Within this he tends to be overcome by greed to improve his lot greatly by leveraging within the financial and social world.
The world of rational and irrational speculation beckons him. The incessant tattoo of ad slogans of easy money agencies and spiral instrumented brokers beats out its wild fandango, Circe like, whilst our captain grimly charts his ascetic course lashed to the wheel of the financial good ship lollypop veering between the Inflated Scylla and the Bankrupt Charbydis, his noble crew chanting exhortations of greater effort and pointing madly to the enchanted isles of allure. His faithful second mate, whose blandishments of affection are only occasionally led ambivalently towards the local deliverymen, admonishes him sternly not to wander with his dollar mad eyes, whilst promising favour only if his voyages return with decks piled high with the plunder.
Two great forces create within our economic climate the tendency to peristaltically pulse to make the resources of remnuneration scarce whilst labour is seemingly a constant availability to create what is called "growth". In reality nothing can grow any faster than consumption, (which is almost fixed by population and labour efficiency), can afford it to. If people have no economic surplus created by their wages, then no business can feed into their maw at any greater rate than some fixed amount. The ability to consume, fixed by wage rates, dictates the market for real goods. So in theory unless the population grows, or the efficiency of industry by new technology grows, the growth of an economy and wealth cannot grow at all. We would be regulated as a primitive agrarian economy of historic times, say as Egypt. But if we peel back the dusty pages of history we see that even in those far gone times, the welfare of the people was tied to changing fortunes of industry. We see the prices of gold in the times of the Pharaohs swinging wildly from excess supply for decades at a time. We see shortages of grain and times of plenty. The cycles were oft tied to nature, but often to man's tendency to speculate and create wealth.
Overprinted on the basic production-consumption patterns, which of course thru unchecked business growth and fashions can swing way out of whack, we have the realm of financial instruments, the time value of money and speculation in value of goods and specie. It is these instruments which can be used to fund business, the business of credit, shares, etc, very old ideas, whose trade really starts to cause perceived increases in wealth, whose value cannot be supported by labour and production for very long. This business of fashions of specie, as in Salt, Dutch Tulips, or derivatives, whilst useful to absorb and control prices of common trade and delivery of seasonal goods presold into markets, can also be used for rampant rumour driven speculation and manipulated into a self driven business with a life of its own whose nominal value exceeds real production by dizzying factors. This is the virtual economy we have evolved into. People in NOrth America don't so much work at jobs as speculate in the value of their labour, bargaining with industry who moves their products as forward sold units of production. We can no longer afford to make anything here. The wage spiral has gone ever upward until no manufacturer can afford to hire a North American or European, and even if working in a totally robotic factory, sell anything to anyone else in the world. Robot factories are not that versatile, and require huge capital outlay. Production is captive of huge inertia and marketing forces captive of long term commitments. More agile industries with cheaper labour with open trade agreements can cherry pick the heart of such stagnant economies. Finally the high labour costs and low productivity catch up with the stagnant, purely financially leveraged and speculative nation. She can no longer afford to buy the cheap goods as there is nothing to exchange for them, except paper promises. Production must equal production for trade to flourish. Engineering services are too easily copied and exceeded by the people with the need to produce. their markets can open avenues of trade, whilst closing avenues of reciprocity by more implacable and less easily co-opted government structures. But if the consumer nations die from lack of productivity, the producing nations eventually follow. One hand must wash the other, or they both become infested.
The cycles of greed, the tragedy of the commons, the well meaning socialism of pollyanna politicians, the killing of competition, the existence of an interest rate, the unchecked financial excesses of monopolistic bankers, the power of criminal interests in corrupting government and unions, the powerlessness of the elected representativeness, the smothering power and inhumanity of the technological state over its people, the ever dwindling energy sources, and their massive prices increase and has all conspired to allow cycles of monetary weakness to run unchecked, whilst bankrupt governments run printing presses at breakneck speed to prop up their dire need for international power. At the end of these economic cycles for millenia a magic enemy has always been fabricated who strikes at the heart of the empire, and from the bunker of the free state whose motherhood proclamations no right thinking statist would dare question, comes the exhortation to fight the enemy without whilst the real enemy within continues to consolidate its power by whatever means does so most efficiently. Two threats always confront this state. An enemy conveniently plotting from without, and a fifth column within throw its lots with the enemy, some plotting fiendishly in vile calumny for dollars and base association with clearly drawn disparagment of our most sacred principles, and those who are easily duped by grass-is-always-greener slogans and the false promises of a utopian regime. War must ensue. And it is always a good fix for a bad economy. Real production must increase dramatically to feed a war machine. People must sacrifice wage increases, work efficiently and put in long hours. Maximal utilization of labour is the order of the day. Rosie really can rivet an aircraft. At the end of the war, all is well, and the population much reduced to boot. Prosperity can begin anew. The devastated nations, bombed and burnt to ruins? The rebuilding creates so much new, ingenious enterprise, fierce determination that new organization and efficiency is bred to racehorse levels, and those most shell shocked countries arise as new powers in a few decades. Getting rid of the old seems to only set one back a half a decade at most. The very act of renewal is good for business. And the productivity lessons last. In 1960 Japan was no 12 economy in the world. Every disadvantage in resources was hers. Trade was always long distance. In 25 years she was the number 2 economy in the world. Canada was ahead of Japan in 1960. She hasn't gone anywhere since. 40 years of stagnation. Those who lost the war won the peace. Great Britain whose great efforts managed to go toe to toe with Germany to come up with near miraculous solutions in that initially uneven battle, was near third world status in 20 years following WWII. She went from a country of Empire, with vast commercial holdings across a Commonwealth of 20 nations, to a beggar nation. If not for a conservative revolution and a remolding as a financial center, GB would have been neck and neck with Albania in standard of living. It should be clearly evident where socialistic policies will end a country if all the histories of the adherents are faithfully studied. They all end up in the crapper. They are just dictatorships of rabble rousing demagogues, drunk with power. While well meaning in supposedly reaching out to the downtrodden and the indigent they go to far into making all over into that image. All should not be downtrodden, indigent and sustained by government largesse. The only fonts of wisdom and enterprise do not necessarily emanate from a few hundred populist lawyers with a social conscience in the capital of a nation.
The social conscience of a wise and humane nation notwithstanding, the greatest wisdom of a nation who would be prosperous is to give the citizens the maximal incentive to be productive. It is first for his own good that a citizen would be industrious. For his comfort, his security, his satisfaction in his work, and for achievement and pride. Ambition cannot be quelled for a person to do well by himself with effort he knows works well. How best to do that is a mix of carrot and stick that must be finely figured. Motivation must be extrinsic, and intrinsic. Their must be need and want, so to speak. He must have a real brass ring to grab and the need every day to work toward that. Take away need and you take away 90% of effort he will expend. If the fruit hangs too low, the dollars printed too easy, then no one will do else but bum about the beach and hoist cold ones. If there is no brass ring, or gold one, he will retreat again, perhaps to the government approved palace of ablutions and hoist his victory gin, saluting der fuhrer with a nominal wave.
For America to return to a smooth acceleration of its economy it must return to efficiency. If it cannot make stuff to sell to other people, then obviously it's all over. It's labour is amongst the highest cost in the world. It would have to make absolutely indispensable industrial machinery and business services to ever compete, since consumer goods would appear to be out. Nobody is going to pay 100K for a family runabout. But the two enterprises are closely tied together, consumer goods and B2B. The wage rates cannot come down without deflation. The spiral that has locked the west into uncompetitiveness must unravel. We cannot go up forever. The lock of unions into unrealistic demands, of wedging business into uncompetitive standards, practices has to end. Unions basically killed off GM and the Big 3, and with it, 30% of the industrial capacity of the US. They are as good as gone, and will never return. $70 an hour nobody could afford to pay. It is so much more than the average labour wage in the US, it is ludicrous. The US and Canada are $12.00 an hour countries. That is all business can afford to pay, even when the going is good. It does not make a living, barely makes it with two earning it per family. But that is the reality. Anyone who does not believe that can go to the store and buy a set of steak knives for $1.50. Yep, they are there. Crappy of course, but there. Actually if you want to spend 10 bucks you can get good ones. We could not do that in 1967. The cold cup of coffee America is going to have to drink one morning is that the holiday is over. It lasted 75 years. We were on top.
Pretty soon we will be living in the ruins of this grand experiment. Feeding the furniture to jury rigged stoves in the middle of the living room. Keeping the water running, thinking of checking the snares out the back 40 for some meat on the table, listening to the radio for reports of rioters, looters and gangs. It is time to pick up the kids at the local home school co-op. The school house burnt down last year but it had been all but abandoned to roving gangs. Teachers were volunteer, and only the bravest would venture forth to duck and dodge bullets, on the way to work and in the hallways, thence to stand before largely empty seats to get the brave few to recite their ABC's in unheated rooms with broken windows. You saddle up the team, call on the next door to ride shotgun on the boiler plated ford pickup wagon, reload a brace of black powder shotguns for defense and ride out. Next week you will see the local straw boss of the hood to see if there is any wood cutting and forest gathering expeditions hiring. You think back fondly to ten years before when you could steal gas and ride to the next town to liberate canned goods from old Wal Marts. Most of them are gutted now, or patrolled by citizen defense squads. You decide to brush up on your Chinese. You are glad you sent you kids to language school so they can deal with the commissars discipline squads. They don't come around as much as there is not much to do here. Your district has been under isolation since it could not meet its rice quotas. Your commissar was hung for bad agricultural planning. A new plan is in place for your state. You hope that wood cutting with axes will be reimplemented and targets put so that you can make food on the table. The Commissars aren't so bad. If you go along with the program and keep your head down, you get to see the wife once a month. She has a good job at the state palace as a servant. You won't miss a slice out of the loaf you tell yourself. But the loaf is largely the party's these days and you are the slice. Perhaps your kids can grow up and marry into the party, and achieve some status. It could be worse. Some rebel states were decimated, their crops burned and you don't see much of those people around anymore.
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