4. THE HABITUAL POLITICIANS
A society of human beings has only one primary resource through which all other resources are developed. That primary resource is the human resource. More specifically, the basic resource is the time of the human beings ... and how they use it. The human time of the system as a whole is the summation of time per capita.
You cannot name any of the traditionally defined forms of capital that did not have their origin in the head (caput) of one or more human minds. The traditional definitions of capital resulted from heads directing their time into the production of goods or services. All secondary capital derives from the summation of how the individual heads use their time. If the time is not used wisely, the system of production will collapse. The misuse or mismanagement of the human resources can be indexed on the Sadness Curve.
The Sadness Curve
The Sadness Curve describes the human consequences when a system of production ceases to be productive. The production of goods and services recesses when human time--the basic capital--is misused. Misused capital lowers a peoples' standard of living. Sadness is evoked within anyone who recognizes that the suffering is a result of an imbalanced system of production; the top policy makers have misdirected the basic capital of the economy. The sadness grows as the misdirection increases.
Corresponding to and underlying the Sadness Curve is the collapse of the survival essential production. This collapse occurs when the legal rules of the system promote
the exit of human resources from essential production into less essential production.
The amount of sadness within a civilization increases when the essential production per capita decreases. The sadness should only result from natural disasters beyond human control. The sadness should not result from humans cannibalizing the essential production so as to stimulate non-essential production. Cannibalization involves artificially diverting human time into less essential busynesses at the expense of essential industries.
Historical and contemporary examples of the sad misdirection of human resources are numerous. The issue of "guns or butter" affects the amount of sadness due to reduced essential production as human resources are directed into production of destruction weapons. An early example of misdirection was the massive influx of precious metals into Spain (1600s) which was used to pay people to ignore agriculture. A contemporary analog of the inflation in Europe of the 1600s, wrought by the forcefully dislocated wealth from the New World, is black gold--oil.
One need only look at the OPEC nations that have forcefully caused of the dislocation of currency to see the effects upon their domestic economies; look at Iran, Nigeria, Mexico, and Saudi Arabia. By overt theft (conquisitors) or coercion (OPEC), some economies obtained funds that artificially elevated their standard of living. However, the wealth shifted production within the systems. They became top heavy and collapsed.
An essential/non-essential continuum exists based on how essential a good or service is to human survival. Any two people constructing this continuum would not come up with the same list. However, if a large enough population was polled, a representative continuum could be constructed reflecting the essentialness of any product.
The following should be obvious. If essential production per capita decreases, shortages will develop relative to demand, that is, relative shortages per capita. This production reduction will show up as sinflation (shortage inflation), later as famine, and finally as starvation. More than likely civil violence--domestic and international--will accompany the declining essential productivity per capita.
The suffering from reduced essential production is really sad. It indicts the top policy makers who are charged with maintaining a balanced system of production. The system of production is not balanced when essential production loses human resources to less essential production. This shift of human heads, minds, and time away from maintaining essential production can be called an "essness ratio."
The essness ratio depicts how human time per capita is used within a system of production. If fewer hours are devoted to essential production while population is expanding, what is the results? Using a essential/non-essential continuum every hour of the human beings within a system of production can be assessed a qualifiable factor. For instance, a very essential use of human time is farming. At the opposite extreme is the thief who is always getting something for nothing.
Crucial to survival is the essness ratio and its drift. The drift of the essness ratio would be obvious if everyone was encouraged by legal law to become thieves, gamblers, speculators or brokers. Simultaneously with this illogical encouragement, the recession of essential production would occur. The Sadness Curve would provoke more tears.
At any moment, an essness ratio exists within a system of production, even if it cannot be accurately assessed. While the essness ratio cannot be accurately measured, its drift can be determined by considering socio-economic trends. The laws and regulations from the policy-makers affect human time. If the politicians, judges, and police said that they were no longer going to punish crime, one could expect a shift in the essness balance away from production. Similarly, if
politicians legalize, bankers finance, and necronomists rationalize
the essness ratio will become sadder.
Laffer's Curve, A Cocktail Party Joke
In the late 1970's and early 1980's a new group of necronomists arose who called themselves "supply-siders". These necronomists argue that the government collects, borrows, or prints too much money and then distributes the money to consumers who "demand" products. As an alternative, they argued, the government should organize the flow of money to circulate among those who "supply" the goods and services. Not bad ... so far.
The "supply-siders" say economic ills come from the government over-taxing and over-regulating the supply side of the economy. They say that over-taxation and over-regulation cause reduced production and productivity. Their prescription was massive tax-cuts and deregulation to free capitalists to produce cheaper products.
Supply-siders did not recognize decapitalism through the misuse of the symbols of capital. They pushed tax-cuts and deregulation that merely increased the multiplication of symbols which sadly decreased the production of real wealth. Their cures were worse than the existing disease.
Because the supply-siders did not distinguish between the acquisitive decapitalism and the productive capitalist, free and fair enterprise did not reblossom under their programs of tax-cuts and deregulation. Quite to the contrary, the world economy contracted as inflation chasers, parading as capitalists, proceeded to streamline and vivisect the American economic body. Less capital (human time) went into actual production expansion. The fastest buck was seen on Wall Street, in banking or speculation. The acquisition of old stocks, old production, and old products boomed ... for a while.
In the front ranks of the supply-siders was a necronomist who developed a curve purportedly relating taxation and production: Laffer Curve, named after the originator, Arthur Laffer. The Laffer Curve is a segment of the more inclusive Sadness curve.
The Sadness Curve reflects how human capital, resources, or time are directed to either essential and non-essential busytime. Basically, that is what Laffer described when he said that increased taxation reduces private capital for investment. As Laffer noted, increased consumption by government taxation directs those dollars (and the human resources attracted to dollars) into the bureaucracy of government.
For the supply-siders, the main government waste was the transfer of dollars to the non-productive well-fared. Hypocritically, they ignored the transfer of tax-dollars to the non-productive well-fixed. Sadly, they implemented further tax-cuts, tax-supports, and tax-subsidies for the non-productive well-fixed who used their money for acquiring, not capitalizing, production. Examples include depreciation schedules which manufacturing industries could use because they were strapped for cash: "The truth is that in today's inflationary climate, accelerated depreciation won't have a very significant impact on basic industry," says [one steel official]. Included in the supply-siders empty programs are the curbs on the Security and Exchange Commission authority to investigate and prosecute abuses of stock transactions.
The Sadness Curve includes the counter-productive waste of human resources by governmental bureaucracy. Habitual politicians attempt to solve problems by taxing more. However, in recognizing the essness ratio, the Sadness Curve includes the wasted human resources that occur within the private sector. Supply-siders ignored and stimulated private waste. Attempts to eliminate public waste by tax-cuts and deregulation will fail if the private benefactors do not use the human resources in a productive fashion.
Reagan's Deregulation Addiction.
The Laffer Curve and its prescriptions exacerbated the Sadness Curve. A classical case transpired of treating a symptom (government waste) rather than the total disease (human waste). The Reagan tax-cuts and deregulations based on supply-side necronomics reduced production per capita and increased problems. Tax-cuts can work wonders if accompanied by a reduced need for taxation. Deregulation can work wonders if it is accompanied by the institution of democratic power and responsibility to solve the problems.
Unsolved problems prompted federal regulation in the first place. Eliminating half-wit half-solutions to full problems does not constitute a wiser move, especially if nothing is done to eliminate the problems.
Americans have many doubts about some of the specific proposals [on deregulation].
Reagan was not responsible for economical mess he inherited. But he is responsible the large mess he left when he exited office.
The Sadness Curve Under the Reagan Administration
Early signals from the Reagan administration indicated an ignorance of the Sadness Curve and how it derives from an imbalance of human resources. For instance,
Food is a "great bargain" at current prices, Agriculture Secretary John Block said. He voiced opposition to any government moves to control a rise in grocery prices, expected to average 12% to 15% this year. Block also said the Cabinet next week probably will review curbs on Soviet grain buying.
Block said, in effect, that the U.S. consumer didn't have anything to complain about ... not until Americans pay as much as the rest of the world. In other words, Americans should expect to spend more on food ... until the percentage is equal to that of other lands. In other words, our standard of living is too high, we should not complain ... until it has sunk as low as the rest of the world! So much for the American Dream.
Do you think food is a bargain? Did the Reagan administration do anything to prevent non-essential production from cannibalizing essential production? Inflation can result from production shortages. Under Reagan and Block, prices increased in the essential goods and services, especially food.
Another example of Reagan's insensitiveness to price rises in essential goods and services was in energy. Again, one finds the beneficiaries of government deregulation justifying the price rises on the basis of someone else being overpaid for equivalent goods or service.
"Reagan Plan May Double Natural Gas Heating Bills"
If this head gas person really wanted to close the gap between the prices for equivalent amounts of energy in gas and oil, he should productively organize people to legalize a price reduction of oil. The productive thing is not to seek a inflated price for natural gas. Spokesmen for the natural gas suppliers will never attempt to stop price-gouging by oil companies as a way of ending the price disparity between equivalent amounts of energy. There is one simple reason: the industry is controlled and owned by big oil.
The rationale of the Reagan's deregulation was that everyone should charge more than the highest price-gouger. No thought was given to how the highest paid person is someone benefiting from inflationarily over-compensation. And, logically, how long can a system last when everyone tries to raise their prices to stay even with the most over-paid persons? Of course, who is going to pay and suffer as the free-for-all in non-productive price rises increases? The inflationary sufferers will be those that will not or cannot monopolize the ears of a politician for illogical, inflationary legal laws.
Politician do not analyze laws for the inflationary impact. Rather, they sell out to the highest bidder and use the bidder's rationale for why they passed a law. This sequence occurred with natural gas deregulation. Natural gas officials wanted deregulation to remove the "regulatory burden" of price control. Between the burdens of "price control" and "price gouging," which would the consumer vote for if given the a chance. Oil deregulation had an inflationary burden of higher than the burden of price-control. The promised reduction in oil imports and promised increase in oil exploration did not result: oil companies bought and mismanaged other companies with their price-gouging income.
Calls for price deregulation to remove the "regulatory burden" of price control is analogous to the absurdity that occurred many times in Vietnam. Americans destroyed villages to save them from communism. Similarly, Americans lose dollars to price-gouging deregulation to save them from the penny-losses of regulatory price controls. Who's pays the higher prices and lost products of deregulation?
Three big refiners, Phillips, Atlantic Richfield and Texaco, are cutting off gasoline supplies to several hundred retail outlets. Decontrol freed the companies of the obligation to find other suppliers for the outlets before taking the action.
People sadly know the rise in petroleum prices from Reagan speeding up decontrol of the oil industry. Most expected a price rise. Reagan predicted 3-5 cents per gallon. The oil companies made it 8-12 cents in the first two weeks of decontrol. Most people didn't realize they could be summarily excluded from receiving any petroleum at all at any price.
Few people were summarily excluded from gasoline supplies when the "three big refiners" cut off supplies to the independents. The people could just go down the road to a company owned gas station. Petroleum deregulation is national decapitalization and capitalism for fewer few!
Do Reagan and Republicans Recognize Decapitalism?
It should be clear that Reagan and the Republicans did not distinguish between
between capitalism and decapitalism,
between production profits and inflationary returns,
between production and symbols of production, and
between essential and non-essential production.
Thus, when one hears that "Big [is] No Longer Bad in Antitrust Thinking," one should anticipate more despotic, decapitalistic conglomeration of America. When politicians cry for more savings for capital formation, one should say no way.
In 1980 a president was elected who preached and practice the avoidance of long-term investment. Reagan said that Americans should pursue liquidity. Does hope exist for a nation when a leader does not know the difference between multiplying symbols of production and production itself? What if everyone did what Reagan preached and did, that is, avoid long-term investment?
"How Washington Spurs the High-Tech Companies"
Will high tech save America when basic manufacturing is folding? Does frequenting the latest madam keep the home fires burning? Does funding a satellite solve inner city problems? The heading was an article in Business Week. It described how the habitual politicians believed they would put the country back on the road to recovery. However, it was merely another case of politics interjecting irrelevant factors into a problem solving process.
The high-technology companies in particular have suddenly become the darlings of Washington. In October, Congress passed several bills that will make it easier for small companies to raise capital and ease the regulatory burdens of venture-capital firms that invest in fledgling enterprises. And another 75 to 80 bills to spur industrial innovation have been proposed, a measure of both the concern over the slowdown in productivity and the determination to maintain the nation's technological lead over its international rivals.
When essential goods and services are collapsing (and are matched by record rates of inflation in those products), do we need more stimulus for productivity in less essential, high technology? To those who say that the high-technology is used in essential goods and services, they should investigate the ratio for themselves. High technology cannot carry a nation forward if new technology destroys essential production. Part of the bill was a special tax credit:
A 25% tax credit on the increase in R+D outlays above the average for a prior three-year base period.
Can the farmers, truckers, or food processors afford any R+D outlay to take advantage of this 25% tax credit? No. Capital that could help essential production flows away. The effect on essential product prices? Sinflation. The Sadness Curve will be greater.
Another part of the Business Week article described changes in stock options.
Creation of an "incentive stock option" to treat gains on stock options as capital gains rather than ordinary income. This should make it easier for high technology companies to grant stock options to employees.
Again the question, "How does it affect essential production per capita?" Does it promote improved productivity per capita in essential goods and services where inflation is greatest? Or, does it metastasize more human resources being diverted from essential production? The answer should be obvious and is stated in the last sentence of the above quotation. What does America need most? Cheaper televisions? Or, cheaper food?
Law is the Security and Exchanges Commission (SEC) going to affect the essness ratio?
Help from the SEC - The SEC has relaxed Rule 144, relating to insiders' sales of stock, which essentially permits the financiers of these companies and their managers to well restricted securities more frequently and in larger quantities. This increases the liquidity for those investing in young companies and frees up significant amounts of capital for new investment.
What a bunch of necronomic hogwash and double-talk. First of all, if managers look for money from inside sales stocks, their misdirected attention is going to affect the efficiency of the actual production. Secondly, how can inside sales significantly increase the amounts of capital for new investment? When the venture or inside decapitalist talks someone into purchasing their shares, has the amount of liquidity in the system increased?. No.
The amount of liquidity within a system of production does not increase when an insider is selling or has sold stock. What does occur? Someone gives up control of their liquidity by transferring it to the insiders. The amount of liquidity within the system has not increased, it has just changed hands. An insider's sale indicates that someone is being bamboozled into buying some stocks that are worth less than a MORE attractive short-term or long-term investment: if the insiders stocks were the best investment, the insider would not be selling them.
America's liquid capital is being legally regulated so that America has to promote capitalism for a fewer few. With insider sales and liquidity instability, the opportunities for income involving the symbols of capital are limited to a fewer few. The relaxation of Rule 144 is a reduction in the opportunities of capitalism per capita. Rather than instituting the more productive legalities of capitalism per capita, the habitual politicians metastasize capitalism for a fewer few. It is appropriate to ask, in light of the nature of deregulation of stocks, as well as energy, "Are the modern politicians in Washington ruining rather than running America?"
Summary: We are running out of time.
We are in the process of the Great American Decapitalization which is being
legalized by the politicians,
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