Philosophical Musings

Philosophical Musings

Friday, May 24, 2013

The Primary function of Govt


Men naturally rebel against the injustice of which they are victims. Thus, when plunder is organized by law for the profit of those who make the law, all the plundered classes try somehow to enter -- by peaceful or revolutionary means -- into the making of laws. According to their degree of enlightenment, these plundered classes may propose one of two entirely different purposes when they attempt to attain political power: Either they may wish to stop lawful plunder, or they may wish to share in it. ~Frederic Bastiat

Justice is the central duty of any Government. Govt should protect the weak from the exploitation of the strong. It doesn't matter if the strong is a thug trying to mug you, or a foreign invader, or a greedy capitalist. The purpose of govt is to make & enforce Law to protect the citizens. In the mission statement of America, it is phrased like this:

That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed,

If Govt does not 'secure the rights of the people by providing justice, but instead uses Law & the force of govt as an instrument of plunder & injustice, then the people have the right to alter or abolish that govt, & provide one that is better suited to meet the goal.

"Whenever the legislators endeavor to take away and destroy the property of the people, or to reduce them to slavery under arbitrary power, they put themselves into a state of war with the people, who are thereupon absolved from any further obedience." ~John Locke

That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Declaration of Independence

But what is happening to America? Justice is not being served. Laws are passed to enrich govt cronies, & corruption is running rampant. Policies are made, not with the best interests of the people, but the special interests of a favored few. There is little deterrence for injustice, & the nation is systematically being weakened. Whether it is corporate favoritism, tax subsidies, cronyism fraud, or graft, govt is NOT being used as an instrument of justice, but one of plunder. Redistribution is favored, & the force of govt is being misused to plunder the people.

It is time for Americans to demand justice. It is past time for us to become indignant over the use of govt force as an instrument of plunder. If our elected representatives will not serve the people by securing our most basic right to justice, we need to remove them & install those who will. The nation is being destroyed before our very eyes. Will we stand by idly & watch its destruction? Or will we act, & demand that our govt return to it's basic function of providing justice to the citizens?

It is impossible to introduce into society a greater change and a greater evil than this: the conversion of the law into an instrument of plunder. ~Frederic Bastiat

Saturday, May 4, 2013

Capital & Currency

I need to make a distinction between 'capital' & 'wealth.' I don't mean wealth in the class usage, meaning riches. Poor people have wealth, just not as much as the rich. And of course, capital is only a representation of wealth. Capital & wealth are very similar, & seem like the same thing at times, but there are subtle differences. A farmer who owns a farm might be capital poor, but has wealth in his farm & what it produces. A security guard might be dirt poor, with regards to liquid capital, but might own a home, some cars, or a collection of high tech flashlights. A retired cop might have a large portfolio of stocks, ira's, or other liquid capital, & it is all part of his 'wealth'. Capital, though, is the most fluid (and fickle) measure of wealth. Since it is just a representative, it can purchase real goods or real estate. But a pile of representative capital can lose value through inflation. Most capitalists keep their stash invested, to keep it from being depleted. Sometimes it works, & they make more capital with their capital. But other times, it doesn't, & they lose money. A retiree or pensioner depends on the currency to be stable, for their income to have value.

Wealth provides our basic necessities. Human beings need food, water, air, & protection. Air is free, for now, & water is fairly easy to come by. Food is historically cheaper than any time in history, but that can change. Protection includes shelter, & is a pretty major expense & concern, even if you're homeless. Camping or living under an overpass might be free, but it requires a lot of your time & effort to survive. Protection can be clothing, healthcare, or a means of fending off thieves or invaders, in addition to shelter.

Getting food is not that easy. If we all had to hunt for our food, a lot of us would go very hungry. The  deer & rabbit population would deplete very rapidly, without an organized food distribution network. Roots, wild asparagus, & berries would get harder to find. Hunter/gatherers need a larger area, without a lot of competition. Farmers can cultivate more food in a smaller space than hunter/gatherers, & is a more practical method of providing food for larger groups. It is how we grew to the current numbers on this planet. If we all had to survive on what we ourselves hunted or gathered, i guarantee the world would not have the population it does now.

Most of us work, or used to. We use our time & abilities to trade for goods & services. We attach a value on our time & ability, & get that back in capital, which we buy the food & other necessities, as well as luxuries, like computers & internet access. But someone has to require our services, for us to make the exchange. If i am a skilled buggy whip maker, I can sell my wares to provide for my needs. But if the demand for buggy whips declines, i cannot increase production to make up for it. I need to adapt, or i cannot survive in the open market. Or, i can elicit sympathy from others, or con them into giving me their wealth to meet my needs. Or, i can get the govt to take wealth from other producers, to subsidize my outdated or obsolete venture. But if very many people do this, you will get fewer & fewer producers of actual wealth for the nation. Eventually, the representative capital will collapse, since the fiat part.. the declared value.. is no longer respected or recognized by those making the exchange. Hyper inflation has gutted the wealth of many people throughout history.. and a lot of it not that distant. Many current nations have major problems with their currency & inflation, because it has no credibility.

All of the 'quantitative easings' & other dumping of printed money into the economy has the end result of depleting our true wealth.  It dilutes the earnings of the laborer & steals their savings. And taxation is merely taking from the producers. A good govt takes a minimum from the people to provide justice, protection, & collective projects like infrastructure. A bad govt over burdens the people with taxation for foreign wars, redistribution, or other non-productive policies. Infrastructure & protection INCREASE production, & make the nation wealthier. War, welfare, & redistribution are leeches on the producers.

A nation may go through cycles, or the economy may shift to different sectors. We might go from agriculture to manufacturing, to high tech services, to weapons, or some other product. But we have to produce something. We cannot survive on printed money.  This is the problem with the current practice of 'financial sector' money shuffling. That is moving the economy OUT of a production based system, into a pyramid scheme. That is where you have an illusion of increase, but it is only from the constant flow of capital. THAT is the engine that drives a ponzi scheme. Nothing is produced, just money being shuffled around, pyramidded so the upper tiers get more, until the flow stops. Then it all crashes down.  An economy cannot survive with ponzi scheme parameters driving it.

A stable govt can provide a currency, & 'declare' it's value (fiat: literally, let it be done). If the citizens agree, & use this method of representative exchange, it makes transferring goods & products easier & more efficient, & opens up markets for other goods & services. The us govt had a 'gold standard' for nearly 150 yrs, to provide stability for the currency. The rest of the world was volatile, & currency was at the root of many a civil war.

But, if fiat money is manipulated by hidden agendas, or is used to fleece the producers out of their wealth, eventually the producers get wise to the scam & stop using it.

'Follow the money' This is often brought up for just about any subject. But if you dig deeper, & 'follow the production', you'll see that IT is the true driver of the economy, not currency. Look at any industry, or any service, & you will see production driving or supporting it. EVERYONE depends on the producers of the nation, even if they are in a support role. So economics is quite simple, if you ignore the cacophony of noise & commotion intended to obscure truth, rather than reveal it.

If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property - until their children wake-up homeless on the continent their fathers conquered." ~Thomas Jefferson 

The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation. ~Vladimir Ilyich Lenin

With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people. ~Friedrich August von Hayek

Friday, May 3, 2013

Production: The basis for wealth

All the perplexities, confusion and distress in America arise not from defects in their Constitution or Confederation, nor from want of honor or virtue, so much as downright ignorance of the nature of coin, credit, and circulation. ~John Adams

At the root of all our national problems is money.  We want more.  We want more as individuals, families, businesses, local, & national governments.  We seem to 'get it' at the lower levels.  We know that we either have to work, or con someone into giving us money to increase wealth.  But for some reason, when we go to the national level, we disconnect.  We think money grows on trees.  We can just print money & give it out.  We view the federal govt as a doddering old grandfather, who hands out money to greedy & grasping children.

But it doesn't work that way.  Wealth, to be real, must come from real production in the nation.  You cannot just print numbers & pictures on paper & declare it to be of value.  It has to have backing.

True wealth has to be created.  You have to have a product that others will give of their wealth to purchase.  This is true from the smallest level to the biggest; from an individual to a superpower.  Here are the steps.

1. First, there is labor.  This is always the first, but it requires EFFICIENT & PRODUCTIVE labor.  Labor by itself has no value, only in what it is able to produce.  The commodity produced must have a market, & it needs to be competitively priced.  But labor is required to make it, extract it, or assemble it.  Oil, soybeans, cars, washing machines, homes, industrial plants.. all of these things required labor to produce.

2. Next, you need demand.  Food is always in demand, & has historically been the most important commodity we work for.  People used to spend a lot more of their working time to earn food.  Mechanization has lowered the cost of food so we can spend the fruits of our labors on other things.  That disposable income has opened up markets for other products.  That has created demand.  So now there are many other things, besides food, that we can spend our labors on.

3. Services that improve production.  These are in high demand, since they improve our productivity, & increase our wealth.  A farmer by himself can farm so much land.  With a mule he can produce more.  With a tractor, a lot more.  The cost of operating the tractor is offset by the increase in production.  Mechanization has increased production in every area.  Farming, mining, manufacturing.. all sectors of the economy have improved production with technology & mechanization.  These services include research & development, & the concept of higher education.  All of these things can provide cost saving measures that increase production.

4. Capital.  This is a tool for production, not production itself.  An individual or group can put together a process for creating a product, or farm, or extract oil or gold or copper.  Capital can be used to hire others to do the work.  If the product has demand & volume, a profit can be made for the capitalist, even though he did not do any actual work in creating the product.  Capital can be amassed by long term individual savings, or corporate ventures where many people pool their wealth to produce increase.  But capital by itself has no productive value.  It must be used by those actually producing something to increase wealth.

5. Wealth.  This is the result of intelligent labor.  A farmer increases his growing area, expanding his production, selling more crops, & amassing wealth from the increase.  Much of his increase he puts back into the farm.. outbuildings, machinery, barns, buying more land.. all of these things increase the wealth of the farmer.  A miner or manufacturer does the same.  Even a day laborer can save his daily wage to buy larger investments, or open his own business venture.  But all this wealth is acquired by a combination of market demand for the product, luck, & hard work.

This is all very basic stuff.. most children figure this out early on.  But there is a growing sense of 'entitlement'.  That is the idea that somehow, just being alive entitles you to wealth.  Working smart & hard are not factors, anymore, but it should be provided at birth.  I am not sure where this idea came from.. perhaps from statist regimes that have a cradle to grave management system for the citizens.  But those don't work, & a free people are always more productive than an oppressed one.

A productive people can afford to support a certain level of dependents.  If there are enough who are willing to work hard, many others can be afforded a life of leisure, or at least dependency.  The problems arise when the dependents grow, & the producers diminish.  At some point, an imbalance occurs, & the society can no longer function.  You can stall by borrowing, but eventually, reality sets in.  Someone has to work & produce.  These workers should be allowed to keep the increase from their labors, rather than have govt or the capitalists take from them.  But without a productive people, a society cannot prosper or even survive.