Archives for category: 1989 and the Global Financial Crisises.

In a free-enterprise, private-property system, a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to their basic rules of the society, both those embodied in law and those embodied in ethical custom.” Milton Friedman, 1970

Between 1776 and 1970 the world had leaped forward. Technologically, economically and socially. Not only that we’ve managed to learn so much about the world and to produce immense wealth but we’ve somehow managed to ‘spread around’ the results. The proportion of people who had improved their fortunes had grown constantly during the entire period.

The majority of Americans share in economic growth through the wages they receive for their labor, rather than through investment income. Unfortunately, many of these workers have fared poorly in recent decades. Since the early 1970s, the hourly inflation-adjusted wages received by the typical worker have barely risen, growing only 0.2% per year. In other words, though the economy has been growing, the primary way most people benefit from that growth has almost completely stalled.” Jay Shambaugh, Ryan Nunn, HBR

Isaac Newton hadn’t invented gravitation. He only ‘noticed’ it. Put it in words.
Adam Smith hadn’t invented the free market. He had noticed how it used to work and opened our eyes about it.
For what ever reasons, enough of us had chosen to close those eyes back. And have reached the conclusion that ‘greed is good’.

Milton Friedman was both horribly wrong and exactly right.

He was right in the sense that he had gouged correctly what the ‘general public’ wanted/was ready to accept. “in accordance with their desires, which generally will be to make as much money as possible

He was horribly wrong in the sense that he had perpetuated Marx’s error. Karl’s, not Groucho’s.

Money isn’t everything. Life beats it to the post.
Profit is, indeed, essential. Only it is nothing but an indicator. About how efficient a corporation is.
Meanwhile the role of a corporation is to accomplish – as Friedman himself had dully noted, the will of the shareholders.

The problem arises from the fact that ‘near mindedness’ blinds.
If/when both shareholders and management have nothing but ‘money’ in their scopes the market actually looses its freedom.

Economic agents no longer converge towards the market to solve each-others problems – like Smith had noticed, but to ‘make money’.

Not the same thing. Not by a long shot.

Society exists in two forms.
One in which the individual members have a certain amount of respect towards their peers.
And another one, where John Doe doesn’t give a damn about anybody else. Or even hates everybody else.

The first kind evolves. People talk – and listen, about their problems. Then find solutions.
The second experiences revolutions.

When too many individuals have never had anything ‘substantial’ on their name, and feel they have no chance of improving their lot – because ‘everything’ has already been appropriated by a small minority, that society has a marked tendency towards communism.

Sometimes, too many individuals see their fortunes go down the drain, for no matter what reason. From there, only God knows how, those fortunes go straight into somebody else’s pockets. Any society which experiences something similar has a marked tendency towards fascism.

The problem with both communism and fascism being that they have always failed. Crumbled from within before being pushed into the precipice by those who has seen the situation as an opportunity. As an opportunity too good to be wasted.
Then, if neither had ever survived for long, why are so many people who continue to profess either? So many intellectuals who try to convince their audience that …

Well…, first of all, because ‘intellectuals’ are nothing but regular people. With a twist! Not only that intellectuals have the same ‘passions’ as the commoners – ‘greed’ being the most intense, but they also have a very good opinion about themselves. Hence too many of the intellectuals consider that they are the ones who should be in charge. That they are the ones who know what everybody else need to do if they want to live comfortably.

In a nutshell, too many intellectuals fall into the trap of considering themselves infallible. And ‘deserving’!
Hence those would do everything needed to get what is rightfully theirs.

If a society is ripe for communism, one/a bunch of the ‘intellectuals’ I described above will, for sure, drape themselves in a communist flag.
If another society is ripe for fascism, in a similar manner, one or, probably, more ‘intellectuals’ will drape themselves in a fascist flag.

It’s up to us, who’ve experienced at least one of them, to blow the whistle.
And it’s up to the rest to listen…

One way to interpret Maslow’s pyramid of needs is to consider that an individual might become a full fledged human only after having climbed to the ‘fifth floor’.

The key word here being “might”!

Because nothing mandates that all those who have overcome the material constraints of this world and have successfully integrated themselves in the social milieu will ever become a ‘better version of themselves’.

Need examples? Have you ever heard about people like Bernie Madoff, Martin Shkreli or Myron Scholes?

‘But the last guy, Myron Scholes, was recognized by the Nobel committee as a world class economist!’
Exactly! What more could a person want? Money, fame, worldwide recognition… he was on the fast track to becoming whoever he wanted…
Yet he had chosen to associate himself with one of the deepest financial black-hole ever… Knowingly, unknowingly… doesn’t matter!

‘But what does it mean to become a full fledged human?’

To be free. To consider them-self a free person and to be recognized as such by their peers.

‘Scholes wasn’t a free person?!? Shkreli?!? Madoff?!?’

Nope. Neither was free from greed!
Greed for money, power, public recognition… or any combination thereof.

‘But “greed is good”!!! Isn’t this the current mantra? Aren’t we all driven by this sentiment?!?’

First of all, greed is not good. Read Adam Smith’s Theory of Moral Sentiment.
But yes, we are bombarded from all sides with this notion. That ‘greed is good. That greed is the engine of capitalism, which capitalism has brought us here. Where it is good.’

Yes, here it is indeed good. Only for fewer and fewer of us. It used to be better but since ‘greed has become good’ every ‘bump’ we encounter along the ‘free market’ road has proven to be quite a challenge. An insurmountable challenge for more and more of us.
An unsustainable arrangement. For us, as a community.
And yes, capitalism is the best economic paradigm to date. Only, as all paradigms, it has to be put in practice. By us, the people. In the right way. In the free market way.
Only we are no longer free! Those who cannot escape their sentiment may not consider themselves free. And too many of us have been enslaved by their greed!

‘But greed is written in our DNA!’

Indeed! So is the urge to have sex!
Only we’ve managed to teach ourselves, community wise, that while sex is good, rape is bad!
Not so long ago, rape was more or less condoned. ‘She must have enticed him’. ‘What was she doing there at that hour?’ And so on…
Nowadays, rape is shunned. By most of us.

Only we still live surrounded by rape culture. Seeped in greed.

Will we ever learn?
Will we, as a community, ‘actualize’ ourselves?

US Initial Jobless Claims, provided by the US Department of Labor, provides underlying data on how many new people have filed for unemployment benefits in the previous week. We can gauge economic conditions with respect to employment. As more new individuals file for unemployment benefits, fewer individuals in the economy have jobs. For example, initial […]

The US Unemployment Situation is Stunning — ASYMMETRY® Observations

We make reality.

Each of us: I, you, she, he, brings their individual contributions.
And the end result, our reality, is defined by the quality of the interactions between us.

The new reality, ours, being the ‘place’ where we, the ‘beneficiaries’ of the interactions between us – simultaneously cooperating and competing free agents, and the previous reality, will have to lead our lives.

Until we’ll change it. Again.

Charles Darwin gave us “On the origin of Species”.

We’ve summed it up ‘the survival of the fittest’.
And behaved accordingly. Including some of those who should have known better. “The world of the selfish gene revolves around savage competition, ruthless exploitation, and deceit, and yet, Dawkins argues, acts of apparent altruism do exist in nature.

I reckon all of you know – or at least have heard of, Richard Dawkins.
Compare his celebrity with the relative absence from the public scene ‘enjoyed’ by Ernst Mayr.

And what’s so special about this Mayr guy?
‘Evolution is not as much about the ‘survival of the fittest’ as it is about the ‘demise of the unfit’ ‘

Get it?
In fact, there is no such thing as ‘the fittest’ when we speak about evolution. ‘Fit’ is relative while evolution is a process. Fit is about ‘this moment and this place’ while evolution is about the ability to adapt. To change when needed.

And what has any of these to do with “exploring the consequences of our limited conscience”?

Well, it was us who had interpreted Darwin’s ‘Origin of the Species’ as ‘the survival of the fittest’ individual. It was us who had lionized Dawkins’ ‘Selfish Gene’ and left Mayr’s ‘True’ Evolution in relative darkness…

To sum it up, it is us who are are obsessed with something we call ‘success’.

It is us who keep forgetting that the mighty dinosaurs – maybe the most ‘successful’ animals ever, had been the first to disappear when ‘shit’ had struck. And that is was a meek mammal which had inherited the Earth.

It is our success craving conscience which is highly biased. And I’m not at all sure this is a good thing. In the long run, I mean.

I’ve always been fascinated by quotes which are ambiguous enough to be simultaneously wrong and right.

In this situation, the ambiguity comes from ‘government’ covering three ‘patches of ground’.

‘Method of running a place/country’. (Self)Organized versus chaotic.
‘System in place’ which is used in running a country.
A particular group of people who man, at any given moment, the above mentioned ‘system in place’.

Now, which of the three meanings was at the top of Reagan’s mind when he was uttering those ‘famous’ words?

All governments suffer a recurring problem: Power attracts pathological personalities. It is not that power corrupts but that it is magnetic to the corruptable(sic). Such people have a tendency to become drunk on violence, a condition to which they are quickly addicted.

Frank Herbert

The way I see it, government ‘as a manner of running things’ is a very powerful method. Which had served us rather well, on aggregate. Only it is not fail-proof. Or, more exactly, fool-proof.
Government as a ‘system in place’ is a work in progress. We’ve been improving it since we’ve invented government as an alternative to chaos. Only we need to be very careful. As a man made system it will always be far from perfect. It has not been perfect in the past and, no matter how much effort we’ll put into it, it will always remain perfectible.
Finally, government as ‘the team temporarily in charge’ ‘suffers’ mainly from being composed of humans. Hence both corruptible and attracted to power. Hence liable to do everything to maintain their positions.

‘Liable to do everything to remain in power’.
Which means that it’s our job to keep them on the straight and narrow.
We, The People, are the first to experience the consequences of their decisions. Hence we, all of us, are those who need to keep Government – ‘the team in charge’, on a short leash.
If they want to remain in power, they need to keep us ‘alive’.
They need to keep the system in shape. Working good enough for the vast majority, not for just a few of us. For a few of them, to be more precise.

Otherwise ‘government as a manner of keeping chaos at bay’ would have failed.


What do we have an economy for?

To make ends meet? To make it easier for our needs to be met?

What do we have a banking/financial system for? To mobilize capital for the economy? To make it possible for our needs to be met easier? More efficiently?

Or just for profit to be made?

“It really is possible to do two good things at once: address the abuse of the working poor by payday-loan and check-cashing outfits while expanding the range of services provided by the USPS. Media outlets have called Warren’s proposal “radical.” That’s ludicrous. She’s simply using her position and prominence to highlight the findings of a new study by the Postal Service’s Office of the Inspector General, which notes that roughly 68 million Americans are underserved by the private banking system. “With post offices and postal workers already on the ground,” says Warren, “USPS could partner with banks to make a critical difference for millions of Americans who don’t have basic banking services because there are almost no banks or bank branches in their neighborhoods.”

This is not a new idea. From 1911 to 1967, the Postal Service maintained its own banking system, allowing citizens to open small savings accounts at local post offices—actually a better approach than “partnering” with banks. The system was so successful that after World War II, it had a balance of $3 billion, roughly $30 billion in today’s dollars. Congress did away with postal banking in the 1960s, but post offices in other countries—including Japan, Germany, China and South Korea—provide banking services. Japan Post Bank is consistently ranked as one of the world’s largest financial institutions based on assets.”

Or, to put it the other way around,
‘what profit is?’

The well deserved ‘consequence’ – considered as such by the vast majority of the stakeholders, of a well-done job?
Or a self serving benchmark to be reached at all costs? Which costs are to be ‘shouldered’ by anybody else but the profiteer himself… till reality slaps us, all of us, over our faces…

Let’s face it, in the present circumstances the picture above might mean a lot of things.

It can be a prank – somebody might have made the whole thing up just for the fun of it.
It can also express the frustration of somebody who isn’t such a good speller. Or of somebody who suffers from dyslexia?

What really interests me is how we, the ‘intellectual’ public, react to things like these.
Do we understand the frustration which lies at the bottom of this?
Do we even try to?

Or we just dismiss it as being a manifestation of stupid?

No, I don’t consider the economy as being more important than life preservation. Some very sound arguments can be found here.

But I’m absolutely convinced that treating the ‘others’ with disdain is what brought us here in the first place.

You don’t like the manner in which the likes of Trump treat those who don’t agree with them?
Then why are you doing the very same thing?

You consider yourself to be better than Trump?

Prove it.
Be nicer than him, not worse.

Humberto Maturana teaches us that human consciousness can be understood as our ability to ‘observe ourselves observing‘.
In other words, consciousness might be reduced to self-awareness.

I’m afraid it’s not enough.
While no individual can be described as conscious if not commanding a certain degree of self-awareness, being able to observe their own observations doesn’t elevate an observer to fully conscious status.

How many of us have ‘enjoyed’ messing up ants or other insects just for the fun of it? When we were teenagers, of course.
OK, we continue to squish the cockroaches we happen to see and to spray our gardens against mosquitoes and other pests.
Only we no longer do it for fun. We employ a ‘healthy’ rationale to justify our actions – cockroaches/mosquitoes are ‘bad for us’.
And we try to do it in a reasonable manner. We don’t soak the entire garden with the most potent insecticide available. Simply because we’ve understood, the hard way, that bees are also important for us.

Otherwise put, it’s not enough for us to be able to keep tabs on what we do, we must also take responsibility for our actions.

After all, we’ve been able to notice that bison ‘engineer’ their own environment.

“Herds of bison milling through Yellowstone National Park may seem aimless to the average visitor, but a new study reveals the animals are hard at work engineering their ecosystem. By rigorously mowing and fertilizing their own patches of grassland, the big herbivores essentially delay spring until late summer.”

Maybe the time is ripe for us to understand that we, humans, have done the very same thing for quite a while now.
The world we live in is, to a certain – but rapidly growing – extent, the consequence of our own decision making.

The faster we learn to accept that, the higher the chances we won’t repeat past mistakes.

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