Wednesday, August 31, 2011

Palestinian statehood

The UN is scheduled to vote on Palestinian statehood in September. The United States has the capacity to stop this by veto, but I can see President Obama not doing this. He believes that Israel is the problem. This will create a new national government to balance against Israel’s strength. Supposedly, statehood and recognition is what the Palestinians want more than anything. What we will ultimately get is open warfare between two (Or more) national governments.

Just think, HAMAS and FATAH being enabled to have their ‘soldiers’ put on uniforms, complete with all of the rights and abilities of any other national army. And to top this all off, bordering Israel. Want to start a war? This ought to do it just fine.

It may take some time. After all, the irregular ‘army’ that the Palestinians are fielding today will need to be updated and formally organized. Equipment should be and will be updated and expanded in quality and quantity. This takes time, although how much depends upon how eager they are to use it openly. Of course, they just may decide to keep covert for as long as possible, just to keep everyone guessing. Then the question becomes how long will it take them to provoke Israel into launching the next international war by attacking them. This way, Israel becomes the aggressor. This is an important consideration that may postpone the escalation of open warfare. Besides, this way, if Israel can be forced into an ‘invasion’, other governments can become involved. Any attack by Israel would then become a formal ‘invasion’ of another Islamic government. This could easily unite the Islamic world into a major confrontation against Israel. This would play right into Iran’s hand. All Iran would need then would be nuclear weapons. All of this is far more likely today than ever before, particularly if a new national state of Palestinian is established.

Saturday, August 27, 2011

Money for nothing

A woman at work was saying last year how in France the medical system is free. She was going on and on about how little the French pay for medical treatment and how much they get. It must be really nice to believe this. I am afraid that I just cannot.

You know what you get for free? Not much good stuff is for free. You must pay in one way or another for quality. You can find a diamond in the rough once in a while, but to base our medical system on this is folly. And it really is not free. You pay in the much lower quality you will receive. The problem here is that this is the long-term view. If we made health care free, we would enjoy the reserve of medical professionals and resources that have been built up over generations of capital reinvestment. However, the money to maintain this excellence would slow to a trickle. It would take time, but a serious decline in innovation would immediately begin to follow. Lack of resources would become chronic as time went on. Quality would naturally suffer. All we have to do is look at England and see what we will be getting.

The riots and looting going on in England right now resemble the problems in Greece earlier this year. These countries have crippled their economies by allocating the resources of the nation through the central government. Poor investment is the norm rather than the exception. We have been seeing this within our own country now for decades. We did start the process at a later time than they did. Not to mention that our economy is much larger so it would take a longer period of time before the process reaches the point that England and Greece are at today. And make no mistake. We are heading that way. The financial crises that we have been seeing and the instability in the markets today are the warning signs. The point here is that you can’t keep getting something for nothing. Sooner or later you will pay, in one way or another.

Wednesday, August 24, 2011

Capitalism vrs. Socialism: Conclusion

The history of the United State has proven at least one thing to the world. That over time, capitalism is the most effective economic engine devised by man. Many people today dispute the morality of this system. However, it cannot be denied that capitalism was and is the source of America’s economic strength. The largest and most innovative economy ever built.

In order to thrive, capitalism needs resource investment. In general, the source of this capital is profit gained from economic activity. Over time, the re-investment of capital builds up an infrastructure that allows for extra resources to be diverted into longer-term research and development. The ‘miracle of compound interest’ then begins to be fully felt on a national level. The United States has been past this stage for well over a century. Many of the problems of today can be seen to be because we are tapping much of the lifeblood of our economy, capital.

Through taxation, capital that would be re-invested in the economy is diverted into other projects. Many argue that this is desirable. It also makes sense that a certain amount or percentage of capital could be ‘withdrawn’ without damaging the effectiveness of the system. (I believe that the United States passed this point a long time ago.) Once again, many argue that government can allocate the national resources better and more ‘fairly’. Despite this, it cannot be denied that the withdrawal of capital from the system makes it function less effectively. The argument goes that these resources will be allocated more effectively and ‘fairly’ than if the resources were left in the private sector. This argument has been and is becoming the dominant one today.

The reallocation of wealth by government means that people who did not earn the resources through productive economic activity get to enjoy the benefits as if they did. Who in this group would not vote for this? It is human nature. However, this does not reward someone for hard work and sacrifice. It penalizes them and rewards those who are the privileged that get to receive the benefits. It can be argued that those who receive these resources get them because of subjective measurements that override the objective measurement of individual effort. This is counter to the economic principals upon which the United States was founded. I believe that this is becoming a minority viewpoint. We are addicted to spending.

“Once a population realizes that it can vote itself entitlement, fiscal responsibility becomes impossible.” This is precisely where the United States is today. Those who recognize the financial trouble that the United States has today are many of those who believe in capitalism. Those who deny the severity of the fiscal problems we face today are generally those who believe that the government can allocate the resources of the nation better than if privately owned. The present impasse that we are seeing in our government today is a very good indication of how well this view is entrenched. The idea of a nation spending it’s way out of recession or depression has been accepted and implemented since the 1930’s. Not completely, but the debt of our nation demonstrates that it has been implemented fairly consistently for many decades. The amount of capital available for private investment (in relation to GDP) has fallen dramatically and this is really beginning to have a detrimental impact. The capitalist system must feed upon itself in order to survive. Like a starving person. Just wait until Health Care kicks in. Just under a 5th of the economy of the private sector will then begin to be managed by the government. It will take years, but the process can easily be irreversible. Government develops plans and ideas. Not ‘miracles’ of capital reinvestment. The instability of the markets today is a very real indicator of what we can expect in a worsening situation.

These ‘crises’ are real. It can only be a matter of time before one of these sets off a chain of events that cause major disruption. Economic downturns happen every so often and severe ones occur less often. It has been a long time since the last BIG one. A capitalist economy can react effectively and more quickly than a socialist economy. After all, when you have ‘skin in the game’ you will react to events more readily than if you do not. Unless the United States implements fundamental CHANGE, we can expect the situation to continue to get worse until a major event triggers events beyond anyone’s control.

Saturday, August 20, 2011

Capitalism vrs Socialism: Part II

In politics, a week is a long time. You hear about how politicians are shortsighted. All they do is look for the next election. (An eternity in politics) A Month is forever in politics. Corporations are seen to be no better. But is that really true?

Corporations are seen by many as looking only to the next monthly profit statement. (Actually, many are released quarterly) Even this cycle is much longer than a week in politics. A little longer example is development of a new fighter aircraft. It takes years of research and development. Major capital investments are made even before the project reaches the prototype stage. And it is no certain thing that ANY will ever be built. This type of activity is common in the business world. A different type of long term project is the life cycle of buildings. The Sears tower being built in the early 1970’s put a large dent in Sears profits for years. Yet the building still stands (40 years later) and is still productive. This certainly is NOT a short-term project, nor is it short term thinking. In contrast to political view and activity, capitalism IS a long term thinking ideology. And in the short term it responds to the needs of people far better.

A good friend of mine recently ate at what I consider to be an expensive restaurant. Both he and his wife were disappointed with the food and he wrote in to express this. They received a coupon (No expiration date) of $30.00 each. (Not the full price of the dinner) This type of reaction is common in the business world. When was the last time you got that type of treatment from ANY government agency? Government does not exist to help people get what they want or need. This is precisely why government cannot run an economy anywhere nearly as effectively as a privately owned capitalist economy WILL run.

Government is does not nourish capitalism. Government feeds upon capitalism’s productivity. It takes money away from the economy through taxation and reallocates it to areas that have not earned it. This does not create any new products nor does it support innovation in thought. Government feeds off of Capitalism.

Wednesday, August 17, 2011

Capitalism vrs. Socialism: Part I

A list of inventions due to the effects of a capitalist economic system is quite impressive. (Not necessarily American) I boiled them down to:

1) The Steam engine (Steamboat)
2) The Cotton gin
3) The reaper
4) Mass production of steel
5) The Electric light bulb
6) The Phonograph
7) The telephone
8) The internal combustion engine
9) Mass production of automobiles
10) The airplane
11) The computer
12) Nuclear power

These inventions were world changing. (I left out all of medical innovations and innovations in rocket science) Many more exist but I needed to make it a VERY short list. (How about the transistor?)

My study of history has enabled me to find two world changing inventions from a socialist economic system: (The Soviet Union)

1) The T34

The T34 was the most advanced tank design in the world when Germany invaded the Soviet Union in June 1941. The T34 was so far advanced over ANY other design that it took more than 2 full years for Germany to begin to catch up, which they never fully did. Germany built the Tiger tank to fight it off. The T34 enabled Russia to hold off and push back the German invasion. The “Russia Front” during World War II meant for Germany that 75% of its tanks and men went there from 1941 until the end of the war. It also meant 70% of the air force until 1944. In other words, the United States and England needed Russia to win the war. This is world changing. The problem here is that the T34 would not even make the list under capitalism. Invention of the tank would be well down on the list, but it was not Socialist or Russian, but English.

2) The Katyusha rocket launcher

This artillery was an innovative and VERY effective way of helping to drive Germany out of Russia. Germans made newer versions and the U.S and England began to make their own copies before the end of the war.

I am certain that I have missed some but I would like to point out how ALL twelve inventions in the capitalist list CAN be used as weapons of war, but are mainly weapons of commerce. The two socialist inventions I have found are purely weapons of war. One of the good things about capitalism is that it is good at waging wars of commerce. This channeling of human aggression, greed, and ambition into economic activity is much better than declared wars by national governments. In any case, socialistic economic systems fail miserably to manage and run an economy well compared to the inventiveness and organizations of capitalism. (*NOTE: Both of the ‘inventions’ by Russia would be listed down below 50 if combined with the capitalist list.)

Do you know of any that I have missed concerning socialist economic inventions?

(I can also think of laser eye surgery, but this was considered to risky to use on people until after improvements. In my subjective view, this is NOT a world changing invention. )

Sunday, August 14, 2011


This is a response to a comment on the latest post of "Armageddon".

"Magic" invented the cotton gin, the reaper, mass production of steel. How about the light bulb or phonograph? How about the Airplane? The computer? Nuclear power? The list is incredible.

Yea, I choose "Magic" over government "plans" because capitalism channels human behavior into constructive directions. Not everyone and everything, but United States history still proves that the postitives far outweigh the negatives.

Saturday, August 13, 2011

Armageddon: Part II

The United States economy is large and complicated. Like everything else, it can fail. Like in politics, economic failure has two extremes. On one hand, depression would cause the economy to actually shrink and prices to fall. Money actually gains value. This can theoretically be corrected by spending. The other extreme is hyperinflation that results from excess printing of money. Money loses value rapidly and the barter system begins to flourish again. This is because hard items retain value and currency does not. This is what happened in Germany in the 1920s’ and in numerous other countries since. It has not happened to a first world economy since World War II. Hyperinflation is by far the more likely event between these two.

The United States has been on a spending spree the like which has never been seen before by mankind. A potential stabilizing force is that the size of today’s worldwide population and economy dwarfs all past similar situations. The one thing that does not change is Human nature. We will fight over scarce resources. Unless the fundamental structure of the economy of the United States is CHANGED to allow free enterprise to work its magic, we cannot expect anything but a severe correction in the world wide economy. Particularly felt by the United States. This will lead to open warfare somewhere along the line. Even though the U.S. is nowhere near the domination of the past, it is still the largest single economy. Worldwide implications are magnified in particular spots that will reach the point of desperation enough to trigger organized violence. It is preventable, but in the political world of today, it is unlikely to occur in the long run without the loss of the republic in some fundamental ways. This is what I consider to be Armageddon.

The loss of the republic in the United States of America would be a worldwide disaster. (In the long run. The short run (meaning a generation or two) would actually benefit the economy of both) The loss of our republic is much closer today than ever before. Many reasons for this and most of them are economic. The rest are human nature. Just look at what is happening in Europe, particularly in England and Greece. If things become bad enough, martial law may be required. After all, extreme situations call for extreme measures. And hyperinflation IS an extreme situation.

The downgrade of American debt is a natural reaction to the national balance sheet. We already have so much debt in relation to GDP that additional debt becomes more risky. It only makes sense to charge more for additional loans to someone who already has a serious debt problem. Eventually, the risk is so great that ANY loan is foolish to make. At the phase we are in today, any higher interest payment is an additional tax on our economy without ANY benefit to us whatsoever. At least with something like unemployment, we can expect that money to be spent within our own economy. This interest on the debt is just GONE. Once you reach a certain point, (What that point is can only be guessed at) massive inflation MUST result. And this can explode without warning and usually does. I would expect open warfare to explode somewhere on the planet within the next few years. I am not referring to numerous small wars. These will become regional if not worldwide within a short period of time. Loss of the republic can easily be expected beginning around this time. I consider this another form of Armageddon. Even though the short run of a few generations will benefit, absolute power does corrupt absolutely. If we can push this off another generation or two, is it not worth the effort? Why speed it up?

These economic ‘crisis’ are real. They are occurring more frequently today. It can only be a relatively short time before we take action, or some event in and of itself minor can set off a snowball that will be out of control. I would expect war to break out not long after. Potentially a real Armageddon depending upon how you define Armageddon and how extreme the situation becomes.

Wednesday, August 10, 2011

Armageddon: Part I

Remember after the stimulus was passed in 2009? President Obama responded by saying, "People thought that this would cause Armageddon, but I went out this morning and it was a beautiful day."

Well, that cliff that he saved us from falling off is back. I guess the ‘fix’ that he help implement did not work so well. It is after all, only two years later. And CHANGE did not work so well. So what do we do now? I have an idea: Let’s do more of the same. Lets continue to spend our way out of trouble. This is infinitely easier than making the difficult decisions as to which parts of government are less important. No matter what you do when cutting, you will piss someone off. Politicians on ‘both sides of the aisle’ don’t want to do that, at just about any price. This is at least part of the reason why we are in this mess in the first place. This is after all, human nature at work.

Is it not strange how the two sides can switch? President Obama voted against raising the debt limit back in 2006 (One of the few times he did NOT vote PRESENT) and yet he rails against Republicans for fighting against raising the limit. Republicans got the raise in the debt limit back in ’06 and are fighting tooth and nail against it today. Switches like this are common in politics. Today’s issue is that the fundamental economic strength of the United States is viewed as being so weak and vulnerable to shock. One of the biggest problems is that enough people understand the position well enough to realize that this is a fight that cannot be lost. And yet the Republicans are the ones keeping away the deal. I thought that Republicans were so good at making deals that they are constantly laughed at by Democrats. After all, it is commonly thought that all we are doing is waiting for the Republicans to cave again at the last minute. This is what happened in 1995. What makes this ‘crisis’ different is that for the Republican side, this is an all or nothing issue. I personally believe that this is the last chance to save the Republic. Makes it impossible to compromise.

One thing that really bothers me today is that I have never seen this country so divided. I am counting
Vietnam and it was bad enough. Today the problem is financial, which is an issue that is not so easily resolved. We could just cut and run from Vietnam. (We did just that) The financial problems of today do not allow for us to do so, although we can ‘just kick the can down the road’ by just doing the same and
not CHANGING our behavior. This has been going on for generations. Eventually, something will happen. What has happened in Greece would be a very mild example as the United States is the largest economy in the world. Violence occurred in Greece and is going on in England right now and with nobody to bail out the largest economy, the possibility of some degree of Armageddon becomes very real. Why do I believe this?

Like the budget and debt limit conflicts, wars are fought over scarce resources. Someone wants (or needs) what someone else has and is willing or desperate enough to attempt to take it by force. I do not believe that it was a coincidence that the greatest war in mankind’s history was immediately preceded by the greatest economic downturn in mankind’s history. And we have the possibility of the largest economy in the world going broke? I just cannot see how a war would not result.

Wednesday, August 3, 2011

Debt deal

From what I am hearing about this deal, this is a much better deal for conservatives than I had believed to be possible. Not that I believe that this will alter the long term trend that the United States has in spending more than it takes in. I believe that this can only be a temporary setback. The American public has demonstrated a remarkable ability to change its mind. We will go back to business as usual in a few years. In the meantime, we have still lost more than we have won.

The passage of Health Care in 2010 and the impact it will have is still in the future. Even with the recent debt deal, the complications and expenses of nationalized Health Care far exceeds anything that has been won in this new deal. The only thing that would completely neutralize the effect of Health Care would be for a repeal, which is NOT going to happen. In other words, Health Care is permanent and is here to stay. This is one of the reasons as to why it was passed the way that it was. Even though the Democrat majority knew that it would take big hits for passing Health Care, they understood that undoing it would prove to be virtually impossible. They are correct in this assessment. Yet even without the new Health Care system, this new deal is only temporary.

As a compromise, very few people are going to be satisfied with this debt deal. I am one of these. The basic underlying financial problem is being addressed, but only in a temporary way. And it does not go anywhere near far enough. (This was expected, as I do not believe that permanent correction is possible without the loss of the republic) The general trend of big government and big spending has been going on for more than 3 generations. (Actually, much longer than that but I consider the 1960’s to be the beginning of the real acceleration in BIG government entitlement) In other words, it will take many elections and many years to permanently reverse this trend. This is possible, but it does go against human nature. In this way, the Democrats have created a pattern that does go with human nature and in this way, they get what they ultimately want. Power and Control over the economy of the United States. Actually, they already have accomplished this. All that needs to be done now is complete the process. Health Care goes a long way toward this objective.