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You can’t create a twenty-first century society based upon an educational system promoting the myth that you can be all you can be — by just showing up; enforced by an mediocre bureaucracy – which essentially just shows up; built on a twentieth century industrial model to create workers for factories — that no longer exist; and enforced by a geopolitical financial establishment — totally hedged against any risk.
— Jerry Bannon, The Wonder Springs Chronicle, 25 January 2012, Publisher and angry American citizen

By attempting to pick up where we left off last week and close out this brief series, this article runs significantly longer than I normally like, but I think the context helps provide a cogent framework to build toward a positive future economic path. Borrowing the outline, and placing it in a totally different context from what was presented in a Monday evening presentation I attended, the conclusion is: Make wine, not argument, and definitely not war.

When your first job after graduating from college is in military intelligence, the one universal law is to: Never believe anything you are told without verifying it from at least two other independent sources. Through experience, even in the more communications side of the spy craft, like the National Security Agency, contrasted with the real spooky dudes, you quickly learn that the real world does not operate as it is generally hyped and anything approaching the real truth is hard to come by.

This of course can quickly make you cynical, if not tempered with the most powerful force in the world — which is truth. Truth always comes with a cost and most of the time untruth grows not so much from its power, but from the naïve perception we do not possess the resources to dismantle the presuppositions of these lies.

One such untruth fostered through the media, especially at this time, is that we live in a global capitalist system of markets. This whole myth supports inductive extreme views that in order to move toward the shining city on the hill, we need either to restrain capitalism or unleash capitalism and markets will work their magic.

Neither view is able to grasp the reality that the industrial consumer age we experienced during much of the twentieth century is unsustainable, because all the productivity gains we have been able to achieve, especially in the last thirty years, have been offset with decreasing efficiencies and centralization.

Tags: capitalism, high marginal tax rates, Laffer Curve, Reagan Revolution, Glass-Steagall, debt, Alan Greenspan, GDP, globalism

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If you want it done precisely your way, you better do it yourself!
— Ancient Chinese Proverb

Late last week I bought a new over the air TV antenna from Costco, no more cable or satellite television for me. Now just the twenty minutes of advertising per hour rather than paying around an additional hundred bucks a month for the privilege of watching hundreds of channels I care nothing about, and I suspect few supply much positive influence to change our nation or the world.

To celebrate I decided to watch the Saturday evening Republican Debates. This was debate number 15, or so I was told. They all seemed like decent, somewhat committed guys, but I didn’t see a national messiah amongst the crew. But just like the current incarnation of our president, it seems that they all still believe that the federal government is the source of the solutions to our current woes.

Over the past three years we have learned that Barack Obama was not the national messiah either. But in the first real job he ever had, it seems that he was amazed, just as much as most of his supporters, that achieving nirvana in this world was not an easy task. Falling back to a more realistic desire shown in Machiavelli’s The Prince, he also seems not to have either the talent, the ambition, or the constitutional ability to achieve that desire either.

When you look around the world, even though there seems currently a little temporary stability coming to the United States, we still seem incapable of even dealing with our universe of ever expanding debt; solutions are just as far away as they were a year ago; yet the current plight remains a juggernaut to a stable future.

What all this means is things are going to get worse, possibly much worse before they get significantly and sustainabiy better. In the context of last week’s article on The Normalcy of Deviance, this climax may probably come about not through a slow demise of prosperity but rather a global stupendous collapse. Could it be the Mayan’s got it right, long ago, for reasons they could not understand?

Tags: normalcy of deviance, Barack Obama, GDP, MADP, risk, debt, capitalism, entrepreneur, Entrepreneurial Pioneer Area

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If you don’t fundamentally change structure and culture, you are doomed to repeat history.
— Diane Vaughn, Columbia University; Author: The Challenger Launch Decision

We begin this year and this week with a quotation from Diane Vaughn that we used in our introduction to our September 7, 2011 article on Climax Entrepreneurs & Entrepreneurial Pioneer Areas. Diane’s work was again brought to my attention by an article by Gillian Tett in the Financial Times that appeared late last year and widely reported in many sources about the potential for another Flash crash threatens to return with a vengeance. This refers to an episode that happened on May 6, 2010 when US equity markets froze because of unexpected high volumes.

In the flash crash article “Normalcy of Deviance” appears, referencing the Challenger spacecraft disaster and how NASA scientists and engineers truly believed that such an occurrence was impossible because they assumed they were essentially too good to allow the impossible to happen.

I spent some time looking for more information on the normalcy of deviance and found outside the Challenger incident and the flash crash reporting, “normalcy” and “deviance” were seldom if ever linked. I assume that means that “normal” is sort of by definition never “deviant.” Or perhaps more to the point, we just don’t have the guts to look for such a stupendous reality.

As we begin 2012, it occurs to me that our new normal is totally deviant from historical standards, at least for a half a century and perhaps a whole lot longer. For example never before in history, will the Mayan end of the world prophesy come into play at the winter solstice on December 21, 2012.

In that perspective, a potential equity flash crash is the least of our worries. Furthermore it doesn’t take long to come up with a whole list of potential economic catastrophes that could basically destroy the world we have all too long taken for granted. When you get right down to the basics, in the context of human history, for virtually all of our lifetimes, we have had it pretty squishy.

Tags: normalcy of deviance, economics, capitalism, Eurozone, USA, Entrepreneurial Pioneer Area, Grizzly USA

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“Three Acres and a Cow,” 1880s British Land Reform &1920s Distributionism
“Forty Acres and a Mule,” Emancipation of Southern Slaves, US Civil War
“One Hundred Sixty Acres and Independence,” American Homestead Act 1862-1976

Human beings are a risk adverse bunch. In fact this seeking of security is the real reason we seek to form bunches. Families, neighborhoods, communities, towns, cities, states and nations, as well as churches, synagogues, mosques, social clubs and lodges; the list is almost endless.

The physical issues however, flows from the reality of fallen man. We truly believe that there is safety in numbers, which is true to a point, that point being when the dignity of the individual is replaced with its loss. The more of that individual dignity we lose, the more we evolve into the so-called lesser animals.

In western culture, to make these communities workable, we first created a financial system called banking, in which we believed that a preexisting commodity called money could be managed in such a way as to increase security.

It took some enterprising Scots, enlightened by the Protestant work ethic, to give us a positive model for creating that global shining and secure city on a hill. That merger of banking and enterprise fueled the creation of capitalism, in which risk is controlled through the application of compound interest.

What happens however, if natural risk isn’t covered by the simple compound interest spread?

Simply put, human beings seek their security through other means; most commonly land, as described at the introduction. Since during the Age of Discovery and the open frontier all land was initially the property of the state, and hence land grants of varying orders, became the mechanism for development to take place, this is beyond the pale of capitalism and compound interest.

Tags: Third Opening of the West, capitalism, agriculture, Earl Butz, John Wesley Powell, Industrial Age, Individual Age, USA, water, distributism