No Skin In The Game VI
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Ready for the storm? It’s coming!
Thursday afternoon my email inbox chimed with a weather alert. A large storm was headed this way and warm heavy rains, causing a rapid melting of the snow pack, was expected to cause area flooding and rapidly rising small streams. The Saturday storm however, punched its power on the eastern slopes of the Cascades, here it was probably the nicest day we have had all year.
My Sunday morning forecasts said, never fear the storm is coming today, arriving about 11 AM. While there was a brief shower about that time, it soon passed, but slowly the sky darkened, the wind picked up and we knew the storm was on its way. At about 4 PM the rains began, and continued all night, nonstop until midmorning. The storm dropped more than an inch of those wet drops, causing Boulder Creek to rise to its highest level I have seen, since I have moved over to God’s country.
Decreasing showers and colder weather is bringing the creek back to a normal seasonal yearly peak flow, the Kettle River still has a way to go, and its normal peak comes about the traditional Memorial Day, and Tuesday afternoon it was 22,000 CFS, still well below what I have seen and is now about the peak annual high flow.
Because of the unusually cold spring there is still a lot of snow up high, and the taller mountains up in Canada are still fully white. Should we get some hot weather, things could get really interesting river-wise. If the seasons continue cool and wet, it might be a very delightful summer.
This natural weather is a segue into the storms that seem to be a pattern that is developing again in the world’s economics, which leads us to ask the question: Are you ready for these storms?
As the rains pelted down on the metal roof, I couldn’t help thinking about the song that doesn’t really ask the question, but states the reality that a storm is coming and you need to get ready. The link to the song at the beginning of this article says that the composer, was of Celtic roots but the person is unknown. However most of the artists that have recorded the song, interpret it within genre that through the storm, the lonely sailor is never alone, if he has God as his companion.
One of the artists’ lyric links even goes so far as to reference Isaiah 50:5 - 11 as an appropriate Biblical reference. I like that linkage because it points to the reality that I discussed last week, within the storm metaphor, it is God that is allowing the weather tempest, and those who attempt to be ready for the storm within only their own preparedness are not going to find peace—but torment. In common usage this could be considered Divine Providence.
Monday the United States reached it authorized debt ceiling. Yawn? What happened to the end of the world, as we know it? According to a Wall Street Journal article the real perfect storm default date is now August 2.
So in the meantime, President Obama will continue his electioneering for his second term. His Democrat Party, will continue to say we have a debt problem, but offer nothing constructive to prevent the storm. The Republicans will continue in the Reaganesque mantra that cutting spending and not raising taxes will solve all the nation’s woes. For his part of protecting the folks, Bill O Reilly’s 500 word, ninth grade level column, last week dealt with some rapper named Common, who did a gig at the White House. Debt ceiling? What debt ceiling?
The economic storm that is coming to the United States and the rest of the world is not the result of some act of God, but rather the unintended consequences of the human desire to be God in our own eyes and really not possessing the skills, knowledge and wisdom to manage the world we are trying to create; without any thoughts toward an overriding natural reality.
Those storms have destroyed civilizations and empires, from ancient Babylon up to this day; the European Union, China and most of the countries of the world have more destructive storms on their horizon than the United States.
We have attempted to focus upon the time from the 1960s, as the period where we began to assume that a rosy storm-free future would continue forever, provided we played our cards right. The problem was, by the time we reached the 1970s, with the need to fund the Great Society and the Vietnam War, we assumed that financial liquidity was all the same, whether it came from debt sources or from true wealth. That is the true weakness of fractional-reserve banking.
Still today, the leadership of the United States truly believes that we can fix the problems by just properly managing the world the way we did as we reached the climax (used as an ecological term) of the Industrial Age.
So today we have a polarized country in which the Collective Elitists believe with just a little more government help, social justice and a whole feast of egalitarian progressive solutions, will make as a better nation. In contrast the Laissez Faire Scoundrels believe that if we just get the government off the backs of the people, the free market will make a better and more prosperous nation.
Both of these worldviews are just extremes of atheistic materialism and because both are founded and operate totally within human limits, the concept of grace, towards others, who might not agree with you, has no basis in reality. Therefore we are limited to one of two choices; you can either attempt to create a world in which mankind can design our own collective salvation; or man can create his own individual salvation out of his evolving rational goodness.
By the 1980s however the Industrial Age mechanism of more stuff forever was beginning to reach the limits of prudent natural law. With the Reagan Revolution and the appointment of the Ayn Rand disciple, Alan Greenspan as head of the Federal Reserve, Rand’s Objectivism of rational self-interest, in the true atheistic sense, was used to continue the illusion of prosperity, by rationally securitizing ever increasing housing values, as the highest and best example of the American Dream.
Absent the common sense gift of God, it seems this dream would work forever. When this was coupled with the belief that lower marginal tax rates would increase government revenues; that if the wealthy had more money to spend; that wealth would trickle down to others; economic growth would grow forever. We now have thirty years of empirical data that shows that trickle down doesn’t. That growth illusion however keeps libertarian-conservatives looking back to the golden age where we could have economic growth outside the restrictions of anything natural.
When all this began to unravel during the first decade of this century, at least Alan Greenspan was honest enough to admit that his religious beliefs of forty years, about half of it as FED chairman, were wrong. This reality check however allowed all the closeted progressive Collective Elitists to get a final chance to make it right with the election of the hope in change savior, Barack Obama to the highest office in the land.
That hope and change isn’t working out all that well either; even a cancerous Keynesian economic stimulus plan—has failed to create cancer; but it does seem that Greenspan’s replacement Ben Bernanke, no Great Depression on my watch, is succeeding in creating inflation and weakening the dollar.
About 15 years ago I wrote my only book, “The Garden of God.” I never succeeded in getting it published, I didn’t have enough money to have it self-published, and a few years ago I realized that the electronic copy had somehow been erased in computer changes, but there still are a few hardcopy manuscripts somewhere in storage.
The Garden, seems to have been ahead of its time. Laid out in trade paperback format it ran about 160 pages, and basically took the Phylogenesis attributes of my Business Ecology Principles and provided the common natural reasons behind each point.
Updating it today, could double its size, as it could provide some applications of those natural principles, as we transition out of the Industrial Age into the Individual Age, where human diversity will provide not just the freedom and liberty to follow the republic’s founders desire for the pursuit of happiness, but also provide for a new model of wealth production through entrepreneurship. This updated book would be best achieved through real publisher resources and even a flesh eating book tour. You know of any volunteers?
In the 1960s America was at its true natural zenith as the best that humanity had to offer. That was epitomized, at least in the American male, in their car, it was not one of today’s econo-box gutless wonders, it was not a vehicle, it was your wheels, your manhood, that possession you would love to have again in 2011.
The city that gave us our cars: Detroit Michigan. Today Detroit has become a ruins, as portrayed in the photo essay of Yves Marchand Romain Meffre. Real Detroit city data you might find enlightening is found here. If we continue to pursue the current course of unintended consequences of Industrial Age global materialism, Detroit will be just the first dreadful example of multiple coming storms.
How can we change that future?
I believe that the United States of America was founded as a secular nation, based upon God’s Divine Providence. Over those two hundred plus years, until recently, we have done a pretty decent job. There are those who claim we are still and exceptional nation, but recently that ideal has at least some relative qualifiers, our wishful thinking no longer makes it so, for we have foregone our historical roots.
We previously briefly discussed the Reagan Revolution and how lowering marginal tax rates, eventually increased government revenue. That result, like some of our Business Ecology Natural Life Curves, is visually illustrated by what is called the Laffer Curve. The Laffer Curve helps us determine where increasing taxes become a drag on society rather than a source of government revenue.
What the Laffer Curve does not do however is show us how lower marginal tax rates decrease the amount of equity funds available to entrepreneurial and small business growth. In other words, one of the unintended consequences of decreasing marginal tax rates is that it eliminates essentially flight money from the economic picture, hence the only trickle down comes from the spending of the more wealthy, and they invest only in more secure investments that truly have a detrimental effect on job creation.
This reality was pointed out in a report issued by the Kaufman Foundation that U. S. job growth is entirely driven by startups and that small business and major corporations provide net job losses. This does not fit within the talking points of the news media, so it has been ignored. Is this just a failure of the anchors/analysts/commentators/pundits/ to do their job, or is it just a big business bias of major news outlets, or is it a vast conspiracy to only collect the no trickle down fat paychecks? The actual Kaufman report is just twelve pages that includes; two covers, a title page and a number of graphs and other illustrations.
After the storm future of the United States, depends upon us developing a Business Ecology that has a economic equivalent of the natural hydrologic cycle. That development work can be done before the storm hits and maybe if those adaptations are done now, the effects of the storm will not be all that catastrophic.
The natural hydrologic cycle is the prime natural law that allows life to exist on this earth. The fundamental requirement of economics in the Individual Age is to create a mechanism by which economic seed liquidity can be provided to startups. That means we need to create a way that makes these investments worth the risk.
Next week we will begin to put forth our attempt to start that dialogue.
Your homework will be to read the material under both the Laffer Curve and the Kauffman Foundation links.