31 January 2011

Preparations and moderation

Via Insty, a CNBC report on consumer spending rising as consumer savings go down.

I would speculate that part of that is to pay off debt and another part is the longer term unemployed drawing on savings to make ends meet.  Reducing debt becomes a primary concern during an economic downturn, and Americans have been doing so while the US government has gone on a spending spree like there is no tomorrow.  Making ends meet is also necessary and prudent withdrawals from savings of various sorts helps to extend a family's ability to stay fed, sheltered and clothed.

A third category is one that I fit in, and that is getting the necessary tools so as to build basic skills to make it through a period of bad times.  Additionally there is storing food, purchasing firearms and ammo, plus generally getting prepared for whatever is to come by whatever looks to be necessary.

The first two are done by those still with debt burdens or who lack active, full-time employment, and that is the majority of the population.  That third category are the people who recognize that the skills and tools they have now are not satisfactory to get through a major economic downturn.  We, as a Nation and as part of a global phenomena, are coming to the end of an era of high debt government that has had an ideology that government can provide for the poor and serve as a 'social safety net'.  Government is, by far, the highest overhead, least efficient way to do this and the cost of doing this is one that has long-term insolvency due to demographics. 

In America Alone, Mark Steyn posits that demographics is destiny, and the demographics in the West, Far East (including China), and Russia suck like an Electrolux, save more quietly.  One of the constants of demographic change in America I looked at in Insurance, Assurance and Prosperity, and that even such a simple known demographic change as the rise in life expectancy (not rise in absolute life span of the human body but how long you can be expected to live within a given absolute life span) means that in a system where the retirement age is not raised to keep up with the average age of mortality (so that half the people in a given cohort have already died by that age) there is a growing number of individuals who live past the old 'retirement age' for more than years but decades.  Add to that Medicare, Medicaid and any other program 'designed' to help the elderly, and what you get is a growing proportion of those living past the old average life expectancy and fewer active individuals in the workforce to support them.

The SSA system was changed under the Johnson Administration so that receipts from SSA were given IOUs by the Treasury and the money went into the general funds for government.  There is no 'lock box' for SSA, and what you have are promissory notes by the government that it will really, and for true, have future funds to put back into SSA.  Cross their heart and fingers on that.  That means that at some future point the general fund would need to provide funds for SSA.

That point was last year.

All of the entitlements are unsustainable, which you would think that the Left wanting 'sustainable' everything else would want to get rid of this unsustainable part of government.  Unfortunately this is used as a political football to allow politicians to show how 'nice' they are in running a Ponzi Scheme to help the retired and poor.  Ponzi Schemes are thwarted by demographics when the first layer or two of 'investors' get paid out via incoming cash from new entrants in the system, but as the pyramid grows for pay-outs, the income from new 'investors' hits a flat-line or even diminishes.  This problem actually was pointed out in the 1930's by the opponents of SSA, but was over-ruled by the Progressive nature of American politics that believes that government would be the solution to all of man's ills.

On the plus side for the US is that we currently have a good internal age demographic and replacement rate for our population that allows for marginal growth for the mid- to long-term future so long as we don't screw up the present.  Our Nation basically has more babies born, living longer, and staying fit longer as adults to the point where our population still grows even as the median age rises due to the Baby Boomers.  This is not true in most of the West at this point in time, with many Nations falling below that replacement rate, meaning fewer younger people coming in to replace older people who have retired onto the social safety net.  In the West this includes: Greece, Italy, Spain, Norway, Sweden, Germany, France... basically all of the old Western Europe.

Notice what happens when the bottom falls out of an economy with too many people on the dole and not enough to pay into the system?  Europe's Ponzi Scheme is a few years ahead of ours as we were more moderate in picking them up, didn't expand them as fast as Western Europe did and did not follow the scare-mongering of Ehrlich and his lot that the Earth would be over-run with humans by the 1990's.  The sub-replacement rate for places like Greece means that an American is more likely to have a Big, Fat Greek wedding than someone in Greece is, with large families and all now on the severe decline there.  Also in this boat from the old Eastern Bloc is Russia, which was suffering this sort of problem going into the 1980's, which may account for the sudden decline in popularity of Communism there... although authoritarian rule has been more the rule than the exception in Russia and is making a comeback.

Who else is in this demographic downtrend?  Japan.  With the over utilization of capital for government public spending since the 1990's and with a society now below the replacement rate demographically for nearly 3 decades, Japan now has more public buildings than can be used... most of them newly built!  To a degree this is true of most of the Far East, but the old 'Asian Tiger' economies never got into public works spending as a way to get their economies going like Japan did.  Sort of like what the Left in the US has wet dreams about with sleek bullet trains, mass transit, crowded cities and public works now crowding out normal buildings in some towns.  Japan will be positively geriatric in two decades while most of Western Europe will just be elderly.

The other fun place with a major demographic problem is: China.  Consider the 'One Child Policy' (which wasn't that well enforced but still had an impact) and that it went on from the early 1970's to 2008 or so.  Just a bit over 30 years of one child families in the urban areas and smaller families in the rural areas, and even with the horrific living conditions, pollution and people dying at factories they live at, life expectancy is still up versus where it was in the 1960's.  If you were born, say, in 1973 in China you are now 38, which would be in the prime of having a family in the US.  In China it means that you are now in a situation where men outnumber women, that you have scant savings, and that you make $6/day (on average) of which $4/day is spent on food.  Looking at your parent's generation you see men and women in their mid-50's on up, and slowly becoming less productive in the workforce.  Plus as the older generation dies out, there are fewer replacement workers and fewer families around.

In a previous article I look at the Directivity of China, just on the financial/economics realm and how the crony capitalist system there is causing rapid accumulation of Non-Performing Loans both to the government and outside investors.  China financed its economic boom in the mid-1990's with capital investment from outside of China, mostly in the West, and put that debt into debt vehicles that run through 5 years.  The first major roll-over of that debt was circa 2000, and a second roll-over was circa 2005.  In 2010 China started to get worried as some of its creditors were not accepting a roll-over and wanted their debt vehicles cashed out and China is using some of its assets to pay those off, while trying to get agreements on yet another roll-over. 

Inside China, the banking system has gotten used to handing out loans faster than you can say Fannie and Freddie.  The Chinese looked at the Western system in Europe and the US for doing such things as running home mortgage systems and particularly liked some aspects of how the government can funnel money to preferred customers.  In other words, they liked the corrupt system of banking that was bubbling in the West.  So they repeated that in residential, commercial and industrial real estate.  There is trouble brewing in China on over-built cities and subdivisions with few people living in them.  In this regard China is also doing some post-bubble Japan work to build infrastructure... with a declining population base ...

Finally China has a dustbowl going on in its agricultural sector, with clouds of dust going over major cities (adding to the pollution there) and then seen on satellite images over Korea.  Dust from the central part of China has been scraped off of buildings in the western coast of the US and analyzed... and while it isn't much, given how much likely gets into the Pacific Ocean, the fact that microgram amounts can be found in San Francisco just about anywhere is an indication of the scope of the problem in China.  And if you live on a farm in China you are probably older than average with your children having gone to the cities to get work, thus the agricultural sector of China is ageing out faster than the other sectors of the country and are still under crushing poverty.

So when elites are saying 'China is the future' you can ask them: the future of what?

Remember all of that points to a demographic decline in China, with not enough people to work the farms and with less arable land, plus a nasty pollution problem.  Anyone familiar with the ecological disasters from the old USSR in Russia will be able to clearly identify similar in China.  The frantic pace of spending within China is not normal to any economy, ever, on any sort of 'sustainable' basis.  What happens when the able-bodied older generation ages out is anyone's guess, but it won't be pretty inside China.

The other place with positive demographics?  Parts of the Arab Middle East and Africa.  What do they lack?  Skills, infrastructure, education, good jobs, a reliable financial system.... you know, the basics.  Plus most of the political systems aren't set up for anything but authoritarian or dictatorial regimes.

America has huge problems!

We have a housing sector gamed by politicians for decades.  Ditto that on the financial sector that they now wish to game more from last year's lovely laws passed in the dead of night, over weekends or holidays, or buried under a Friday avalanche of documents.  The problem with more government 'regulation' in financial, industrial, commercial and residential markets is obvious: less efficiency, build up of long-term debt, and the creation of an unsustainable crony capitalist system that erodes trust in the laws.  Not to speak of what it does to the fabric of society.  America, however, has countervailing influences not seen in most of the rest of the world.

First up, we don't go to the streets during tough times, but tighten our belts and vow to get through the tough times.  Politicians, academics and ideologues have been trying to destroy this for decades, and yet the US remains one of the most civil societies on the planet.  Notice how 'gun control' laws stopped rioting in Greece, the UK, France?  Oh, that's right, they didn't.  So sorry, perhaps trusting one's fellow man to look to his own safety is better than letting the government do it for him.  Letting each man control his destiny, for good and ill, is the basis for a strong civil society, while top-down mandates on what society MUST be from government never do seem to work out all that well.

Second, America looks to frontiers.  Why all the Alaska programs?  It is the last of the terrestrial frontiers for the US.  It has all the positive draws of hardship, untamed wilderness, natural resources and people who know how to take care of themselves.  If you screw up in a harsh environment you don't get a ticket, a citation to appear in court, or expect 'help' to arrive soon: you either take care of yourself via preparation or you are dead.  Americans love the harshness and cutting nature of a true frontier that is boundless.  Of all the insane things this Administration has done, the one sane thing was to neuter the NASA manned space program, and leave that up to private enterprise.  Already the first commercial test flights are happening and the paying ones start late this year or early next.  The freedom of a frontier to thumb your nose at government and do as you wish is strong and Americans will flock to that like nothing ever seen before on this planet.  That is two decades off to get into full swing if we survive our current circumstances and get a sane financial system put down.

Third is DIYism.  'If you want something done right, do it yourself' is the cliche.  This is not, exactly, true as not everyone can have all the skills at the highest level to do things.  It more properly comes out as: If you want something done that you can be satisfied with, do it yourself.  In doing something yourself you get to see the level of your own abilities (or lack thereof) first hand and that has a positive feedback like you wouldn't believe.  One of the things I've lacked is having my own workshop, what with my prior active working life and then becoming disabled to a high degree, it just hasn't been in the cards.  Yet now I accumulate the tools, hardware and raw materials to start up with some help from cheap tool places, and picking up the Gingery books on the DIY machine shop at low cost.  Also books on basic woodworking and gunsmithing with hand tools are now in my hands.  In America we expect home owners to take care of their homes, on their own if necessary, and the times look to be heading that way.

Fourth is the cussed streak of liberty that can be traced back to the early settlers of America.  These are the people who will NOT part with what they believe and would PREFER that society left them alone, but when society through government feels it must tell one what to do, think, act and believe, then the answer is to leave the society and government.  This is part and parcel of 'get off my damned lawn'.  Americans expect what they own to be honored by their neighbors and not coveted by government... and we tend to back that up as individuals and our society must respect that.

Fifth is that thing that Jefferson wanted: a revolution every 20 years.  Instead we have the Constitution and notice that the things government must do (organize and pay for a military, keep a post road system, ensure equal enforcement of the  laws of the land, protect the Nation from invaders, regularize immigration and naturalization, keep a Mint going as well as US Patent and Trademarks system, pay off our National debt, support our Embassies overseas as well as a court system) are minimal.  Plus nowhere does it say that any Congress must continue on with the laws, regulations, etc. of past Congresses, so long as the government adheres to the Constitution everything is up for grabs every 2 years.  This is known as 'clean sheet' government when take to its maximal, little carry-over state: all but the basics are wiped off the board and the Congress restarts with what it thinks is necessary.  When we didn't have much government, there wasn't much need for this capability, but now that we have an over-sized, costly, over-burdened, Ponzi Scheme running bureaucracy trying to rule our lives, the 'clean sheet' option starts to look very nice, indeed.  Even 'entitlements' are not debt obligation systems, but systems you pay into, now, with a promise of being paid back later, in smaller amounts.  You don't hold a bond or other negotiable vehicle, but a promise of payment.  This is known as a contract.  Our government can wipe those out without batting an eyelash for that is what sovereign governments are able to do.  Fun, no?

While I do have grave concerns over the current state of our government and society, the countervailing parts of the system have been gathering steam for over a decade and more like two decades, now.  The problems of government trying to decide what a 'minimum wage' is, what you are 'entitled' to and how much you should pay for 'health insurance' has now gotten to the point where the countervailing forces are now applying their pressure.  To right this ship and stop it from taking on water requires getting rid of the overburden (cutting the excess supercargo of goodies off the deck), closing hte hatches and running the pumps to get the water out of the hold.  Americans are leading the way to thrift, preparation and paying down debt and will now expect our government to follow suit and get out of the damned way.

If that isn't started now, then 2012 will start to shape up as a 'clean sheet' revival.

Keeping what we have is not an option.

Getting the ship of state upright and the water pumped out of it is a necessity.

Americans grit their teeth and do the necessary things during a disaster... and this is a disaster, make no mistake about it.

Americans are preparing, now, for the long haul.

Our government?

Either get with the program or get the boot, the era of 'nice' government is coming to an end and the bare essentials era is coming your way.  Prepare now... your fellow Americans already are.  We will pay our debts, as a Nation, but we can stop incurring them in a heartbeat... and the great effects of withdrawal from government addiction is that you get richer and freer, both, and begin to wonder just why you ever thought letting government run your life was a good idea.

Painful?  Yes, but the pain soon stops once you realize you actually can pursue your happiness for good or ill, and care for your fellow man.  That will take a few years to sort itself out.  Painful years.

Far better than the degrading situation we are now in and will get if we don't do what is necessary.

Who else is going to do the necessary things to keep this Nation going?

I'm not counting on the Jihadi's to do it, that's for damned sure.

29 January 2011

So let me get this straight...

The proposition for 'health care reform' is that the cost of health care, and thusly health care insurance is too high.

Why is the cost of health care so high?

Well, we subsidize it in the tax code, for one place to start.  The law of subsidies is that anything that is subsidized is no longer given a proper valuation, is over utilized and under appreciated, thus causing actual costs to rise and scarcity of what is subsidized.

Another place to start is that we have government run health care systems for the elderly and poor, and as government cannot pay the full cost of that health care, physicians and practitioners must cost shift that burden over to their paying customers.  Thusly, health care costs increase.

Why did we subsidize health care?  That started in the 1940's when the fit and able went overseas to fight.  Women and the retired had to have reasons to come into the workforce and Congress allowed for a portion of the cost of health care insurance to be written off as an enticement to those who were not working to come into work.  Until that point in time health care insurance was a 'perk' of the upper management of companies as it was seen as an overhead cost that, for a few individuals, was easily spread over the entire company.  When it was subsidized and expanded to cover more individuals, the overhead cost to run a company increased which was passed on in the cost of goods and services offered.

Women had not been a major part of the workforce due to cultural influences.

Why did retirees need to be offered a 'perk' to come back to work?

That is due to the Social Security system that was set up in the 1930's to retire out the older part of the workforce via government impetus in which all workers paid into the plan to pay out to new and existing 'retirees'.  These individuals who were 'retired' need a rationale to come back to work above and beyond the pay, thus health care costs were subsidized via the tax code.

Why are the elderly poor?

That is due to Social Security not providing enough 'benefits' to allow for a standard of living that would support them well, thus those who retire live from one benefits check to another in substandard living conditions.  These conditions are caused because they stopped working via government impetus at a set age when they are the most productive workers in the workforce and earning a proportionately higher wage.  By forcing these employees out they are not given the capability to earn enough to live on as they aren't allowed to by the system and its penalties for working past retirement age.  To address this Congress created a system in which workers could save money in Individual Retirement Accounts to help supplement their retirement checks via Social Security.  Through these means and modern investing vehicles, like mutual funds, many retirees now grow wealth during their working years to raise their standard of living during their retirement years.

Why doesn't Social Security pay enough to maintain a standard of living for retirees?

Social Security depends on a ratio of active workers to retirees, so that active workers pay into the system and those funds are paid out to current retirees.  At the start of the system that meant that approximately 6 active workers were needed to support 1 retiree at a minimum level of income.  If that amount were raised, the proportion would change.  Thus a doubling of output cost would mean that 3 workers were supporting one retiree.  This ratio changes as the population ages via demographics and via lower birth rates, so that there are not enough new workers in the system to support retirees.

Wouldn't allowing people to work longer, make more and, from that, pay into the system longer change that?

Yes, but then they wouldn't be 'retired' now, would they?  That is the point of the system.

Why was assistance for health care sought via Congress?

That was to pay for retirees who had health plans that stopped covering them when they retired as their past employers could not maintain that burden for both active and retired workers.  Prior to this companies could do this, but only if their active to retired worker ratio would support such an activity, and as the cost of health care rose so did the cost to companies of non-productive workers in retirement.  Over time company provided benefits decreased and Social Security was not providing enough money to allow retirees to purchase health care.  Thus government stepped in to provide a cost-shifting scheme so that everyone else paid more for health care.  As demographics and improving standards of living allowed for longer life expectancy, the number of aged retirees grew quickly and their cost to the health care system increased.  That required more expenditures by government that did not cover the full cost of care and treatment of individuals, thus shifting costs further into the actively paying pool.  Those in that pool were getting subsidized health care via the tax code not only for companies but individuals, which meant that the full cost of health care, medications and procedures were not being paid by those receiving them.

Were any means sought to allow individuals to better pay for their health care?

Yes, health care savings accounts were allowed to be tax free for their earnings but only if they were utilized within a single year.  We do not treat your health as a worthwhile investment to allow for tax free growth of money so as to pay for future health care.  If these accounts were treated like IRAs then individuals could invest money, even at minor rates, while young to ensure growth of capital over time so as to have more funds to address health care needs later in life when procedures and medical problems arise faster due to ageing.

Does this work?

To a limited degree, yes, but the loss of ability to roll-over such accounts year to year means that careful pre-planning is necessary to maximize their usage, unlike retirement accounts (by and large).  Without roll-over security for the funds in these accounts, their ability to help cost-shift are restricted to a single calendar year, not year to year or early to later in life.

So health care savings accounts set up to allow flexibility of payment within a given year to better handle the cost of health insurance is only limited in effectiveness because it doesn't allow for long-term planning?


Can individuals get other health insurance types to do this?

Yes, they can, but they must be picked up when relatively healthy, and therefore at a young age, and paid into every year so that catastrophic or long-term care needs are addressed.  The moment you actually get a long-term condition the cost for these plans skyrocket as you will need active payment from the insurance system to care for you, and you have not paid into the system to get such coverage.

If all of this is subsidized, why doesn't it work better?

Because of the subsidies, themselves, cost shifting from efficient, individual payments to less efficient bureaucracies in health insurance companies and via the least efficient means which is the federal government.  Every co-pay is a cost shifting event, so that every utilization of the health care system for non-emergency, non-chronic events incurs costs which are shifted in the way of higher prices paid by those able to afford it.  As physicians see the cost of overhead rising via the staff and infrastructure necessary to deal with health insurance companies and the federal government, they have fewer hours to deal with patients due to paperwork overhead and the cost of employees filling out such paperwork added into the cost of the actual health care.

Those overhead costs aren't paid for by the system?

If that means they are not covered by the system, that is only partially true as they are covered by the increased cost of doing business for a physician.  Physician reimbursement to see an individual utilizing health insurance is negotiated between the company and the physician, which does not allow for much variation in pricing between physicians, thus eliminating market forces for better utilization of physician's time and to lower cost per visit.  By attempting to standardize the system with bureaucracy, the ability to differentiate between the quality, cost and timeliness of delivery of care is removed as the burden of the reimbursement system layers on an overhead cost that must be borne by all those in the system.  You pay for that overhead in your direct co-pay and via your premiums used to pay physicians for treatment, and if you get a co-pay system your premiums rise disproportionately when overhead cost is increased.

Doesn't the new health care law add in more accountability?

Yes.  That is an overhead cost via tracking of paperwork and adding bureaucracy.

Doesn't that increase the cost of health care and health insurance premiums?

Drastically, yes.

How can the cost of health care be brought down?

Removing subsidies, overhead costs and reimbursement systems so that physicians can compete on cost, quality of care and timeliness of care.

Wouldn't that be more expensive?

To whom?  For those with 'health insurance' this would see doctors stepping away from a cost reimbursement system and lowering cost per visit which, while still higher than a co-pay cost, would be lower than the nominal charged through cost of physicians to health care companies via premiums.  By reducing staff size, office size and requiring the signing of non-malpractice waivers, physicians could move from our current, highly regulated system in which they bear the burden of costs for your health care to you necessarily managing your health care and assuming the cost of your decisions.

Wouldn't that increase the cost to retirees?

Yes, it would.  Not necessarily in direct physician cost but on medication cost for the maintenance of long term chronic disorders, like diabetes.  Many pharmaceutical companies have special plans and help systems for those unable to bear the full cost of such medications, however, as a form of charity which is lower cost that trying to shift the cost burden via health insurance.  With companies overstock and over-runs of production that would not normally be marketed would be accessible to the poor and elderly at a reduced cost with the company passing on the fractional cost of over-production (which it has anyway) to those currently paying the full cost for medications.  In addition we subsidize charitable contributions in the form of write-offs to companies.

Aren't subsidies dangerous, though?  I mean look at what they've done to the health care system, already?

They can, indeed, be dangerous: you might get more generous companies as a result and start removing the image of greedy companies for ones that will see a social good and value towards helping the poor and elderly.  Politicians need large corporations not only as donors but punching bags for re-election campaigns, and any attempt to let companies soften their image by actually helping people, directly, instead of indirectly means there are no pay-offs to political cronies and the amount of funds going into campaigns by generous companies are reduced.

They should be regulated to stop that!

They ARE regulated to reduce that and to otherwise add political input into the system.  The net result is that those companies being regulated feel the need to get their own input into the political system via lobbying of government officials and bureaucrats.  Companies have a vested interest in making sure that they can operate and secure market positions, and regulations are a prime way to reduce competition by increasing the barrier cost of entry into markets from smaller firms.  Bigger firms can pass on those overhead costs of lobbying easier than smaller firms, and the system is thusly biased towards larger firms.  The cost of that lobbying is passed on to you, through the higher costs of goods and services, including health care.

Why are these companies moving facilities and jobs overseas?

The cost of regulation means that the American worker is less competitive compared to their foreign counter-parts due to the cost of living in the US, the lack of low-end wage flexibility and the cost of overhead to run Social Security, health insurance and all the other regulations that impact US businesses on a daily basis.  Every hour spent filling out paperwork for the government or to receive reimbursement, which is an indirect payment, means that those are non-productive hours that the company still incurs as part of its overhead.  That overhead cost of all regulation is passed on to you through the higher cost of everything and the less efficient delivery of goods and services.  Every transaction has a cost to it, especially when reimbursement and accountability systems are added into the mix.  Each accountability and reimbursement system has its own cost per transaction that includes the cost of purchasing and maintaining the necessary infrastructure to the system and the cost of human oversight of the system.  All of those transactions bear the fractional cost of the annual operation and maintenance of the system or is otherwise passed on via premiums, price hikes and fees.  The cost of the government side is added in to your taxes and through the number of transactions that are layered on to the system to 'regulate' it.

Doesn't that change the ratio of active workers to retirees?

Yes, though indirectly.  Because of the lack of low-end wage flexibility and the cost per worker of federal, state and local regulations, companies find that it is not economically feasible to offer such low wage jobs in the US legally.  Such things as the minimum wage for citizens, and then trying to circumvent that via hiring non-citizens, points to a systemic incapability of the US system to employ its own citizens at low wages.  This then retards time to entry into the workforce and while increasing wages it reduced overall active time in the workforce to have gainful employment to invest for the long term.

So the illegal alien problem stems from the minimum wage and the cost of adding citizens to the workforce for short-term work?

Yes, to a degree.  Historically there has been a small, migrant population on the southern US border that tended to move with crops, but that only became a problem when we burdened the cost of legal employment for citizens.  There are no jobs that Americans 'can't do' but there are jobs for which the cost of hiring American citizens is economically inefficient.  Do note that this goes for the high tech industry as well as the agricultural community.

So government makes it harder to run Social Security via the minimum wage and regulations on business?


Is this sustainable?

No.  Social Security is now permanently in the red and will eat up more in the way of taxes from the federal government, which will increase the amount of taxes to run the federal government for all that it does.  Further the cost of Medicare and Medicaid, plus the new health and financial regulations are increasing the cost of paid-for health care and the transactional cost on everything these regulations cover, which is all of the financial community including your credit card and bank account.  Everything you now do will have an increased transactional cost due to federal regulations.

This doesn't sound good, does it?

If this were a private enterprise then any politician who voted for any of these regulations or signed them into law would be part of a RICO investigation to perpetrate multiple Ponzi Schemes on the American public via the abuse of their power.  As it is Congress loves to exempt itself and the government from such investigations.

Is there any way out of this?

Yes, it isn't nice but there is.

What is it?

End new entrants to Social Security, remove the medical subsidies and entitlements via a block-grant to the States and then phase them out over 5 years, the clean-sheet the tax code to get a single tax rate for all Americans, remove all deductions and benefits from the code, and proportionately reduce that under the poverty line so that each and every working American has a stake in the US government.  In addition clean-sheet government starting with just the few functions of the Treasury, Mint, Commerce, Defense, Coast Guard, and any interstate laws not connected to a federal agency (such as kidnapping, wire fraud and such).  All other government agencies and quasi-government entities would be abolished, and the postal system put into a standards carrier system to which any carrier could apply for pick-up and delivery service so long as they abided by a system neutral concept for exchange of packages.  We can pay for those already in Social Security through higher taxes, but Social Security, itself, must go as a concept.  States are better able to gauge the need for their poor for health care, and by removing the cost overhead of the current system, prices across the board for health care will drop.  State and local systems already duplicate many of the large scale systems at more sustainable and accountable levels and removing the duplicate work that is 'One Size Fits All, Fits None Well' from the federal side will allow for leaner and better crafted systems to take over at the State and local levels.

But won't that cause chaos?

You tell me what happens when the system collapses on its own, because that is the path it is on.  We can plan for it, do it, and remove the government retail or wholesale, but the cost of it must go one way or another.  The other choice is bankruptcy for the Nation and then all these things go, anyway.  The choice is yours.  You may feel 'entitled' to a retirement.  Tough.  You have been lied to for decades as one of the victims of multiple Ponzi Schemes and you believed that the first through Scheme indicated a viable systems while, just like any Ponzi Scheme, they are part of a confidence game to gain your trust and fleece you of your hard earned dollars.  The warnings have been out there for decades, if you did not pay attention to them then you did so willingly: You are the Mark.

Aren't the Marks the last ones to figure out a Ponzi Scheme?

Yes.  It is time to stop being a Mark and picking up your duties and obligations as a citizen of the United States.  You may not like that, but the alternative is chaos.  The choice is yours... just know that very little good comes from chaos within a Nation save for blood and loss.  That choice is yours.  We can do it fast, we can do it slow, but this must be done to survive as a Nation.  We can no longer gain international credit to run these Ponzi Schemes: we are no longer trusted on our own finances because we have tried to run them on unsustainable debt.  The bill can be paid if we stop increasing the debt load.  That means less government now and in the future, stable taxes and shutting down the Ponzi Schemes.  It is either that or you are the Mark... and down that path lies blood at your feet as you could do something, now, as a citizen to let government know it must stop this insanity.

15 January 2011

Persuasion and marketing

Watching the Glenn Beck program on 13 JAN 2011 was a fascinating experience as the topic was Edward Bernays and marketing. Mr. Bernays was one of the first admen to develop advertising campaigns based on psychological methods to create campaigns. To do this he relied on the works of his uncle, Sigmund Freud, who identified basic drives of the body that are part of the unconscious human psyche. Those advertising campaigns introduced the utilization of these drives (survival, thirst, sex, hunger) as part of their basis, so as to appeal to multiple levels of the unconscious mind and to utilize imagery and words that would linger in the association with whatever was being pushed. Additionally he used an 'appeal to authority' by paying for studies that would 'show' certain scientific based concepts (ex. that hunger is better sated at breakfast with a richer meal including bacon and eggs) then send those to either other 'authorities' or to local individuals involved in that area of work (for the bacon example it was physicians). Throw in some study generated numbers, an important institute or doctor and you have an advertising campaign.

It works, too, this appeal to the lowest part of the human psyche: sex sells. Reading Frederik Pohl's works (both science fiction and some his autobiographical pieces) we get to see how this had worked by the 1950's, to the point where admen could sell magazines to doctors offices that didn't want them. The process of advertising and marketing grows up around the concept of the animal part of man (that is natural man) wanting to be led to the successful conclusion of his desires. That is why sex appeal sells, as well as campaigns for getting people to eat more or drink more, and even campaigns to get you to 'switch' brands are based on things other than the actual product being sold or are secondary to that product by slapping a label on it (like 'healthy' or 'diet'). This concept of a herd driven mentality towards products was utilized in politics to sell political parties, programs and ideologies. We went from a Nation that had politicians not doing much, and rarely being reported on, to one in which they were on the airwaves, giving 'photo ops' of things they don't do in their daily life, and generally drying to mold the mind of public opinion on a constant basis.

Bernays recoiled from how these concepts were used in wartime Germany as they utilized the full suite of Freud and found it to be successful. That suite of drives goes beyond those I've already listed and includes the 'death drive' or 'destrudo'. This is part of the Freudian view of human psychology, and while psychology has varied from that even in the Freudian side of things, when one utilizes the concept of base human drives the destrudo is a functional part of that view. The Nazi Party utilized symbology and iconography to enforce this (ex. the death's head symbol as part of the concentration camp SS insignia) and through the concept that the next generation would be fiercer and 'do what is necessary' for the problems of Germany. This also worked and very effectively, to the point where Germans were turning their heads at cattle cars full of Jews going to the concentration camps. At a subliminal level they had been marketed this idea since the late 1920's as the NSDAP rose to prominence, and part of the idea was to 'perfect' Germany's culture by subtracting the 'unwanted' portion of it.

Here, as James Burke would say in Connections, I could follow many paths.

I could follow down the line of books on The Making of the President XXXX where the year would be in the X's. Those works offer insight into campaigns and reviewing them allows for a longer perspective of how marketing has not only changed political discourse and elections, but change the type and kind of people who run for office.

Or I could examine the way companies have utilized marketing to influence public opinion and then turned a small portion of their dollars into the industry of marketing their ideas to government. That forms a cycle of public funds going to favored companies that have good insider contacts so as to garner those public funds via the appropriation process, and then 'reward' that legislator by putting some jobs or work in their district and sending campaign contributions to them. By getting the idea you can 'regulate' something via appeal to public unconscious drives, legislators then push their programs forward and can find not only electoral success but money from those they regulate. This is usually done through the venue of fear, so that people come to believe they have something to fear about the activities of companies... sometimes you do and other times it is just marketing to push an agenda.

I could even look at the intrusion of marketing into grief, as was done at the recent Tucson, AZ memorial service that, for all the pleasant sounding words of the speech given by the President, the symbology and reactions clash in discord. But I've already done that, and it is actually a spin-off that I put out first to help gel a few ideas.

Instead I'm going to look at that complex between science (or at least scientific sounding) work with marketing and the problem of politicians not understanding that the Freud animal driven complex is not the be-all, end-all of psychological analysis.

The problem with going into the animal based subconscious as being the primary driver of man is that it runs into the problem of rational thought. This is driven by the irrational motivations of the body, in the Freudian venue, but has a wholly different perspective under a different school, that of Carl Jung, say. To become a functioning individual you must integrate the rational and irrational, the conscious and unconscious, and retain conscious autonomy so as to be an individual: you are not a beast in a herd but a conscious animal able to integrate and control base desires with the conscious mind. The horror of subliminal advertising, then, is to approach only the unconscious or sub-conscious mind if the conscious mind does not have the necessary understanding to properly tag the subliminal content so that the unconscious mind can weigh the import of any given message with that rational input.

Jung then posed a second part of the human psyche that was not wrapped up inside individuals, but was held by all mankind as part of our natural background. In this view of the unconscious there are also the archetypes of characters that are the pure forms of those beings we have come to represent through mythology and stories. These forms reside within us unconsciously, and we seek out these archetypes when we are troubled in our lives. As someone said of Batman: 'When I was in danger of losing my life I sought to find the answer Batman would have to my situation, and then did that action'. You rarely, if ever, reach into that storehouse on a conscious basis, and yet it is always available to your unconscious mind. Asking 'What Would Jesus Do?' is doing just that: reaching for that which is Jesus in all of us, so as to find his answer and implement it.

Now to show how this works, we have seen the slow erosion of our political and economic systems via the foundations built by the Progressive movement integrating Freudian concepts into campaigns and pushing agendas. As Bernays said, the end result was to have an elite class that would be a benevolent dictatorship to the masses. If you listen to all the Marxist rhetoric, you would expect people to take to the streets, demand ever more, as that is their base natural desires being denied by the act of government after getting them used to living at the government teat for such things as welfare, unemployment, food stamps, Medicare, Medicaid... the list is long. This is what is going on in Europe, by and large and is an age-old, archetypical tradition there that stretches back for centuries or even longer. When the King withholds a good to the populace, the peasants revolt... and then are put down and submit to the ruling order.

In America, however, the concepts of thrift, patriotism and each individual making their own way in life has created a force counter to the Freudian driven addictive force for more government: the Tea Party force for less and more accountable government. The elites are being seen as failures not only on the personal scale (where government programs must win adherents) but at the National level as well. When 70% of the population does not want the debt ceiling raised for the country, they are not drawing upon a Freudian drive but a Jungian archetype that we remember from our Founding and Framing eras. America started in debt and only got out of debt when Andrew Jackson was in office: he was the first President to preside over a debt-free country, and he then proceeded to remove the National Bank from the government's rolls so that it couldn't manipulate the economy directly again.

In the realm of fiction there are very, very, very few authors that even attempt this sort of thing. The best that I've read is Gordon R. Dickson who utilizes this throughout his large Childe Cycle of works but most impressively in his novel Way of the Pilgrim. In that novel Earth is taken over by a kindly but really quite powerful alien race... we get a benign despotism to rule over us. We are handed the 'hope' that in a few generations we will become skilled enough so as to be 'brothers' to them. Mankind, as a whole, slowly begins to reject this but not openly. The first sign to show up is a simple stick figure of a man in a cloak with a staff. He is called The Pilgrim. The Pilgrim, as an archetype, exists across humanity and soon, very soon, people start to take up cloak and staff. First it is scattered, then there are more and more. The aliens don't know what to make of this, it is beyond them. Then The Pilgrim begins to manifest directly in one man and he has no conscious knowledge of what The Pilgrim does when it manifests. The message that is carried: mankind rejects your authority and wants you gone from our planet and we will all die in pursuit of this goal. By then there are millions upon millions across the globe wearing cloak and carrying staff: The Pilgrim has come. Unwilling to commit genocide and unable to deal with something they don't have, they are forced to leave: they have no pool of archetypes to draw upon, no deeply shared unconscious capability, for all their power they have met a power greater than theirs in a realm they can't even go into.

This is why the appearance of the Tea Party is such a shock to the political Left and those who invest strongly in man as a barely rational animal: we are not just animals with a thin veneer of rationality, but a rational mind deeply in contact with our own unconscious not just for our bodily needs but for our outlook in life. This is beyond the realm of politics, marketing, or even advertising as there is no way to influence our archetypes. Those who are integrated individuals are not dictated to, but they tell you they wish to live their own lives in peace and to get the hell out of their faces. We know the ways of the Rattlesnake and it is always fair in its warning and you always get it. The message is clear: back off or suffer the consequences of your ill-thought out actions.

How else can one explain the quick spread of the Tea Party movement, from nothing to political force in less than 2 years? This is a remarkably American phenomena because of our storehouse of archetypes, which is a 'can do', 'if you want it done do it yourself' and 'get the hell off my lawn' formation that is NOT present in any other Nation on this planet. Anyone with the integration capability with their unconscious that has some rational basis for these sorts of ideas CAN get in contact with these archetypes: they are universal to mankind, you just have to be flowing into their formation for them to manifest. And once an archetype catches hold, especially in times of danger, it spreads like wildfire without even the need for conscious intention beyond the need for the answer which only the archetype can give.

Now if that isn't enough to scare the socks off the 'market it to their gonads and their minds will follow' crowd, the next part will remind you of how Einstein described quantum physics: 'spooky action at a distance'.

The concept of the Noosphere is given by Vladimir Vernadsky and Teilhard de Chardin as the 'sphere of human thought'. This concept of a 'hive mind' has been around for awhile, that being a conscious construct shared by the entirety of humanity. With that said the physical outlay of it is already happening with the World Wide Web teamed with a new set of laws based on computing, networks and the re-utilization of concepts at different scales (which I go over in this article). The reason I say this is that the World Wide Web is a construct that allows our conscious minds to interact with each other in an asynchronous, multi-media mode. This is not, perhaps, what was envisioned for this concept when it was first proposed, but the interesting parallels between the Web and the Noosphere are obvious.

With that said there is a definite unconscious part of the Noosphere that is only reflected in the consciously available material on the Web, and the rest of the material appears to reside elsewhere pre-Internet era. The Noosphere is used to explain how individuals pick up skills and knowledge faster than those people before them, and this is not even a 'direct teaching' form of learning as something like how to fashion bronze looks to be something less than a 'spread' of knowledge and more a 'multiple learning events' sort of knowledge. This is closer to quantum theory and 'spooky action at a distance' than the relativistic view of information spread via slow word-of-mouth means. There are similarities in stone structures across the world (ex. pyramidal structures in Egypt and Central to South America) that have physical understanding as their basis, which is to say the angle of repose for particles cannot exceed a certain angle that depends on density, particle size and surface roughness. The ability to organize relatively modest populations to complete these tasks is one of convergent understanding at a distance: dissimilar cultures find similar ways to organize to complete similar tasks without referents to each other. That is the unconscious part of the Noosphere at work which is a mirroring of Jungian views on archetypes, though expanded to daily process knowledge (i.e. how to do things, make things, and the necessary skills involved for them).

This, like archetypes, is not something you can market or advertise to so as to influence an individual as it operates independently of the physical basis for mankind as it requires conscious and rational thought to allow access to it. That physical basis coupled with rational thought would then be the necessary 'keys to the kingdom' to have access to this shared knowledge from individuals within cultures across cultural domains.

Where I have some disagreement with the Noosphere and individuals like Kurzweil, is the idea of a 'unity' formation of conscious minds to form one larger, complex, cross-cultural mental structure. To date there are no indications of consciousness either by activity nor by messaging of this Noosphere. The biologically based portion of it has acted more as a reference storehouse of knowledge than a communication system: more library with knowledge available than individual actively sharing knowledge by intent. The dissemination of process information and cultural archetypes has been, instead, a form of dissemination far better described by quantum physics ('spooky action at a distance' between entangled particles sharing information at faster than light speed) than by complexity theory.

What the Noosphere does allow people to do as individuals is to process information faster. This is part and parcel of the Feiler Faster Thesis (FFT) which I have examined as a phenomena multiple times. It is represented, at first, by our ability to 'catch up' with the news cycle on a faster basis over time, which is to say that the rate of our rate of adaptation is increasing. This is a 'meta' formulation of examining a process or creation of an artifact, so that meta-thinking is thinking about thinking and the meta-rate of change is the change of the rate of change. Col. John Byrd (USAF) described this as getting within the 'OODA loop' of someone else in combat: Observe, Orient, Decide and Act. Getting 'inside' and opponent's OODA loop is an essential part of combat operations and Col. Byrd's application of it to USAF concerns has proven to be a single instance within a huge category of human activity. That is to say the OODA loop thesis can be widened in scope (utilizing the Gould scale applicability concept) to encompass how businesses operate, how you drive a car safely, how a chess match operates between human opponents, and, indeed, how you absorb information from the news.

The FFT is the process of tightening the individual's OODA loop to be within that of the overall news presentation cycle so that you are less surprised by future outcomes than the news presenters are. Similarly you are better suited, as an individual, to understand the implications of new technology or world events due to the ability to tap into the Noosphere storehouse and find the way to hone your own perceptive skills so as to implement the FFT, since learning to do so is, itself, a skill. If you wonder why government officials, regulatory agencies and such fall out of step with the way of world events or even just social realities, it is because their outward structure cannot incorporate the Noosphere and, thusly, the FFT. Government is an external management system for the basics of ensuring safety for societies, it is not an operative system for enhancing knowledge or disseminating skills. In fact the failure of those governments that try to do this is littered with millions dead in the vain attempt to create something in the physical realm that we already share in the conscious and unconscious realms. What government is, however, is a physical safeguard of a culture and its territory and it is lent the negative powers that are granted to us by having a physical being by Nature, and we then take oversight of this created power structure for the good of all individuals within society.

Here is where the Jungian concept comes fully into play with the Noosphere: the Noosphere isn't a way to create a mass cognitive structure, but a way to allow the individual to create an individual identity within all of human culture and to find the necessary archetypes and process information so as to allow creativity to expand the overall knowledgebase and enhance archetypes, or even create new ones. Thus the individual melds their physical bodies from Nature with their rational thought system keyed to their culture to allow them to better gain individuality and creative expression of their individual self. Thus, if this is correct, we are heading into the steep learning curve era of enhanced individuality re-asserting its power over the social power structures we know as government, and not just within the USA, either.

For if we apply the Noosphere to the human condition with the understanding that it is to enhance human expression, and therefore human liberty, one must be free to utilize their positive liberty freely. That requires the greatest liberty of all: freedom to utilize your positive liberties outside of the negative power oversight of government.

If you wondered how chapters of the Tea Party can form up in the UK, Germany, Italy, Israel, Russia and Australia, now you know.

The FFT is now in play on a global basis.

Gaining one's liberty from the State has always been fraught with danger.

What happens when this goes on a global scale? My dearest hope is we do not get the kind of carnage of 1775-1783 for 10% dead and 15% fled where the 15% have nowhere to go means disaster. There are better ways to do this as Gandhi and Aquino found, as well as some of the faster transitions of power in Eastern Europe with the fall of Communism. I do hope those in power will learn from the Noosphere that it isn't worth the bloodshed to grasp power to the bitter end. There is just no teaching some people, however, for they refuse to learn from the mistakes and lessons we have learned.

For The Pilgrim will not be denied.

10 January 2011

A simple agreement

From Glenn Beck's website:

Denouncing violence from all sides including your own does not make your movement any less just.  To quote Martin Luther King:

But there is something that I must say to my people, who stand on the warm threshold which leads into the palace of justice: In the process of gaining our rightful place, we must not be guilty of wrongful deeds. Let us not seek to satisfy our thirst for freedom by drinking from the cup of bitterness and hatred. We must forever conduct our struggle on the high plane of dignity and discipline. We must not allow our creative protest to degenerate into physical violence. Again and again, we must rise to the majestic heights of meeting physical force with soul force.

I challenge all Americans, left or right, regardless if you’re a politician, pundit, painter, priest, parishioner, poet or porn star to agree with all of the following.

  • I denounce violence, regardless of ideological motivation.
  • I denounce anyone, from the Left, the Right or middle, who believes physical violence is the answer to whatever they feel is wrong with our country.
  • I denounce those who wish to tear down our system and rebuild it in their own image, whatever that image may be.
  • I denounce those from the Left, the Right or middle, who call for riots and violence as an opportunity to bring down and reconstruct our system.
  • I denounce violent threats and calls for the destruction of our system – regardless of their underlying ideology – whether they come from the Hutaree Militia or Frances Fox Piven.
  • I hold those responsible for the violence, responsible for the violence.  I denounce those who attempt to blame political opponents for the acts of madmen.
  • I denounce those from the Left, the Right or middle that sees violence as a viable alternative to our long established system of change made within the constraints of our constitutional Republic.

I will stand with anyone willing to sign that pledge.  Today I make a personal choice.  I urge leaders of both sides and all walks of life to join me as all Americans joined hands on 9.12.2001.

Do note that this goes along with my agreement to The Manifesto Against Islamic Totalitarianism, with the provisos I outlined for that.

In this case the following I see as being recognized as being fully in accord with political non-violence:

  • The right to defend myself via my civil rights against those who seek to do me injury or go after my loved ones or property. 
  • To hold myself accountable in all such instances as is necessary for the continuation of a civil society by the rule of law when I must exercise the right to self-defense.
  • The right to have and utilize my physical property without any interference so long as I present no danger to any one and the right to tell others to get off my damned lawn and keep their grubby fingers from my stuff.
  • Likewise I respect the rights of others to their property and will respect their right to it and abide by their wishes for it as this is necessary to have a civil society.
  • In all cases I abide by the Law of Nations which is universal and will resort to the positive liberty of war to defend myself, my loved ones and property from the violence and depredation of those seeking to bring savage war to me.
  • I reject the savagery of personal warfare without sovereign sanction, denounce it in all cases and shall never exercise that so long as we maintain our civil society.
  • As a citizen from a Nation that comes from the Great Peace of Westphalia via the colonizing power that started it, and in recognition of the great good of religious freedom, I extend the coverage of non-violence to religion as I have done previously for speech, as violence is never a prerequisite to religious belief or adherence.
  • Anyone impugning violence as derived from speech must show a clear and demonstrable linkage between the actions and the speech involved and cannot assert that any atmosphere, iconography or 'feeling of hatred' is a cause to violence.  Crosshairs on districts is not a call to violence, nor is looking for a smaller and more accountable government. There is a distinction between evidence and hyperbole, and I do not misunderstand the latter for the former.
  • Do note that violence propagated for political means is seen as savagery under the Law of Nations, and my unalienable rights do apply.

Not a single item on that list is a threat.

They are a solemn promise to you from me.

Just because they come from someone you don't like doesn't invalidate the promise behind them.  I am willing to take such a promise as it is an inherent exercise of my positive liberties to do so without regard to the source asking for such be it Glenn Beck, Cthulhu, Christ, Odin or that poor fellow down the street predicting the coming advent of the influx.  This is the responsibility of citizens to have a civil society, and I accept this burden gladly.

Can you do the same?