Authoritarian Governments

Is democracy a requirement for a Capitalism to flourish? I think a good example of an authoritarian government that created a successful Capitalist system would be Chile. Chile elected a socialist Allende who was overthrown by a CIA led coup by General Pinochet. Over the next 17 years Pinochet allowed a free market economy using the teachings of Milton Friedman. Even after Pinochet returned power to democratic rule the government has not reversed many of his reforms.

Another example comes to mind would be Great Britain who after World War II adopted a socialist form of government. It became know as the “British Disease” (Boyson). British productivity by the 1970’s had fallen behind the rest of Western Europe by 30-40% while inflation for the period of 1972-77 was 120% (Boyson). It was only after the reforms of Margaret Thatcher that the economy began to recover.

Democracy is a messy business with people having the ability to vote themselves programs and authoritarian regimes have created market economies. I think the question becomes can a nation like China sustain a market economy over the long haul? I can think of no regime that has been both authoritarian and capitalist over the long run. I guess one question I would like answered is how can a nation whose political system requires centralized planning, China is communist, allow the long term growth of a free market system without giving up its political power?

Boyson, Sir Rhodes and Antonia Martino. What We Can Learn from Margaret Thatcher, The Heritage Foundation. November 24, 1999,
http://www.heritage.org/Research/PoliticalPhilosophy/HL650.cfm

Conservatism - Death by self inflicted gun shoot

When did the Conservative Movement die? I have thought about this recently watching the election. In 1994 the Conservative movement was at their heights and within 10 years the collapsed had occurred. The only thing I can say is happiness is the death of false politics. Conservativism had died many years before when it allowed men like Ann Coulter, Sean Hannity and Rush Limbaugh take control and destroy the movement. It moved from an idea generating machine to a hate mongering machine. Ideas are not Hannity's strong point. Every time I see Hannity I realize what Jesus had to deal with with the Pharisees.

Liberal Media Bias

Once again I am hearing those on the Right complain about the Media favoring Obama. I have heard since I was a kid that the MSM was liberal. Who cares. I heard today the NYTimes profits are down 82% and the Evening News the viewers are dying faster every day. I understand talk shows need fonder to talk about. But come on. Get over it people. Get a life. You have unlimited media access with the internet. Seriously why would anyone watch either Chris Matthews or Sean Hannity. Both are blowhards who love to hear themselves talk. Take a little time and read the online newspapers from around the world. See what is happening in Africa or Asia. Maybe even South America. I know this will be tough for people who live inside the United States because the world revolves around you but try.

College Educated Workers

Thomas Friedman states that college educated workers grew through the 1980’s. What has happened since 1993 according to the National Science Foundation has been a 40% increase of college graduates, reaching over 40 million in 2003 up from 29 million. Of those 40 million about 12% have their degrees in science or engineering. Listening to the media I thought the world was coming to an end and America was getting dumber. During this time period the population of the United States population has grown from 257.7 million to over 300 million (NPG). According to The Olympian “in February 2005, USA Today reported that 64 percent of high school graduates go to college, but the number of Americans with bachelor degrees is only 29 percent.” (Yamamoto) I understand this because I like many Metro State students have returned to school to finish my degree.

According to the National Bureau of Economic Research since 1980 the supply of college graduates have been growing at a rate of 2% while the demand as been averaging “3.27 to 3.66 percent per year.” This has allowed the wage premium that college grads have enjoyed over high school grads. High schools grads also face increase competition from immigrants. The average American wage has increase from $21,027.98 in 1990 to $38,651.41 in 2006. A debate is raging over whether real income has been keeping pace with inflation as the real inflation has come under scrutiny. Official inflation does not include food and fuel. In researching this item I came across this item on Business Week online, “Real College Grad Wages Plummet 5.5%” for the second quarter of 2008, wages adjusted for inflation (Mandel).

2003 College Graduates in the U.S. Workforce: A Profile. National Science Foundation, http://www.nsf.gov/statistics/infbrief/nsf06304/

Negative Population Growth http://www.npg.org/facts/us_historical_pops.htm

Yamamoto, Julie. Only 29 percent of Americans have a college degree
http://www.theolympian.com/columnists/story/227366.html

National Bureau of Economic Research (NBER). The Rise and Fall of the College Graduate Wage Premium. http://www.nber.org/digest/jan08/w12984.html

Social Security Administration. National Average Wage Index
http://www.ssa.gov/OACT/COLA/AWI.html

Mandel, Michael. Real College Grad Wages Plummet 5.5%. Business Week
http://www.businessweek.com/the_thread/economicsunbound/archives/2008/07/college_grad_wa.html

China and America's Debt

Thomas Friedman comments in his book (The World is Flat, p.143) that the savings from cheap Chinese imports has “helped the Federal Reserve to hold down interest rates longer” thus allowing Americans to buy homes or refinance, using their homes as ATM machines to buy more toys. As I write this CNN Money online has a headline about the possible collapse of Fannie Mae and Freddie Mac called, “The $5 Trillion Mess”(Benner, title) What the Federal Reserve has done is to artificially lower interest rates below free market rates by manipulation of the currency. This helped to create the housing (credit) bubble that has been in the news. .

Friedman also says that Morgan Stanley estimates Americans have saved $600 billion by buying cheap imports. The analytical group Bridgewater Associates now estimates bank losses worldwide from the credit crisis to total $1.6 trillion. The United States have been running a trade deficit with China that currently is over $1.4 trillion. “In effect, every person in the (rich) United States has over the past 10 years or so borrowed about $4,000 from someone in the (poor) People’s Republic of China” (Fallow).

Because of the cheap interest rates Total U.S. Consumer Debt has grown from $1.69 trillion in the first quarter of 2000 to the most current numbers of $2.56 trillion in May 2008. Mortgage debt outstanding at the beginning of 2000 stood at about $6.9 trillion and today it stands at $14.7 trillion. Federal Debt has climbed to $9.2 trillion from$6.8 trillion. (Federal Reserve) China currently holds over $1 trillion of this debt. There has been talk of bailing out Fannie Mae and Freddie Mac of late. China presently holds $376 billion dollars in these company’s bonds that are subject to US government bailout (Shedlock), so much for the American taxpayer saving from cheap Chinese imports.

Federal Reserve Bank (2008). Statistical Supplement to the Federal Reserve Bulletin.
http://www.federalreserve.gov/pubs/supplement/2008/05/200805StatSup.pdf
http://www.federalreserve.gov/pubs/supplement/2004/01/200401StatSup.pdf

Shedlock, Michael. (2008). U.S. Taxpayer Bailout of China over Fannie Mae, July 11, 2008.
http://www.globalstrategywatch.com/independent-insight/85886366ea7628c1b9fc317567dd54e5/

Fallows, James. (2008). The $1.4 Trillion Dollar Question, The Atlantic Monthly, Jan/Feb 2008.

Benner, Katie. (2008). The $5 trillion mess, Fortune, July 12, 2008. Retrieved July 13, 2008.
http://money.cnn.com/2008/07/11/news/economy/fannie_freddie.fortune/index.htm?postversion=2008071209

Mauldin, John. (July 11, 2008). $1.6 Trillion and Counting, Thoughts from the Frontline. Electronic Mailing List

Reason I Left

Once upon a time there was this group of people who would meet. This group was lead by a self-professed “anointed” leader. The leader taught this class every week and talked about spiritual things. The beginning of the group was filled with many people but over time the group became smaller and smaller. Why? You see the leader would decide that people needed to be cleansed from the group so he would drive these people out. Being one of immaturity the “leader” would throw a temper tantrum and give the person the “cold shoulder.” For those not familiar with the cold shoulder it is ignoring a person to punish that person. Over the years the leader would treat people in this manner.

There joined to this group a young man who lacked knowledge of spiritual things and for many years this young man continued in this group. At times the man would disagree with the leader but mostly kept it to himself because he desired the friendship of the leader. On those rare occasion when the man talked about the disagreements with the leader the cold shoulder method of punishment was handed down. So this taught the man to keep things to himself even when he thought the leader was just plain wrong.

Well one day it happened, the man (after many years of bondage) was talking to the leader who was bloviating about something he had heard. The man went home and got to thinking about what the leader had said. The man foolishly decided to send his thoughts to the leader. The thoughts had helped the man in the past so he foolishly thought the leader would want to discuss these thoughts with him.

The man, who had learned much about freedom in Christ and is learning the love of Father, once again experienced the temper tantrum of anger, from the stand, and the cold shoulder of this leader. Why would this leader or any leader do this? Insecurity. Immaturity. The man had mistakenly written the note with the hope of starting a conversation with the leader. Foolish man he had not learned yet that self appointed religious leaders don’t care what you think even if you golf with him. The leader is only in love with himself and his self appointed “anointing.”

The man decided it was time to leave the group. What was different this time with the man? In times past the man would have kept quite until it blew over. Suffering under the leader's self appointed “anointing” and the cold shoulder of punishment. The change was the man had discovered that God loves him and desires an intimate relationship with him and that Father does not give “leadership” permission to treat his children in any way but love.

Let it be said the man does not hate this leader but still loves him and in many ways feels sorry for this leader for the leader judges people based upon them accepting his self appointed "anointing" and self created religious system.

Murray Rothbard at his best:

The basic root of the controversy over slavery to secession, in my opinion, was the aggressive, expansionist aims of the Southern "slavocracy." Very few Northerners proposed to abolish slavery in the Southern states by aggressive war; the objection – and certainly a proper one – was to the attempt of the Southern slavocracy to extend the slave system to the Western territories. The apologia that the Southerners feared that eventually they might be outnumbered and that federal abolition might ensue is no excuse; it is the age-old alibi for "preventive war." Not only did the expansionist aim of the slavocracy to protect slavery by federal fiat in the territories as "property" aim to foist the immoral system of slavery on Western territories; it even violated the principles of states' rights to which the South was supposedly devoted – and which would logically have led to a "popular sovereignty" doctrine.

Murray Rothbard
http://www.lewrockwell.com/rothbard/rothbard175.html

Lack of Future Growth in America

When I talk about “desire” I mean the people of the United States has become a nation of spenders. We love to consume. Our savings rate is around zero with it going negative at times. How does a nation build the means of production to compete in the world marketplace when it no longer saves? We have a negative balance of payments equal to about 6% of GDP and federal deficits running in the hundreds of billions of dollars. And to fund all this we have become a nation depended on the kindness of strangers, i.e. the Chinese, Japanese, oil producing states, etc. I grew up during the Cold War so the thought that Communists are funding our hedonism just seems strange to me. But China is a nation of savers. “A penny saved may be a penny earned, but in China a penny saved is usually invested in an infrastructure project or an increase in manufacturing capacity. China’s gross domestic savings rate, after averaging 40% or so of GDP for most of the 1990’s, has grown over the past couple of years to close to 50% of GDP (Prestowitz).”

Hu is saving in China? Prestowitz, Clyde. 2008
http://www.econstrat.org/index.php?option=com_content&task=view&id=169&Itemid=1

International Monetary Fund

The International Monetary Fund (IMF) was created in 1944 as part of the Bretton Woods agreement. The Purpose of Bretton Woods was to “design a postwar international monetary system” (Hoover). The US dollar was made the worlds currency. The job of the IMF was to stabilize the exchange rate when each country would tie its currency against the gold backed dollar. In 1971 Nixon took the dollar off the gold standard because of nations like France who kept demanding to exchange dollars for gold. From 1971 forward the US dollar and many of the world’s currencies have been allowed to float freely.

The way the IMF works is it allows governments to borrow US dollars in exchange for local currency. Congressman Ron Paul has been an opponent of the IMF even requesting the US stop funding the group. As Paul has said, “the IMF forces American taxpayers to subsidize large, multinational corporations and underwrite economic destruction around the globe” (Paul). The IMF has a long history of funding governments creating economic disasters. A recent example was the Argentine economic crisis in 2001. The IMF lent Argentina over $8 billion of US taxpayer backed loans.

The history of the IMF is one of creating problems. The problem with the IMF in my opinion is the government to government loans that are made. Giving money to corrupt leaders and then expecting them to act rational does not exist. As Congressman Paul states, “The only constituency for the IMF is the huge multinational banks and corporation” (Paul).

The better way is what groups like Kiva Loans (kiva.org) and Bill Gates Foundation that will loan money to individuals within these poor nations to build a business or buy additional farming equipment. Kiva loans is an organization that allows anyone to participate in helping people become productive.

The Case against the IMF. Hoover Institution. http://www.hoover.org/publications/epp/2845951.html?show=essay

Paul, Ron. Statement on Ending US Membership in the IMF, Feb 27, 2002.
http://www.house.gov/paul/congrec/congrec2002/cr022702.htm

Accounting has Changed

How has accounting changed over the last 25 years? When I started studying accounting in 1980 there was no accounting software available. I remember using columned green paper doing accounting problems and doing multiple transactions to cover it all. I would use T-accounts when figuring accounting issues. When spreadsheet software first came out (I think it was called Lotus 1-2-3) I remember asking a teacher if he thought it would change accounting. His answer was he didn’t think it would change anything. When Lotus 1-2-3- came out it was fantastic. It allowed the creation of financial statements so easily instead of using typing up on an 8x11 piece of paper, with correction fluid nearby. I would have to use charts created by the printing department for meetings instead of creating my own in PowerPoint presentation and I can import from other sources in doing it.

I remember when I went to work for a company that used an in-house accounting package. It allowed me to enter a transaction for both sales and accounts receivable in the same. Today the accounting packages available are so amazing. I use Microsoft Dynamics GP at work. GP is an Enterprise Resource Planning software package that allows me to track accounting, projects, human resources, etc. I can do payables, receivables, and general ledger. I can track fixed assets like never before. I don’t need to track these items within a spreadsheet anymore. I enter a payables transactions and it hits the general ledger, payables, vendor account all at one time. I can create projects that allow the tracking of costs and revenue from a particular customer. Today, because of software I can do more than twice what I once was able to do.

Crash of 1929

The stock market crash of 1929 may be the most famous bubble in America. I hold to the belief that the Federal Reserve’s monetary policy was to blame for the crash and the resulting Great Depression. During the 1920’s the Federal Reserve inflated the monetary supply to grow the economy. The result was lower interest rates than the free market would have allowed causing the economy to overheat. Then in August 1929 the Fed changed policy and raised the discount rate. This also occurred under Fed Chairman Alan Greenspan (Tech and housing bubbles). Speculators entered the market driving the price of stocks higher. It is estimated that approximately 600,000 speculators traded on margins.

The result was not good. On Monday Oct 9, 1929 the reporting could not keep pace with news of the fall. That Saturday margin calls started to go out. By Oct 19, Black Tuesday, shares were dropping vertically in price. The extent of Americans involvement in the stock market even surprised me. I always thought the initial collapse only affected a few but nearly 30 million families were participants in the stock market out of only 120 million people. Investment trusts were being created daily and using high leverage to speculate in the market. When the market started its fall margin calls were made to people unable to pay. By July 8, 1932 the market had fallen from a high of 452 to 58. General Motors had fallen from 73 down to 8. At that time GM was considered one of the best run companies in America.

What followed was an economic collapse as industrial production dropped over 50% and unemployment hit 26.7% in 1934. (Johnson)

Pongracis, Jr., Ivan. The Great Depression According to Milton Friedman

http://www.fee.org/publications/the-freeman/article.asp?aid=8132

Johnson, Paul. Paul Johnson on Rothbard. Ludwig von Mises Institute.

http://mises.org/article.aspx?Id=447

Plague in the Unites States

The Bubonic Plague’s entrance into the United States though minor in comparision to other nations was made worse by politicians. The history of the Bubonic Plague can best be described by Middle Age scholar Ibn Khaldun, who wrote, “the East and the West was visited by a destructive plague which devastated nations and caused populations to vanish” (Echenberg, 2002, p. 429). In recorded history there have been three Bubonic Plague pandemics. The first occurred in A.D. 542 (Justinian’s Plague) in the Eastern Roman Empire, starting in Egypt and attacking Constantinople killing millions and helping to bring about the destruction of the Empire. The second started in 1347 in Naples and spread throughout Europe in only 4 years in what became know as the Black Death. Estimates have ranged as high as half of Europe and the Middle East died. There has also been plague like epidemics reported in China starting with the Ming-Qing Dynasty, approximately 1590 until the 18^th century. The third pandemic emerged from the Himalayan region and traveled in South China including Hong Kong by 1894. It was from Hong Kong that the disease spread via British steamships and the rats they carried, finally arriving in San Francisco in 1900 (Echenberg, 2002).

The plague is caused by the pathogen Yersinia pestis. The pathogen is carried by fleas (Xenopsylla cheopis) and transmitted when a rodent is bitten. It is known that hundreds of rodents have been know to carry the infected fleas ranging from rats to rabbits. When the infected rodents get close enough to humans and the rodent host dies the fleas will migrate to humans in search of a blood meal. The key to human infection is getting within range of a hungry and infect flea. The death toll of infected humans without receiving antibiotic therapy is at least 60 percent (Echenberg, 2002). The plague in the United States followed a hierarchical effect by starting in port cities like San Francisco, Los Angeles and New Orleans and spreading into Arizona and New Mexico.

The first reported case of Plague in the United States was a Chinese man who was found dead on March 6, 1900. The Yersinia pesits was identified by the City Health Office. The infected lymph node was given to Dr. Joseph Kinyoun, Chief Quarantine of U.S. Marine Hospital Service in San Francisco. Dr. Kinyoun agreed that it was probably plague. This information was taken to the City Board of Health who immediately ordered the surrounding of a 12 block area of Chinatown, which consisted of overcrowded tenements, suffering severe poverty. What followed was a political firestorm against any idea that plague could exist in San Francisco. The attack was lead by the local newspapers and was joined by the governor of California Henry Gage who used terms such as, “plague scare” when speaking of it, fearing the damage it would do to business and tourism. Gage would continue his opposition right up until the time he left office. Another factor that hindered the investigation was the refusal of Chinese leaders to cooperate by hiding the plague infected bodies from authorities. It took until May of 1900 before these Chinese leaders would begin working with the city health authorities. In January 1901 the Secretary of the Treasury appointed a Commission to deal with the outbreak. A program of cleanup, the burning of clothing and bedding, and fumigation with sulfur was begun. By 1905 121 people would become infected with 118 dying (Lipson, 1972), with overall U.S. deaths hitting about 500 (Echenberg, 2002). How many lives could have been saved had politicians allowed health officials to do there job? As with HIV racism and expedience took priority over people’s lives.

Between 1925 and 1965 human cases of the Bubonic plague numbered fewer than two a year. That changed in 1965 when an outbreak occurred in the Navajo Reservation in northwestern New Mexico. Seven people were diagnosed that year with the plague. The number of cases increased with peaks every 5 to 8 years reaching a high of 40 in 1983. Between 1965 and 1989 308 cases of human plague was recorded, mainly in the southwestern United States with most of the infections occurring near the patient’s home including several cases of infected domestic cats. Rodent plague has been reported frequently over the years but with limited human exposure (Barnes, 1990).

In 1979 the City of Albuquerque and the Centers for Disease Control entered into a long term surveillance and control program with the goal of conducting annual surveys of animal and flea populations for evidence of plague activity and the use of Carbayl dusting of fleas to reduce the population within the Sandia Mountains. Another program was started with local residence being asked to report any unusual numbers of sick or dead animals. The study showed a total of 180 plague positives including 21 domestic cats. The result was the “reaffirming the Sandia Mountains as a hyperendemic area” (Barnes, 1990, p.45).

The Bubonic Plague has shown itself to be a resilient pathogen that has survived the millennia always waiting in the wings for the right time to strike again. Three times in recorded history this plague has produced devastation on humanity. Modern medicine has given us the ability to fight the disease with much success. Though we look through a glass darkly, the history of the plague has shown us a possible future. Used in the past as a biological weapon, catapulting corpses over city walls and dropping infected fleas from airplanes, the possibility exists today for such use by terrorists or nations set on destroying an enemy. Like so many other bacterium there has been “recent observation of the presence of multidrug-resistant plasmids, almost identical to those acquired by Y.pestis” (Stenseth, 2008, p.12). The possibility exists for a drug resistant Bubonic plague.

By focusing on the introduction of this killer in the United States I wanted to show that politics have no place in fighting these deadly zoonotics. A future pandemic of a plague like disease is real. History has shown we have not destroyed these menaces but have only kept them at bay.

Lipson, Loren George (1972). Plague in San Francisco in 1900. Annals of Internal Medicine, 77, 303-310.

Echenberg, Myron (2002). Pestis Redux: The Initial Years of the Third Bubonic Plague Pandemic, 1894-1901. Journal of World History, Vol. 13, No. 2, 429-449.

Barnes, Allan M. (1990). Plague in the U.S.: Present and Future. Proceeding of the Fourteenth Vertebrate Pest Conference 1990, University of Nebraska – Lincoln, 43-46. Retrieved from http://digitialcommons.unl.edu/vpc14/5

Gage, Kenneth L. (2000). Cases of Cat-Associated Human Plague in the Western US, 1977-1998, Clinical Infectious Diseases, 30, 893-900.

Ruiz, Alfonso (2000). Emerging Infectious Disease, Vol. 7, No. 3. Retrieved June 20, 2008, from http://www.cdc.gov/ncidod/eid/vol7no3_supp/ruiz.htm

Stenseth, Nils Chr. (2008). Plague: Past, Present and Future, PLoS Medicine, Vol. 5, No.1, e3