Assuming that the two major political parties that have held a near exclusive grip on power in the United States for well over a century retain their near deadlock on elective office, our next president will move directly from the Senate floor to the White House. That's something that rarely happens.
And the three senators in question fail to engage my interest. All three have voted to fund the war of aggression and occupation unprecedented in our history. All three have agreed with the idea of throwing money at a problem that wouldn't have happened if we hadn't bankrupted ourselves giving money away to those who least needed it.
Our economy's cycle of growth and recession repeating ad nauseum has a very simple explanation. At its root, of course, it's greed. But there's a very clear progression of events that leads to each recession. I explain this so you'll see why none of the major candidates (and minor candidate Huckabee included) seems fit to lead ahead from here.
One of the key concepts that makes capitalism possible in a world of defective beings is the promise of return on investment. Any economic activity on this world as we know it ultimately makes the same gamble. The farmer plants seed with the expectation of a crop. Bad weather, changes in the market, and the actions of other humans could reduce or even eliminate this expected return.
A good investor acts to eliminate as many risks as possible, or to find ways to mitigate the effect of certain risks. Planting fields with more than one crop means that some risks would affect one crop more than another, increasing the chance of a return in the face of unfavorable conditions. In business this is called diversification.
Insurance is another tool for managing risk. By pooling resources a society can prevent economic disaster for an individual whose risk became reality. We have developed experts who can investigate an economic activity (such as manufacturing) for risks that can be reduced or eliminated through an intelligent manipulation of the environment.
But as we keep looking for more ways to reduce risk we lose our moral compass and begin doing things to reduce personal risk that increase the risks to others. But like many such moral lapses this one eventually demands a repayment. In the system of capitalism the investor has ultimate power over how her money is used. This produces an upside-down condition that can ultimately backfire.
Naturally enough investors want to increase their return while keeping the resulting risk low. And so they put pressure on the managers they've hired to run the business to increase ROI (retrun on investment). And there are many such efforts that pay real returns. New efficiencies are found, material wastes are reduced, procedural barriers are removed.
But there's a mathematical limitation to how far such improvement can go. Those who've studied calculus are familiar with the concept "as the value approaches zero." Once you reach 100% efficiency you can't improve things any more. Now it's true that we never reach 100% efficiency, but the longer we attempt to do so the closer we get and we begin to approach zero inefficiencies. The percent gained by successive initiatives gets less and less.
Now if investors and managers understood that and stopped expecting large gains, this wouldn't be so bad. But they start looking for other ways to shave gains out of their economic operations. And when they get to this stage they start seeking short term gain at the nearly certain risk of long-term counterproduction.
Economic activity earns a profit only when consumers are able to pay for the goods and services they consume. In modern economics the price of any good or service isn't based on the cost of producing it but on "what the market will bear." One major option for producing growth is to increase the price. The other is wage pressure on workers. But wait a minute! Workers don't exist in a vacuum. The workers whose real wages have dropped over the last decade or so are the consumers who are expected to pay for goods and services.
When investors exert pressure to reduce the real wages of workers (usually through inflation) the workers are forced to cut back on consumption. But there's another way to make a profit. It doesn't involve providing either a good or a service, but it does help stimulate consumption to enable the two-way squeeze to continue a little longer. Certain investors provide credit which allows workers to make purchases they couldn't otherwise afford.
Credit is not a service because it does not benefit the consumer. It actually penalizes the consumer because it takes more money to make a purchase with credit than without. The beneficiary is not the consumer, but the investor who provided the credit.
This only works for a brief time, however. Once workers/consumers become "overextended" they may find themselves unable to afford the things they purchased which were beyond their means. This can lead to a default on the loan. Then the investors are out more than their interest; they're out the principal. If they should react by restricting credit, the whole house of cards can come down.
There is clearly some blame to be placed on the people who use credit to get things they can't afford. But the investors who provide credit bear a much larger burden of guilt. They are the ones that pushed credit on these underresourced consumers in the hope of making a larger profit. When their greed causes defaults they ask the government to tighten restrictions on bankruptcy so people will have to reach more extreme circumstances before they can gain relief.
But the system does have its limits and strains. An occasional recession helps to rebalance things, but if the government applies too much stimulus trying to keep the gravy flowing to investors, the system might overheat and crash into a full-blown depression. And the signs this time around aren't very good.
One of the most troubling signs is that George Bush says the country's economy isn't entering a recession. If he says something it's almost certainly a lie. And he does have a reason to lie about this. For the last seven years or so his policies have encouraged investors to think that the government was on their side when it came to increasing the rewards of investing.
The sub-prime mortgage issue is one symptom. Even though the risks were high, the rewards would also be high, because these less than reputable borrowers would have to pay higher interest rates. But the economy's false health led borrowers to think they could afford these high-interest deals.
The lenders applied a certain amount of pressure. You can't earn money by loaning money if people don't borrow money. So the consumer's decision to commit to such an obligation was influenced by advertising and marketing.
This time the card house has fallen. Banks are seeing large losses on sub-prime related securities. The artificially-inflated prices of real estate are dropping, a boon to future homebuyers, neutral for people who own the homes they live in (unless they sell before it's paid off) and a disaster for people heavily invested in real estate. But then the gains they'd been seeing were based on the abnormally high increase in real estate prices, and not on the actual physical improvement of the property.
That's the problem with the expectation that real estate prices will increase indefinitely. There is no real increase in value in most cases, Just higher prices. But over-inflated prices mean fewer people can afford to buy homes, and in some cases can't afford to rent them at rates their owners expect in order to earn a profit. When there's no one left to buy the land at an increased price, someone loses a lot of money.
The people who made the non-value-based profits do well if they get out just before the market correction. If they don't, then their losses are really paper losses only since the previous gains weren't based in actual value. But if someone who planned to live in the home they bought signed the deal just before the collapse, the money they pay for their house will be considerably greater than its price when they've paid it off. Those are real losses. But the losses aren't natural. The money goes to those investors who got out of real estate while the getting was good.
The working-class consumer has also been hit by energy prices. The recent jump in the price of oil has put a premium on all energry. So workers are paying more to heat and cool their homes; more to drive their cars to work and back, and more for the goods that arrive at their location in transportation powered by traditional energy sources. In short, the working class is in the middle getting crushed in both directions at once.
The "poor loser" investors will be peeved by this "recession" and will take their marbles home to play alone. This highly immature and irresponsible behavior will be ignored, because power in this world gravitates to people who already have it.
Money is power, and it will always act to maintain its power. (I clearly don't mean that inanimate money does or thinks anything, but the people who control it do act and think; and usually in their own short-term interest.
Back to the candidates. None of them have a clear enough view of this issue to be able to make real change. Most of them are significant investors themselves. Hillary recently "loaned" some five million to her campaign. You don't earn that much money simply by providing goods and services, so she is clearly an investor and would govern with their interests in mind. Obama certainly didn't get where he is by remaining a producer whose earnings are based on effective and efficient production.
John McCain may not be so bad in that respect, but he is a hawk committed to continue trashing our reputation and spending our children's futures by continuing our involvement in a completely unnecessary and counterproductive military operation. And he does belong to the party with a long reputation of pandering to investors at the expense of the rest of the country.
The former governor of my home state is something of a populist and could actually be a champion of the "little man" in government. But he presents a much greater threat than the others because of his support for policies that would shut down political and social dissent, enforce a narrow set of values on those that support them as well as on those that don't support them. He's charming, and he did a decent job at the state level, but he would be extremely dangerous with national power.
So who can I vote for? Nader? The two party system is too powerful to let an ousider like him actually win an office this important. Because of that people who vote for him might actually hand the general election to McCain and Co.
I know, we should be free to vote our true feelings and values; but until we break the two-party lock on power, people who stand on principle will always lose to people who vote their fears and prejudices and who are willing to compromise to exert power over those who disagree with them.
I'm not making a hard and fast judgement here. I'm torn on the issue. What needed to happen in Florida in late 2000 was for all but the two top vote-getting candidates to be removed from the ballot and for a run-off election to be held. Both Nader and Robertson would have been removed from the ballot.
Yes, that means Gore would have won, but compared to what we've had for the last seven years and to what we're about to experience regardless of who wins this November, that might actually have been bearable.
I did vote in the Arkansas primary. Here you're allowed to select your party when you enter the polling place. Of course I selected Democrat (the two parties are the only choices offered at the polls). And I voted for Barak Obama. I did so because he, unlike Hillary, didn't call me at home and ask for my vote.
Maybe some day our politicians will realize how immoral it is to seek to influence a voter's opinion. We should be allowed to make up our own minds based on our own values and preferences. Hey, dudes and dudettes, get off my case!!