I spent the morning working on Black Friday Ads. This month I've had sales from Vann's Electronic in Missoula, and Love Lettering in Logan.
If sales go well, I might hit the road after the holidays in search of a free market group interested in health care reform.
My poll on the Medical Savings and Loan ended. I had two votes expressing interest in the idea.
I had been thinking about self-publishing the work. Publishing a printed work would cost $400 to $1000. If I had a product to sell, I might have more success getting heard.
My real hang up in publishing a book is that I strongly believe in the process of peer review. Writing a book before I have sufficient input is wrong.
Unfortunately, it is nigh impossible to get pier review when one has been driven from the local community as a pariah. Of course, this is what the progressive professors at the University of Utah intended when they falsified my test scores to keep me from obtaining the degrees of my choice.
I flunked three class one quarter for including the line "Workers of the world untie" in a criticism of Marx.
Anyway, Although I derived the Medical Savings and Loan by studying actuarial data, I don't have that information on hand anymore. I feel the work is too theoretic. I want more hard data. For example, I would like data showing the exact figures people pay out in health care to compare to premiums. This would prove that people can pay for the same care if they were allowed to keep their health care dollars.
The book includes too many unverified suppositions.
For example, I state that, for an insurance company to remain solvent, premiums must be greater than claims. But even an intuitive statement such as P > C must be backed up by data.
I need data to show that insurance companies that spent more than they took in went bankrupt!
IMHO, there is value in stating a theory, then testing it. This how the scientific method works. A person develops a theory, then tests it.
(I should say, this is how it used to work. Progressives control the University, and are busily working to change scientific theory more to their liking.)
This type of experiment is what I want to do. I want to prove that if a person put the $500,000 that they will spend on insurance over their life time into a savings account, that the person could buy a half million dollars in medical care.
I want to prove that if one put money in a grant program (as opposed to reinsurance) that the money could be spent on medical care in a more cost effective manner.
I don't like writing without data to back up wild claims like P > C, but an imperfect self published work stating the theory could be followed up by peer reviewed works with substance.
Anyway, I've been working on ads today. Even a tiny bit of cash would open up opportunities.
Friday, November 26, 2010
Thursday, November 25, 2010
The Medium is the Message
The other day, I came across an ad for a company that claimed to have the answered for the uninsured. The answer was a program that promised to deliver health care over the interet (for a modest subscription fee).
The idea is absurd.
Medical care must take place in direct person to person contact.
For that matter, the idea that health care is about people directly helping other people was the founding principle of the Medical Savings and Loan.
I have no intension of creating a computer program that will deliver health care. I am seeking a way that empowers people to maximize their personal resources so that they get the most of their care.
Reading the web site intro for this internet scam drove the point of why I am failing to get out the message about the medical savings and loan.
People see web posts and articles, but they end up confusing the medium with the message.
The reality is that the Medical Savings and Loan is an organic method to help people self-fund health care.
As it is an organic approach to funding health care, the interface is not a computer. The interface of the system is human beings.
Yes, the program deconstructs an insurance company. However, the program did not start with the math. The program started by an examination of the claims adjusters.
For the most part, claims adjusters are wonderful people who really want to help people get the best care. The structure of insurance puts claims adjusters in an adversarial role to both the patient and doctor.
This adversarial role exists because the adjuster's job is to defend the insurance pool. If one changed the orientation of the system so that the people owned their own resources, then the adjuster's job is to defend the assets of the patient. The adjuster becomes an advocate for the patient.
Simply changing the orientation of health care funding solved a large number of problems.
Pretty much all of the major complaints about insurance and socialized medicine fall away when we change the orientation of the system from group funding to self funding.
Anyway, it was with the health care advocate in mind that I developed the medical savings and loan.
It was with this health care advocate in mind that I developed the rest of the medical savings and loan.
The math is compelling. If one deconstructs health care pools into individual accounts, one creates a structure that better serves the people needing care.
Any attempts to implement a program depends entirely on the people. The interface of the system is face to face contact.
Anyway, I am stuck in a rut. As people tend to confuse the medium with the message, I fear that the only way to convey the program is within the same medium as the message ... face to face contact.
Face to face contact is very hard to pull off in a community where one is driven off as a pariah. Every day I eye the road and think about a direction to drive.
It is warm in Arizona, but I don't know anyone in Arizona.
Regardless, I am thinking of hitting the road after the holidays.
As for right now, I am adding internet coupons on an ecommerce site. Maybe, I could get some road money.
Subscription fees don't work for medical care. The reason is that people have different needs and will consume different resources.
A subscription service will need a large number of underserved chumps for each properly served patient.
A subscription service will need a large number of underserved chumps for each properly served patient.
The idea is absurd.
Medical care must take place in direct person to person contact.
For that matter, the idea that health care is about people directly helping other people was the founding principle of the Medical Savings and Loan.
I have no intension of creating a computer program that will deliver health care. I am seeking a way that empowers people to maximize their personal resources so that they get the most of their care.
Reading the web site intro for this internet scam drove the point of why I am failing to get out the message about the medical savings and loan.
People see web posts and articles, but they end up confusing the medium with the message.
The reality is that the Medical Savings and Loan is an organic method to help people self-fund health care.
As it is an organic approach to funding health care, the interface is not a computer. The interface of the system is human beings.
Yes, the program deconstructs an insurance company. However, the program did not start with the math. The program started by an examination of the claims adjusters.
For the most part, claims adjusters are wonderful people who really want to help people get the best care. The structure of insurance puts claims adjusters in an adversarial role to both the patient and doctor.
This adversarial role exists because the adjuster's job is to defend the insurance pool. If one changed the orientation of the system so that the people owned their own resources, then the adjuster's job is to defend the assets of the patient. The adjuster becomes an advocate for the patient.
Simply changing the orientation of health care funding solved a large number of problems.
Pretty much all of the major complaints about insurance and socialized medicine fall away when we change the orientation of the system from group funding to self funding.
Anyway, it was with the health care advocate in mind that I developed the medical savings and loan.
It was with this health care advocate in mind that I developed the rest of the medical savings and loan.
The math is compelling. If one deconstructs health care pools into individual accounts, one creates a structure that better serves the people needing care.
Any attempts to implement a program depends entirely on the people. The interface of the system is face to face contact.
Unlike insurance, the Medical Savings and Loan doesn't hold the money. People will have their own savings account in the financial institution of their choice. So, it is not an accounting program. It is the concept of structured savings to self-finance care.
The medical savings and loan is not a computer program. It is not a book, nor is it an accounting system. The medical savings and loan is about people working together face to face in a concerted effort to optimize their health care resources.Anyway, I am stuck in a rut. As people tend to confuse the medium with the message, I fear that the only way to convey the program is within the same medium as the message ... face to face contact.
Face to face contact is very hard to pull off in a community where one is driven off as a pariah. Every day I eye the road and think about a direction to drive.
It is warm in Arizona, but I don't know anyone in Arizona.
Regardless, I am thinking of hitting the road after the holidays.
As for right now, I am adding internet coupons on an ecommerce site. Maybe, I could get some road money.
Tuesday, November 23, 2010
Self Excluded by the System
David Horowitz likes to write on ways in which conservatives are systematically excluded from the teaching profession.
A response to Mr. Horowitz provided a very interesting insight into the fascist mindset of progressives. In support of ideological litmus tests in schools hippiepooter said: "it is you who excludes yourself from the employment."
Progressives are such ugly people. They will design a system in ways to exclude people, then cast dispersions at the people they exclude. "It's your fault that I am doing this horrible thing to you."
Sadly, progressives are so full of their own self-righteousness that they can pull these things off without rebuke.
A response to Mr. Horowitz provided a very interesting insight into the fascist mindset of progressives. In support of ideological litmus tests in schools hippiepooter said: "it is you who excludes yourself from the employment."
Progressives are such ugly people. They will design a system in ways to exclude people, then cast dispersions at the people they exclude. "It's your fault that I am doing this horrible thing to you."
Sadly, progressives are so full of their own self-righteousness that they can pull these things off without rebuke.
Monday, November 22, 2010
Summary of Reforms
Our financial institutions were designed to the desires of the central bankers--Not for the needs of the investing public.
Because of this our financial institutions artificially concentrate power in the hands of bankers while undermining the wealth creation process within the community.
The solution to this problem is to redesign financial products around the needs of the investing public.
We need actions. Not just complaints.
In this blog, I've made four very concrete proposals for financial reform. The common thread in these four reforms is that they replace financial tools geared to the needs of banks with tools geared toward the need of the investing public.
The reforms are:
The first two proposals are concrete ideas that could be implemented by small companies.
The OSRTX is more theoretical. It could be implemented by a collection of companies or investors seeking to share ownership in equities. The primary goal of this project is to demonstrate the short selling is the creation of anti-market regulations.
The Object Oriented Tax is a political solution. This program taxes an object between income and consumption. It combines the best of a progressive income tax with a consumption tax. Essentially, everyone will have two accounts: An Investment and Spending Account. The system charges a progressive tax when people transfer money from the investment to the spending account.
With the OOT, people can make their investment decisions without having to calculate the effect of taxes. People would have to pay a progressive tax on what they spend. The system empowers individuals in saving and investing. The system eliminates the capital gains tax, but taxes capital gains spend on consumption at a progressive income tax rate.
Even if I find no backers for thes programs, I believe a vigorous discussion of the reforms directly address the underlying problems with our current financial structure.
For example, the programs fit well in discussions about the difference between the free market and capitalism.
In the free market, the free mind of the individual is supreme. The theory of capitalism overemphasizes the role of paper money.
An investment firm could offer SEF-Liens as an alternative to mortgages. (A SEF-Lien is pegged to the local realty market. One would never see a house financially "underwater" because the lien would automatically drop in value if housing prices dropped.
Yes, it is true that businesses implementing either the Medical Savings and Loan or Share Equity Financing will make less profit per client than insurance or mortgages; however, people in need of financial services are likely to choose the products that offer best security.
I believe that, if the programs were implemented, they would be a hit in the market as they provide a better service to the public.
The structures discussed in this blog could be part of such an effort.
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Because of this our financial institutions artificially concentrate power in the hands of bankers while undermining the wealth creation process within the community.
The solution to this problem is to redesign financial products around the needs of the investing public.
We need actions. Not just complaints.
In this blog, I've made four very concrete proposals for financial reform. The common thread in these four reforms is that they replace financial tools geared to the needs of banks with tools geared toward the need of the investing public.
The reforms are:
- The Medical Savings and Loan: This reform replaces insurance with a system of structured savings and supplemental grants to secure medical coverage.
- Shared Equity Financing: This reform replaces mortgages with direct investment in housing.
- The Real Time Open Source Exchange is a product that replaces black box stock exchanges with an open source program that executes trades in real time. Executing the trades in real time eliminates naked short selling.
- The Object Oriented Tax. The object oriented tax is an interesting program that taxes an object between income and spending.
The first two proposals are concrete ideas that could be implemented by small companies.
The OSRTX is more theoretical. It could be implemented by a collection of companies or investors seeking to share ownership in equities. The primary goal of this project is to demonstrate the short selling is the creation of anti-market regulations.
The Object Oriented Tax is a political solution. This program taxes an object between income and consumption. It combines the best of a progressive income tax with a consumption tax. Essentially, everyone will have two accounts: An Investment and Spending Account. The system charges a progressive tax when people transfer money from the investment to the spending account.
With the OOT, people can make their investment decisions without having to calculate the effect of taxes. People would have to pay a progressive tax on what they spend. The system empowers individuals in saving and investing. The system eliminates the capital gains tax, but taxes capital gains spend on consumption at a progressive income tax rate.
Empowering the Investor
Each of these reforms arises from the same thought process which seeks ways to empower the individual in our economic system.Even if I find no backers for thes programs, I believe a vigorous discussion of the reforms directly address the underlying problems with our current financial structure.
For example, the programs fit well in discussions about the difference between the free market and capitalism.
In the free market, the free mind of the individual is supreme. The theory of capitalism overemphasizes the role of paper money.
Implementing the Reforms
It would be easy for small organizations to implement the first two reforms. I designed the Medical Savings and Loan as a method for reverse engineering an insurance company. A company seeking to reduce the cost of health care benefits could implement the Medical Savings and Loan.An investment firm could offer SEF-Liens as an alternative to mortgages. (A SEF-Lien is pegged to the local realty market. One would never see a house financially "underwater" because the lien would automatically drop in value if housing prices dropped.
Yes, it is true that businesses implementing either the Medical Savings and Loan or Share Equity Financing will make less profit per client than insurance or mortgages; however, people in need of financial services are likely to choose the products that offer best security.
I believe that, if the programs were implemented, they would be a hit in the market as they provide a better service to the public.
Conclusion
To restore the American experiment, tea party patriots simply must start engaging in a positive discussion of the ways that the free market and limited government can solve the problems created by our over centralized banks.The structures discussed in this blog could be part of such an effort.
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Sunday, November 21, 2010
Shorting our Way Into Debt
We all know that America has a debt crisis. This crisis is not simply the result of borrowers. The debt crisis is the result of a financial system that floods capital markets with easy money.
Notably, the fractional reserve lending system of the Federal Reserve multiplies the amount of debt. Banks lend out multiple dollars for each dollar saved. The Fed works like a lens systematically magnifying debt.
Perhaps the most pernicious effect of short selling is that it contributes to this debt crisis.
A short sell is a similar source of easy money. Short selling is not an investment in production, but a financial tool derivative of other's productivity. It is a paradox-ridden kin to a margin play.
When a person shorts a stock, they borrow a stock then sell it at market prices. The person who lent the stock for the short sale no longer has an investment a company. The investor has a loan that tracks the price of the stock.
These loans often take place without the knowledge of the investor. So, you might think you have 100 shares of GM, when really you have a loan to a third party that tracks GM's price.
When a short seller sells a stock, the short seller gets money. This easy money floods into other investments. Short sellers often hold the money in tools like government bonds or mortgage backed securities ... creating an artificial demand for these financial products.
(Short selling feeds the beast that crashed our economy)
The amount of easy money created by short selling is phenomenal. It is second only to the amount of easy money created by the Fed.
Hedge Funds use a formula for shorting. For example, some hedge funds with have $30 in shorts for ever $70 in investments. The amount of money being shorted is massive.
Following the short interest on stocks, I find it common for the short interest to be 20%, 30% or even 40% of the float for long durations.
For a trillion dollars in investments, one might see short sellers generate $200 billion in easy money through shorting.
Free-marketeers should be irrate about short selling. This is not wealth created by the re-investment of surplus production (as was described by Adam Smith). It is vast quantities of easy money created by the financial regulations that allow short selling.
Short selling (selling stock that does not belong to you) is a direct violation of the principles of property rights. The system has numerous perverse effects that muck up the process of generating real wealth.
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Notably, the fractional reserve lending system of the Federal Reserve multiplies the amount of debt. Banks lend out multiple dollars for each dollar saved. The Fed works like a lens systematically magnifying debt.
Perhaps the most pernicious effect of short selling is that it contributes to this debt crisis.
A short sell is a similar source of easy money. Short selling is not an investment in production, but a financial tool derivative of other's productivity. It is a paradox-ridden kin to a margin play.
When a person shorts a stock, they borrow a stock then sell it at market prices. The person who lent the stock for the short sale no longer has an investment a company. The investor has a loan that tracks the price of the stock.
These loans often take place without the knowledge of the investor. So, you might think you have 100 shares of GM, when really you have a loan to a third party that tracks GM's price.
When a short seller sells a stock, the short seller gets money. This easy money floods into other investments. Short sellers often hold the money in tools like government bonds or mortgage backed securities ... creating an artificial demand for these financial products.
(Short selling feeds the beast that crashed our economy)
The amount of easy money created by short selling is phenomenal. It is second only to the amount of easy money created by the Fed.
Hedge Funds use a formula for shorting. For example, some hedge funds with have $30 in shorts for ever $70 in investments. The amount of money being shorted is massive.
Following the short interest on stocks, I find it common for the short interest to be 20%, 30% or even 40% of the float for long durations.
For a trillion dollars in investments, one might see short sellers generate $200 billion in easy money through shorting.
Free-marketeers should be irrate about short selling. This is not wealth created by the re-investment of surplus production (as was described by Adam Smith). It is vast quantities of easy money created by the financial regulations that allow short selling.
Short selling (selling stock that does not belong to you) is a direct violation of the principles of property rights. The system has numerous perverse effects that muck up the process of generating real wealth.
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Saturday, November 20, 2010
Short Selling and Liquidity
Proponents of short selling repeat the theme that short selling improves liquidity.
All of my experience shows that the exact opposite happens. Short selling decreases liquidity.
Wikipedia (drawn 11/20/2010) defines "Market Liquidity" as "an asset's ability to be sold without causing a significant movement in the price and with minimum loss of value."
My experience is that when a short seller has a large block on the ask line, it is difficult to sell the stock without accepting a steep loss. I've often seen the case where a piece of bad news hits a stock. The short interest in the stock will explode and the price will tank. This reduces the ability of the common share owners to liquidate their stock.
I have noticed that short interest tends to jump just before planned sales of stocks. For example, when employee stock options vest, there is generally a jump in short interest prior to the vesting date dramatically dropping the price during the window when employees are allowed to exercise their options with planned sales.
Short interest increases whenever a company plans a secondary offering. The short sales are decreasing the liquidity of the stock.
Short sellers are like other investors. They want to sell high and buy low. As such short selling generally increase during market dips.
There was a massive increase in short selling during the liquity crisis of 2008. The prime time to short stock is when people are panicking or otherwise being forced to sell.
Yes, back in the 1800s when it took several days to execute a transaction, short selling helped improve the liquidity of stocks.
But when one has a system where transactions can take place in real time, there are few cases when short selling actually improves liquidity.
The most active short selling occurs when there is a distressed seller. In these cases short selling dramatically decreases the ability of the distressed seller from selling their stock.
All of my experience shows that the exact opposite happens. Short selling decreases liquidity.
Wikipedia (drawn 11/20/2010) defines "Market Liquidity" as "an asset's ability to be sold without causing a significant movement in the price and with minimum loss of value."
My experience is that when a short seller has a large block on the ask line, it is difficult to sell the stock without accepting a steep loss. I've often seen the case where a piece of bad news hits a stock. The short interest in the stock will explode and the price will tank. This reduces the ability of the common share owners to liquidate their stock.
I have noticed that short interest tends to jump just before planned sales of stocks. For example, when employee stock options vest, there is generally a jump in short interest prior to the vesting date dramatically dropping the price during the window when employees are allowed to exercise their options with planned sales.
Short interest increases whenever a company plans a secondary offering. The short sales are decreasing the liquidity of the stock.
Short sellers are like other investors. They want to sell high and buy low. As such short selling generally increase during market dips.
There was a massive increase in short selling during the liquity crisis of 2008. The prime time to short stock is when people are panicking or otherwise being forced to sell.
Yes, back in the 1800s when it took several days to execute a transaction, short selling helped improve the liquidity of stocks.
But when one has a system where transactions can take place in real time, there are few cases when short selling actually improves liquidity.
The most active short selling occurs when there is a distressed seller. In these cases short selling dramatically decreases the ability of the distressed seller from selling their stock.
Mortgage Backed Insecurity
Patrick Byrne of Deep Capture repeats an interesting rumor. The rumor is that a sizeable portion of the loans in the toxic mortgage-backed-securities bundles that crashed in 2008 were actually fraudulent loans. The "paperwork errors" holding up foreclosures are tiny things like houses that don't exist or mortgages that don't have liens on titles.
Possibly some of the bad loans aren't just loans made to people who can't repay, but were fraudulent loans from the start.
The convolutions of mortgage backed securities, CDOs and credit default swaps make my eyes curl up in their sockets.
However, this much I know.
These bizarre derivatives all came from the insurance industry.
The idea behind a mortgage backed security is that centralized banks can manage risk by bundling large number of mortgages into packages that are then traded on the market.
Freddie Mac and Fannie Mae are GSEs (Government Sponsored Enterprises) that bundled, insured and served as an exchange.
The exchanges created a convoluted complex of derivatives such as CDOs and credit default swaps to facilitate the trade of the securities and promised the ability manage risk.
The exchange system for mortgages failed miserably.
I repeat that. The exchange system for mortgages failed.
The exchange system for mortgages failed.
The exchange system for mortgages failed.
The exchange system for mortgages failed.
The heart of ObamaCare, and other current approaches to health care reform replicate the failed centralized exchange system of the mortgage industry.
The system where traders sit in towers and speculate on the risks of others will simply replicate the failed mortgage system. It will be rife with fraud while those needing care will be spun off onto the public coffers.
The better approach to health care reform is to march in the opposite direction. Rather than created convoluted group pools in which the elite control health care, we should develop a system where people self-funded their care (with supplemental grants and loans).
Hmmm, I wonder if anyone has come up with such a thing.
I've watched the news, read the papers, hit the tea party web sites.
I haven't found any.
Hmmm. If only some would work on such a system, it would be great.
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Possibly some of the bad loans aren't just loans made to people who can't repay, but were fraudulent loans from the start.
The convolutions of mortgage backed securities, CDOs and credit default swaps make my eyes curl up in their sockets.
However, this much I know.
These bizarre derivatives all came from the insurance industry.
The idea behind a mortgage backed security is that centralized banks can manage risk by bundling large number of mortgages into packages that are then traded on the market.
Freddie Mac and Fannie Mae are GSEs (Government Sponsored Enterprises) that bundled, insured and served as an exchange.
The exchanges created a convoluted complex of derivatives such as CDOs and credit default swaps to facilitate the trade of the securities and promised the ability manage risk.
The exchange system for mortgages failed miserably.
I repeat that. The exchange system for mortgages failed.
The exchange system for mortgages failed.
The exchange system for mortgages failed.
The exchange system for mortgages failed.
The heart of ObamaCare, and other current approaches to health care reform replicate the failed centralized exchange system of the mortgage industry.
The system where traders sit in towers and speculate on the risks of others will simply replicate the failed mortgage system. It will be rife with fraud while those needing care will be spun off onto the public coffers.
The better approach to health care reform is to march in the opposite direction. Rather than created convoluted group pools in which the elite control health care, we should develop a system where people self-funded their care (with supplemental grants and loans).
Hmmm, I wonder if anyone has come up with such a thing.
I've watched the news, read the papers, hit the tea party web sites.
I haven't found any.
Hmmm. If only some would work on such a system, it would be great.
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Friday, November 19, 2010
No One Can Listen
Harry Markopolis is an option trader who figured out that Bernie Madoff's hedge fund was a fraud decades before Madoff's ponzi scheme crashed in multibillion dollar financial scandal. This last year Markopolis penned a financial thriller titled: "No One Would Listen" (buy at Overstock.com) which details his frustrations as he tried to convey his discovery to the financial community.
He talks about how he brought his information to the SEC, the press and others, but no-one would listen.
I've had similar problems throughout my career where I have very clear ideas to communicate, and I am simply unable to communicate the idea.
I've come to the conclusion that it's not a simple case that no-one will listen, but that our leaders have dinked around with the language to such an extent that no-one can listen.
The modern era has been full of intellectuals who sought to manipulate discourse at a foundational level. For example, Hegel, Marx and modern progressives love the term "sublate." This is a process in which a term gets turned into its opposite.
The process is ever so clever; however, as progressives grub power through a systematic undermining of our language, we lose the ability to communicate with each other.
So, the power of the Aristotelian tradition was not so much that Aristotle created a superior method of reasoning, but that he created a relatively clean method for people to communicate their reasons.
Whenever there is a society where the Aristotelian method clicks, people are able to communicate with each other and accomplish great things. When intellectuals resort to manipulating the language to gain power, the ability to communicate dissipates and the society diminishes.
He talks about how he brought his information to the SEC, the press and others, but no-one would listen.
I've had similar problems throughout my career where I have very clear ideas to communicate, and I am simply unable to communicate the idea.
I've come to the conclusion that it's not a simple case that no-one will listen, but that our leaders have dinked around with the language to such an extent that no-one can listen.
The modern era has been full of intellectuals who sought to manipulate discourse at a foundational level. For example, Hegel, Marx and modern progressives love the term "sublate." This is a process in which a term gets turned into its opposite.
The process is ever so clever; however, as progressives grub power through a systematic undermining of our language, we lose the ability to communicate with each other.
So, the power of the Aristotelian tradition was not so much that Aristotle created a superior method of reasoning, but that he created a relatively clean method for people to communicate their reasons.
Whenever there is a society where the Aristotelian method clicks, people are able to communicate with each other and accomplish great things. When intellectuals resort to manipulating the language to gain power, the ability to communicate dissipates and the society diminishes.
What is Capital?
This post is a reply to a tweet.
Before engaging in high level debates, it is useful to think about the terms used in the debate.
For example, we often use the term "capital." But what exactly does one mean by "capital"?
Wikipedia we find the term capital referring to different things. In classical economics it referred to a real physical thing ... a factor of production.
In Marxian economics capital refers to an abstract entity called "money."
It is possible to create or destroy money without actually producing any physical benefits. This is what the Federal Reserve does.
In common discourse, people tend to use a muddled definition where it refers to both the physical factor of production and the money used in investment, but in actually trying figure out how things work, one finds that different definitions of capital work differently.
Things become even more convoluted with the absurd convention of using the term "capitalism" to refer to the free market economic system favored in the United States.
Before engaging in high level debates, it is useful to think about the terms used in the debate.
For example, we often use the term "capital." But what exactly does one mean by "capital"?
Wikipedia we find the term capital referring to different things. In classical economics it referred to a real physical thing ... a factor of production.
In Marxian economics capital refers to an abstract entity called "money."
It is possible to create or destroy money without actually producing any physical benefits. This is what the Federal Reserve does.
In common discourse, people tend to use a muddled definition where it refers to both the physical factor of production and the money used in investment, but in actually trying figure out how things work, one finds that different definitions of capital work differently.
Things become even more convoluted with the absurd convention of using the term "capitalism" to refer to the free market economic system favored in the United States.
Definition of Middle Class
I believe that the distribution of wealth is far more important than the distribution of income.
Income refers to the amount of money that a person receives in a year. Individual wealth refers to the resources that one owns over a life time.
In the scheme of things, one's income is derivative of ones wealth. Income is simply a slice of one's life long wealth.
I contend that if a society has a healthy distribution of wealth, it will naturally have a health distribution of income.
Conversely, a society with a healthy distribution of wealth might have an uneven distribution of income as people make different amount during different years of their life.
My last post spoke about the changing definition of the Middle Class.
The original definition of middle class was based on the distribution of wealth.
One could split the ancient regime into three primary classes. There was a small ruling class, a very large working class of peasants and workers and a middle class between the two.
The ruling class derived its wealth and power from the state. The working class sold its labor for subsistance.
The middle class learned to re-invest the proceeds of the labor to improve their productivity. This middle class of merchants and manufacturers re-invested the profit from their endeavors to build capital.
Note, both the ruling class and working class were largely dependent on the state. As the middle class built capital, it gained a certain amount of independence from the state.
Intellectuals despised this middle class with its independence.
Because this despised middle class was very good at creating wealth, it systematically pulled millions of people out of poverty and the ranks of the capital owning middle class swelled.
In this traditional paradigm, the term middle class (bourgeoisie) was based on the distribution of wealth. The distinguishing feature of the middle class was that it owned and controlled capital.
Progressives hate this property owning middle class with a deep abiding passion.
Progressives took a tool developed by Hegel and perfected by Marx called sublation. Sublate is a process which one can use to turn a term into its opposite.
The defining characteristic of the middle class was the ownership of capital (its wealth). Progressives simply made income, not wealth, the defining characteristic of wealth.
Income, like most statistical phenomena, falls into a simple bell curve. Progressives took to calling the middle section of the bell curve of income "The Middle Class."
For a variety of economic reasons, the reported incomes of the ruling class, middle class and upper segment of the working class will fall in the middle of the bell curve of income. The really successful business owners fall in the upper section of the bell curve, unsuccessful workers make up the bottom of the bell curve.
By changing the focus of the middle class from wealth to its derivative income, progressives successfully sublated the term "middle class."
Middle class no longer refers to the productive business owners who built up the wealth of the nation. It now includes the parasitic ruling class and some of the higher paid workers.
The term "middle class" now means its opposite. The group of capital owners who sat between the rulers and working class is now in a separate vilified class, while the proletariat is lionized as the middle class.
Of course the progressive definition of middle class is absurd. By simple economic laws, most people will fall in the middle of the distribution of income.
It is the distribution of capital that matters! With a centralized economy, control of the wealth of the nation falls into an increasingly small number of very corrupt hands.
While progressives pound the sublated definition of "middle class" the real middle class that gave us our prosperity is being systematically destroyed.
Income refers to the amount of money that a person receives in a year. Individual wealth refers to the resources that one owns over a life time.
In the scheme of things, one's income is derivative of ones wealth. Income is simply a slice of one's life long wealth.
I contend that if a society has a healthy distribution of wealth, it will naturally have a health distribution of income.
Conversely, a society with a healthy distribution of wealth might have an uneven distribution of income as people make different amount during different years of their life.
My last post spoke about the changing definition of the Middle Class.
The original definition of middle class was based on the distribution of wealth.
One could split the ancient regime into three primary classes. There was a small ruling class, a very large working class of peasants and workers and a middle class between the two.
The ruling class derived its wealth and power from the state. The working class sold its labor for subsistance.
The middle class learned to re-invest the proceeds of the labor to improve their productivity. This middle class of merchants and manufacturers re-invested the profit from their endeavors to build capital.
Note, both the ruling class and working class were largely dependent on the state. As the middle class built capital, it gained a certain amount of independence from the state.
Intellectuals despised this middle class with its independence.
Because this despised middle class was very good at creating wealth, it systematically pulled millions of people out of poverty and the ranks of the capital owning middle class swelled.
In this traditional paradigm, the term middle class (bourgeoisie) was based on the distribution of wealth. The distinguishing feature of the middle class was that it owned and controlled capital.
Progressives hate this property owning middle class with a deep abiding passion.
Progressives took a tool developed by Hegel and perfected by Marx called sublation. Sublate is a process which one can use to turn a term into its opposite.
The defining characteristic of the middle class was the ownership of capital (its wealth). Progressives simply made income, not wealth, the defining characteristic of wealth.
Income, like most statistical phenomena, falls into a simple bell curve. Progressives took to calling the middle section of the bell curve of income "The Middle Class."
For a variety of economic reasons, the reported incomes of the ruling class, middle class and upper segment of the working class will fall in the middle of the bell curve of income. The really successful business owners fall in the upper section of the bell curve, unsuccessful workers make up the bottom of the bell curve.
By changing the focus of the middle class from wealth to its derivative income, progressives successfully sublated the term "middle class."
Middle class no longer refers to the productive business owners who built up the wealth of the nation. It now includes the parasitic ruling class and some of the higher paid workers.
The term "middle class" now means its opposite. The group of capital owners who sat between the rulers and working class is now in a separate vilified class, while the proletariat is lionized as the middle class.
Of course the progressive definition of middle class is absurd. By simple economic laws, most people will fall in the middle of the distribution of income.
It is the distribution of capital that matters! With a centralized economy, control of the wealth of the nation falls into an increasingly small number of very corrupt hands.
While progressives pound the sublated definition of "middle class" the real middle class that gave us our prosperity is being systematically destroyed.
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