Obama, You Have it Wrong
President Obama is doing a few things right. But when it comes to economics, he is doing a whole lot wrong. Very wrong. The coming articles intend to explain why his errors are so dangerous for the country.
March 6, 2009
Misconception Number 1 - The World Works From the Top Down
I suppose when people become part of an elite group that holds the power, they can eventually fool themselves in thinking that the world actually revolves around them. After all, their misconceptions about their own success are exactly why we have the mess today. The excessive accumulation of power by too few has erased many critical elements of a healthy capitalistic society.
Leave it to people of this warped ilk to think that the world cannot survive without them. But therein lies the problem. The beautiful thing about economics is you can't lie. Well, you can lie, but you can't lie forever. In a transparent system, lies are short lived, and quickly corrected. The pain is small when they get revealed. But in an opaque system, lies live a lot longer, with time to build up excess in the wrong places. Economics does not allow a lie remain hidden forever. The reason we have a huge pop in our economy right now is because a huge lie is being unwound. This unwinding is inevitable. The pain is necessary. It is moral. It is justified. It is essential - both the unwinding and the pain.
I have to believe that the Obama administration believes that the world operates from the top down, because they insist that the world needs their swift action (from the top) to save it. Now if they were talking about global warming or nuclear proliferation, I might take them seriously. But when they tell me that 'the economy would fail, and never recover, if they don't take strong, fast action.' . . . Really? The economy? Forever? You're kidding, right? I can only assume they must not understand what an economy is.
Jim Rogers said it best when he said 'there is no such thing as too big to fail.' He makes a point about the morality of free markets that needs to be repeated here. "In a free market, the incompetent are supposed to fail, so the competent can move in a take their assets. When the government tries to take money away from the competent (the tax payer) and give it to the incompetent, that is damaging to the overall market, not to mention immoral. It hurts the competetent, because it prevents them from moving in when they should." The code word here is bankruptcy. Nobody wants to utter those words, but it is not as bad as it sounds. We should be celebrating the concept of bankruptcy. It is one of the healthiest, and most vital concepts of our capitalist system. If the Obama Administration wants to deny the value and function of bankruptcy, they are robbing this nation of a critical ability to cleanse itself of incompetence. They are also failing to see how helpful this is in rewarding competence. That's the truly sad part, is they are not optmistic enough to see the tremendous well beneath them -- a well that can fill any vaccuum if they would simply allow it to happen.
Unfortunately, the Obama administration is so buried in the details, they can't move back far enough to see the macroeconomic concepts. This concept being preached by Jim Rogers is not nonsense. It's a concept about morality, and the efficient movement of power. It is precisely how the cream rises to the top in a competitive system. Since the cream has not been rising to the top the past several decades, we have been stuck with an entire population of incompetent CEO's running corporate America. They have grown used to not having any competition. This is why they are so blatantly overpaid, even when they do poorly. Now that they are truly failing, the flies are at the door, ready to move in and lay their eggs. You know, without flies, that shit just hangs around. The powerful incompetents are desperately trying to save themselves from annihilation. And who is helping to save them? The US Government.
Birds of a feather do hang together. Just remember this. If you help the incompetent, then that says something about your own competence. You cannot prevent their fall. You can only delay it. And if you delay their fall, you will stick to them like glue and fall with them. I would strongly suggest, Mr Obama, that you look for winners to support, instead of losers. That is the ONLY path to helping your country. It is your job to level the playing field, and let the dues be paid by those who create failure. Let in the flies, or be eaten by them. They may look nasty, but they serve an oh so critical function when there's stink in the air. And when they are done, I think you will see that the economy will not 'fail forever.' Whoever told you that was probably playing for the losing team. There is life after the flies do their thing. I promise the grass they leave behind will be surprisingly green, if you just let them do what they were put on earth to do.
March 6, 2009
Misconception Number 1 - The World Works From the Top Down
I suppose when people become part of an elite group that holds the power, they can eventually fool themselves in thinking that the world actually revolves around them. After all, their misconceptions about their own success are exactly why we have the mess today. The excessive accumulation of power by too few has erased many critical elements of a healthy capitalistic society.
Leave it to people of this warped ilk to think that the world cannot survive without them. But therein lies the problem. The beautiful thing about economics is you can't lie. Well, you can lie, but you can't lie forever. In a transparent system, lies are short lived, and quickly corrected. The pain is small when they get revealed. But in an opaque system, lies live a lot longer, with time to build up excess in the wrong places. Economics does not allow a lie remain hidden forever. The reason we have a huge pop in our economy right now is because a huge lie is being unwound. This unwinding is inevitable. The pain is necessary. It is moral. It is justified. It is essential - both the unwinding and the pain.
I have to believe that the Obama administration believes that the world operates from the top down, because they insist that the world needs their swift action (from the top) to save it. Now if they were talking about global warming or nuclear proliferation, I might take them seriously. But when they tell me that 'the economy would fail, and never recover, if they don't take strong, fast action.' . . . Really? The economy? Forever? You're kidding, right? I can only assume they must not understand what an economy is.
Jim Rogers said it best when he said 'there is no such thing as too big to fail.' He makes a point about the morality of free markets that needs to be repeated here. "In a free market, the incompetent are supposed to fail, so the competent can move in a take their assets. When the government tries to take money away from the competent (the tax payer) and give it to the incompetent, that is damaging to the overall market, not to mention immoral. It hurts the competetent, because it prevents them from moving in when they should." The code word here is bankruptcy. Nobody wants to utter those words, but it is not as bad as it sounds. We should be celebrating the concept of bankruptcy. It is one of the healthiest, and most vital concepts of our capitalist system. If the Obama Administration wants to deny the value and function of bankruptcy, they are robbing this nation of a critical ability to cleanse itself of incompetence. They are also failing to see how helpful this is in rewarding competence. That's the truly sad part, is they are not optmistic enough to see the tremendous well beneath them -- a well that can fill any vaccuum if they would simply allow it to happen.
Unfortunately, the Obama administration is so buried in the details, they can't move back far enough to see the macroeconomic concepts. This concept being preached by Jim Rogers is not nonsense. It's a concept about morality, and the efficient movement of power. It is precisely how the cream rises to the top in a competitive system. Since the cream has not been rising to the top the past several decades, we have been stuck with an entire population of incompetent CEO's running corporate America. They have grown used to not having any competition. This is why they are so blatantly overpaid, even when they do poorly. Now that they are truly failing, the flies are at the door, ready to move in and lay their eggs. You know, without flies, that shit just hangs around. The powerful incompetents are desperately trying to save themselves from annihilation. And who is helping to save them? The US Government.
Birds of a feather do hang together. Just remember this. If you help the incompetent, then that says something about your own competence. You cannot prevent their fall. You can only delay it. And if you delay their fall, you will stick to them like glue and fall with them. I would strongly suggest, Mr Obama, that you look for winners to support, instead of losers. That is the ONLY path to helping your country. It is your job to level the playing field, and let the dues be paid by those who create failure. Let in the flies, or be eaten by them. They may look nasty, but they serve an oh so critical function when there's stink in the air. And when they are done, I think you will see that the economy will not 'fail forever.' Whoever told you that was probably playing for the losing team. There is life after the flies do their thing. I promise the grass they leave behind will be surprisingly green, if you just let them do what they were put on earth to do.
