Rambling About Economics and How Much I Hate Whatever Our Country is Becoming

This post is about economics. It is going to be scattered and may not make much sense to those of you that do not understand how my mind works. That’s fine, read it anyway, and ask me questions. We can have a conversation. I’m not brilliant enough to have all the answers. I do have one thing going for me though. I can see the flaws. I can ask questions about why those flaws have not been addressed. I can and will do those things.

First I am going to address a common misconception. We do not live in a free market society. Many economists wish to blame various issues we are facing on the failure of the free market. The market hasn’t been free in a long time. Free implies unregulated. Our market is heavily regulated. I am not saying a market must necessarily be completely unfettered in order to work. But let’s not bullshit ourselves here. The current market isn’t free.

Some people will counter with the statement that while our market is regulated, it is deregulation that created the current recession. This is another mistake being made, I believe in most cases intentionally (among those that try to tell us what to think), for political reasons. Deregulation never happened. What happened was re-regulation. The worst kind of re-regulation. Everything was re-regulated so as to benefit major corporations and the banks, and to screw the average person. Close your mouth. I’m not finished yet.

Let’s look at the housing market. This is an example most will be familiar with. Quick lesson. Freddie Mac and Fannie Mae are government created private corporations. The corporations are owned by private individuals and stockholders, but have the backing of the government. In order to keep having the backing of the government, they have to pay careful attention to the wishes of the federal government, or they can lose that backing and they will be on their own (starting to see how the market isn’t even remotely free?). 

These companies buy mortgages from banks. Banks sell their mortgages because they can pocket profits quickly instead of waiting years. In the 1990s politicians decided they wanted more people to be able to borrow money. They then loosened the restrictions on what kinds of mortgages Fannie and Freddie could buy. They then began to set quotas saying they had to buy certain amounts of mortgages every year that were risky. Mortgages taken out by people that would have been denied previously because banks were not willing to lend out money to people who would probably not pay it back. This allowed the banks to lay that risk off by selling the mortgages to Fannie and Freddie. 

Normally these would be considered high risk, high reward investments. However, because of being able to sell to federally backed F&F, they turned into low risk, high reward for the banks. So what was the plan for when these mortgages started failing? Well, the federal government guaranteed that if F&F met the quotas, then the federal government would help mitigate the losses for mortgages that went bad. 

The federal government doesn’t have money. It is fully funded by the hard earned money of citizens of the United States. This is the socialization of risk and privatization of profits. The American people assume the risk, while the banks pull in profits regardless of how their lending practices play out.

Not only did the federal government do this. But major corporations such as J.P. Morgan figured out a way to take advantage of this in the private sector. Because the government was for political reasons pretending these investment practices were safe, that lead to bundles of this type of mortgage being rated as safe by the S&P 500 and Moody’s. So what private companies did is they created a similar situation. They would essentially insure their bad investments with companies like AIG. Insurance is normally heavily regulated but this had never been done before and everything was being done under the table so nobody really knew what was going on.

What was going on was that AIG was insuring insane numbers of these investments, without holding the recommended reserves in preparation to pay out should the investments fail. Having the investments insured allowed banks to lend more and more money, and nobody was keeping cash in reserves to cover the failure we now know was inevitable.

When the house of cards tumbled and it looked like major banks were going to crumble under the weight of their own irresponsible actions. The government stepped. With our money. This was absolutely necessary and the banks knew it was necessary. Why was it necessary? Well in 1999 we repealed Glass-Steagall. A bill introduced and passed after the great depression that made it illegal for investment banks (risk taking gamblers) to gamble with the money of people’s savings accounts. When that got repealed, massive numbers of consumer banks merged with massive numbers of investment banks. And the money they were lending that caused the crash was the money in the average joe’s savings account. If the government hadn’t stepped in, everybody would have lost everything again.

So come back to this, the socialization of risk, and the privatization of profits. If one of these major banks makes bad decisions, the American people absorb the losses, and when their bad decisions work out, the banks pocket the profits.

This is a gross simplification of everything that happened and I suggest if you wish to come to a better understanding of why everything is so messed up right now, you check out books by Ph.D.’s in economics. I’m just a humble college dropout.

I’m still not done though. All the above was to demonstrate what I mean by the socialization of risk and the privatization of profits, and thus demonstrate what I mean when I make a distinction between de-regulation, and re-regulation. The government didn’t just tell F&F  they could make these loans, they incentivised them to do so by threat of punishment should they not, and promise of reward if they did do this thing.

See how the market isn’t free? So if we don’t live in a capitalist country, then what is this? Well, it’s a new thing. Which is convenient for the politicians. When we were fighting fascists in WWII and communists during the cold war we ran our propaganda machines pretty hard against them. Neither of those things would fly in this country. Not blatantly.

So what we have is possibly worse. We have massive corporations that control the vast majority of wealth in this country. The total assets of the six largest banks in the country total 63% GDP. That is some incredibly buying power. If those banks fail by the way, we have seen, they will be bailed out with our money. When they make massive profits, they keep most of it for themselves. What do they do with this money? Well they’d like us to think they spend it all on jets and yachts, and expensive champaign. In reality, they leverage their buying power in the political marketplace. Around 90% of candidates elected in this country are those with the most money. Where does that money come from? Well of the greatest contributors to each of 2012’s presidential candidates. Goldman Sachs, Citigroup, J.P. Morgan Chase, and Morgan Stanley contributed to both of them. That’s just the official numbers. Who knows how many loopholes are exploited to ensure that major financial institutions can swing elections as they please? I do not. I expect it’s more than a few. 

So here is what we know. The major financial institutions have the greatest sway over who is elected to office (money). The politicians that have been elected with the money of those institutions recently re-regulated the financial industry to enable those in that industry to make a significant amount of money in the short term. The government also then handed over taxpayer dollars when the house of cards fell. 

Bank of America recently was found to be foreclosing on homes they couldn’t actually prove they owned. Last time I checked a poor person can go to prison for stealing a car. Bank of America was stealing the homes of thousands of people and they just got fined.

In the end, the name of this kind of government will be determined by future generations. For now, I’ll just have to sum it up by saying: I don’t know what to call it, but it sure does suck.

Cognitive Dissonance in American Politics

So, naturally after making a post about writing, I then don't post on my blog for a couple of months. I've been pretty busy lately, lots of things in life developing all at once, but that's not what I am going to talk about today. I've been thinking a lot lately about American politics, and the significant cognitive dissonance that exists within our major parties. One of the easiest ways to spot these issues is to look at the difference between the actions of politicians, and their platforms. Do their actions jive with what they tell us? If their actions across the board, are they just stupid, or is there some other agenda at play? What might that agenda be? The last question is almost impossible to answer and where conspiracy theories come from. I am not a conspiracy theorist, but I do believe that conspiracies exist. Is that cognitive dissonance on my part? I don't think so (obviously). Most conspiracy theories are pretty out there, and have no basis in fact. But just because the conspiracy theorists aren't right in their specifics, doesn't mean they are wrong about the existence of conspiracies. So, lets look at some of the dissonance. I am going to start with national security in this post. This will be a series because to address all the cognitive dissonance in American Politics is beyond the scope of a single blog post.

National Security Dissonances

Lets look at some of the actions of our government, and think about their reasoning for these actions.

The NSA catalogs all phone calls within the United States. They tell us that they do not listen to these calls, just record who calls whom. I will take them at their word for the purpose of this article. So they catalog all incoming and outgoing calls made through the major telecom companies. The NSA whistleblower Edward Snowden has been accused of treason in the media, and by certain opportunistic politicians that obviously never read the definition of treason, the only crime specifically defined in the Constitution of the United States because it was a favorite accusation of the sort of despotic tyrannies they were fighting against. More moderate figures have accused him of espionage, an accusation for which there is no merit, especially considering the definition of espionage in the law, which I will not spell out here. If you really care, look it up for yourself. I'm not a professor or reporter here purporting to spoon feed you all information. You are responsible for educating yourself. Regardless, the NSA and the United States Government has come down on Snowden for endangering human lives, putting our troops at risk, and compromising national security.

The TSA currently primarily operates at airports, though there has been talk of expanding the operations of the agency to bus stations, random checks on the highway and on the streets in major cities. In airports they scan our bodies to make sure we aren't carrying weapons. They pat down people (supposedly at random) that seem suspicious, and if you don't want to expose your body to low amounts of radiation, you are subjected to a much more invasive pat down.

New York City practices a procedure known as Stop and Frisk. Police officers stop people on the street that look suspicious (such as, a black person wearing a hoodie, which is super suspicious) and frisk them, search their bodies. This is a direct violation of the Constitution's protection against unwarranted searches and seizures.

Why do we do these things? Well, terrorism for one, we are told. We are trying to stop the crazy terrorists from terrorizing people. These terrorists may blow people up and in order to keep our citizens safe, we must invade their privacy, and pervert the protections of the Constitution because we are so concerned about the safety of our citizens. Never mind the warnings of our founders stating that those willing to give up freedom for security will receive neither and deserve neither. We want everybody to feel safe. Stop and frisk isn't intended so much to thwart terrorism as it is to "keep people safe" you know, except the innocent people whose daily life is interrupted by thug cops looking for any excuse to arrest them, even going so far as brutal treatment designed to get the person in question to resist even a little bit so they can take them in and pad their records.

Now lets look at other actions taken by the government that are dissonant with their reasoning for invading our privacy, and treating us like criminals.

The first thing that comes to mind is the situation in Syria. It has recently been discovered that the CIA and U.S. Special Forces have been providing the Syrian rebels with training. Now we are also going to begin supplying these rebels with sophisticated and powerful weaponry. Who are these rebels? Well, most of them are Muslim. A good portion (granted not all) of these rebels are Al Qaeda, or directly supported by that terrorist organization that has sworn to bring about our destruction. Even if not all the rebels we arm are terrorists, we will still arm all the terrorist rebels.

These rebels have shown their radicalism by summarily displacing, raping, torturing, and executing large numbers of Christians. I can give you a video of one of the rebel groups beheading an Eastern Orthodox Bishop. I don't post it here because it is profoundly disturbing but if you ask me for it, I will send it to you.

These are the people we are arming. They have sworn to destroy the infidel (read anybody that disagrees with them). This isn't limited to Christians. They will kill Atheists, Jews, Bhuddists, Homosexuals, Immodest Women, and anybody else that disagrees with them just as quickly as a Christian bishop.

So the U.S. government claims that Snowden has put American lives at risk, while they put weapons in the hands of people that have declared us enemies and will kill our soldiers, and civilians just as Al Qaeda did (remember, Al Qaeda and the Taliban were contingents we armed to fight the Soviets in Afghanistan, and here we are doing this all over again). The TSA, NSA, and various police departments and federal agencies treat American citizens like criminals in the name of national security while arming our enemies in the name of humanitarianism. If that's not cognitive dissonance, I don't know what is.

So the question I pose is, if the government isn't concerned enough about national security to abstain from arming terrorist organizations that have sworn to destroy our country, then what is their real reason for the erosion of our privacy, and their treatment of U.S. citizens as enemies? I don't know what the agenda is, but it seems like it's probably not benign.

Writing

Today I am going to write about writing. This post will probably be self indulgent. Consider yourself warned.

Writing is one of the most frustrating things you can ever decide to do with your life. Especially if you're a writer that reads, which all good writers must. Writing is unimpressive because it something anybody can do. It doesn't require money, anybody with an idea can start writing, especially fiction, these days it seems like half the world is working on a novel. But that's also the beauty of it. Great stories can come from just about anywhere, anybody, regardless of socioeconomic class, race, gender, what have you. Maybe even me some day.

I know I am not a great writer. Writing doesn't come naturally to me. I am not a genius born to tell stories. Writing isn't something I must do. Sometimes I wonder why I torture myself and then I remember. I do it because no matter how bad I am, no matter how much I hate the majority of what I write, I want to tell stories; and there is nothing like the feeling of writing something I am proud of, the rarity of that occurrence makes it even sweeter. Part of my motivation comes from wanting to write stories that I want to read. The other portion of motivation is derived from the admiration I have for history's greatest writers. Writing is the one experience I know I can share with them, it connects us. When you've read as many of the great works in western literature as I have, it's a double edged sword. I don't compare myself to other struggling first time authors, no, because what's in my head is some of the greatest literature ever written. I compare myself to Hemingway and Fitzgerald, Mark Twain, Dickens, Vonnegut, and I find myself lacking. But maybe on some level it does let me connect with them even more. The experience of writing certainly deepens my admiration for these great writers. Did they struggle? Did they strive to be  great? Did they compare themselves to other great writers and find themselves lacking? Did they care? Do I care?

Stephen King espouses in his book "On Writing" that there is a gulf between great writers and those that are merely good (he classifies himself as merely good). I agree. Great writers are both born with the natural capacity for greatness, and work at it with an obsessive tenacity. A bad writer can become a good writer, with perseverance, humility, and hard work. Maybe that's why I continue even though I despair every day at the amateur quality of my work. Because in the end, if I press forward, and work my ass off... maybe I can be merely good.

What the Boston Bomber Taught us About the Indefinite Detention of United States Citizens

I wish to write today on the topic of the indefinite detention of U.S. Citizens. This is a subject that has recently come to the forefront of national discussion with the tragic events of the Boston bombing. Upon the capture of the second suspect in the bombing two Republican United States Senators (John McCain and Lindsey Graham) began advocating for the indefinite detention of the suspect as an enemy combatant. They argue that under the provisions of the National Defense Authorization Act of 2012, U.S. Citizens may be detained indefinitely as enemy combatants when it is deemed that they have taken up arms against this country. I wrote to my senators and representatives against this provision in the NDAA back when it was up for a vote last year. I was assured by the office of two senators that the indefinite detention provision could not and would not ever be used against an U.S. Citizen.

Now it is clear, that despite the choice of the current administration to proceed with the case through traditional criminal justice means, the indefinite detention of a U.S. Citizen arrested on U.S. soil for a crime committed on U.S. soil is a possibility. I am distressed. While I am thankful that the Obama administration has not decided to invoke the ability to indefinitely detain suspect number two without trial, I should not have to be thankful for this. The indefinite detention of a U.S. Citizen without trial should never be on the table unless the citizen in question was captured on a battlefield while engaged in hostilities against the United States. No matter how heinous their crimes, citizens of the United States are entitled to due process of law under the Fifth Amendment to the United States Constitution, and a right to a speedy and public trial under the Sixth Amendment to the United States Constitution.

Some have argued that the suspects in question should never have been allowed to become U.S. Citizens. This is a matter that will no doubt be debated for some weeks but has no effect on whether or not they actually are citizens. Some have even argued that because they became citizens only in the last couple of years (or possibly in bad faith) they should not enjoy the rights of United States Citizens. Were these arguments successful, this would make all immigrants to the United States second class citizens, their status as “true” citizens would be up for debate, as would their access to the fundamental protections of the U.S. Constitution. This is a dangerous line of reasoning and it is troubling to me that two U.S. Senators seem so eager to set this sort of precedent. Regardless of the immense amount of evidence against suspect number two, under the law he is presumed innocent until proven guilty.

I am thankful that the Obama administration has decided to pursue the prosecution of the second suspect (who has now been officially charged) through normal means. But what about next time? What about when we have a less scrupulous president that is less concerned with upholding the constitutional rights of citizens? The constitution is supposed to limit the government’s power so that when democracy inevitably fails, and we elect a potential tyrant, their ability to damage this country irreparably will be curtailed.

I would ask you to set aside your emotions. The anger and rage we all feel at the killing of three and maiming of hundreds, to think about the greater implications of such drastic actions. Think about the implication of even having the potential to deny American Citizens their fundamental rights under the “appropriate” circumstances. The danger is that if there are appropriate circumstances under which to deny American Citizens their fundamental rights, then in the end there is no true protection of those rights, and our free society is lost.

A Short Interview With Myself Regarding the Motivations Behind my Desire to Engage in Philosophy

Why attempt to engage in philosophy when by modern standards, you are unqualified? You lack any demonstrable credentials, you have no degree.

Well there are no qualifications necessary to be a philosopher except the possession of a curious mind, and the desire to think critically. Whether or not people in modern culture will listen to somebody that lacks the credential of socially approved education is another question. The point of philosophy, however, is not to be heard. Qualifications can actually be a hindrance to philosophers. People in modern society rarely challenge somebody that possesses superior qualifications to their own on a subject in public, and being challenged is absolutely necessary in philosophy. In some ways, my lack of a college degree is an asset to me as a philosopher because people will challenge me frequently in a more strident manner. I welcome being challenged as that is the only way to grow intellectually. "Experts" are too often affronted by people challenging their authority on a subject about which they are ostensibly qualified to speak. They seek to shut down questioners with the weight of their years of study, and not the content of their arguments.

Why should anybody consider to what you have to say? Why not read Plato, or Kierkegaard or other established philosophers instead of spending time reading you?

Well it depends on whether the person is seeking to be a student of philosophy, or a philosopher. I would recommend reading established philosophers to anybody. I would never want somebody to choose between reading my writing and reading the writings of any great philosopher. However the only person for whom it a legitimate choice to just read past philosophers is the person that seeks to be a student of philosophy, and not a philosopher. Ludwig Wittgenstein said it best when he said “A philosopher who is not taking part in discussions is like a boxer who never goes into the ring.” The main advantage I have over the great dead philosophers is that I am alive. You can interact with me, we can discuss things, you can challenge me. You don’t have to ask an expert on me what I would have said, you can simply ask me, and we can have a discussion. That is the difference between doing philosophy, and studying philosophy.

Why do you wish to be a philosopher? You don’t have a degree, likely nobody will publish your philosophical essays or dialogues. What do you gain from this?

Few of the great philosophers of old were known in their time anywhere outside a few small intellectual circles. Most of these philosophers never made money from their philosophizing. It’s not really that sort of field. The great thing about intellectual circles is you don’t have to go to a college to find them, you can create them by finding other intellectual people that want to have conversations and do philosophy. Being a philosopher isn’t about being famous, it’s not about people 500 years from now reading my writings, what does that matter to me? I will be dead. No, what matters to me is getting the most out of life by thinking about the mysteries of human existence, our place in the universe, my purpose as a human being, my responsibilities to other human beings. Philosophy all goes back to Socrates, it is simply valuing the examined life over the unexamined life. I didn’t choose to do philosophy, I have to do philosophy. There is no other way for me to be fulfilled in this life. So I will philosophize and hope others will join me because as great as this conversation with myself has been, it gets boring all by yourself.

Philosophy is a big place, what aspects most pique your interest?

Right now it would have to be the distinct lack of concern with philosophy in our culture, and the damage the compartmentalization caused by modern education is doing to our society. I want to make the case for philosophy, and for changing cultural perceptions by changing how we teach our children to learn, and how to interact with each other and the world. Most of all I want to talk about things that other people want to talk about with me. I want to have conversations about everything, and write down my thoughts, share them with others and receive their thoughts on the subject in return. I love philosophy because it is such a big place, because the universe is a big place, and discovering how things are connected is the greatest adventure I can imagine.

Modern Entitlement: The Government as a Resource

Today I want to talk about what I believe to be one of the most dangerous trends in modern society. The view of the government as a resource. When one hears the terms “entitlement” or “welfare state” political rhetoric has trained us to think of the poor. Our minds have been trained to perceive welfare and entitlement as the domain of the welfare queen, a lazy person that pursues the life strategy of suckling at the teat of the government. These people do exist, though I would argue that the majority of those in need receiving some form of government aid take it in good faith, and why should they not? After all, entitlement is not, as we have been led to believe, solely the domain of the poor. Many of the wealthy, indeed some of the largest corporations in the world, also believe themselves to be entitled to free money. This is because the culture of entitlement in this country is far more pervasive than we have been led to believe. The poor are not the only people out there that seek government assistance to maintain the state of their existence.

The more extreme of the conservative pundits shout loud and long about all of the awful poor people that want the government to pay for luxuries such as housing and food. These same conservative pundits seem to ignore the other side of the coin, the entitled rich. We must ask ourselves why so much hullabaloo is made about one kind of entitlement, and not the other. Why are the poor not deserving of help and food, but few cry foul when the government subsidizes massive energy conglomerates, banks, oil companies, and agriculture corporations? This says nothing of our nation’s habit of propping up dictators and fellow democracies alike with foreign aid.

So, just how pervasive is this entitlement state of mind? How much money do corporations receive every year compared to the amount spent on social welfare programs? Which of the two types of entitlements is the most insidious? A study performed by conservative think tank “The Cato Institute” found that the cost of corporate welfare, while difficult to calculate, to the taxpayer totals at least $100 billion annually http://www.cato.org/publications/congressional-testimony/corporate-welfare-spending-vs-entrepreneurial-economy. The cost to the U.S. Taxpayer of social welfare programs? $422 billion according to http://www.usgovernmentspending.com/. This number includes assistance for families and children, unemployment, the unemployment trust, worker’s compensation, housing, and the earned income tax credit which goes only to the working poor.

What does this mean? The welfare programs for families and children cost taxpayers $110 billion, tax credits for the working poor cost around $160 billion. The rest of the programs are mostly temporary assistance programs to keep people from falling off a ledge. Family assistance programs cost the U.S. Taxpayer just $10 billion more than corporate welfare. Thus far the entitlement mindsets seem to be fairly equal monetarily, but which is more insidious? Lets look at the purpose of a family versus the purpose of a corporation.

The purpose of the family is to raise children, to provide them with opportunity and moral guidance, to love and care for each other. What happens when a poor family cannot sustain itself? They can become homeless, children can be taken and put into the foster care system which is already overloaded to the breaking point (and, by the way, also costs billions of dollars to operate). So the bulk of the cost of family assistance welfare, which goes to families caring for children, would likely be transferred to the foster care system when parents lose their children due to being unable to support them. What do we get in return for the investment? Fewer starving and homeless children, and more children in a loving family environment.

The purpose of a corporation is to provide customers with products and services, and thereby make a profit. What happens when a corporation cannot sustain itself? It goes bankrupt, the products and services it provided, if there is demand for them, will be provided by other corporations, often more efficiently, often at lower cost, benefiting everybody except those that ran the bankrupt corporation poorly.

Corporate welfare props up defunct corporations that do their jobs poorly and could be replaced by better and stronger corporations. We should not have a problem with this because corporations are not people. A corporation is not a child that is dependent on others for its existence. Corporations are not entitled to life. People are, if our declaration of independence is to be believed, entitled to life. We are not giving the poor a rich or lavish existence with our social welfare programs. We’re enabling them to eke out a meager existence in the hope that in the future, they, or their children, will become successful. This is a worthy investment. Propping up corporations that have failed at their only purpose, is not a worthy investment.

We, as a civilized society, must embrace the idea that we value human life enough to support those that cannot support themselves. However, I see no reason to continue to support bloated and defunct corporations so that their tired, outdated leadership can continue to pretend to be successful and buy another yacht. The most destructive entitlement mindset of today is that of those who possess more than any human being needs, and ask the government to keep intact the means by which they support their lavish lifestyles. The wealthy corporate welfare queen treats the government as a resource to be used to prop up a lifestyle to which they feel entitled and it’s time for that to stop.

Here we go.

God help us all, another blog. I haven't had a "blog" for years. Back then it was a stupid, self indulgent internet version of a journal or diary. Arrogant as we all are in youth, not realizing that diaries and journals are generally private because the world does not deserve to be subjected to a 16 year old's sycophantic musings on daily life. While all blogs are on some level self indulgent, you have no need to worry about being subjected to my musings on my private life. Instead I will post about writing, politics, culture, and life's great mysteries. Here are the blog's goals in a concise list.

1. This blog is for me, a place to flex my writing skills, facilitate conversation, and get easy feedback from friends and anybody else that might find me.

2. To begin the process of putting work into the public eye and provide prospective clients with a convenient place to sample my writing.

3. To provide myself with a place to express my thoughts in an organized and coherent manner and eschew the internet hell that is Facebook.

So, the motive, the goal in constructing this blog, is self indulgence, on purpose, with purpose; which makes it better, that's just science.