The Boom and the Bust

The boom and the bust of the market is like the ebb and flow of a stream.

Look at the flow of a stream as consumer demand. It is a constant in some degree, larger at some times, lesser at others; if it dries up, then all around it dies from no water. The mountains and valleys that form the tributaries, that are innovations, which contribute to the flow of the stream and are brought into consumer demand. These innovations, like the flow of water from the mountains out to the sea have their own birth, life and death as they form on their way to the stream, flow with the stream until the stream expels it out to the sea; e.g. the Model T being built, mass produced, and then phased out - replaced. There is one more part to consider, and that is the dam – the marketplace. The marketplace is where consumer demand builds, the various innovations are available for various consumers; it pools the innovations, yet also provides an outlet to expel that which is no longer desired in the market, such as the Model T being ousted from the marketplace when newer, better autos became available.

The marketplace, in conjunction with consumer demand and innovation regulates itself. When a new innovation is available, such as Ford replacing horse buggies, others seek to participate in the demand, and General Motors among other auto manufacturers add their own in their tributary to the stream of consumer demand. The level in the dam rises. Eventually, the dam rises too much, there is too much input and the release is increased flushing out the excess. The beginning is when prices are high with lesser supply but higher demand; the middle is where more supply is offered by those seeking to profit off the demand; the end is when there is more supply than demand and prices are at their lowest. There is no boom, no bust, just small fluctuations.

It’s an efficient system, and takes care of itself with its cycles, its ebbs and flows. However, there are ways of messing up the system, and the biggest way is through governmental influence introducing artifice into the marketplace; it is by an outside influence altering the cycles, and that only can bring problems for the marketplace and all those who are in it.

For example, the government may influence it in two main ways: trying to stimulate production, more of what comes from the tributaries; controlling the consumption, that is regulating the release of the dam.

Through stimulating production, the State is giving that which isn’t otherwise marketable a false place in the market, siphoning water from one route that produces more and routing it to a dead zone, such as re-routing a creek from an area of lush vegetation so that parched earth may get wet; the lush vegetation suffers, while the parched earth gets wet, and may eventually produce something, but not as much if the water went to grow that which was already growing. An example here is how much was lost across the planet for ‘green’ jobs. They may be marketable at some point, but now they’re not: see Solyndra.

Through controlling consumption, the State is blocking the release of the dam and not letting the prices change to how the stream dictates. This release control is done in two ways: stopping the release, or forcing the release to be too much. Keeping the release open beyond what the marketplace desires keeps the price too high, and as its too high to stay in the marketplace, it quickly goes out and the marketplace doesn’t built; consumers don’t consume as much and this can be seen in minimum wage laws, licensing fees and other regulations that increase the cost of business but do not actually contribute to the process of business.

This brings us to the most damaging part, and that is when the release of the dam has been jammed shut, and the marketplace just builds. This is the bubble that will burst. Without a release, the marketplace gets flooded with goods with higher prices than what the market says it should be. It wants to expel the excess, but it can’t because the State blocked the release. So, more builds in the marketplace, and it continues to build; the housing market is an example of this. The demand for houses was high, and the prices were rising so more got into the housing market. The more that enters the market, the more the prices should go down; the release should be triggered. However, with the blocking of the State, the marketplace couldn’t get rid of the excess so it only grew. Things can only grow for so long; if the dam doesn’t break altogether, it will overflow. That is the burst bubble. The market is correcting itself and trying to get the prices to where they should be. With the artificially high prices being what was invested in, those are the prices people agreed to, but after the correction began, and the real market value comes to the fore is when people lose their equity.

Those are the only things the state can do in the marketplace. Stimulate that which the market says isn’t ready to be marketed in one of three ways, or worse and compounding, blending the three. If the marketplace was left alone, the basic fluctuations of supply and demand would take care of it self; with the interference of the State, bubbles are created and great amounts of wealth are lost.

Let’s keep the government in its proper place: protecting individual rights. When it tries to get into the field of business outside of rights violations, it will only hamper the market.

The Biggest Problem in Politics

The biggest problems with legislators, is that they pass laws.

They’re not the worst things in the world, but career politicians are a definite negative factor in society. What is a career?—a career is chosen path, profession or occupation. Being in a profession, one wants to be productive; what is it to be productive politician?-worse, what is it to be a productive legislator?

There are some areas of governmental work where one can make a career: military or law enforcement: police and judges. However, where governmental careers create problems are when they are in the executive or legislative branches. There will likely always some members of society that may decide rights violations are appropriate, so there will always be a need for police. Even moral people may come to disagreements on terms, so aside from criminal prosecution, judges are needed. To deal with criminal acts and civil disagreements, it can be daily work.

What do legislators do? What more do legislators need to add? Legislative laws are to reflect moral laws in application in society, i.e. not allowing, and prosecuting violations of individual rights. If that law protecting individual rights is set, what more can a legislator add? When the principle has been set, only the superfluous may be added. If someone murdered another, then they should be punished (after being judged guilty) for the act of murder; the principle of the right to life was violated, and that violation is to be punished. Adding the superfluous to that principle, e.g. a ‘hate’ crime to justify a more severe sentence, or for a lesser sentence, maybe someone was ‘mentally impaired.’

With legislators getting into the situation, the principle is no longer enough. Context may have been given consideration in the process of a trial, where the jury of peers may weigh the validity of said context, but with legislators preempting the judicial system, what emerges a formula created by someone outside of the prosecution of the trial. It is also a justification of the legislator being able to legislate, giving the image that they should continue to legislate in society, and in more areas in society.

What happens when the legislator legislates in other areas?—further intrusion into the lives of those in society, denying them to take their own context into consideration, and be told what is acceptable by the distant legislator. A couple of examples include the minimum wage and rent control. If someone is short on money and needs some earn some supplemental income, but the potential employer that has work that is only worth a wage that is not as much the minimum wage, then his work remains incomplete and the one short on funds, remains short on those funds. With a ceiling on what can be charged on renting a room, then more can afford it, but there are consequences with that as well and not just the goal of more people getting a room like the legislator wanted. With the prices being held artificially down, then more can afford to rent, and rent on their own where they might have roomed with another, and more do not have a room at all. With the limit on what can be earned, there won’t be the incentive to offer more rooms, so the supply will not increase, but the demand will have increased. With an increased demand, but same supply, concern of quality and upkeep will be less for it isn’t worth the same investment, and if someone doesn’t like it there will be another in line who will accept the lesser quality, cheaper room.

Legislators keep themselves busy; No Child Left Behind, Obamacare, drunk driving laws, subsidies, the HUD, and each of these programs/laws have consequences far beyond the hyped goal pontificated by the legislator.

But, people see the busy law-makers and applaud ‘look at how productive they are.’ They have been productive, and cumulative; that which previous law-makers create remain as laws until a following law-maker works specifically to overturn the earlier laws. The federal tax code has close to 80,000 pages – how all those legislators have kept busy. Each code is a restriction, barrier or at the very least, a ‘hoop to jump through’ in order for ‘free’ people to associate with each other in business and employment.

Politicians were not to exist in that sphere for a career – they were to be living their lives and coming to serve the public, to return to their lives. But with the push for production, a great trait for the private sector, legislators’ production comes with new laws/codes/regulations that have with them the threat of a gun behind them. A body will die from a thousand cuts; a State will die from a thousand laws.

We need less productive legislators. We need less productive government, for a 'productive' government is one that is busy governing in our lives, meaning leaving our lives less free.

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On foreign perspective…

Consider if you will, Mexico, having a problem with someone in the US (Sheriff Joe Arpio, notorious on immigration, for example), and to deal with their problem, the Mexican military began shooting rockets into Arizona, killing some US citizens while destroying US private property and infrastructure. On top of that, as the Mexican military continued to step up their attacks on trying to get Arpio, began building bases, enforcing their legal systems in suburbs of Phoenix. This would be a foreign country initiating attacks upon US soil, targeting a US citizen while taking over US land. Who’d be pissed at Mexico?

Now, let’s add to the aforementioned, with the Mexican military’s desire to get Arpio’s network of like-minded sheriffs, began expanding their range of attacks and the number of bases, including taking over Mt. Rushmore, the Alamo, and the Washington and Lincoln monuments. Think more would be pissed at Mexico?

Switch it around, and that would be the US in various areas in the world. Some areas welcome our presence, but some do not: a foreign power coming into and taking over one’s country (therefore their sovereignty), causing the loss of life and property.

We in the US have our first amendment, so how would we like a theocracy imposed whether it was by some Iranian mullahs who used force to impose Sharia law, or some Roman priests to impose laws based from the Old Testament? While trying to dismantle constitutional protection and Sharia was being preached from the Washington monument, or Old Testament rules were being preached from Mt. Rushmore and that from these foreign sources called for ‘moving beyond’ the existing cultural belief structures, again who’d be pissed?

Regardless of an objective value of a culture, using force to impose change increases fundamentalist resistance as that is the culture’s assertion of its tradition, led by the most ardent of its adherents. Someone is going to be pissed, try and garner support and raise that support against the perceived threat based on how the cultural values are perceived.

On Regulations

Regulations are the requirements to do business, and there are always regulations. The question is: who creates the regulations?—the market or the State.

Market-created regulations, first and foremost, are voluntary. Not only are market-created regulations voluntary, but they are also amorphous. Being voluntary and amorphous, individuals (those involved in a transaction) may interact as they see fit. This applies to businesses as large multinational corporations, to kids selling lemonade on a front yard, and their customers; if you don't like how the product is processed, thinking it is unsanitary, such as using not cleanly processed lettuce in hundreds of restaurants, or a dirty lemonade pitcher, any individual may decide to not purchase the product. However, if those concerns are addressed (and quickly addressed from decreasing market share), patronage may return. If there wasn’t enough to warrant a concern, patronage wouldn’t have stopped.

State-created regulations, first and foremost, are involuntary. What is it to blend the involuntary when mixed with the authority of the State?—the removal of choice with legal punishment and all that entails. With State-created regulations, the individuals who actually want to do business with one another are of a secondary concern to what the State will first allow. Want to get a specific style of hair braid from the only beautician who knows how to do that style (Jestina Clayton*)? Without the proper State-sanctioned license for the beautician, it’s not allowed. Want to buy that glass of lemonade?—the child didn’t get the license to sell the lemonade, so they’ve been shut-down by the threat of a fine. Patronize the license-less beautician, and fines will follow.

Market-created regulations just mean there will be no transaction unless terms have been agreed upon; if terms have not been agreed upon, then from mutual agreement, there will be no transaction from disagreed upon acceptable terms. State-created regulations mean that permissions must be sought and approved by governmental bureaucracy. If those permissions haven’t been given, to continue means instead of license fees for permission to act, there will be fines to be paid in punishment for acting without permission – refuse to pay the fines, and one goes to jail.

Let’s expand upon the aforementioned on something like wages; they can be regulated by the market, or by the State. Market-regulated wages would be dependent on the context. The market is the King of context. If there is a high demand but there were too many workers, the wages would be lower, but more would be employed. While if the demand was still high but if there were too few workers, the wages would be higher and the best would be employed. If the demand was low, then the wages could be lowered to hire some to perform the less demanded work.

State-regulated wages requires a minimum wage to be offered, and sometimes a cap on what can be offered. If there was a high demand with many people, but with the higher wage dictated by the State, then there would be fewer employed for there is still only so much that the work justifies in wages, so the fewer employees would earn some more wages, but there will be higher overall unemployment. If there was a lower demand, then an employer would skip hiring altogether for the hiring wouldn’t pay for itself, or be profitable. (Wages and prices will be another article).

Market-created regulations follow economics: an individual’s incentive mixed with limited resources. A well-funded, established businessman may splurge for a luxury work vehicle to be part of his image, while one just starting may buy a used car, emphasizing practicality. Both may be able to buy the expensive vehicle, but the recently-started businessman would decide funds would be better spent on other work expenses instead of just one car, especially primarily for image. More on context with incentives and limited resources: the family of six needs a different vehicle than a bachelor, and both have only so much to pay for a car while needing to also pay for other expenses relevant to their lives. To continue, a brooch may just be a trinket to one, but an heirloom with high subjective value to a family member. A can of SPAM may be repulsive and not worth a dime to one accustomed to caviar as they live in luxury, but that same one who stranded and starving may find the SPAM – their only source of nutrition – as worth hundreds of dollars at that time. At the same time, one who likes SPAM may not be interested in caviar at any dollar amount, until it is the only source of nutrition. Again, the market is the King of context.

State-created regulations are laws. Laws are mandates on what must be done, how, and punishments for not doing things according to law: proscriptions and prescriptions, blended. When laws are introduced into the market, aside from rights violations, such as requirements for licenses, subsidies, quotas or ‘sin’ taxes, it is artifice introduced into market. All the aforementioned false-market effects are created for a reason, to help some one, or sector. Help them do what?—get an advantage in some way: help them with something or prevent competition doing something. Before the artifice-laws were created, more were on equal footing with opportunity, but afterward, the established sets up assists (e.g. subsidies) for themselves, or barriers (e.g. licensing fees) for competitors. Through the force and manipulation of the State, regulations prop up that which isn’t worthy, while putting at a disadvantage that which is otherwise worthy. An extension of this artifice is that what the market normally would deny because it wouldn’t be practical or desired, gets a false foothold in the market, such as green energy, high-speed rail and ethanol. All of this artifice is done by ‘investment’ by the State with someone else’s (the taxpayer) money being handed out – handed out by those not directly in the transaction of the buyer or seller. (Each of these have their own market effects).

State-created regulations allow true monopolies, prevent competition and last as long as the law remains, across the area the law affects. Market-created regulations do not prevent competition, and last only as long as there isn’t a better option available in a given area. It is the difference between the post office and a grocer who may be replaced by a new grocer offering better product for better prices, if the first doesn’t improve what they offer.

Lastly, we’ll look at regulations dissuading innovation. Regulations that were designed, in part to ‘protect’ us, (also to protect the vested interest of those established in business and the State) stifle innovation. An example, if a bureaucrat decided what needed to be added in order to ensure ‘safety’ the Wright brothers never would have flown, but because they planned, worked and took their own risks, they, and with what they started enabled all of us to fly.

Disingenuous comparisons

As a follow-up to the incendiary language issue, there comes the issue that Bob Beckel displayed, and that is 'name-calling.'

Hoffa Jr. made news recently with calling various Tea Party Republicans 'son-of-a-bitches.' Beckel equated Hoffa's name calling to whether one could call Obama a socialist, and when Bolling defended calling Obama a 'progressive socialist,' Beckel ranted about how wrong it was to use such a pejorative term (socialist).

This is a false comparison, for a socialist is a denotative term to reflect a set of beliefs and policies, while son-of-a-bitch is a connotative term that is impossible to reflect anything in a denotative manner outside of a canine, or genetic manipulation. Son-of-a-bitch is slang; socialist is not slang.

Where the disingenuous nature comes in is by comparing the two terms, it is an attempt to hide the beliefs and behaviors that denote the denotative term by linking it to the inflammatory connotation of the slang term.

Don't let those who try and make such a comparison get away with it. Defend your terms, and make them defend theirs.