Sad Irony

You spend years telling your housemates that the metaphorical house is not built to withstand earthquakes. For years, you are ridiculed and left to fend for yourself because you are a "doom and gloom" sayer. Then the earthquake strikes. Many parts of this house fall apart. Yesterday's experts who ignored completely what you said are now using the identical words you used in previous years to say that the house is not built properly to withstand earthquakes.

What is happening after the earthquake is the attempt to place blame on someone, so for every room that has collapsed we attempt to find the carpenter who worked on that particular room and expect him to fix it to earthquake proof standards and we scrutinize his very tools and his methodology. When the carpenter takes his 3 day long lunch break (which he always took before the earthquake struck), the experts who were responsible for allowing this 3 day long break to happen in the first place begin pulling their hair and are ready to lynch this particular carpenter. Other unrelated carpenters wisely hide in the woodwork so as to not be the next targets of lynch mobs. What the mobs don't seem to know is that they are being guided by the same experts who allowed this disaster to happen. The experts received money from the carpenters to pronounce publicly that the house was safe, the experts negotiated contracts that allowed the carpenters to have 3 day long lunch breaks.... Its only after the earthquake hit the house did the experts smoothly became the housemate's best defender against the carpenter.... after all the experts don't want to be targetedby the mob so they concentrate on assigning blame on the carpenter who was unlucky enough to have worked on the collapsed room.

So here we have it, our economy has gone poof, the unlucky corporations/industrialists who were following the accepted procedures of how our society is run are now being grilled by our politicians who never did anything about this economy until after it went poof. The politicians are trying to take responsibility now and are seeking someone to blame for this disaster. Are things going to change for the better? Here is what will happen, the rooms which have collapsed will be rebuilt using earthquake proof methods, the carpenters who have been unlucky enough to be behind these rooms will be forced to reduce their 3 day lunch breaks to a mere 6 hour lunch break. Other carpenters who were lucky enough not to be in the spotlight will volunteer to fix up their assigned rooms to make it more earthquake proof but in reality it will be mere cosmetic changes. The experts will then be bought off as before to say that the house is now earthquake proof. In the end, the house will be in worse shape and everyone will congratulate themselves at having averted the last disaster and prevented the next one..... until the next earthquake strikes.

What happens to the people who warned everyone that the house was not earthquake proof in the first place before the disaster struck? Well they are still ignored as doom and gloom sayers even though once again history has proven them correct. They will only be accepted as experts if they accept to be bought off and say that the Emperor is wearing the latest fashion. Seems like the Emperor is still naked after all of this. When do we truly change our carpenters and experts and replace them with hard-workers and wise individuals? Why are we still accepting lazy rich people as our CEOs who would get fired after the second week of a real job for being lazy? Why are we still accepting politicians who before the earthquake, said that everything was built properly and then poof after the house collapses they act as if they are outraged at having been duped.... yet decide to let the same people dupe them again?

Sad irony, the house will receive some overhaul but in the end will still not be earthquake proof because to truly do that we would have to rebuild it from scratch and no one is ready to do that. And the solution offered is still to try to get the citizenry to become avid consumers to restart the economy which is exactly what brought us to where we are today..... Sad irony.

What Economic Crisis?

Well here it is, the world has a crisis, an economic one. People are losing their jobs, the rich management who made poor decisions are taking a breather and requesting public money to kickstart the economy and........ WAIT, WHAT? The business leaders who brought about this mess in the first place by abusing public funds to line their pockets, the same leaders who push the citizenry into becoming consumers and production machines, the same leaders who now face the consequences of their corruption..... THEY WANT WHAT?

Isn't that how we got into trouble in the first place? Bad decisions, no preparation for the future, reacting to situations instead of THINKING and preventing unusual situations. What do we get from this economic downturn? A knee-jerk reaction where all the nations immediately agree on a solution (proving that with the proper political will, the governments of the world can make an important decision..... of course this decision bailed out the rich from troubles more than the majority of us who are now suffering job losses).

The economy has shown its hiccup and demonstrated that our current direction is a bad one.... How do we respond? We slow down this metaphorical car but maintain the same direction despite the last bump where we damaged our car. The bureaucracy stays the same, the corruption is found and covered up (to be replaced by a yet more sophisticated corruption scheme that we will uncover in 20 years and act as shocked when it is discovered as we are "shocked" today), the business leaders or industrialists are not replaced or brought to trial..... So nothing has really changed.

If an employee or a bureaucrat had done that much damage to his company or to his bureaucratic system, we all know how that would end: a lost job and prison time. Yet when the leaders of our society do this (and I really don't mean politicians), they keep their money, they keep their assets..... AND TO ADD INSULT TO INJURY, they request public funds to bail them out..... So much for the trillions of dollars of profits done by these leaders (guess that money is gone). So the poor who followed the direction of the rich, now have to pay for obeying their master's direction.

Should society be run on charisma? knowledge? wisdom? riches? Well at the moment, it is run by riches irrelevant how you got the money, you now have the law firm to defend your acquisitions. With riches, you sponsor the charisma you need to transmit the message you want. You hire the knowledge you want and you pay for "wisdom" from sophists. Anyone tells you something you don't want to hear, you have the money to ignore that unpleasant sound....

Plato's Republic mentions that the metaphorical city would be in ruins if it was run by the industrialist who seeks after riches..... Here we live in a society that is run by the motivation of acquiring riches and we have a hiccup to make us pause and reconsider our future..... How do we respond? Seems like we will continue to fund the confirmed rich to continue stealing from us and make decisions that are senseless for society but very profitable for the few rich.

Maybe I should become a sophist.... I'd have more money and flatter my rich customer with trivialities....

So to conclude, what economic crisis? We aint changing anything..... more of the same attitude, produce and consume, ignore anything unrelated to those two activities and let the rich leaders continue in their role of our coaches as we continue to produce and consume.... If we work hard enough, we may finally get that carrot dangling in front of our faces, just beyond our reach.... just a bit more effort now!

In the Service of the Rich?

Previous blogs gave examples of why our current economic system favors the intelligent thief. If you have the morality of stealing from others, you will become rich and get public recognition of being a great member of society. This was mentioned to show what we tolerate as a society and also how much money is available to pay for our precious and failing education and health care. If a government is forced to use $100 as a budget and that health care alone requires $80 and education requires $90.... well we can see that harsh sacrifices must be made when the total budget we give our governments is mere peanuts compared to the riches we know exist out there.

We seem to think that we can not make major changes in the rules of the game and that we can only administer budgets under the existing rules. After all, the debates of the elections have so far been about how to administer the public purse and creating rules to make its administration easier. Yet the irony is this, and I don't know how many people have noticed it but.... when the richest members of society have had their small hiccup with the economy, the governments of the entire world moved as one mind to help solve this crisis that touches the richest of society. The poorer you are in the system, the less this crisis affects your pocket book worth.

Now we can debate to see if these measures are but a band-aid on the problem or not, my point is that an unusual compliance of world governments have come together to protect the interests of the very rich. If the world governments can do this in such a short time in the interest of serving a small minority, how much more could be done if they were serving the interests of the majority?

Lets look at my argument from the previous blogs and put it all together:

-We have a problem dealing with issues because we move too quickly and do not take the time to think.
-We have the technology to take the time to do things properly.
-Current budgets have no money to solve the real problems so we stagnate and try to keep afloat.
-There is an overabundance of money available and thieves have control of the purse.
-There is a lack of will to solve the problems as we should because we would prefer to serve the rich with the belief that one of us poor suckers may become rich ourselves one day and we want to be served in the same way.

In brief, we have an economic system that rewards the intelligent thief and we do nothing about it. I would also suggest that we have a political system that rewards the intelligent liar but finding examples of that is much more difficult. I don't want to use blanket expressions that all politicians are the same or that one party is better than another at X or Y. The current politicians are playing a game, and they must play it well to get some things done, and the nature of that system requires rhetoric (fancy word for lying).

My next blogs will critique our current system of governance and how again we are responsible for allowing it to get that way. We know that money can be acquired by the snap of the fingers for society's sake, deficits can be written to be non-existant by a simple law that says so.... The current crisis shows an attempt at rewriting the rules to benefit the rich who have lost out (imagine if they would have the same motivation to serve the poor in the same zeal.... when the poor loses out, tough luck for them).

So in brief we are in an economic system that supports the thief and a political system that supports the liar. To change one system we must change the other at the same time. Democracy introduces Capitalism like a child, when the child takes over and treats Democracy like a child, we lose out the better elements of both. We must transform Capitalism and Democracy and bring them back into the proper level of balance (assuming that those systems are the ones we want). Democracy must become the leader of Capitalism. The political must command the economic. Our main problem is that we have allowed the Economic to subtly become the Leader over the Political. An alternate argument which follows in the same idea as the economic/political relationship, we have allowed Laws to dictate what is Justice when Justice should determine its Laws.

Again, this is something we have tolerated. Shall we continue to tolerate this foolishness? Shall we smash down the idols we have created and now worship? Lets take the time to think and then implement prudent actions. I have shown that our economic system is a runaway train and we are all passengers on this train, lets take back the control as we should before we run out of railway. As for the political system..... future blogs will explore that one.

What kind of Leader do you want?

Well here's a metaphorical outlook of the situation in Canadian elections and what the leaders are saying:

The neighbor's house is on fire and the fire department has been called (US economy taking its nosedive and Senate trying to come up with a law to solve it). The boss of the house we live in is explaining how our house is built with brick and stone and will not catch fire like the neighbor's house, we do not have to worry about our house catching fire (our banking system and how our economy works is built upon stronger foundations than the US). What do the other leaders who want to be the boss of our house are saying? "PANIC!!! OUR HOUSE IS ABOUT TO CATCH ON FIRE!", then they all ridicule the current boss of our house in doing nothing.

The current boss mentions how we can spend our time to get a water hose and perhaps spray our lawn and our wooden sheds which may be at risk (a proper time to invest in low priced stock, a proper piece of advice considering that our economic system is based upon Invest-Produce-Consume and that if one of these three components is damaged, it affects the other two). How do the other leaders respond to our current boss's advice? "PANIC!!! WE HAVE TO WORRY ABOUT THE POSSESSIONS IN OUR ROOMS!", then they all ridicule the current boss of our house for giving foolish advice.

The Investor within our economy has to have confidence that his investment will bring him a return, this will only happen if the Producer and the Consumer do their jobs. If leaders yell out PANIC, the Consumer will consume less. If the Consumer consumes less, the Producer will not produce as much and the Investor will worry and invest less. Less investment will mean less Producers which will then make the situation a real cause for panic.... there will not be enough Consumers (they just lost their jobs) etc for a downward spiral. Our current boss of our house is maintaining a calm head and saying that things are on track and the others are using the election to gather extra votes by risking our economy.... Does the Canadian population really want self-serving leaders who use panic to get votes? Our house is intact, there is no reason to panic. We can take preparations, which are already being done, to try to protect the weaker aspects of our economy.

So I ask again, if you are in a shopping center and the fire alarm has rung out to have the area evacuated because of a fire in an office building next door.... who do you prefer to be in charge of the evacuation, the one who calmly guides us towards the exits and says that everything is fine or the ones who scream at the top of their lungs: "PANIC! EVERYONE FOR THEMSELVES! oh and vote for me because I saved your life!"

Look at the situation, see how our economy works. See what our current boss has succeeded in many projects.... as a minority government!!! Forget the foolish name-calling or the rhetoric or the propaganda of all of the political parties (yes even the current boss's political party engages in this..... its the nature of our current political system to do it that way and the public seems to encourage it because very few of us verify claims made) Be scientific, the proof is there.... verify.

Now I do see flaws in our current system of democracy, our electoral processes and even in the whole legitimacy of whether or not we should vote; but, while we are "playing" with these flawed rules, we should try to play well while we try to figure out how to change the rules themselves to make the "game" more fair for all.... and in this view; I hope we will verify the claims, I hope we will see how the economy currently works in the world we live in, and I hope we take the time to understand that for any diplomatic measure used, there requires a strong military in the background to impose order (do we really think that police officers could do their jobs without firearms? but that is another argument for another blog). Enjoy the Canadian elections!

Customer: ignorant victim of theft or con?

Yesterday's blog mentioned how the Industrialist was more loyal to his investors than anyone else. The Industrialist may start being nice to his customers but greed and the growing demand of increasing profits (remember, the Industrialist not only promises a profit, he promises that this year's profit will be higher than last year's-->this increases the value of the company stock making the Investor ecstatic), forces the Industrialist to cheat and steal from his own customers.

We are told that prices increase because of inflation. Ok, lets look at an interesting case:

Years ago, long distance charges were at about $1 per minute. The excuse? Extra funds needed for research and maintaining existing telecommunication lines. Competition is allowed to enter the long distance race.... suddenly, we have long distance charges at about 10 cents per minute but you are only allowed to have this special rate if you pay a special permission of $5 a month. What happened to the extra research costs? Are we also not in the process of replacing existing telecommunication lines with fiber-optics? The competition charges 8 cents per minute without any special permission fees. Once again, the main company, the leader of the pack.... you know, the same one who has lost a decent percentage of its customers over to the competition.... well they now seem able to charge the customer 7 cents per minute and they get rid of the special permission charge.... To add insult to injury, the loyal customers who pay the special rate of $5 per month so that they can benefit the 10 cents per minute are never told about the new rates, so they continue paying the $5 per month and 10 cents per minute. The new rate is only offered to attract new customers away from the competition. I guess inflation, research and development and other expenses have not increased the prices for this industry.

That's not theft? Stealing from the customer? Yesterday's blog showed theft against the workers. How about another example:

Many years ago, banks offered you a cheap toaster to convince you to get a bank account at their branch. Boy, did they treat you like royalty! They bent over backwards to attract your interest and they put everything aside when you walked in the door! They knew you by your first name! Today, you have to wait in line to see someone, then you are invited to make an appointment, a law had to be enacted to prevent banks from denying anyone because they started to deny their services to the poor. Once you show up and get your bank account, you must pay a minimum of 2 cheap toasters a year just to have your bank account open. If you enter your home branch, you are politely invited to use a machine to do your transactions.

Well you must hand it to the banks, they have managed to increase their rates of profit consistently! But have the customers suffered? What about the competition? Well lucky for someone, all the banks have a similar practice so they can all get away with their prices!

Basic management textbooks explain how prices are set: lets say a refrigerator costs $10 to manufacture. They test different prices and see how many people decide to buy them at whatever given price.

If the price is $100 then 7 will buy the product. Total $700
If the price is $200 then 6 will buy the product. Total $1200
If the price is $300 then 5 will buy the product. Total $1500
If the price is $400 then 4 will buy the product. Total $1600
If the price is $500 then 3 will buy the product. Total $1500
If the price is $600 then 2 will buy the product. Total $1200
If the price is $700 then 1 will buy the product. Total $700

So they choose their price based upon the highest money that they will get, in the above example, it will be at $400. As for the remaining 3 who won't buy it, who cares!!! Now note, they could sell it much lower, but they choose not to. The total cost to make $40, the sale $1600, for a difference of $1560. With this money they spend on packaging, advertising (to convince you to buy their product), transportation and leave enough for a profit.

Now if someone decided to make a high quality refrigerator which would cost $70 to manufacture. One that lasts 25 years (lets assume the above regular refrigerator has a 3 year lifespan before things break down). If the manufacturer decides to sell at the same price of $400, he will have much less than his competitor to advertise the superior quality.

So the cheap, wins out. The cheap gets his message out to more people. The cheap doesn't care what the price is and that some poor guy won't be able to afford his product. The cheap will try to find ways to cut cost if he can because if he starts out using the "cheap".... why would he stop there? The one who tried to get a decent product out will inevitably lose the attrition war.

Marketing textbooks will explain to you that about 90% of the price is all based upon marketing (which includes packaging, transportation and advertising). About 3% would be the actual production cost. So we see that the initial price setting is more based on what they can get away with as opposed to the stories they feed us about production costs and other nonsense.

Would it be fair to say that our entire economic system rewards the intelligent thief? The celebrated Industrialist steals from his workers first, then steals from his customers next. Because he has gotten away with it for so long, the Industrialist is now starting to steal from his investors..... Enron anyone? How can we sustain such a system of thievery? Why do we tolerate it?