Our Theory of Economic System Fluidity: Marx and Rand together in perfect harmony

10/22/2012 Portland, Oregon – Pop in your mints…

In the realm of economic thought, there are two extremes.  On one end of the spectrum sits the economic equivalent of Karl Marx’s workers’ paradise, known as Socialism.  On the other end sits the economic expression of Ayn Rand’s rugged individualism, known as Capitalism.  As anyone who has studied these philosophical extremes can tell you, the operation of real world seems to constantly fall somewhere in the space between the two, making strict adherence to either an indefensible position.

While apologists for these extreme positions do a wonderful job of explaining why complete adherence to their ideals by all would lead to an utopia on earth, a careful examination of the arguments, along with a quick glance at how things operate in the real world, lead one to conclude thatevidence of both Socialist and Capitalist ideals can be found in nearly any system.
How can this be?  If the extremes are both correct in their reasoning, they msut be mutually exclusive of each other.  However, we look around at the world around us, as well as into the depths of our own souls, and we invariabley find an uncomfortable coexistence of ideals that is difficult, if not impossible, to reconcile.

That is, until today.

Our aim today is to reconcile this age old dilemna.  Fret no more, fellow taxpayer, for the answer is simple:  Socialism works for local systems, while large scale systems are best served by embracing Capitalist ideals.

How can this be?  The answer is simple.

Socialism, with its embrace of community property and centralized decision making, is a superior policy for systems until they reach a critical mass.  Socialism unwittingly provides the framework in which society cares for its economically weaker members.  It is a system which is entered into with the understanding that at least a portion of one’s actions will take the form of altruism, that is, they will work for the benefit of others without the expectation of material compensation.  In fact, socialism is the basis for the family unit into which a great deal of humanity enters the world.

Karl Marx

 

Given the barbarities which are justified in the name of profit, it can be said that the basis for morality and human decency most frequently occurs in a Socialist setting.  Given the inherent requirement of altruism, Socialism is the system which asks the individual to look beyond themselves.  However, as we touch on later, Socialism on a large scale tends to bring out the worst in human beings, as the inevitable onset of poverty quickly diminishes any moral advantage that small scale Socialism may enjoy.

We digress on the question of morality for a moment and instead submit to you an insightwith regards to the corporate structure.  It is the revelation that Corporations, entities which are held out as the champions of Capitalism, are, in fact, Socialist institutions (the stunned silence is deafening, please do read on, fellow taxpayer, it will make sense, trust us.)

It is for this reason that wages do not fit well into free market pricing mechanism and instead lend themselves to the “Labour theory of value” which is a base concept of Socialist philosophy.
The logical proof is the following:  The employer, employee relationship is based on a set rate per time period of work.  Once it has been agreed upon, the wage rate ceases to adhere to free market theory and bcomes a component of the Labour theory of value.  The top level managers in corporations that employ persons in an employee capacity become the centralized authorities in what is a socialist realm.

Another proof of this can be found in that property, which is held in the name of the Corporation, is cared for and used by employees.  As such, corporate property, as its name would imply, is held in common by subjects who themselves have no property rights in said property.  They may be offered shares in the corporation themselves, but this does not directly effect their day to day use of the Corporation’s (their employer’s) real and personal property.

A majority of human beings today find themselves as part of a Socialist entity of some sort, be it a family, household, corporation, or governmental employer (which, for purposes of analysis, behaves in a similar fashion to a corporation).  It is within these systems that we have most of our day to day interactions.  It is understandable, then, that most people would see a form of Socialism as the basis for a utopian ideal.

However, the members of these same Socialist organizations, the heads of household, CEOs, heads of government, members of Boards of Directors, salespeople, security personnel, customer service agents, and a host of others, well know that the “esprit de corps” which may exist in their organization is thrown aside in their dealings with the outside world.  The outside world, where individual corporations collide, is marked by brutal self interest and the protection of private property rights which are the hallmarks of Capitalism.

What gives?

Capitalism, the system which honors private property rights and glorifies the pursuit of self interest, must be embraced and allowed to operate in an unhindered state as the basis for the interactions between the small scale Socialist systems (families, corporations with employees, and those brave individuals who choose to face the Anarchic system of the world alone.)

Ayn Rand

The reason that Capitalism must be embraced by the smaller systems is that its principles, namely the laws of supply and demand and the Golden Rule, must be allowed dictate their day to day activities so that the smaller systems can better adapt and survive in a harsh, unforgiving environment.  To put it another way, Capitalism is a superior response to the Anarchy in which we all find ourselves, whether we are willing to admit it or not.

However, apart from its invaluable contributions to understanding the material world, even hard core Capitalists would agree that blind adherence to the Capitalist creed would not only lead to a trampling of those less fortunate in society, but the potential isolation of the individual from human warmth, feeling, and dare we say, loss of the ability to love.

For all of the virtues of Capitalism, its potential frigidness at the individual level and lack of a clear moral compass make it unpalatable to the majority as an absolute ideal.

So the answer is simple.  Socialism operates on a small scale, Capitalism on a large scale.  Marx asks Rand to dance, she accepts, and the world makes sense.  As the theory of biologos attempts to bring harmony to the polarization of two views of the world’s origins, our theory of economic system fluidity allows the economist and politician to embrace both the virtues of the Socialist ideal as well as the Capitalist economic imperative.

The final question which begs to be asked is the following:  In terms of size, at what point is it appropriate for a system to stop being guided by Socialist principles and to break up into units better able to cope with the Anarchic surroundings, meaning a leap to the Capitalist model, which naturally defines the size limitation of what may be called a functional Socialist system?
While there is no firm answer, it is clear that a Socialist system has reached its limit when it is corporately bankrupt and unable to fulfill its commitments, either morally or financially, to its members.

In the case of the corporation, it must adjust its productive activities and/or release either property or employees into the capitalist system until it finds equilibrium.  The released Employees then find themselves, albeit for a moment, in what may be called the free market for labor.  In it, they will either learn to compete perpetually in the capitalist environment and form their own small scale socialist entity, or link up quickly with another socialist entity, be it another corporation, state welfare, or the generosity of a family unit.

The fact that both families and corporations can accumulate wealth are proof that socialist entities can and do compete and thrive in a world where capitalist thinking and political structures are an imperative.  It is the ability of each unit to adapt to changes and to seize opportunities which makes the difference.

There is much more to say about this but it will have to wait for another day.  We leave you with what should now be obvious.  When Socialism is employed on large scales, it looses both its ability to compete as well as any moral superiority which it may have enjoyed.  When persons are thrust headlong into poverty, which is the logical economic end of large scale Socialism, what were once moral imperatives are tossed aside in pursuit of purely Capitalistic aims in a desperate attempt to eat.

Anyone who has lived such an event will attest that it is in these unfortunate circumstances that the rotten core of humanity is laid bare for all to see.  While unbridled Capitalism has its own faults, which are daily brought to light in the media as a reminder of when it has been allowed to run too far.  It is this consciousness, and the human desire for mercy, which work to keep the evils of Capitalism in check.

The beauty of the theory is that the normal operation of each system keeps the proliferation other in check, any attempts by government or sovereigns to impose or preserve one system over the other will end in disaster.

Rushing to extremes is for fools, for the Kingdom of God is one of perfect balance.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for October 22, 2012

Copper Price per Lb: $3.64
Oil Price per Barrel:  $89.16
Corn Price per Bushel:  $7.61
10 Yr US Treasury Bond:  1.80%
FED Target Rate:  0.15%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,729 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.8%
Inflation Rate (CPI):  0.6%
Dow Jones Industrial Average:  13,345
M1 Monetary Base:  $2,334,000,000,000
M2 Monetary Base:  $10,199,400,000,000

The Silent Majority, why no one will win the 2012 Presidential Election

10/23/2012 Portland, Oregon – Pop in your mints…

A few days ago, we laid out three seemingly absurd reasons why we have decided not to vote in the upcoming elections, with the exception of city and county referendums.  If you missed it, you can read our rant here:

Three Reasons why we’ve stopped voting, The Trail of Tears

In the spirit of full disclosure of our voting record, we have voted in just two of the five Presidential elections that we have been eligible to cast a vote in.  Namely, in 2004, we voted for the incumbent on the indefensible reasoning of choosing the “Lesser of two evils,” for though it be the lesser, one has still chosen evil.  In 2008, we wrote in Ron Paul, albeit with an overwhelming feeling of powerlessness, as write in votes are, if anything, a symbolic gesture.

In the meantime, we have dutifully filled out countless circles on scantron sheets and scanned countless pages of voter’s guides in a fruitless effort to understand, to loosely quote Joe DiMaggio as he came upon his then wife, Marilyn Monroe, striking her now famous pose as she stood over a steam grate in Times Square, “what the hell is going on around here.”

By the time the most recent ballot arrived in the mail, along with a voter’s guide which rivaled the yellow pages in size, our disillusionment for what today passes as democracy was complete.  We resolved, then and there, to stop tacitly endorsing the enslavement and slaughter of persons with which we have no quarrel.  We would withhold our vote.

Given our history and our most recent resolution, it can be said that we have not exactly been the model of someone fulfilling their civic duty.  Yet strangely, since coming to grips with our non-voter status, we have never slept better.

Are we alone in our disillusionment?  Or is our shunning of civic responsibility something native to the American landscape?  We have taken it upon ourselves, fellow taxpayer, to provide you with the shocking answer to these questions.

We began by analyzing a data set of the total US voter turnout against the corresponding voting age population (VAP) at the time.  We chose the Presidential election years in the US as they are generally the election cycles which elicit the highest voter turnout.  Fortunately for us, the voter turnout  for the Presidential elections held from 1828 – 2008 is accessible on Wikipedia.
To arrive at the VAP totals, which were provided for the election years 1960 and later, for the prior elections (1828 – 1956), we did the simple inverse math of dividing the number of votes by the stated voter turnout percentage.  This gave us a “theoretical” VAP with which to perform our analysis.  We then pulled census data for each year which coincided with an election year to satisfy ourselves that our methods were sound.

Within the data set, we then broke the number of popular votes cast in each election, which is also available on Wikipedia, down three ways.  Those for the candidate with the majority of votes, those cast for the one who came in second, and the combined votes for all other candidates which were counted.  The counts are presented in the order of the highest number of popular votes received, not those cast by the electoral college.  It is interesting to note that in four times in US History (three of which, 1876, 1888, and 2000, appear in our data set) the candidate with the highest tally of popular votes was not elected to the Presidency.

We then took the number of popular votes by category and divided it against the VAP for those deemed eligible to vote to arrive at our final data point, the percentage of the VAP which cast a vote for the candidate.  As we did this, we added a fourth category which we call the “No vote,” to capture, for comparison purposes, the percentage of the VAP who simply did not cast a ballot.

We then took the four resulting percentages by election year, from 1828 – 2012* (*We extrapolated the findings based on 2008 turnout and today’s Intrade market for the election) and asked two questions:

1)  In each election analyzed, was the President elected by a simple majority of the total VAP?
2)  In each election analyzed, did the percentage of No votes represent an absolute majority of the VAP?

While we wouldn’t stretch this analysis to question the legitimacy of a Presidential election, the findings are nonetheless fascinating with regards to the presence of non-voters in America.  You can see a graphic of the percentages for each candidate juxtaposed against the “No vote” candidate by election year, on the plot below.

On the plot, the highest mark is the winner.  The “X” on the plot represents where the “No vote” candidate, if you will, would have finished.  The colors of the other markers, despite their blue, red, and green tones, do not indicate which party won that year, only the percentage of votes received by the first, second, and all other candidates for whom votes were cast:

In summary, when taken against eligible voters, the No vote majority began to emerge in 1916 after a 75 year hiatus, and took firm command of the polls in 1968.  However, 2012 is shaping up to be an exception, and, if current trends hold, it can be said that, come November 7th, there will be a President actively selected by a majority of the eligible VAP in the US for the first time since Lyndon B. Johnson.

Now, most voters in the US are aware that women were not allowed to participate in elections as voters until 1920.  Don’t worry ladies, nor the rest of those who were/are part of the disenfranchised, we have not forgotten you.  In fact, when the analysis is expanded to include all of the presumed VAP over 18, regardless of their technical eligibility to vote, (which is the number used to arrive at the voter turnout percentages) the results are even more dramatic:

What we see in this analysis is that, since 1828, there has been only one President who was elected by a simple majority of the VAP, Dwight Eisenhower in 1952.  In fact, those who did not vote consistently represented an absolute majority until 1928, which means, depending upon how one interprets the No-votes, there may not have been a President who was elected to office in the purest democratic sense until Eisenhower.  While we admit it is a bit far fetched, it is nonetheless fascinating to ponder.

 

Voter frustration/apathy, after taking a break through a good portion of the 20th century, returned to America in 1996, as Bill Clinton defied the indifferent masses, which again represented an absolute majority of Americans as it had in all pre 1928 elections, and extended his stay on Pennsylvania Avenue for four more glorious years.

Blanco o Nulo?  The question of interpretation of the Non-votes.

Blank or Null?  The answer to this question determines how one will ultimately interpret the data which we have gathered.  Are we to take the “No votes” as “votes in Blanco,” meaning that the lack of a countable vote signifies tacit assent to the selection of the voting majority?  This is the generally accepted analysis of the absence of votes in America, where voting is not obligatory.
Or shall we take them, or at least a portion of them, as “Nulo,” meaning that the absence of a countable vote signifies a disillusionment with the democratic process so deep that one simply refuses to go through the motions to lend even a shred of legitimacy to the process? 

In Bolivia, it is obligatory to vote, if you cannot provide proof that you have voted, you can face a fine, or worse.  This legal obligation has also given rise to an explicit form of voting, “in Nulo,” which can be cast if one chooses not to select one of the candidates or decide on a measure which has been presented.

It is the formalization of a conscientious objection.  The likes of which have only been officially tallied in US in the bizarre election of the year 2000, when a Washington DC resident filed a vote as an “abstention” in protest of Washington DC’s lack of representation in Congress.

So which is it, blanco or nulo?  It is an important question, and one that, unlike Bolivia, the United States voting regimen currently has no tool to answer.

We have provided a link to the data sheet used to create the above graphics so that you can check our work as well as expand and hopefully improve upon it.  Please feel free to download it and use it as you wish.

No Votes – Analysis and Charts of US Presidential Elections 1828-2012

As November 6, 2012 approaches, the votes are tallied, and a President of the United States is declared, stay tuned long enough to catch the data on voter turnout.  With the latest measure of voter apathy in hand, go to a quiet place and ask yourself the following question:

Did the American people win the election?  If our predictions are correct, the answer will be the same as it has been with regards to every election before and since everybody liked Ike:

We’ll have lost yet again.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for October 23, 2012

Copper Price per Lb: $3.58
Oil Price per Barrel:  $86.46
Corn Price per Bushel:  $7.56
10 Yr US Treasury Bond:  1.76%
FED Target Rate:  0.15%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,708 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.8%
Inflation Rate (CPI):  0.6%
Dow Jones Industrial Average:  13,103
M1 Monetary Base:  $2,334,000,000,000
M2 Monetary Base:  $10,199,400,000,000