Tuesday, May 31, 2011

The News Cycle: Full of Sound and Fury, Signifying Nothing

No wonder we're struggling; we're given tales told by idiots as "news" and "interpretation."

The Mainstream Media has completely failed to make sense of the global financial crisis. By "make sense" I mean a framework of interpretation that properly attributes responsibility to the causes and players and which explains the key dynamics in common language.

A framework of interpretation doesn't disappear in the next news cycle: it is constantly reinforced by additional interpretation and illumination.

The news cycle now lasts at best the length of a playoff series. Mr. bin Laden's news cycle didn't even last as long as an NBA playoff; the demise of the "most dangerous man in the world" was shoved into the ashbin of history within a few days, with little interpretation beyond fist-pumping and a few fusty pontifications by the usual suspects, i.e. the "experts" trotted out during "big events" to explain it all away.

The full quote from Macbeth (Act V, Scene V): It is a tale told by an idiot, full of sound and fury, signifying nothing. Every "news event" is terribly important, until a few hours later it is unimportant.

This is a form of madness, a madness which goes unrecognized in the crazed, turbulent flood of "news."

To be sure, a handful of people within the Mainstream Media (which now includes the Web aggregators such as HuffPo/AOL) do labor away at an honest account, but these reports are either buried beneath an avalanche of dross or they are touted (briefly, of course), as the Media's Potemkin Village: you see, we really are doing good journalism here.

The ugly truth is the Mainstream Media now depends on adverts aimed at the top 10% of the populace for its survival. It's all well and good to talk about journalism, blah blah blah, but I've got a kid in private school and a mortgage, and the last thing this "news organization" needs is to undermine the advertisers by calling the entire Status Quo into question.

Simply put, the top 10% of households are the ones paying the media's bills. Their consumption of goodies accounts for 40% of the entire U.S. economy, and so advertising rather naturally skews to serve their desires and aspirations.

The debt-serfs and tax donkeys below (I raise my hand here) may have aspirations to the lux life, but with the home ATM shut down, costs for essentials floating ever higher and earnings in decline, their discretionary income approximates a shovel full of snow dumped on Death Valley asphalt in July.

Local television stations limp along until a new election cycle disgorges a wave of pricey electioneering. Elections are an essential "profit center" for TV. Do you reckon that colors their coverage of the travesty of a mockery of a sham that is American politics? Of course it does: the Media is itself dependent on the charade being treated as "terribly important" when it is all just a money-driven tale told by idiots, full of sound and fury, signifying nothing.

The essential framework of intepretation that is missing from the Mainstream Media is that the Status Quo is unsustainable and profound changes cannot be avoided. But rather than assemble a framework which might help us understand our limited pallette of hard choices, the Media distracts us with a frenzy of gossip, brightly packaged "news" that looks just like marketing and circus-like "thrills and spills" to entertain us between the "clash of gladiators."

A handful of commentators understand this, and a few of those are occasionally given a bit of space amid the cacophany, again, to burnish the Potemkin Village image of the media as "responsible" and "providing a wide range of voices," blah blah blah. David Stockman is such a voice, relegated to the back pages/buried links or "financial section" where it can be overshadowed by the "earnings surprises" and "rising profits" stories:David Stockman, Reagan economist, on debt spree.

The truth is that the Media is terrified of the coming transformation. Dependent as they are on adverts aimed at the top 10% (with a few grocery circulars for the bottom 90% to paw over, looking for bargains), the idea that the entire edifice is crumbling leaves them with no lifeline.

There is a lifeline, but they are too afraid to see it: you could tell the truth. The truth is difficult, but it is something some people would pay for. It is, after all, one of the essentials of life.

There is another idiot in the room: search engines which reward aggregation of meaningless sound and fury. If the Google et al. algorithms weighted original content as a 10 on a scale of 1 to 10, and any aggregated links to that content a 0 or a 1, then that would instantly change the incentives of the "game" of "attracting eyeballs" and thus advertisers.

Right now, an aggregated link to this entry places higher in a search of the title than my own site, which is a Page Rank 5 site (i.e. it has a lot of "strong" links in and a lot of content). That is a snapshot of what is pushing the Media to spewing ever louder and more meaningless sounds and furies.

If all the major search engines relegated aggregator links to the basement and rewarded original content, that would help right the sinking ship.

The Mainstream Media is boxed in by its old models and its fear of the future. As its subscriber base melts away, it turns to precisely the worst "strategy," which is marketing to the top 10% of the populace which supports its advertising base, and giving that top tranch what they want to hear: everything's gonna be fine, profits are rising, we have a great lineup for Fall, the latest fashions are "gotta have," and all the other idiot's chatter of marketing which signifies nothing.

By offering up an idiot's delight of "content" and fawning support of the Status Quo "story"--there is no need to transform anything, everything's fixed, there's plenty of everything forever, technology will seamlessly provide solutions to every vexing problem, our system (healthcare, politics, etc.) is the finest in the world, etc.--the Media and its search engine offshoots have failed the nation, profoundly, deeply and irrevocably.

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Sunday, May 29, 2011

Just Following Orders

Large-scale evil requires surrender of autonomy, coercion by a central authority and a willingness to follow orders.

There is evil, and then there's organized evil. This is a memorial outside the village where my brother lives in the south of France. It is a typical village, quite small, perhaps a few hundred residents. The memorial commemorates three young French civilians who were taken out and shot by Nazi soldiers, either for "crimes" of resistance or perhaps as a "lesson" to the restive civilian populace.

The German soldiers who pulled the triggers were of course "just following orders."

Evil must be resisted, corralled, vanquished. Interestingly, people don't need to be forced by a central authority to resist evil, though their efforts will prove more successful if they band together and submit to a competent authority of their own choosing. This is the basis of the "good war" or "just war."

But to be part of large-scale organized evil, people do need to surrender their autonomy under threat, and be ordered by a central authority.

This is the origin of the Nuremberg Defense: I was only following lawful, Superior Orders when I murdered those French civilians. The soldiers who followed the orders would have been punished had they refused; coercion is always the backbone of central authority.

Hannah Arendt wrote about the Great Evil, Nazi Germany, and "The Final Solution" of death camps in Eichmann in Jerusalem: A Report on the Banality of Evil. The Nazi machine spewed plentiful opportunities to practice the banality of evil, and the death camps were simply one division of the daily grind of pressing one's palms on evil and passing it on to the next "good German."

The routine killing of civilians went on day after day; it was the "day job" of the occupying troops.

Those inside the central authority know, of course, but very few are telling, because the see-saw is just so imbalanced in a system which depends on lies and the distortion of truth to continue its domination.

The truth-teller will lose their prestigious position, their generous salary and the acceptance of their peers, and perhaps their life. In exchange for this sacrifice, the truth-teller receives only the glowing, ephemeral shards of his/her integrity: in the current zeitgeist, that literally has no value. The machine will grind on without them, impervious to the tiny pricks of truth; the machinery of propaganda, artifice, misdirection and misrepresentation is well-oiled and masterful in the reach and scope of its operation.

In this context, it is worth watching The Most Dangerous Man in America: Daniel Ellsberg and the Pentagon Papers. Daniel Ellsberg was only one of thousands of "good Americans" doing their job in a war machine built entirely on lies and propaganda. He was one of a handful of citizens out of those thousands, or tens of thousands, who was willing to trade his career for his integrity and conscience.

The Vietnam War was "sold" to the public as a "just and necessary war" that they had "chosen" via their elected representatives. But it was all lies, propaganda, coercion, topped by the profound cowardice of an elected leadership unwilling to risk the loss of perquisites and power.

Ellsberg had given excerpts of The Pentagon Papers, the secret and oh-so-dangerous unvarnished truth about America's involvement in Vietnam, to various members of Congress; all but one did nothing. Only Rep. Pete McCloskey (R) thought the American people deserved the truth. (McCloskey is a decorated U.S. Marine Corps veteran of combat during the Korean War, recipient of the Navy Cross, the Silver Star, and two awards of the Purple Heart. He published Truth and Untruth - Political Deceit in America in 1972.)

Perhaps the American people would have chosen to sacrifice its youth and its treasure on what it had concluded was a "just and necessary" in Vietnam, but it never got the chance to learn the truth which was the necessary foundation of any such decision.

That's how the banality of evil works. When truth becomes too dangerous to the Status Quo, it must be strangled every day, by tens of thousands of people, and its limp corpse hidden away.

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Wednesday, May 25, 2011

Things Are Spinning Out of Control

The pretense of centralized control of history is wearing thin.

The single greatest conceit of the Status Quo in the U.S., China and Euroland is that systems and trends can be tightly controlled. That conceit is slowly being revealed as hubris, as all sorts of things are spinning out of the control of the centralized authorities and financial elites in each geopolitical power center.

Does anyone really think the people of Greece will stand idly by while the state treasures of their nation are transferred to the banks which foolishly lent billions to a visibly risky enterprise? The banks, of course, lent freely to insolvent governments throughout the European Union, confident in the backstop of the E.U. itself.

The analogy to subprime mortgages in the U.S. is near-perfect: banks lent freely to extremely risky borrowers, breezily confident that their worker-bees in the Federal Reserve, Fannie Mae and Freddie Mac, the Treasury and Congress would all toil feverishly to transfer the risk to the U.S. taxpayers, by whatever means were necessary.

Does anyone really think the uprisings against this transfer of national wealth to the "too big to fail" banks in Europe will fade as unemployment rises and the true costs of the transfer become apparent to all?

Does anyone really think there is no chance that the citizens of one of the nations lined up to be stripmined by the E.U. will openly rebel against the stripmining, throwing out their government until they find some politicians who are not spineless lackeys and factotums of the financial Status Quo?

Does anyone really think the banks are really that precious to the people they are stripmining? Just how awful would it be if all the big banks with exposure to sovereign debt in the E.U. went belly up and were declared insolvent? A handful of very wealthy managers would lose their jobs, a handful of very wealthy owners would lose their stake, and all the pension funds and mutual funds which bet on the infinite passivity of the citizenry and the infinite checkbook of the E.U. would lose, too.

It's called Capitalistic risk and return, baby, and return can be negative. All the big players assumed the citizenry would quietly line up to have the clothing ripped from their backs and their flesh flayed to extract the pound of flesh "owed" the banks. But as the citizenry of Europe wake up to costs of the stripmining, which extends now to the taxpayers of Germany, Finland and beyond, they are withdrawing their support of the financial Status Quo.

Here is my plea: Ireland, Please Do the World a Favor and Default (November 29, 2010).

Things are spinning out of the control of the centralized mandarins in the E.U. They seem to have borrowed the Federal Reserve's playbook to keep the stripmining proceeding as planned: lie, frequently (practice helps); obscure systemic risks by printing money; and issue a foul sewage of propaganda about how nicely the economy is "recovering" to mask the real game, which is diverting the national income stream to the banking cartel.

The levers of interest rates, credit and money supply do not control larger trends; the appearance of control is illusory. The E.U. and the Fed are both busily applying the duct tape of various monetary machinations to the overheating boilers of the global economy, and presenting their frantic improvisations as "finely tuned, guaranteed to work" policies. As things spin out of their control, reality is poking through their rice-paper facade of "normalcy" and control.

Here in the U.S., the Fed's game plan of stripmining the nation to "save" the banking cartel is based on a cruel deceit I explained yesterday in The 'Baseball' Economy: The Fed Strikes Out (May 24, 2011): while the Fed maintains incentives for financial speculation and backstops any cartel losses in those speculations, it claims its policies are designed to "boost employment" in the real economy.

That is the world's most dangerous joke: if you believe it, you die from extreme irony. What the Fed is actually doing is starving the real economy and thus precluding any gains in employment as it diverts the national income to fatten the insolvent banking cartel.

Does anyone seriously believe their scam can endure? As I described in Your Pick, Ben, But One Goes Off the Cliff (April 22, 2011), the Fed's policies are setting up multiple double-binds. The Fed cannot finesse the unraveling of the entire financialization project.

There is currently a "great debate" over QE3, the next round of Fed "stimulus" (read stripmining). As things spin out of control, it no longer matters what the Fed does. That is, after all, their central conceit and the basis of their power: that the Fed actually controls anything. This quote, attributed to Napoleon Bonaparte, is increasingly relevant: "Do you know what amazes me more than anything else? The impotence of force to organize anything."

The Fed claims it can force the real economy to "grow" by forcefeeding it credit. But all the Fed is really doing is fattening the banking cartel with guaranteed profits (borrow from the Fed for free and then deposit the funds at the Fed for interest) and enabling another speculative frenzy which generates fees and profits for the banking cartel while the U.S. taxpayers play bagholder.

The Fed has lost control of the reaction to QE3. There is no "surprise" in QE3, so the potential positive is lost. Whatever the limitations the Fed imposes on QE3, they will be recognized as limiting the "high" of the credit-cocaine injected by the Fed.

If the Fed chooses an open-ended, essentially infinite QE3, then it will be recognized by the market that the Fed has lost all control and the pretense of "growth" is truly threadbare. No matter what the Fed does with QE3, the results will be negative. If they try to finesse a limited QE3, the markets will recognize the policy is unable to force-feed more speculative bubbles. If the Fed unleashes the printing press, then inflation will wrench free of the last rotten ropes restraining it, and the market will recognize that the current stock and bond bubbles are so tenuous that only unlimited money printing can keep them inflated.

Simply put, things are spinning out of the Fed's control. The Fed has been transferring the wealth of the nation to the banking cartel and the financial Power Elite for three long years, and the fraud at the heart of their claim to be "stimulating" the real economy is now in plain view.

Does anyone really believe Japan's economy is under control? The tragedy at the out-of-control Daiichi Fukushima reactors might well be an analogy for the entire Japanese economy. Does anyone seriously believe Japan's over-indebted experiment in endless quantitative easing will sustain a demographic sea change and yet another explosion of debt to support rebuilding and more "stimulus," i.e. bailing out Japan's insolvent banking cartel, which has been insolvent for 20 years?

As for China: inflation is now out of control. Party authorities are frantically pulling the same levers of monetary policy, but the wires connecting the levers to the real economy have snapped. All their efforts to "cool" rampant speculative bubble-blowing and rampant inflation are failing. Taking their cue from the U.S., they are desperately trying to mask their loss of control with doctored statistics, but the conceit cannot endure for much longer: rents are rising even as housing sales decline. Local governments are still borrowing and speculating wildly, in a last-ditch effort to prop up their own income streams, which are dependent on real estate speculation and land grabs from peasants.

Things are spinning out of control. Trends are beyond the feeble grasp of central financial authorities. Power is based not just on controlling events in the real world but on the perception of having some control over the real world. Once the central banks' control over large-scale trends and systems is revealed as illusory, then the unraveling of the Status Quo's powers will gain momentum.

NOTE: I finally shipped books last week--thank you to everyone who has been waiting so patiently. I am taking a few days off from email and the blog to attend to houseguests. The usual drivel will reappear this weekend.

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Tuesday, May 24, 2011

The 'Baseball' Economy: The Fed Strikes Out

The Fed's game plan is to pitch low-cost credit so borrowed money will flow into the productive economy. But the Fed's own policies insure that the borrowed money goes to speculative bets and unproductive reserves.

The Federal Reserve has been playing a perverse version of baseball, and unfortunately it has struck out. Here's the Fed's version of baseball: The Fed "wins" if it can get batters to "swing" at more debt and get a "hit" by spending that borrowed money in the real economy. If a job is created by that spending, then the "hit" becomes a "run" and a "runner" gets on base.

To entice players to borrow money, the Fed has been lobbing big fat slow pitches for the past three years: zero-interest rate policy (ZIRP), excess liquidity, quantitative easing, buying risky mortgages to take on bad debt from the banking system, etc., all designed to keep interest rates low and credit flowing.

The "too big to fail" banks and speculators have swung at the fat slow pitches, but no one's on base: few jobs have been created by the Fed-fueled rampant financial speculation. Speculating in financial games has added a few jobs to Wall Street, but it accomplishes precious little the real economy. the Fed's game plan boils down to funneling billions of dollars to the top 5% of the households who benefit from rampant speculation in stocks and financial instruments, and then hoping their purchases of Porsches, Coach handbags and $100 bottle of wine in high-end restaurants will "trickle down" to the real economy.

While Porsche dealerships, luxury retailers and elitist restaurants have prospered, their share of the real economy is too small to have much of an impact on jobs. Yes, a few more retail clerks, dishwashers and waiters have jobs, but these are ultimately temporary and often low-paying/marginal positions.

Banks have amassed "hits" by borrowing vast sums of the Fed's "free money," but since they have squirreled the money away at the Fed to earn no-risk interest, they don't get any "runs." The money sits there, earning easy profits for the banks, but it doesn't flow into the real economy. The banks' "hits" aren't leading to "runs."

Large enterprises are selling debt to amass "war chests" of cash they can use to snap up competitors. But corporate acquisitions don't create jobs, they destroy them as overlapping divisions are axed and consolidated.

The irony is painfully obvious: the more slow fat pitches the Fed throws, the more the banks and corporations borrow for speculation or no-risk interest paid by the Fed itself. As for investing in actual capital-intensive new plant--who would be insane enough to do that in the U.S., where regulations and taxes on productive profits are burdensome and profit margins are slim? It literally makes no sense.

What makes sense is to borrow the "free money" here and build the capital-intensive plants in countries with advantageous tax policies that are near the high-growth BRIC markets. As for the U.S.--the high-profit plays are all speculative financial gambits.

You have to feel sorry for the lame-brained Fed: all it knows how to do is toss fat, slow pitches of "free money," hoping someone will borrow the money and put it into the real economy. But the Fed's own policies insure that the money will either be hoarded by banks or "invested" in speculative gambles which are ultimately backstopped by the taxpayers--gambles with little to no payoff for the real economy.

As the Fed-engineered stock market rally rolls over, then perhaps the Mainstream Media sitting in the press box sucking corporate-sponsor provided beverages will awaken and look at the progress of the Fed's game: lots of corporate hits, but no runs, nobody on base and zero RBIs (runs batted in)--that is, no jobs created despite the trillions in treasure lavished in new credit.

It feels like we're entering the eighth or ninth inning of the Fed's perversely destructive game, and all we need is an umpire to call "STEE-RIKE!" and end the doomed-from-the-start "extend and pretend" game the Status Quo has been playing since 2008.

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Monday, May 23, 2011

If You Want Solutions, First Pin Down Where the Money Is Going

A high cost structure dooms households, enterprises and governments alike.

Everybody wants solutions. Here's the first step to any real solution: pin down exactly where all the money is going. Only when you know the true, full costs in any system, and have a system of accountability that aligns with the cost structrure, can any real solutions emerge.

Everyone agrees education is important, but the "solution" demanded by the Education Cartel and Fiefdom is more money. More money may or may not be the solution to what's wrong with education, and to ascertain that, we need to first "follow the money" and track down exactly where every dollar currently allocated to education goes.

Unsurprisingly, perhaps, education does not have a transparent cost structure.

Once we have a full accounting of every cost, then we can compare those costs on a per capita basis (so we're adjusting for population growth and inflation) with costs in the recent past (20 years ago, for example) and then move on to aligning the cost structure with a metric of accountability.

For example, if a school district is getting considerably more money per capita than it did 20 years ago, yet the performance and graduation rates of its students have declined, then we can conclude that the additional money actually hurt student performance.

In that case, "more money" is akin to throwing gasoline on a fire to put it out. The problem and thus the solutions obviously lie elsewhere: in better administration, better coordination with parents, better teaching techniques, etc.

Please consider this chart of the University of California system's employment of professors and administration. If we extrapolate the lines, then soon there will be more highly-compensated seat-warmers in administration than there will be professors teaching in the classrooms.

In 13 short years, the number of senior administrators shot up by 142% while the number of tenure track professors rose by 29%.

Hmm. Is there any possible conclusion other than most of the skyrocketing costs of higher education can be traced to a rapidly expanding bureaucracy? The Sacramento Bee has offered a database of California government employees' salaries (not including benefits or retirement costs).

I looked up a professor of math I know who teaches full-time at the University of California at Berkeley, one of the premier research universities in the world. His salary was $76,000, roughly one-third that of the now-famous lifeguards in Orange County who pull down $200,000, and less than half of what senior high school teachers in Illinois earn (see below).

Those within the State Fiefdoms who have arranged incomes which are disconnected from the reality of the job market and performance naturally defend their booty. Brent Jacobsen, president of the Lifeguard Management Association, defended the lifeguard pay in Newport Beach: “We have negotiated very fair and very reasonable salaries in conjunction with comparable positions and other cities up and down the coast.”

Do the taxpayers of Orange County agree with this gent's definition of "fair and reasonable"? The more important question is: why was it "news" what public employees make? Shouldn't that information be presented to the public in every budget? If privacy is an issue, then list the position and the salary and pension costs while keeping the employee's name confidential.

For a rare gloves-off appraisal of academia, please read Faulty Towers: The Crisis in Higher Education. Those of you who teach in academia (or who know someone who teaches in a university) will be nodding your head: yes, yes and yes.

It seems that some members of the Education Cartel and Fiefdom came to do good but stayed to do well--as in triple the national median earnings of full-time workers:

Students: You Are Exploited Debt-Serfs (April 12, 2011)

Salary: $172,163
Position: High School Teacher
Full/Part Time: Fulltime
Percent Time Employed: 100%
Assignment: Physics (Grades 9-12 Only)
Years Teaching: 30.5
Degree: Master's

Salary: $163,526
Position: High School Teacher
Full/Part Time: Fulltime
Percent Time Employed: 100%
Assignment: Driver Education
Years Teaching: 32
Degree: Master's

And how about those pension and retirement costs? Exactly how much of the city budget goes to those costs? We have an answer for New York City, and it is sobering.NYC budget - pension costs skyrocketing:

It's expenses that are killing us: over the past decade, New York City hasn’t really grown its population but has increased expenses from $28.8 billion to $49.7 billion. The vast majority of that $20.9 billion increase has been in the form of more dollars to fewer employees. Pension costs are killing us most: this has grown from $1.3 billion in 2002 to $8.3 billion in 2012.

That's a 638% increase in pension costs in one decade, while the city budget leaped 72% despite a stable population. The share of the budget devoted to pensions jumped from 4.5% in 2002 to 16.7% in 2012.

Draw a chart of these costs and extrapolate them out a few years. How can anyone claim these are sustainable? Has there been a comparable rise in the quality and quanitity of city services?

Yes, Baumol's Disease (which I covered in detail in Productivity, Baumol's Disease and the Cliff Just Ahead, December 8, 2010) accounts for the slower pace of high-labor-cost productivity, but that is not an explanation for a 72% rise in city expenses or a 638% jump in pension costs in a single low-inflation decade--it's an excuse.

To understand any problem with an eye on an actual solution, then start with where all the money is going. This leads to uncomfortable conclusions, because a lot of the Central State money ends up in millions of pockets. For example, Social Security and Medicare. The Millionaire Retirees Next Door: Typical retired couples will collect $1 million or more in Social Security and Medicare. This is more than they paid in, and the cost will fall on today's workers.

The problem is that wages are declining while taxes and other costs are rising. Exactly how can we expect workers in the future to pay our rapidly rising Social Security and Medicare costs? is there any accountability in Medicare that aligns skyrocketing costs with results or performance? If so, why does healthcare (a.k.a. sickcare) in the U.S. cost twice as much per capita as it does in our developed-world competitors such as France and Australia?

I have addressed these issues many times, for example in The Devolution of the Consumer Economy, Part II: Rising Costs, Declining Wages (April 8, 2011) and Complexity: Bureaucratic (Death Spiral) and Self-Organizing (Sustainable) (February 17, 2011).

I have highlighted the Education and Sickcare Cartels, but there are many others with exploding costs and zero alignment with accountability or performance. The Department of Defense, famous for routinely losing track of hundreds of billions of dollars (and does anyone lose their job over that gross mismanagement? No, everyone gets a promotion and raise for doing such a swell job), manages to triple the cost of every weapons system, regardless of the actual performance benefits (marginal, perhaps?)

The new F-35 fighter aircraft cost $150 million each, once we add in the overruns, replacing the Super Hornet F-18 E/F that cost $57 million each. Is the F-35 really three times better than the F-18? Which would a commander facing squadrons of bad guys rather have, 30 F-35s or 90 F-18s? (I suspect they'd take the 90 F-18s, as long as they were loaded with the latest Sidewinder and long-range air-to-air missiles.)

Once lifetime costs are included, the F-35 will cost upwards of $300 million each. If we assembled some fighter jocks and working engineers in a "skunk works" untouchable by the DoD bureaucracy and Congressional meddling, does anyone doubt that they could design and build a superior next-generation steathy fighter aircraft for $57 million each?

If you really want a solution, then start by pinning down exactly who's getting all the money. Then find out if they're accountable for how it's spent. Nobody wants to admit the reality: our nation is dominated by cartels and fiefdoms serving entrenched constituencies whose budgets are simply not sustainable, i.e. they are disconnected from what the nation actually produces in surplus wealth, and rising far faster than wages (declining) or the underlying economy (also declining once you subtract Savior State borrowing and spending).

Those with the bloated budgets are also largely unaccountable, both for how the money is spent and for the results.

Very few in the public sector have the courage to "follow the money," because they know the trail leads right to their own pockets or to those of their cronies and constituencies. A lack of accountability benefits everyone who is complicit, because as long as no questions are asked about results or performance, then the money spigots remain wide open.

The problem is that this open-spigot spending is unsustainable. If we don't dare look at real solutions, then the problems will soon expand beyond our control.

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Order Survival+: Structuring Prosperity for Yourself and the Nation (free bits) (Mobi ebook) (Kindle) or Survival+ The Primer (Kindle) or Weblogs & New Media: Marketing in Crisis (free bits) (Kindle) or from your local bookseller.

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Saturday, May 21, 2011

Don't Despair, It's The New Normal, Part II

Success lies in self-expression.

Correspondent Elizabeth S. recently shared her positive response to Failure: Don't Despair, It's The New Normal (May 4, 2011). Elizabeth identifies a key component of self-worth and happiness: leading a life of self-expression. Yes, we all need some money, but if we set money and possessions as the only metric of self-worth and happiness, then we doom ourselves as the Status Quo devolves into various stages of systemic failure.

Given all the bile and no-solutions, brittle criticism I get from readers, it is refreshing to receive a positive commentary of accessible, applicable wisdom.

Here is Elizabeth's commentary:

After several years of stocking up on food, ammo, precious metals and the like, my husband and I seemed to hit a dead end. The nagging thought kept occurring to me, "What do we do after we have burned out all the freeze-dried food and really have to start surviving?" Also, I had become weary of the non-stop, head-for-the-hills Rambo mentality of most survival blogs I have read. Granted, they provided GREAT information but have been sorely lacking in spiritual upliftment or even offering the possiblity that there could still be a good life to be had while/after the State caves in on itself.

Happy was the day I stumbled onto your blog (found a link off of Zero Hedge)!!! It is so comforting to find alternatives to the Mad Max scenario that I have been reading about for so long. I just re-read your article, Failure: Don't Despair, It's The New Normal (May 4, 2011).

I really took it in this time around. I have felt like a TOTAL failure. I did all the "right things": went to school, got a degree, tried to always improve my skills. NONE OF THIS MATTERS NOW. Truly, the rules have changed. Three years ago I was an administrative assistant working as a contractor for the Federal Dept of Commerce. I earned $50k a year. That job ended, never to be replaced. Today I work part time in retail and earn $10 an hour. My take home pay is maybe $200 or less every two weeks.

I have asked myself over and over, "What did I do wrong?!!" I have felt like there was something terribly wrong with me, that I suffered from some sort of fundamental flaw. (After sending out endless resumes and filling out endless appplications for ANY JOB, you start to wonder if there is something really wrong with you.) Now, I consider that perhaps I am not so much the problem and that the system crashing around me is the problem.

Thank you for your articles and confirmation that I am not crazy or useless or damaged. The State may be going to hell, but, I sure don't have to. I am still a kind, honest and true person. Thank you for reminding me that it's the system that is broken, and not me. I am beginning to feel some hope again, for myself. I am beginning to look for other possibilities. I am beginning to believe in myself again.

Thank you for your wonderful, inspiring writing. I am beginning to feel like a valuable human being again.

I hope my experience can help some of your other readers.

Here is another thought for you. If we are reaching the point where we are not going to be making much money anymore anyway, we really need to start doing what we really want to do. One of the fallacies I have been suffering under was that, if I was going to take a low-paying job, I should take ANY old job.

Well, if I have the choice, I am now thinking, I should find work that I actually care about. I should find work that interests me. It makes much more sense to me now to be paid minimum wage for something I might like. For instance, I like clothes, books and music. I could, most likely, find a job selling any of these things for minimum wage and part time.

Until recently, I believed that if I am getting low pay anyway, I might as well hate what I do. (Value-add misery to the whole stupid mess, right?) It just occurred to me that I could love what I do just as well and feel better. Make sense? I am just now starting to play around with this idea and it feels really good. I know this might sound crazy. But after I lost my good job, i just felt horrible and stopped caring about a lot of things, including myself and the work I did. Anyway, thought you would find this interesting.

Thank you, Elizabeth, and yes, this does make sense. In large part, the system asks us to sacrifice ourselves to serve some false metric which boils down to the bumper sticker, "Whoever dies with the most toys, wins." What a sad statement of current values.

Martial arts master Bruce Lee once observed that martial arts was not about fancy moves or beating up other people; ultimately, it is a form of self-expression. Only those who have gained insight can grasp this, but it true not just of martial arts but all of life.

Tech pioneer Steve Jobs said much the same thing in his commencement speech at Stanford in 2005, after he'd battled pancreatic cancer.

Your time is limited, so don't waste it living someone else's life. Don't be trapped by dogma — which is living with the results of other people's thinking. Don't let the noise of others' opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.

Stay Hungry. Stay Foolish.

Yes, Jobs is a billionaire, but the money was secondary. Apple was ultimately a form of self-expression.

This is the basic philosophy which powers this site, and in the event you may have missed the Bonus Aphorisms below, here is a relevant sampling:

"There is no security on this earth; there is only opportunity."
(Douglas MacArthur)

"We are what we repeatedly do." (Aristotle)

"Success: To laugh often and much; to win the respect of intelligent people and the affection of children; to earn the appreciation of honest critics and endure the betrayal of false friends; to appreciate beauty, to find the best in others; to leave the world a bit better, whether by a healthy child, a garden patch, or a redeemed social condition; to know even one life has breathed easier because you have lived. This is to have succeeded."
(Ralph Waldo Emerson, submitted by J.P. Bahner)

"It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly; who errs and comes short again and again; because there is not effort without error and shortcomings; but who does actually strive to do the deed; who knows the great enthusiasm, the great devotion, who spends himself in a worthy cause, who at the best knows in the end the triumph of high achievement and who at the worst, if he fails, at least he fails while daring greatly. So that his place shall never be with those cold and timid souls who know neither victory nor defeat."
(Theodore Roosevelt, submitted by Kenneth R.)

"To endure is greater than to dare; to tire out hostile fortune; to be daunted by no difficulty; to keep heart when all have lost it -- who can say this is not greatness?(William Makepeace Thackeray, submitted by U.Doran)

"The way of the Tao is reversal." (Lao Tzu)

"Chance favours the prepared mind." (Louis Pasteur)

"It is neither necessary to hope to undertake, nor to succeed to persevere." (William of Orange)

"Success consists of going from failure to failure without loss of enthusiasm." (Winston Churchill)

"Where there is ruin, there is hope for treasures." (Rumi)

"All fixed set patterns are incapable of adaptability or pliability. The truth is outside of all fixed patterns." (Bruce Lee)

"Always be yourself, express yourself, have faith in yourself, do not go out and look for a successful personality and duplicate it." (Bruce Lee)

"During times of universal deceit, telling the truth becomes a revolutionary act." (George Orwell)

"Everyone thinks of changing the world, but no one thinks of changing himself." (Leo Tolstoy)

Readers forum: DailyJava.net.

Order Survival+: Structuring Prosperity for Yourself and the Nation (free bits) (Mobi ebook) (Kindle) or Survival+ The Primer (Kindle) or Weblogs & New Media: Marketing in Crisis (free bits) (Kindle) or from your local bookseller.

Of Two Minds Kindle edition: Of Two Minds blog-Kindle

Thank you, D.M.T. ($300), for your overwhelmingly generous contribution to this site, and for your life-affirming, kind wisdom -- I am greatly honored by your continuing support and readership. Thank you, D.& E. Shannon ($100), for your staggeringly generous contribution to this site, and for your inspirational home life-- I am greatly honored by your support and readership.


Friday, May 20, 2011

Priced in Gold, Is Housing a Buy?

What is the relative value of housing if we price it in ounces of gold?

My basic point of view is that nominal prices and broad terms such as deflation, inflation and growth should be viewed with extreme skepticism. The more useful approach is to examine the purchasing power of various assets and the the purchasing power of the income streams generated by those assets.

Put another way: to value housing, let's compare the price of a house priced in loaves of bread, or ounces of gold, or barrels of oil to historical norms. Secondly, let's look at the income stream generated by the median-priced home (that is, the median rent and net income after all expenses of maintaining and paying for the rental home are deducted) and ask how many loaves of bread, ounces of gold and barrels of oil that net income can buy.

Correspondent Bart D. has charted some relative values for essentials in Australia, and I will share his fascinating charts next week. Inspired by his work, I have done some calculations on U.S. prices of bread, housing, oil, etc. as well.

Today let's look at a chart of the Case-Shiller Housing Index priced in gold, courtesy of longtime correspondent Harun I.

Click on the chart to open a larger image in a new browser window.

Harun's comments are worth studying. Selling housing at the top and buying gold would have enabled the speculator to buy back his/her house at 1985 valuations. Alternatively, an equal investment in gold in 2005 would have served as a hedge to the huge loss of housing value as the bubble popped.

The Case-Shiller Index tracks the resale prices of homes, and is widely considered to be the most accurate metric of house prices. Median or average prices can be heavily skewed by a small number of outlier homes (very costly or very cheap), and they do not reflect the dynamics of the housing market as well as resale prices.

In broad terms, the ratio of the Case-Shiller Index and gold can be understood as "housing priced in gold." We can see that the current ratio is around 110, which aligns almost perfectly with the second chart, which prices the median home in gold going back to 1970.

The calculation is easy: last report median home price of $166,000 divided by price of gold $1,500 per ounce = 110.

On Harun's chart, we can see the ebb and flow of both housing and gold. A mini-bubble boosted housing prices dramatically in the late 1980s as the last of the Baby Boom bought homes. (The Baby Boom is typically considered the generation born between 1946 and 1964, but many dispute these dates.) Those born in 1960, for example, reached their peak home buying years of 25-30 in 1985-1990.

Gold declined modestly in price in that era, so the ratio moved smartly as housing jumped.

In the 1990s tech/dot-com stock bubble era, housing and gold were both flat, and this is reflected in the ratio's meandering through much of the 1990s. Gold slipped in the late 1990s and housing began a new ascent as the dot-com capital gains and low interest rates began to move real estate markets.

As housing prices climbed from 1997 to 2001, gold went nowhere, so the ratio more than doubled. Put another way, housing greatly outperformed gold.

As the dot-com bubble burst, housing increased its attractiveness as a speculation and gold began its ascent. As a result, the ratio stayed flat in 2001-2004 as both gold and housing rose together. The housing bubble's last sprint to the peak in 2006 puched the ratio up to 500: it took 500 ounces of gold in 2006 to "buy a share" of the Case-Shiller Housing Index.

In terms of the median price, it took almost 600 ounces of gold to buy the median priced house in 2005.

Then housing collapsed, and gold rocketed from $500/oz to $1,500/oz. As a result of housing declining by 40% and gold tripling, the ratio has plummeted by 80%, from 500 to just above 100.

How low can the ratio go? Some might look at the second chart and conclude that the previous bottom around 90, in 1980 when gold shot up to $800/oz, might well mark a bottom in the ratio.

Those who believe that 90 is the bottom would then sell their gold and buy housing at that point. Since the ratio is currently at 110, that point is still a ways off.

I am not so sure, as there is plentiful evidence that we are entering an unprecedented era. The Baby Boom numbers about 65 million, and the generation behind them (Gen X) is considerably smaller (45 million). That suggests there won't be enough buyers to buy all the houses sold as Boomers downsize/retire.

As the U.S. economy grinds toward its event horizon, the generations behind the Boomers are less wealthy--their wages have stagnated, and they will inherit less wealth as assets in general fail to keep pace with inflation (i.e. loss of purchasing power).

If you examine the data in this list of median home prices, by state, in nominal and adjusted prices from the U.S. Census Bureau, you will note a gigantic jump in housing prices between 1970 and 1980. This coincides with the brutal inflation of that era and the first wave of Boomers buying homes.

In broad brush, this data suggests that housing has retraced back to around 1990 valuations when priced in constant/adjusted dollars. Priced in gold, it has retraced to the early 1980s, but I think it likely that the generational retrace could eventually fall all the way back to 1970 prices in constant dollars.

That suggests housing could fall quite a bit further in markets which retained the huge gains logged in the 1970-1980 period.

Meanwhile, at least one respected analyst has set a target for gold of $5,200.Louise Yamada called the turn in gold in 2000-2001, and set a target of $1,500/oz years ago. Thus her technical targets should not be dismissed out of hand.

Yamada has also called for a turn in interest rates/the bond market. The Federal Reserve has kept interest rates at historic lows for years, but cycles cannot be eliminated, they can only be extended. So once the 30-year cycle of falling rates reverses into an era of rising rates, housing will come under a pressure it hasn't experienced in two generations: price compression from rising mortgage rates.

Simply put, the $300,000 home at 5% mortgage rates will decline to $150,000 if mortgage rates double to 10%. The average household can only afford so much per month for a mortgage. If rates double, then the sum of the mortgage has to fall by half to be affordable.

Yes, there are cash buyers, but if central banks around the world have to stop printing trillions in free money to rein in rising inflation, then the flood of free cash looking for a quick return will dry up very quickly.

We might also ask what happens to speculation in rising home prices if interest rates start rising. If cash buyers are counting on hefty returns from rental income, then we have to ask what might happen to rents.

Even if housing stays at current prices, if gold triples to $4,500 an ounce, then the housing-gold ratio would fall to the 30s: $160,000 divided by $4,500 = 35.

If housing declines another 25% to a median of $120,000, then it would take a mere 27 ounces of gold to buy a median-priced house.

There are certainly good arguments (usually based on replacement costs) that housing can't possibly fall much lower, but oversupply and higher costs of money may well combine to push the speculative value of housing to new lows.

This is all speculation and guesswork, of course. All we can do is look at trends and study history for clues about what might happen. What will happen is unknown.

Readers forum: DailyJava.net.

Order Survival+: Structuring Prosperity for Yourself and the Nation (free bits) (Mobi ebook) (Kindle) or Survival+ The Primer (Kindle) or Weblogs & New Media: Marketing in Crisis (free bits) (Kindle) or from your local bookseller.

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Thursday, May 19, 2011

Models of Community: Alternatives to Corporate America

There are community-based alternatives to Corporate America.

As I have often observed, the majority of America's household income flows to a handful of corporate cartels protected by the Central State. Most of the mortgage payments flow to the "too big to fail" banks. Most of the telecom payments flow to the few companies in the telecom cartel. Most of the energy money flow to the energy cartel. Most of the food budget go to the Big Ag cartel and the retail cartel. Most of the money spent on "entertainment" flows to the corporate media cartel, and so on.

Most of the global media is owned by 5 or 6 corporations. Most of the radio stations in the U.S. are owned by two corporations. This tremendous concentration of ownership of the nation's assets gives these cartels immense political power, and so the Central State acts as "partner" to Corporate America, protecting the cartels from competition by insuring that regulations are used to stamp out or limit competitors. Corporate losses are shifted to the backs of the taxpayers, all in the name of the "common good." Profits are private but losses are public--a peculiar definition of "common good."

Corporate profits are now the bellwether, and the raison d'etre, of the entire U.S. economy. The central State and the Federal Reserve have a single domestic goal: boost the U.S. stock market, which they have made the proxy for the economy's "health." If corporate profits and the stock market are rising, then all is well. Or so we are constantly told by Fed and Treasury hacks, toadies and lackeys.

If The Pledge of Allegiance reflected reality, it should now read: I pledge allegiance to the profits of the Corporate States of America, and to the stock market for which it stands, one nation under the Federal Reserve, with taxation and serfdom for all.

As I noted yesterday, the Central Savior State "makes things happen" via centralized top-down authority, predatory taxation and the ultimate threat of coercion. Community "social capital" is not coercive, centralized or exploitive. Global corporations share many characteristics with central states; the "taxation with representation" offered by our government is a facsimile of representation, for the representatives are all "owned" by or partnered with financial Elites. The U.S. has in essence become a Corporate State.

Community "social capital" is a different, under-appreciated model for getting things done and building "value."

A good friend of ours has volunteered at a "listener supported" community radio station for many years: KALW-FM in San Francisco, CA, whose tagline is "Local Public Radio."

The radio station is a PBS affiliate with programs purchased from NPR, but it also produces a variety of local programming, some of which is now aired by other listener-supported public radio stations.

The station's annual budget is a (by corporate or government standards) modest $1.8 million, 70% of which comes from its membership base of 11,000 listeners/contributors. About $150,000 of this represents the office space etc. provided by the S.F. School District, which operated the radio from 1941 to 1971 as a training ground for its students.

If as the Founding Fathers believed, a free press is the bedrock of democracy, then we have to ask if a handful of corporations whose only purpose and mission is to rake in maximum profits are capable of being "free" in any meaningful sense.

It could be viewed as an obligation of citizenship to bypass Corporate Media and seek out whatever truly free press still exists in the nation. KALW is an example of non-corporate media, in this case, radio.

Just as with the church-related example I described yesterday Models of Community: Shared Beliefs, Shared Goals, having the legal status (church or non-profit), the building or office, a bit of income and the mission is not enough. Many worthy churches and community organizations wither despite having these assets.

The key, it seems, is a staff or core of volunteers with organizational skills and what might be called professional zeal for their task. The more organized and professional the core staff, the more creative everyone can be, and the more work can be produced.

As those of you who have joined various community efforts know, many such efforts fall apart not for lack of enthusiasm but for lack of organization. Churches tend to endure for just this reason: there is an organizational structure which participants accept. If a church's leadership becomes too dictatorial or focused on self-glory, there is a corrective mechanism: the congregation abandons the church and goes elsewhere.

This same mechanism is at work in every community group. Humans being humans, power, however modest on a global stage, can distort the priorities and judgment of those given that power or authority. The organization has to embody feedback and corrective mechanisms which function without sapping the core energy of the group. Many of us have seen organizations fail as the group focuses its last best energy on factional squabbling and constant re-organization.

The level of professionalism of the core staff (paid or unpaid) counts. Professionalism includes (or should include) the ability to separate the work from one's inner state. Well-meaning amateurs without any managerial or organizational experience and skills often run aground on the complexities of managing volunteers or making things happen in real time in the real world. Enthusiasm is essential, but it is not sufficient.

Corporations and government, being quasi-military/top-down/dictatorial in organization, breed mini-dictatorships, fiefdoms and self-glorification as a result of their intrinsic nature.Stripped of public relations happy-talk, Corporate America has a fascist core. This is the ugly truth.

Community groups, being opt-in, self-organizing, "intentional" structures, are bound only by the shared goals and values of participants. Authority is limited because everyone can leave whenever they choose to do so. Their participation is contingent.

Leadership, as noted yesterday, is not about being charismatic or dictatorial; it is fundamentally about organizing the resources of the group, however modest, to serve the "do-able" goals identified by the group itself.

People with good organizational skills are like gold, eternally valuable. It is amazing to see what a single individual with a modest ego and outsized organizational skills can accomplish. The effects within an organization are both dramatic and positive. What seemed disorganized beyond repair is cleaned up, what seemed muddled and confused is clarified, and meetings that routinely crumbled into discord proceed smoothly toward actionable plans.

We all want to be part of something greater than ourselves. Churches enable this, and so do other local organizations which serve the community. Every organization needs people with good organizational skills and a professional mindset and bearing.

Corporations exist for one purpose, and one purpose only--maximize profits for the owners and top managers. Everything else is propaganda and HR cheerleading. A nation which has become dependent on corporations for its identity and goals is a lost, hollowed-out nation.

If someone wants to make themselves useful to their community, then one way to do so is to build up one's organizational and leadership skills by volunteering to lead some small project to completion. It might be a potluck meal, or a newsletter. Everything takes effort and organization. Start small and learn from those around you. Contributing to something larger than one's own self-interest is rewarding in ways that those enslaved to Corporate America and the Central State cannot imagine.

Readers forum: DailyJava.net.

Order Survival+: Structuring Prosperity for Yourself and the Nation (free bits) (Mobi ebook) (Kindle) or Survival+ The Primer (Kindle) or Weblogs & New Media: Marketing in Crisis (free bits) (Kindle) or from your local bookseller.

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Wednesday, May 18, 2011

Models of Community: Shared Beliefs, Shared Goals

Organizations bound by shared beliefs and goals offer models of sustainable community-building.

Yesterday I drew a causal connection between the ascendence of the Savior State and the resultant decline in community. As the Central State devolves, we will benefit from examining proven models of re-establishing or strengthening community.

Chief among these models are organizations bound by shared beliefs and goals, and the most common examples of these are houses of worship: churches, synagogues, temples, mosques and meetinghouses (Quakers). For simplicity's sake I will refer to all such houses of worship as churches.

The term "faith-based organization" is generally a synonym for religious faith, and so I use "shared beliefs" to include organizations which are not religious in nature but which draw upon a shared belief system and a shared set of goals. Many environmental groups have these characteristics.

As readers of Survival+ know, I see community and local enterprises as the solutions to the devolution of the Savior State and the hegemony of global corporate cartels and State/bank financial Elites.

As a result, I am keenly interested in all aspects of community organizations and enterprises.

Thus when correspondent Charles D. asked me to address local religious communities, it was a subject I'd been mulling for years.

If I had one request of you it would be that you consider doing a series of entries on local religious communities that generally share your values. I am talking about local congregations, not national religious organizations. My local church, the Episcopal Church of the Good Shephard (NY) takes care of its own and as many others as its parisoners can manage. From what I can tell this is true of some of the local synagogues as well. These folks mean well, care a lot, and put their care into action under challenging circumstances.

Unfortunately, religion on the national scale has largely been hijacked by special interests and politicized to serve their agendas. The U.S. constitution explicitly separates a secular Central State from the tyrannies of religion, while protecting religion from the tyrannies of the State.

Some community groups are founded on and bound by religious faith; others are based on a secular set of values and goals. No one group can do everything for individuals and the broader community, and the "social capital" described by Robert Putnam in Bowling Alone: The Collapse and Revival of American Community is a vibrant, dynamic mix of many groups, voluntary associations, circles of friends and professional colleagues, etc.

Just as opaque, centralized, State/central bank-controlled manipulation has distorted the financial ecosystem of the nation, so too has the Savior State laid waste to the ecosystem of community, which in a healthy state is comprised of many layers of loosely networked voluntary, opt-in "intentional" groups and organizations.

In terms of charting out these self-organizing networks, each individual is a "node" that connects (much like a neuron in the brain) to a number of "clusters" of other individuals, i.e. a group, social network, organization, club, etc.

As Putnam observed, the atrophy of community in the U.S. runs much deeper than the decline of civic purpose, pride and engagement; the American people have largely given up on picnics with friends, too.

Membership has atrophied into a simulacrum of membership--a passive annual contribution, most of which goes to support the bloated staff of a national organization which devotes most of its time and energy to collecting funds to support itself. That is a hollow "membership" indeed.

Today I will relate a story of a church that experienced a revival, and tomorrow I will discuss a non-religious community group which thrives on the support of the citizens it serves.

A few years ago, the Presbyterian Church my father had been attending for years was in a perilous state. The membership had dwindled to a handful of elderly people which barely filled a single pew on Sunday. The minister was a highly educated, intellectual gentleman who knew the Bible but did not have an interest in outreach or community building.

As a result, the church was considering transferring ownership to some other group seeking a church building.

My father had been donating time and money to the church for all his years in the congregation, and so he was involved in these various negotiations. The decline of the church troubled him deeply but it seemed unstoppable.

In what can only be classified as a minor miracle (divine intervention to believers, a stroke of luck to others), a group of people in their 30s, mostly parents of young children, began attending the church, and they soon made it known that they'd been seeking a church which could serve their own thriving circle of friendship and faith.

The transformation was magical. A new minister, just as highly educated and knowledgeable, but with young children of his own, was hired, and within a short period of time this "new blood" had infused the leadership of the church with new vitality. Suddenly (or so it seemed to me, a frequent visitor) that the laughter and energy of children had returned to the church grounds, and study groups, work groups, and shared potluck meals came to life.

What had become a rather sad place was now an energized house of worship and sharing. There are practicalities to maintaining any structure and grounds in the real world, and my father had been making do with a dwindling base of donors to keep the place up. The new members, being in their peak earning years, also brought an infusion of donations that were applied to various maintenance issues.

I draw several lessons from this experience. As our society and economy has become ever-more centralized, we have glorified the role of leadership: we worship CEOs now as if they were living gods because the highest goal of our culture is generating outsized profits, and expect our political "leaders" to do what we cannot do for ourselves: make the hard choices and trade-offs. Is it any surprise they fail so completely and miserably?

The rebirth, if you will, of this one small church shows that leadership comes from within the group; a "leader" is not so much leading as organizing the goals set by the group itself. Leadership, as many have noted, is more a function of the group "leading" the leader than being passively led forward by a charismatic figure.

It takes a strong commitment of time, devotion, money and tolerance of others to forge a new community or revitalize an atrophied one. "Community" is not a Hollywood film, with a plot point at 20 minutes and a conflict/crisis resolved by minute 110. It is going to meetings and tolerating the foibles of others, gently suppressing the unworkable in favor of the do-able, and building consensus around clearly stated goals and projects.

Leadership responsibility is assigned and accepted or declined, a support group (subcommittee) is formed to make sure there are enough motivated bodies around to get the job done, and all the details worked out--a time consuming process.

Groups not bound by faith or an equivalent shared value system tend to devolve quickly, as the friction of working with others grinds down the will to continue. Tolerance is a undervalued treasure, and faith provides the "glue," the forebearance and the forgiveness which is needed to work with a spectrum of others.

A Central Savior State "makes things happen" via centralized top-down authority, predatory taxation and the ultimate threat of coercion. Community "social capital" is not coercive, centralized or exploitative. Global corporations share many characteristics with central states; the "taxation with representation" offered by our government is a facsimile of representation, for the representatives are all "owned" by or partnered with financial Elites. The U.S. has in essence become a Corporate State.

Community "social capital" is a different, under-appreciated model for getting things done and building "value."

Readers forum: DailyJava.net.

Order Survival+: Structuring Prosperity for Yourself and the Nation (free bits) (Mobi ebook) (Kindle) or Survival+ The Primer (Kindle) or Weblogs & New Media: Marketing in Crisis (free bits) (Kindle) or from your local bookseller.

Of Two Minds Kindle edition: Of Two Minds blog-Kindle

Thank you, Lori C. ($25), for your extremely generous contribution to this site-- I am greatly honored by your support and readership. Thank you, Jim K. ($50), for tremendously generous contribution to this site-- I am greatly honored by your support and readership.


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