Government bailouts only prolong the time inefficient management teams can keep control of a business. Inefficient management always hinders the health of a company and its progress. The sooner the ineffective are out the sooner the assets can be put to more productive use.
Lawrence Lessig's rant: the mistake in bailouts
Walter Williams - Bailouts and bankruptcy
What is it with music? So much of it is annoying. I was driving in my car today and I scanned through the entire radio frequency twice searching for a song I wanted to listen to. Nothing, I turned the radio off. This is not the first time I've gone through this routine. It happens all the time.
OK, I'm not really moved by mainstream pop music and today's country music, for the most part, is pop music with a twang. The old time country music is nothing but twang and all the lyrics make me have to pull over and... Well, let's just leave it at that.
So given my musical preferences, I'm not expecting dozens of radio stations to be playing something that's intriguing to me, but am I so odd that nobody is creating music that appeals to me or, if they are, no station is willing to play it because there's not enough of an audience? Some of the things I hear while scanning are so annoying I have to wonder who could possibly be listening to it; how could there be a large enough market for that stuff and no market for something I would like?
Some people believe they were born at the wrong time, that they might have functioned better in a different era. Me, sometimes I wonder if I was born in the wrong world.
With the vast number of people inhabiting the planet and the many and varied cultures somewhere someone has to be creating sounds that will communicate to me.
There are many factors that economists and pundits bring up in describing inflation and deflation. Unfortunately most of these factors are symptoms rather than causes. Recently in the news headlines decry the threat of deflation.
The so called "pundits" are confused. Deflation and its opposite inflation are ultimately and always a function of the money supply. If too much money is injected into an economy--defined as the money supply increasing more than the supply of goods and services available--inflation is the end result. Conversely if the money supply does not keep pace with the supply of goods and services deflation occurs.
Government's responsibility is to keep a stable currency. That can be accomplished by tying the money supply to something like gold (the U.S. used to be on the gold standard) or increasing the money supply by the amount of growth in the gross domestic product of the country (not as good as the gold standard, but better than what we have now).
When the money supply is controlled by government, inflation or deflation is the sole product of its meddling. Even if those in government act with the very best of intentions, injecting too much money into the system leads to inflation; not keeping enough money in the system leads to deflation. Government meddling over a period of many years can destroy a currency. That is why the U.S. dollar's purchasing power today is only a fraction of what it was in the 1940s. Extreme actions by government can trash a currency in a very short period of time. Many examples of this abound (humanity doesn't seem capable of learning from others mistakes), but one of the best known examples is the Weimar Republic in 1923.
In our day, the rush by the U.S. government to "bail out" the financial industry and possibly other industries by injecting billions of dollars into the system can only lead to inflation. Let us hope it will not be hyperinflation.
The free market pricing mechanism is simply everybody reacting to market forces of supply and demand. If too much money is being supplied then prices go up, the opposite happens if there is not enough money in circulation.
The most important point about pricing in a free market is that prices still fluctuate even with a stable supply of money. If a particular product is not able to be supplied in amounts to meet demand the product's price will rise. If demand for a product declines and the supply becomes too great then the product's price will decline. The market is constantly adjusting prices.
This phenomenon is merely the natural functioning of a free market and has nothing to do with inflation or deflation provided the money supply is not being overly manipulated by government.
Sadly the U.S. government has injected billions of dollars into the economy and has intentions of injecting much more.
How can housing prices be in a tailspin if the government is injecting too much money into the economy and fueling inflation? The government has been pumping too much money into the economy for most of the 2000s and keeping interest rates artificially low. These two factors created an overblown demand for housing over the last many years pushing prices higher and higher. Now with the change in economic conditions the demand for housing has declined; many speculative markets have almost completely dried up. Demand is off and prices are adjusting accordingly.
Four other perspectives: Robert Higgs , Rich Karlgaard , D.W. MacKenzie , Steve Hanke, and WalterWilliams
In my post Free To Fail my point is we learn and become stronger by the experiences we have. What we learn helps us better understand how to deal with new situations we are confronted with. When someone shields us from those experiences they do a disservice. When we are shielded from important experiences over a very long period of time the results can be disastrous.
Clayton Christensen in his book Seeing What's Next: Using the Theories of Innovation to Predict Industry Change, in referring to the process of hiring people, articulates it this way:
Most of what managers have learned results from wrestling with problems. Overcoming these challenges or problems leads to the development of competencies that people can use in similar situations in the future. While the right-stuff thinking castigates failure, failing can actually be beneficial as long as one can learn to identify the root cause of the failure so as to prevent it in the future.How people, managers, have overcome difficulties is often as important or more important than the management skills they have learned.
Of all the freedoms we enjoy the one most overlooked is freedom to fail. Fail?! That's not, really a freedom is it? We don’t like to talk about it and, truth be known, we really wish it wasn’t there.
Still, this little backwater freedom is under major attack by government officials with encouragement from every side: liberals and conservatives, Republicans and Democrats, economists, journalists, businesspeople and citizens at large. Heck, we’d give away the freedom to fail in a heartbeat—if anyone would take it. Who wants to fail? Not me!
What we learn from our failures though—our mistakes—is often more meaningful than what we learn from our successes. Part of human nature is making mistakes. Humanity is full of emotions. We push things to extremes: up and down. Small failures help us learn to avoid big failures. We become more cautious, more observant. We back away from ideas that don’t work and pursue ideas that do work.
When government steps in and saves us from economic turmoil it adds to a feeling of euphoria, a feeling that government really can control things and make life better through economic planning and social programs. However, even when done with the best of intentions, government programs such as loosening financial standards, creating too much money, and acting quickly to keep the economy from experiencing its normal ups and downs delay, but do not eliminate economic corrections.
My biggest fear is that those who want to run the government are too willing to take control and solve our problems. Just sit back and relax. They won't let anything bad happen to us. Poof, our freedoms are squandered along the road to a better society.
You say I'm paranoid and overreacting to the situation? In the last year, we have witnessed many government seizures of control I never dreamed could happen in my lifetime. In some cases the profligate business people begged for government help.
Free markets are made up of millions of people acting on their own behalf; economic engineering and social programs deny us of lessons we as individuals must learn to ensure sound economic growth and development. If we don't learn from our small mistakes as we go, then the let down when it comes is worse, sometimes catastrophic.
Our current situation has grown out of many years of government engineering of the economy and the money supply. The lessons we haven’t learned put us further out on the limb than is reasonable or prudent. We will never know what our economy might have been like if we had grown stronger by learning from our mistakes.
Billion dollar bailouts are a last ditch effort to save us from the harmful and often wrong decisions of economic planners over the past 30 years. Lessons we should have learned in those years have been postponed, but not avoided.
Unfortunately, the price we pay to avoid the pain is more than monetary. We give up the chance to take care of ourselves and do things in better ways, in ways that are more personal. We give up the freedom to choose.
Solving our problems won't be easy. A space ship off course by only half a degree will miss its target by thousands of miles. Because of government meddling our economy has been moving off course for many years. Then when government officials decide to embark on a plan to save us, and throw billions of dollars at it in the process who can stop them?
To be sure, there are other factors contributing to our being off course: greed and big business seeking and receiving favors from government are two, but the lessons we haven’t learned apply here also. And the culprit is also the same: Government granting favors to select groups and encouraging reckless actions on the part of individuals in the name of accomplishing some social program.
Those who would run the government believe we are not capable of taking care of ourselves. They don't have faith in us. They earnestly believe only they can provide the solutions to our misery and woe.
However, people like to do things for themselves. We are capable of figuring out solutions to challenging situations; even situations that are unpleasant and thrust upon us. We have the energy and enthusiasm to meet challenging tasks and overcome them. Our history is full of examples. Our energy and enthusiasm grow when we take care of ourselves.
Relying on government to solve our problems—or worse, wanting government to do so is a recipe for loss of freedom, and I believe for failure on a large scale. We may be learning that unnecessary lesson right now.
There is no substitute to taking responsibility for our own well-being.
We have entered into a sailing ship and are on a great journey. At our destination is a lighthouse and although that lighthouse is far away we see the light and we continue on. Seas may rage, winds may blow, obstacles may loom in our way but we continue.
There is a revolution ahead. Some would argue we are already well into it. One thing seems certain, we are much closer to the beginning than the end. This is not a religious war, though some may see it that way; this is not a war of political ideology, though some will try to impose their political orientation; this is not a war for geography, we are moving past that.
This is a war for the World Wide Web and how it is used.
William Badke in his article What to Do With Wikipedia does an exceptional job of addressing several issues that are key to the information age and the way people learn in this new era. The article is worth reading. My perspective on this issue follows: The first issue--creative destruction--was popularized by economist Joseph Schumpeter and more recently articulated by Harvard Professor Clayton M. Christensen in his book The Innovator's Dilemma. When creative new methods or technologies come forth those entrenched in the established methods, most strenuously resist the new ways. Early on at a time when new ways could be adopted the established organizations resist change; the old way works just fine and they are in control. Later when the threat of destruction looms on the horizon the establishment seeks to embrace. Second, to the old guard knowledge is power; something that must be controlled and only imparted (through scholarly journals) to those who are qualified or to those who pay (students). Control does ensures a certain level of discipline, but does not always keep out bias. To the avant-garde knowledge should be freely imparted. In every field, knowledge thus shared brings to bare the intellectual force of all who are interested. This is blasphemy to the anointed scholars, but beyond them are thousands of intelligent people who have significant contributions to make, but in the past were disregarded. When more people get involved ideas are tested and refined in ways that would otherwise not be considered. (James Suroweicki in his book The Wisdom of Crowds proposes the idea that a group of people with varying intellectual abilities often finds a better solution, because experts tend to view things in similar ways.) Discipline is maintained because those involved have a vested interest in making sure it does; perhaps discipline even improves because so many unbiased eyes are watching. Third, the new ways will prevail if for no other reason than the old guard will die. More and more, new academics will innovate, contribute and collaborate in the new medium. Fourth, even some who are accustomed to the traditional academic methods question one of academia's products. Career counselor and author Marty Nemko sees eroding value in the traditional four year college degree http://chronicle.com/free/v54/i34/34b01701.htm. Fifth, as the cost of a college education and advanced degrees continues to skyrocket, as the volume of information even in narrow fields continues to explode, and as the knowledge gained may be very important, but have a short shelf life one must question the viability of the traditional academic format. A system that teaches students--who have no intention of becoming "experts"--vast amounts of information that has no application to the students' needs. Sixth, for years George Gilder has held out the idea that what we have in abundance should be wasted; what is scarce should be preserved. Transistors are a good example. In the 1950s they were rare and expensive, today because transistors are made of silicon they are everywhere and cheap. Knowledge is taking a similar path. Wikipedia is not the new way, it's the current way. Innovators will continue to forge ahead developing new tools and finding ways to use them. What the Internet and the academic environment will look like in another decade is anyone's guess. To be sure it will be someone's guess or more likely the thinking of many.
I have so many ideas that come to my mind, but they rarely come to me while I'm at the computer and I usually don't carry around a note pad to record them. Frequently these ideas come to me while I'm driving and it would be impossible to write them down without pulling over to the side of the road. I must start carrying a note pad though.
I was reading some comments last night by Ray Bradbury about his work. He indicated he didn't really create his stories and ideas they just came to him and he would then work to get them recorded. He mentioned how even as a young boy he loved words and ideas and this has carried him through the sixty plus years of his work. He talked about how he wrote as a youth and as he looks back on it how awful his work was and that he didn't really have any talent. He developed through continuing to write because he loved recording his ideas.
I guess I come late to things. I have had a love of words and ideas for the last twenty years or so, but it seems so hard for me to organize my thoughts and get them recorded; when I look back on what little I have recorded my writing seems awful. Still I have this love for words and communication and sharing ideas and it just keeps surfacing in my mind. I must record what I am thinking, even disjointed little snippets of ideas. If I can get them recorded then I have at least a better chance of organizing them into something.
Marc is getting ready to go on Trek in Wyoming. I was asked to write a letter that will be given him while he's on Trek. Here it is:
Dear Marc,
One of the greatest joys of my life is having you as my son. I love you. I enjoy being with you and I enjoy our conversations. It has also been a spectacular journey watching you grow into a young man. Life is a journey not a destination.
Sometimes life forces itself upon us and we just have to tough it out and make the best of the situation. At other times many options are before us and we have to choose. I don’t know what fields of study and endeavor you will pursue in your life, but I have great faith and confidence that you are fully capable of figuring this out. (I know there have been times when you’ve felt like I made you do something, but I want you to know I believe in you and your ability to make your own choices. I will tell you what I see based on my experiences in life, but my desire is always to let you make your own choices.)
You have worked hard to make the most of your talents and abilities and you have also made wise choices. Working hard is not the same as making wise choices. Always remember to step back—in your mind’s eye—far enough to see the situation before you; you will never have complete information so remember to trust in Heavenly Father. Make an assessment of your options, make a decision and then work hard to accomplish your mission. To the extent possible, follow your heart.
Life is constantly changing and you must learn to change with it. Skill sets will come and go, opportunities will come and go, talents will come and go, and even people will come and go; through it all you must learn new things and apply them. Hold fast to the people you love and who love you, but understand even they will come and go. Keep them in your heart, but don’t let their loss cripple your ability to act.
Some people will be mean or rude or try to take advantage of you in an effort to “get ahead” or for no good reason at all. Avoid these people if you can, but that is not always possible especially at work. Many people believe life is a competition (sports, school, work, business), but that is not true not even in those areas.
Life is a journey and a road that is not meant to be traveled alone. Joy is to be found in every step not at the end. Many people will be nice and if you go out of your way to be nice to them you can have incredible friendships. Every person that you meet whether bright or not, talented or not, beautiful or not, rich or not has something to contribute and if you listen you may be surprised. Develop these friendships and networks of people you can rely on and work with. This is extremely important. I didn’t realize this and it has curtailed some of my opportunities in life.
Never forget you also have great contributions to make. Some may not want to let you contribute; do it anyway. Others will be grateful for your contributions.
I could not have asked to live at a better time or with a better family. I love you so much. Even as much as I love you I know that our Heavenly Father and Mother love each of us infinitely more. Don’t forget to check in with Heavenly Father regularly. Go and do your very best; there will be times when you feel you have fallen short, but you haven’t if you never give up.
I love you.
Charles Darwin made a name for himself and shaped the thinking of the world with his theory of evolution by natural selection. I believe in evolution, but not to the extreme that Darwin and many in modern science believe.
Through our own experience we see evolution on a small scale: we create new strains of plants and see that genetic code can be altered by cross breeding. I can even accept that over long periods of time cross breeding could result in improvements to the genetic code itself, but I still sense the work of a higher being, God, in the world and the universe.
My point here isn't which is right: creationism or evolution. No, its a different subject entirely--society and government.
For those that so adamantly endorse evolution the idea of a managed society should be heresy. The evolution of the world and its vast array of biodiversity is the result of natural selection not central planning. Even natural selection with just a little help from those that believe they are truly bright enough to enhance the whole process would still be tinkering. For those that believe in a higher being, central planning is still wrong because it means control of the many by the few. Life, liberty and the pursuit of happiness by very definition mean freedom of the individual to choose.
Information is increasing at an incredible rate. Not all information is available to all people; it's impossible to collect all information into one repository, and even if it were possible it's impossible for one individual or even a small group of individuals--no matter how smart--to process that information in a timely manner. Even the gifted and talented cannot know more than a fraction of the information needed to effectively "run" the economy. That is especially true as we become a global economy and move further into the age of information.
Collectively though, all available information is known and is processed by someone. Millions of people acting independently and in their own best interest are able to more rapidly sift through information and put it to use. Some will choose wisely and others won't and it doesn't matter. Millions of decisions will be made and of those decisions the best, the most practical will produce positive results and rise to the top.
