Archives for category: Choices we make

“Do you know why I hate capitalists?

1. All they care about is money

2. They have all the money”

This is a bi-partisan joke. Some of the haves use it to demonstrate that money is the essence of modern life while the ‘lefties’ use it to demonstrate the ‘malign’ nature of capitalism.

Both sides are wrong.

According to Adam Smith, the market consists of many specialized economic actors who sell their wares/services. Thus helping each-other lead a better/simpler life than if each of them had to ‘do everything’. Furthermore, a free market is better than a ‘cornered’ one, simply because competition keeps everybody on their toes.
In this sense, a capitalist is a guy who organizes a group of synergically skilled operators in such a manner as to increase their aggregated efficiency.
In order for the market to remain free, a.k.a. efficient, there must continue to exist a certain degree of competition between the said capitalists. And for the whole thing to remain a market, each of the capitalists must remain but an actor, not become a dictator. A.k.a a monopolist.
Differently put, for the market to remain functionally free, capitalists should remain/must be kept level with the other ‘merchant-men’. The bakers sell their bread-making skills, the brewers their beer-making skills, the butchers their ability to carve carcasses while capitalists sell their ability to organize people. Their entrepreneurial skills.
OK, there is difference. But only in our heads. While each of the others use specialized tools – ovens, vats, knives, etc., capitalists use money. Yet another tool but one which seems familiar to all of us. But very few of us see money as a tool and even fewer accept that using money, a lot of it, implies a huge responsibility.  Hence the enormous misunderstanding. No reasonable human being – except for a carpenter, of course, would dream to amass a huge number of, say, hammers, but a majority of people are convinced that having a lot of money would make them happy.

And why did I say “both sides are wrong”?

Because real capitalists are focused on the needs of their business partners – a.k.a. ‘consumers’, not on their pockets/paychecks. Because real capitalists understand that sellers would go hungry if there was no money to buy their wares.
Because free market capitalists are focused on making money go round – and getting handsomely paid for this, instead of constantly attempting to hoard all the money in their grasp.

It’s not me who says so.
Jamie Dimon, Alex Gorsky, Tim Cook, Ray Dalio….

 

Advertisements

Decision is the frontier between action and understanding.

All frontiers are, in fact, links.

Present decisions set the stage where future will be played, just as past decisions have built the theater.
While we, “the people”, are the building actors. The script writers. And the spectators who will eventually bear the brunt.

 

Three things have grabbed my attention this week.

Carrie Lam, the Cambridge educated Hong Kong’s top civil servant, whose career spans more than 40 years, who happens to be a devout Catholic, had tried to fast track legislation allowing the Hong Kong authorities to extradite people to mainland China.

More than a million of the 7.4 million inhabitants of Hong Kong have taken to the streets, in protest.

Across the Pacific Ocean, in Venezuela, a pregnant mother accompanied by her two small children, had joined other 31 people who attempted to flee their impoverished country. They had climbed aboard Ana Maria, a fishing boat which was supposed to take them to Trinidad but never made it across the 20 km wide stretch of treacherous water.

Maroly Bastardo, the Venezuelan mother, was trying to survive. Since it is harder and harder to find food in Venezuela – for themselves and for their children, more and more people attempt to leave the country. Which, despite having an immense natural wealth, is being led to disaster by a group of ultimately incompetent people.

The one million people protesting in Hong Kong have adopted another strategy. They attempt not only to survive, physically, but also to preserve their way of life. Their cherished way of life.

These two are relatively easy to figure out. It’s easy to understand the need to survive. Equally easy to understand is the determination of those who want to continue a lifestyle they enjoy.

But what drives the Carrie Lam’s and the Nicholas Maduro’s of this world?
OK, I might accept the idea that, somehow, each of them might have ‘lost it’.
But what about those around them? How come so many people still consider they can, somehow, contradict the entire human history?
‘This time will be different!” ” ‘This Reich’ will rule for one thousand years!”

Yeah, right…

This rule of thumb is also known as ‘Gresham’s Law’

At the core of Gresham’s law is the concept of good money versus bad money. The law holds that bad money drives out good money in circulation. Bad money is then the currency that is considered to have equal or less value compared to its face value. Meanwhile, good money is currency that is believed to have greater value or more potential for greater value than its face value. One basic assumption for the concept is that both currencies are equally liquid and available for use simultaneously. Logically, consumers will choose to use bad money over good money because good money has the potential to be worth more than its face value.”

‘Concept’, ‘the law holds’, ‘is considered’, ‘value’, ‘compared’, ‘is believed’, ‘assumption’, ‘logically’…
So. The way I see it, ‘Gresham’s Law’ is about people interacting according to their own ‘impressions’, ‘drives’ and ‘internal logic’.

But wait. Things are far more interesting than ‘commoners’ hoarding the potentially more valuable coins, when having the ‘opportunity’ to choose between good and bad money.

“The minting of coins provides the most basic example of Gresham’s law applied. In fact, Gresham’s law itself was built around the minting of coins and Gresham’s service to Queen Elizabeth I of England. Sir Thomas Gresham lived from 1519 to 1579, working as a financier serving the Queen and later founding the Royal Exchange of the City of London. Henry VIII had changed the composition of the English shilling, replacing a substantial portion of the silver with base metals. Gresham’s consultations with the Queen explained that consumers were aware of the change and began separating the English shilling coins based on their production dates to hoard the coins with more silver which, when melted down, were worth more than their face value.”

In fact, Gresham’s Law is about ‘commoners’ reacting in a logical manner whenever the powerful had tried to ‘trick’ the less powerful into accepting less valuable coinage.

Let’s examine the situation from another angle.

Gold and silver had been used to make coins for a number of reasons.
Both were rare enough to maintain their perceived value no matter how much of them might have been ‘suddenly’ discovered. For example, the Spaniards had brought shiploads of precious metals into Europe from South America without creating much ‘inflation’.
They, individually and or alloyed, were soft enough to be minted using primitive technology. The oldest coins made of precious metals go back almost 3000 years
Both gold and silver are impervious to the passage of time. That being the motive for those coins having survived for so long.

For these three reasons gold and silver had been the obvious choices when people had realized they needed a ‘technology’ for making payments and for preserving and transporting value.

In reality, this is the intrinsic logic for which gold and silver had been valuable for us. They had represented the most convenient manner of making payments and for transporting/preserving value. As metals, gold was basically useless until the advent of microelectronics while silver had become really useful only after Daguerre started using it to make primitive photographs.

So. Ancient people had discovered that by using gold and silver coins they could vastly accelerate their economies. The most interested being, of course, the powerful of the day.
The rulers. Those who had the means and the authority to mint.
Some of whom also had the gumption to mess with the whole process. For their own profit, of course. Why do you think Hieron, the King of Syracuse, had hired Archimedes to determine whether a piece of metal – a crown, but the shape had no real meaning, was made of pure gold – as the goldsmiths pretended, or not?

Instead of a conclusion.
Since the start of time, some people have tried to swindle the others. No matter how high their position on the social ladder. And the rest have tried to protect themselves. Or, sometimes, even to emulate the ‘bad’ behavior.

This being the beauty of the free market.
Whenever a market is truly free, the reasonable people naturally weed out the swindlers.
Whenever the swindlers happen to have the upper hand, the rest have no other option but to follow suit. To hoard the ‘good’ money.
The consequence being the slowing down of the economic cycle. To the ultimate ‘bad’ of everybody. The swindlers included. And their children/suitors!

 

We live.
Hard to deny that, no matter what we may think about it.
The very fact that there are so many of us who do live simultaneously makes it a near certainty.

Since we do live, then there must be a place where this whole charade unfolds.

That place is called, by us, ‘Reality’.
Which reality had started to exist only after we, the living things, have become aware of its existence.

‘Hey, wait a minute!  a short moment ago you were arguing that our mere existence was absolute proof for the existence of ‘reality’ and now you pretend that ‘reality’ has appeared only after we’ve  noticed it… We’d been alive for way longer than that, dude!’

Of course. Our very existence does depend on the presence of a certain place where we may exist. Only there’s no need for us to know that. Nor for us to be able to name that place. The ants don’t ‘know’ there’s a whole world around them. Nor have a word to describe it!

What we call reality and the ‘place’ where we live are two separate things.
There is an intersection, of course. What is correct of what we think we know about the ‘reality’ and the collection of things that really exist. Only we don’t exactly know what is correct of what we think we know…

And it is here that things become really interesting.
We not only think that we have meaningful information about the thing we call reality. We also act based on that information, with the deliberate purpose of fulfilling our intentions. And in so doing, we decisively change the place. In ways we fail to understand comprehensively.

My point being that we change the place we depend on, for our lives, without having a clear understanding of how the place itself really works. Nor of the changes we implement – willingly and/or unknowingly.

At least, let’s have some respect. For the place itself.
And for us, as an important component of that place.

“A person may choose to have an abortion until a fetus becomes viable, based on the right to privacy contained in the Due Process Clause of the Fourteenth Amendment.”

This was how the United States’ Supreme Court was reading the US Constitution in 1973.

Pro-lifers oppose this view. Their main argument being that life is sacred and needs to be protected. Period. For them, abortion equals infanticide. Plain murder.

What we have here is a clash of absolutes.
The absolute right to life and the absolute right to dispose of your own body.

The United States Supreme Court has solved the conundrum by setting a time frame. “until the fetus becomes viable”.
Pro-lifers propose another solution: “make abortion and attempted abortion felony offenses except in cases where abortion is necessary in order to prevent a serious health risk to the unborn child’s mother“. (Alabama’s HB314/2019)

Let’s see where lie the differences between Pro-Choice and Pro-Life.

Pro-Choice say that agency must be reserved for those who 1. are alive and 2. are directly implied in the matter.
Pro-Life extend the definition of ‘alive’ to cover everything they consider to be ‘living matter’ and thus take the final decision from those who are directly implied into the mater. And give it to those who have to decide the seriousness of the “health risk to the unborn child’s mother”.

In both cases the absolute becomes relative.
In the first case, the absolute becomes relative to the person directly involved in the matter.
In the second case, the absolute becomes relative to those powerful enough to insert themselves, and others, into the equation.

And both sides clamor they are acting in the name of individual liberty…

In many ways, technology has leaped ahead of leaders and organizations, and the human element needs to catch up.

Erica Volini et al, Introduction: Leading the social enterprise—Reinvent with a human focus

I’m afraid there is nothing new here.

‘Technology” has always been the elephant in the china shop.
Only it is very seldom that elephants enter by themselves. Anywhere, let alone in a china shop. And the mahouts who led them there were not always up to the task.

First things first.
“Technology has leaped ahead…” is an oxymoron.
Technology has always been one step behind the humans.
For no other reason than the fact that technology is a human invention. Each and every technological feat has been initiated and put in practice by a human being.

Hence ‘ ‘technology’, (wink) has leaped ahead of leaders and organizations, and the rest of the human element needs to catch up’!

Secondly, the ‘mahouts’ have a relatively easier job than those who drive the ‘rest of the human element’. Developing a technology is fairly easy but making sure that people do not hurt themselves while using it is fairly impossible.

The physical world is straightforward. It’s reaction is always the same. Once the experimenters learn what happens when they execute a certain action, the ‘response’ elicited from ‘that’ physical system by the experimenters’ consistent actions will never change.

On the other hand, people – conscious people, that is, are not that straightforward.
Being self aware, they constantly evaluate the consequences of their responses. They constantly evaluate what happens after they respond to whatever probes them from ‘outside’.
They constantly re-evaluate the consequences their actions produce upon themselves. They learn.
Only they don’t do it ‘mechanically’. Each of them has preferences and a certain freedom of will. Hence their inconsistency. Each of them learns slightly different things from the same situation. And each of them may choose to react in their own manner.
In spite of their assumptions, people are at best reasonable and never fully rational.

Bluntly put, it is fairly easy to evaluate the consequences of a gun being shot at a man but a lot harder to evaluate the consequences of a man shooting a gun.

While ‘fitting’ discount priced toilet paper into my new second hand car, something struck me.

DSC_6406

In many ways, we are a first generation.
And by ‘we’ I understand what Americans call ‘the baby-boomers’.

We are the first generation to use toilet paper ‘en masse’. Have you noticed the hole in the Farmer’s Almanac?
We are the first generation to witness new cars becoming less reliable than the older ones. Not to mention less ‘honest’… remember the scandal regarding the Diesel engines emissions…
We are the first generation who has not witnessed a large scale war. As a consequence, very few of us had to flee conflict. My paternal grand parents had to leave their country behind after WWI while my mother was trice displaced during WWII. During my ‘tenure’, I’ve only read about those who had to flee the war in ex-Yugoslavia. Or Syria… We’ve met refugees, indeed, only all of them had come from other continents. While our parents/grandparents had to flee themselves. Had relatives and/or friends who had to run for their lives.
We are the first generation whose children expect to have a harsher life than ours.

Would this be enough explanation for the demographic decline we witness in Europe? And in other civilized places? Japan, South Korea…
As in ‘the reason for which less and less of our children have children of their own’?

OK, and where’s the link between my discount priced toilet paper and the demographic decline?

The fact that we don’t want to get our hands dirty is absolutely normal!
Who, in their right minds, would want such a thing?
There is a second fact though. Which cripples us. We haven’t yet learned that, from time to time, people do have to get their hands dirty in order to survive.

And people actually died because of this.
Boeing was so eager to cut costs – and corners, that didn’t even consider doing the ‘right thing’. ‘Getting their hands dirty’ and treating the 737 Max 8 as the new type of aircraft it really was. Before two of them having crashed due to pilots haven’t been properly trained for the new flying conditions.
Boeing should have designed the plane starting from a clean sheet  and the FAA should have  certified it as such.

“A district judge has ordered the Bernalillo County Sheriff’s Office to release property that deputies took during a child abuse investigation and kept after the charges were dropped.

In October, the District Attorney’s Office dismissed sexual assault charges against a nuclear weapons expert who formerly worked at Kirtland Air Force Base. But the Bernalillo County Sheriff’s Office didn’t release the man’s property, which included thousands of dollars of electronics and a draft of a book.”

 

They kept the kids in cages. And Excel spreadsheets. And more than 60 other government files and databases that made it nearly impossible to track the thousands of children who have been separated from their parents by the Trump administration while trying to enter the United States.

This is according to a new report released Thursday by the Department of Health and Human Service’s Office of Inspector General, which finds that, since 2017, the Trump administration has separated thousands more children from their parents than it previously disclosed and that it tracked these kids in ad hoc, disparate databases, including Excel spreadsheets and Microsoft Sharepoint accounts, further complicating the already tortured process of figuring out where those children are today.”

I have no first hand knowledge about any of these two separate ‘incidents’.
The first one might have been caused by a series of ‘misunderstandings’ while the second is only a portion of a hugely complex matter.

What really bothers me is what they have in common.

Both have been initiated by people belonging to/working for institutions put in place to protect the greater good of children. Children who are nothing but our future. Our only future.
Each of these ‘actions’ have been botched. By those who initiated them.
The institutions themselves had failed. To control the ‘runaway operators’ and to perform adequate ‘damage control’.

“Why are we doing things like these to our fellow human beings?”

Because we don’t consider them, in earnest, ‘our fellow human beings’?
For whatever reason?

“Profit is a natural by-product of voluntary commerce, exchanging value for value. Increasing profits come from better exchanges of value over time. Accepting a lower value of trade in order to benefit someone else believed to need the benefit is a myth. Self interest has always been a key component of human commerce.”

Paul Garner

The barons who had forced King John to sign the Magna Charta were interested in preserving their privileges, not in the deepening of their fellow citizens’ freedom… yet this was the ultimate consequence of their actions.

“No free man shall be seized or imprisoned, or stripped of his rights or possessions, or outlawed or exiled, or deprived of his standing in any other way, nor will we proceed with force against him, or send others to do so, except by the lawful judgement of his equals or by the law of the land. To no one will we sell, to no one deny or delay right or justice.

This clause gave all free men the right to justice and a fair trial. However, ‘free men’ comprised only a small proportion of the population in medieval England. The majority of the people were unfree peasants known as ‘villeins’, who could seek justice only through the courts of their own lords.”

The heirs of those barons had evicted their Scottish tenants in search of the higher profits yielded by raising sheep, not because they wished to improve the local food market. Yet exactly those ‘clearances’ had constituted the stepping stone for the economic blooming of Scotland. And for the advent of the ‘Scottish Economic Thought’, epitomized by Adam Smith.

Are we to understand that ‘self interest’ will, sooner or later, somehow morph into ‘the greater good’? By its own, according to a yet unknown ‘natural law’?

I’m afraid this is nothing but wishful thinking.

The barons who had rebelled against King John were following an already established tradition.
Being the nephews of the Norman – read Viking, invaders, they were familiar with the Scandinavian things. Their uprising against the king was nothing more than a defense of their fore-fathers’ way of life.

Of their fore-fathers’ free way of life!

The landlords who had evicted their tenants to make way for the more profitable sheep may have created the conditions for the development of a thriving free market… only it was exactly this free market which had represented the doom of the ‘landed aristocracy’…

So. Is freedom the most important aspect of the free market?

I’m afraid that would be an oversimplification.

The markets are free, period.
If anything impedes their (transversal) freedom in ‘space’ – a ruler, a dictator or even a natural set of events, markets will find their (longitudinal) freedom in ‘time’. All dictatorships have been toppled by ‘history’ and all ‘natural’ sets of events have been overcome. As yet, at least.

The most important ‘things’ in the market are the people who animate it.
Any market would be nothing but an empty intersection of roads if not for the people who gather there to trade their wares. To better solve their existential problems by exchanging the ‘fruits of their respective skills’.
And the freer those people are to hone their skills and to take the fruits of those skills to whatever intersection they choose, the better the solutions developed, by them, for their existential problems.

And what about the profit? Is it good?

Of course it’s good. But for only as long as it remains free!
For only as long as it doesn’t depend on external forces and for only as long as it doesn’t become an obsession.
Since most of you understand the perils of monopolistic ‘external forces’ being exerted to limit the freedom of the market, I’ll delve directly into my obsession about the hidden dangers of pursuing profit as an existential goal.

We describe ourselves as being conscious.

In Humberto Maturana’s terms, ‘we are able to catch ourselves red handed’.

As a human being I do what we human beings do, I operate as an observer observing. The observer is not a condition of being, it is not a transcendental entity that exists by itself, it is not a material entity, it is our experience of being aware of ourselves doing what we do as we human beings operating as observers observing. And what do we do as human beings operating as observers in observing? We make distinctions. We make distinctions of objects, of notions, of ideas, of concepts, …,of entities that we bring forth with our operations of distinction together with the domains of existence in which they arise.

When hungry, we not only feed ourselves. We also notice that we feel good once our bellies are full. And we strive to make provisions for the next meal. Thus increasing our chances to survive.

Some of us end up eating too much. They are so keen to reproduce ‘that’ good feeling that they end up morbidly fat. Thus diminishing their life span.

Still others try to make sure they’ll enjoy their next meal by appointing themselves ‘gatekeepers’ to ‘food’.
And, sooner rather than later, every time they succeed, this ‘arrangement’ ends up in abject failure. The most publicized recent example being the failure of the centrally planned ‘popular democracies’. Unfortunately, there had been countless other examples. In fact, in all instances where power had been concentrated in a too small number of hands, the societies which had allowed this to happen have eventually collapsed.

Another example is our addiction to drugs.
All of us enjoy feeling good. Which is an evolutionary device meant to show us we are on the right track. To prod us in the right direction.
Some of us have discovered ‘the short cut’. Instead of doing ‘the right thing’ first and expect the reward afterwards, they just imbibe the ‘right’ substance. Alcohol, sugar, nicotine, heroine, coke, THC

Now, can any of us pretend that a drug addict or a morbidly fat individual is a free person?

Returning to the freedom of the market, we can only say that a market is functionally free for only as long as a functional majority of the trading agents behave in a free manner. Do as they individually see fit.
Compare this to the situation when, for whatever reason, the majority of the trading agents feel compelled to follow a fad.
The Tulip Mania is the first example which springs into my mind every time I discuss this subject. Followed by all other bubbles which had ‘punctured’ our economic history ever since.

The current fad being ‘profit’.
Which profit is essential for the long term well being – read ‘survival’, of any economic enterprise.
Only we need to remember that economic enterprises are meant to solve problems. To be of service to people. So useful to the consumer side of the market that the consumers are willing, on their own accord, to part with enough money to make those enterprises profitable.

If the market is warped so far that things go the other way – enterprises are managed to maximize profits at the expense of the services rendered to the clients and the ‘beneficiaries’ are not aware of what’s going on, or have no say in the process, the whole thing starts to resemble what used to happen inside an opium den.

We somehow managed to weather all economic crises that we, ourselves, have brought upon our heads. And to outgrow our obsession with opium.

I’m sure we’ll manage to free ourselves from our current obsession with profit.

Nota bene!
Under no circumstances we may allow capitalism itself to be left behind in our quest for liberty from the tyranny of ‘profit’.
Capitalism is something else than the unending and callous adoration of the ‘golden god’, just as profit is a very useful indicator but a horrible master.

 

%d bloggers like this: