THIS IS MY 91ST BLOG ON UNDERSTANDING MONEY TOOLS
I mentioned in my last blog that I might approach one of my
pet peeves, “extractionists”/ “extractionism” and the detrimental effect on our
nation.
The word “extrationist” is probably not a word you will find
in any dictionary, but it was a commonly used word when a bright friend mine
and I discussed our economic US system.
To us, the word meant a person, company or industry that added little or
no value and yet reaped quite substantial economic rewards.
First, let me take you into my mental memorabilia on great,
simplified, highly functional societies or ethnic groups, the Eskimo of year’s
past. How did I get here with this?
In college in the 1960’s I took classes from one of the best professors
there could be, and of all classes it was anthropology. Every time I had an elective I would
take this subject from a Dr. Olson.
He was the Indiana Jones of that time. During the summer months he would
go off looking for unique finds, some of the most interesting in Central
America and the northern part of South America. The stories he brought back
were horse back for months, tents and shoot-um outs with people trying to rob
their group. However, his favorite
people were the Eskimo of “old”, and related it to a next to perfect,
functional society driven on individual responsibilities to the family and
society or tribe.
With the Eskimo every individual had a role. Everyone had to work, to engage
themselves. When they became too
old to add value they took it upon themselves to wonder off into the cold and
die, not be a burden on the family or community. Where I am going with this? Hopefully, you will see and it will make sense.
Back to America and extractionists. Let me take my favorite four in the
group, Wall Street investment bankers, commercial bankers, lawyers and
politicians. None produce one
thing. They all live very well-off
taking a piece out of society without producing one item; hedge fund managers
and investment bankers at the top of the list. Now let’s add on insurance companies to the list. They have
annuities and insurance products based upon actuarial studies and statistics,
however don’t produce a tangible product. Bottom line, these industries take a
lot of money from society, and really offer very little in value. If our society and the world could
conduct themselves within a reasonable civil order of honesty, integrity with
ethical and moral behavior we could save a ton of money!
Let’s also look at more “extractionist” behavior. I am all for taking care of people who
aren’t able to take care of themselves because they are obviously
sick/handicapped, mentally or physically.
However there are so many people who are capable of working, but chose
not to and live off the system.
With training and encouragement many could be productive.
To a degree we have permitted this to happen; cause and
effect. Money can corrupt for the
short term, leading to disastrous long-term effects. That is what we have, and I am afraid we have crossed the
border of no return. Money has
bought politicians for years, nothing new. Politicians make laws. Who benefits from most of these laws,
big business; they have the money and pay the lobbyists. In turn, lobbyists
work the politicians. We don’t have enough good jobs for people who can’t find
work. Yes, we have the low paying service jobs, but that doesn’t help our
economy very much. There are
certain things that have happened over the past 30-40 years that are quite
concerning for our nation and aid extractionists/extractionsim:
- The
dissolving of the 1894 Sherman Anti-trust Act. I’ve covered this many times
before. The Act kept US companies
from acquiring smaller companies
and uniting into one, limiting healthy competition. Today we have a few retail stores and six banks. Now, big companies can squeeze the
small business out and own many companies under one “holding company”, e.g.
General Electric.
- The
dissolving of the 1933 Glass Stegall Act. I have also beat this to death in
past blogs. This was created for a
purpose under FDR and after the financial ruin in the late 1920’s. The dissolving of this Act helped lead
us to the disaster of 2007-8; crazy lending, little competition. Certain commercial banks and investment
banks were too big to fail, and bailed out by the taxpayer. Today, the situation is even worse
leaving only a few major powers.
- The
creation and passing of NAFTA,
(North American Free Trade Agreement). It was created under President
George Bush in 1991, and became law under President Clinton. Companies started really exiting the US
with this becoming law. It was free trade between countries and US companies
can actually get financial assistance setting up new factories abroad. Today, Mexican factory workers get
about 30% in wages compared to what Americans receive so American companies are
closing factories by the thousands.
From an alarming statistic I received this week, we have closed over
56,000 factories in the US since the year 2000.
- Trans-Pacific
Partnership which recently passed under President Obama. This is only going to
bring in cheaper products created by cheaper labor from emerging countries,
thus more American companies will set up production plants there. This is only
an extension of NAFTA.
Relating this to extrationists, our US companies are getting
subsidized to start up business abroad using our tax-payer dollars. What does
this really do? Our trade deficit
will go up as we import yet more from cheaper labor. These are US dollars leaving the US, most likely never to
return. Our biggest export is cardboard containers back to Asia to be recycled.
Sad.
Let’s consolidate at this point and briefly mention what
else is extracting money, and other things preventing us ever to be a great
nation. These all impede the
growth (GDP) of any nation.
- High
taxation. Corporately we have one
of the highest tax rates in the world. Company’s headquarters are leaving the US for more favored
foreign soil. The other option for
companies is to keep retained earnings abroad, tax free, currently in the
billions.
- High
government debt and personal debt.
We now have “on” balance sheet US debt approaching $19 trillion, debt
with future entitlements over $100 trillion. Personal debt to GDP one of the
highest in the world.
- As
mentioned above, trade imbalance.
Now, almost $400 billion per year deficit.
- Long
term manipulated monetary policies (Keynesian) versus free market. Worldwide low interest to zero and even
negative; profound effect on financial industries and the elderly.
- Corrupt
government benefiting the politicians themselves. Controlled by big business.
Politicians are some of the biggest extractionists there are! Look at their benefits and what they
receive.
- Wars/hegemony. Now, we have been in Afghanistan about
15 years, no gains and nothing to eventually gain. Long wars will not unite a country but destroy morale.
(Napoleon Bonaparte mentioned that.)
We have expensive government bases and the CIA all over the world trying to control political circumstances
where we have no business right.
Frivolous government spending favoring extrationist defense
contractors. E.G. the old example
of $500 toilet seats and our useless $800 million US Embassy in Iraq.
- Too
great a percentage of people on public payroll and support versus private sector.
Today, we have approximately 144 million people getting some sort of government
check or aid.
- High
unemployment. The government puts out figures, however they calculate
employment differently from most countries making us look superior. Many
millions of people can’t find work at livable wages, and many have given up
looking.
Bottom line, doesn’t look promising!
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