The Deviant Root

Jeff Cornwall would seem to be suffering from a little paranoia, if thee was not a Reality in his statements. The High-Brows of the Economy imagine there is something inferior about a Business structure, which cannot magnify itself multiple times rapidly, and draw itself into compound Debt where it can pay it off only by maintenance of Boom conditions. Small Business fail at about the same rate as the Growth machines under Recessionary conditions, but Small Business failure rarely destabilizes the Banking system; a consistent pattern whenever the Rapid Movers collapse inward upon little actual capital assets. What amuses Me is the actual dependency that the Corporate world has upon Small Business; where a lack of small Service Providers lead to outrageous Operating Costs for their Big Brothers–even Walmart.

I seldom agree totally with Robert Reich, basically because I have always seen him as a little too utopian. I do agree with him about the intrinsic value of Bankruptcy rather than Bailout. Bailout attempts no alteration of Management or policy, simply flooding past mistakes with Cash so as to hide the bad performance which brought the crisis. I disagree with Robert at the Thought that the Big Three should not go through Chapter 11. Bailouts presage the ability to resume normal Business course, if adverse financial liabilities are paid. The Big Three have a huge Inventory of Cars, which are quickly Ageing into Junk; they possessing little other tangible assets. There is no Expectation their Sales will increase markedly in the near future, and loss of Jobs from Downsizing will automatically deteriorate the sanctified Call to Save Jobs. I Vote No on a Bailout of the Big Three.

I include this Post from Mark Thoma because every Student should have some understanding of this Issue. A singular Solution to correct one factor will inevitably affect other factors as well, meaning that you obtain an alteration of the Whole; a meaningful result often undesired. The common Solution has been Bang-Bang as Mark identifies; a Solution where modification is completely On, or completely Off. This creates the actual least intrusion to model operation, with the smallest corruption of model desire. There is mathematical substantiation of this form, and enforces the Chaos theory of deviation along ordered lines. I am sure that most Students who study this Outline will understand it more than I. lgl