Friday, March 06, 2009

Solutions as a Null Set

The Reader would be well-advised to study this article by Amartya Sen. He tries to place a traditional posture on Capitalism, and explain why and how it is operating today, which Many consider to be sub-par performance. My own thesis has always been that Capitalism breaks down under the pressures of limited resources alongside of too many Practitioners of Capitalism. The creation of Capitalist enterprise insists upon the extraction of Normal Profits from the operational activity. The crisis comes when the growth rate of Normal Profits exceeds the rate of economic factor expansion. Higher Profits must be drained from a limited viability of Production, inciting the creation of ‘Middlemen’ with their own insistence of Profit receipts. There has been much Work done on Creative Destruction, too little labor has been devoted to the ‘stickiness’ of Creative Destruction where Businesses refuses to close down. This insistence on Profitability eventually destroys the viability of the entire economy, where Profits Demand ruins all Profitability through the huge increase in economic factor Cost in the Production cycle. Read the article, and make your own speculation.

Here is a Post which wonders whether a Stimulus package can be temporary, and if it is not, there is the implication that the Stimulus may be a total waste of excess government spending. I basically agree with that assessment, knowing that Politicians hate to reduce their own expenditure patterns, especially when there is Vote-getting potential in that expenditure. Government Spending never disappears, as such funding becomes a new, special Slush Fund. Reaganomics may win the Popularity contest, but Keynesianism wins the Operational Budget. New Spending should be considered the Enemy of the People, because of the simple fact it will one day be traditional Spending.

Mike Shedlock has his own Take upon the entire concept of quantitative easing, the proper term for creating a Inflation system to counteract deflationary pressures in an economy. The trouble with quantitative easing stands on the fact that the funds are always transferred to the elements least in need of funding, as they have the least exposure to the deflationary pressures. Banks get the Cash, instead of Mortgage-holders; Businesses get funding to make up for lost Profits from reduced Production, rather than laid-off Labor. Mish might take it too far with his Fiscal Insanity Virus; it might only be a Fiscal Imbecile bacteria. What do you do when you cannot believe in Capitalism or Socialism, Reaganomics or Keynesianism, George W. Bush or Obama? I would like to buy Adam Smith a mug of Mead, and We might make it back there one of these days! lgl

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