Friday, February 14, 2014

Capitalism - Upside Down

I first heard of the term “creative destruction” about 25 years ago as my company at the time was moving a production division from a union shop in Minnesota to a non-union shop in Tennessee.  It seemed all quite logical as the company could not have survived structured as it was around the union wages.  I guess it was logical as the company returned to health and grew rapidly from there, eventually employing many more people producing more and better goods and services.

Creative destruction is inevitable in companies and capitalist economies.  It is a necessary part of the markets that provide capital to hire people to produce goods.  It is ultimately good until it is turned upside down by securitization. 

Securitization is the structuring of deals and financial instruments in such a way as not to support the production of goods and services, but to transfer wealth from large numbers of people – and the future - to fewer people - using debt as a tool.  It has been seen in the acquisition of companies, the use of those companies to secure debt, and the transfer of substantial cash wealth to those who orchestrate such things, followed by subsequent liquidation of the company – and the end of production of goods and services. 

In this case, creation of debt is not used to build the production of goods and services, which would employ and build a middle class, but to convert an asset to cash and move the cash out of production.  Securitization was also seen in the housing boom where homeowners took debt – future income - to realize a dream – encouraged by big financial concerns – and public policy.  That debt was restructured into derivatives and sold to pension funds and others – again securing the substantial cash for the orchestrators of such things.  When the bubble burst, the orchestrators were too big to fail and remain so – even after even more cash was taken from the future and transferred their way.  The shareholders of those who orchestrate such things did not suffer heavily – but the middle class did, and shrank.

Securitization is being seen again in student loan debt, where our children are borrowing from their futures to bring their future earnings into the here and now, again to be securitized and sold – securing cash for those who orchestrate such things.  But slow job growth means many kids will be in a state of debt servitude preventing them from buying goods and services – and houses.

Now be assured, I am a committed capitalist.  Capitalism is the engine that drives the general good and the well-being of the people and our republic.  I have no beef with wealth – none whatsoever – if it is used in a capitalist fashion to employ labor to make goods and services. I am filled with disgust, though, that people who call themselves capitalists are actually those who orchestrate such things, titans of finance rather than titans of industry, failing to capitalize the production of goods and services.  There is a gap in public policy that rewards innovations in securitization and the management of money as much or more than innovations in products, services, and production.  Our best minds are designing innovative derivatives rather than innovative consumer products, drugs, software, and goods and services for a growing middle class.  We need public policy that will redirect that talent to enterprises that will support the growing billions on the planet.

Labor and capital need each other if goods and services, a collective increase in standard of living, and better future for all of our children, are the goal.  If the goal is mere accumulation of cash, this is not creative destruction, it is just destruction as it does not employ people.  This is not capitalism – this is capitalism upside down. 

Friday, June 28, 2013

The Approching Irrelevance of the GOP.

One of the vital – essential - components of our constitutional democracy is a robust two-party system.  The other is the Constitution.  The Constitution does many things, but the most important perhaps is to protect the minority from the tyranny of the majority.  The past two days, I have been saddened to see the extent to which some elected representatives on the far right of my party just don’t get that, uttering repeated assertions that the Supreme Court is anti-democracy on the heels of the DOMA and Prop 8 rulings. Many, including Bachmann of Minnesota, Hueselkap of Kansas, even Chris Christie opined that issues of the rights of minorities are rightly determined by the majority. 

Thankfully, the Constitution says otherwise.  I am stunned at the ignorance.  The majority can only exercise power over the minority through actions of the Congress, the various Legislatures, and in some states by referendum.  The Constitution puts substantial limits on the power of Congress, Legislatures, and voters to do so and there are numerous protections afforded minorities and individuals.  In short, the Constitution specifies that SCOTUS is charged with looking after such things.  And no Michelle, SCOTUS did not overrule God as God is notably absent in the Constitution, which, in fact, specifically forbids any religious test to hold federal office.  Regarding DOMA and Prop 8, SCOTUS did exactly what it was supposed to do this week, exactly what we all need it to do.  Neither the Constitution nor SCOTUS is infallible, but without the Constitution and SCOTUS, we will eventually all be subject to a tyranny imposed by politicians claiming direct knowledge of God’s will, or some superior political purpose or destiny.

The other insurance against tyranny, the two-party system, is under threat though.  Under threat because the Republican Party, my Party, seems determined to reduce itself to a regional, white, religious party of ideologues.  This in spite of a majority in the House and the most incompetent President in my lifetime – or at least since Carter.  This I do not understand.  Mr. Boehner, the immigration bill cannot be allowed to be DOA in the House.  Immigration is a real issue about real people that touches all 300 million of us directly or indirectly.  It must be addressed.  Refusing to seek a thoughtful solution to this and a host of other issues will only accelerate the Republicans’ decent into irrelevancy.  Republicans, Obama is not your greatest enemy, you are.

Either way, I believe we will likely attend the wedding of our daughter to her partner of ten years in the next few months, and I am looking forward to it.

Monday, November 12, 2012

Some Weekend Research

A lunchtime report on some weekend digging. Simple stuff. I checked the increase in gross federal debt during Reagan's term and during Obama's term. I calculated the average annual debt increase for each President, then divided it by the estimated number of persons under 40 at the end of each President's term. After all, our kids will be paying for this. Turns out the debt went up $1380/year for Reagan for each person under 40 at the end of his term. For Obama, it was $9403. The debt has been going up almost $1.6 TRILLION a year on Obama's watch.

Clearly we all need to pay more taxes, but the problem is not taxes. The problem is 535 elected representatives and one President all competing to be Santa Claus.

Friday, November 9, 2012

2016? Already?

A news report noted that Marco Rubio is going to IA next week to headline a fundraiser for IA’s governor, Terry Brandstad.  Who do you support in 2016?

Republicans, Stop! Please!  I identified with the Republican party early, since a community protest meeting refused to allow me to sign their petition opposing the invasion of Cambodia in the Spring of 1970.  Their leaders were the local Democratic party activists.  There were a couple of Republicans there who supported me, but ultimately, I was not allowed to sign because I was not yet 18 (and draftable I guess).  In subsequent years, I have become decidedly libertarian in orientation, and have voted my conscience with particular attention to the future of the kids, and the government's rightful role in their lives – which I would hope to be pretty limited – allowing them to be free, and with some luck, not dependent.

As to the Republicans, before blindly charging toward 2016, the party needs to internalize four realities. One, demographics are against the party as it has presented itself in the past few elections.  Two, trotting out minority Republicans will impress no one and change nothing. Three, they cannot win running toward the irrational right in the primaries and then, in the general election, offering what are seen and felt as moderate platitudes by the majority of Americans who are struggling.  Make no mistake, the majority will still feel like they are struggling in 2016 and feelings are reality in the voting booth.  They will want to feel - to know - that at some point in a Republican future, that there will be real opportunity that will apply to their lives.  Four, the Party must realize that limited government begins with ending intrusion into the private lives of the people.  The party cannot define love and family differently depending on sexual orientation.  The party cannot continue to write off gays, their families and friends and expect to win national elections and enable a place at the national public policy table.

Here is a guiding principle - limited government means limited government.

The Republicans will be irrelevant in and to the future if they insist on being Far White and Far Right. Some Republicans may be greatly saddened or even angered by that, however, they need to accept the realities, get the mourning over with and figure out that limited government means limited government.  Then present principles and practices of individual opportunity and limited government differently.  Government will become more limited in the future; fiscal realities dictate this.  Republicans can choose to participate in shaping that government’s policies or be irrelevant.

Saturday, September 17, 2011

Rolling Sabbatical Postscript

Let me start by saying I am extremely thankful for the circumstances that have allowed me to indulge in this long time daydream of a long road trip.  And to MJ for tolerating my absence.  I am lucky without doubt.  Thanks to Aaron for prepping the car and consulting through the mechanical bumps in the road.

So, 8132 miles were covered in 27 days.  Twenty driving days actually.

The mechanical bumps are inevitable with a 40-year-old car.  Let's see. Failed fuel pump, which Aaron had covered with a spare stored behind the seat beneath the back deck.  Mal-aligned front end had the new tires on the front scrubbed off by half way through the trip. New alignment and new front tires in San Francisco solved that.  The radiator boiled the coolant away in 107 degree Mohave Desert heat.  Slowing the pace and distance from the desert solved that.  There was (is still) the unexplained phenomenon of low oil pressure on start up from time to time.  Fortunately, turning off and back on seems to fix it until it happens again. Got the brakes hot in Ouray resulting in a tow to the flatlands of Montrose to test and assure proper function.  All-in-all, not so bad.

When he was small, after going to a movie, Aaron invariably asked me "What was your favorite part?"  OK - here goes.

Favorite New Place:   The Sedona-Flagstaff area.  Will definitely explore in the future.

Favorite Place I'd Been Before:  Rocky Mountain National Park

Favorite Highway:  Whichever one I was on at any given moment, with some preference for those in our great Southwest.

Best Feast:  The bacon-themed feast at Joe and Cheryl's in Duluth - all the usual suspects attending.

Most Meaningful Quote:  "Yaarrr!" - Sherean, Vanessa, and friends.

Most Uncontrollable Laughter:  Time spent with Mary..

Best Restaurant Food:  Seared Ahi Tuna with Roasted Pineapple Glaze - Fitch Restaurant - Salida, CO

Best Bar Stool:  In the corner at Ed's Cantina in Estes Park.

Worst Night:  The night in the ER in St. Louis

As nuts as it may seem to many of you, my favorite part overall was driving.  I truly enjoy it.  It is a beautiful country, and it cannot be appreciated from the air.  Nice people everywhere.  New experiences almost every moment.  Truly a great time.

Thanks for your interest in the road trip.  I hope you've enjoyed the small part I've been able to share.


Thursday, September 15, 2011


A bit over twelve hours today from Nashville.  It was pretty much rockin' down the highway - no pictures tonight.

This weekend, I'll write a wrap-up of the 8000 miles in 27 days.  Thanks to everyone for their interest.


Wednesday, September 14, 2011

Winding It Up

I knew the last couple of days of the sabbatical would be long ones crossing either familiar territory from Colorado to Florida via the Midwest, or unfamiliar (and most likely not so interesting) territory across Texas and the south.  The Midwest route obviously won.

There was rain at my early departure from Lincoln.  I chose to go south around the bridge closures mostly because there were a couple of interesting things I wanted to check out in that direction.  The weather gave me a couple hours break just as I arrived at those places and then resumed relentless and heavy rain the rest of the day.  No further stopping except for gas and food and no pictures in the rain, though I would love to have captured some of the light show in the sky as I approached Nashville a couple of hours ago.

The first stop today was to check out Whiskey Run Creek winery.  It was founded by the father of one of my long-time and dear friends.  The wines are very well regarded in the area and the winery is a multi-purpose facility for the town of Brownville, NE.  Sadly, the founder has passed away, and the winery is for sale.  Check it out online at  If anyone has had that dream...... drop me a line.

Next stop..... Goff, KS.  Yep, another town that no one would notice if it had not apparently been founded by some ancestor. This one has a bit more to offer that the spot in the Mojave Desert I shared in a previous post.

Perhaps you'll have to take my word for it that the water tower says Goff.  They also have public buildings.  

They also had three gentlemen on a corner and a guy in a red pickup who seemed to cast a suspicious eye toward the stranger idling a Mercedes around, occasionally stopping in the middle of a street to leap out of the car and snap some pictures.  Mr. Red Pickup so much so that he started to follow me around about a half block behind moving as I moved, stopping when I stopped.

My business complete, I thought it best to leave.

The remainder of the day was basically highways and rain.  At this point is is nearly midnight after 15 hours driving in the rain.  I can't keep my eyes open.  Tomorrow is the the final day.  I'll post a little something about it when I get home and do a recap over the weekend.