The Thanksgiving (November 2011) issue of research contains a thought and bile provoking editor’s letter. Research is quite often an excellent magazine. In particular Bill Miller: the closing bell offers a light weight but useful alternative perspective on the self-aggrandizement of financial advisors.
However, the “starvation” letter is built upon one of those big lies that often are critical in preventing honest and honorable discussion of financial solutions.
In the midst of the financial reporting world being so often dominated by clowns like Kramer in my simple point of view it would be easier to start with some truth telling.
Weinreich in his editor;s letter “the lessons of starvation economics” retells the beginnings of the Wall Street smash and grab that makes remarkably clear the issue of moral hazard.
He states, “in 1620, when our Pilgrim forefathers arrived in Plymouth, Massachusetts, per capita GDP was nearly 0.” In reality in 1620 GDP of North America was sufficient to ensure a standard of living higher than that obtained by the peasants of England. What did not show in the accounting was
the entire natural resource asset base of North America in the type of hyper M3 that is used for making long-term commodities calculations such as the combination of proven and unproven petroleum resources. The Native American culture lived within its means and established ownership of its resources through the eminent domain of possession for multiple thousands of years with no oligarchs capable of filing an enforceable claim against them–until the pilgrims.
The Native American version of home ownership savings and retirement plans was the store of provisions within their multiple dwelling places, and those endowments placed in graves.
Just as the Greenspan-Paulson period of American predation held that resources are the natural property of the predator class, the Puritans found “corn, and beans of various colors. These they brought away, intending to give them full satisfaction [repayment] when they should meet with any of
them, as about six months afterwards they did.
“… They thus had seed to plant corn the next year or they might have starved; for they had none, nor any likelihood of getting any, till too late for the planting season.”
In simple terms, the Puritans hedged their synthetic paper that hypothecated a claim to resources without proper audit, thereby inventing Bear Stearns and Lehman Brothers, and then misappropriated funds from accounts not under their control, thereby laying out the legal basis for MF Global, and giving bright ideas to Bernie Madoff.
Weinreich notes, “actually, just under half the population did die that first harsh winter. Socialist economic policies kept the Pilgrim starving for three years, and as today, The unemployment rate needlessly high: “The experience that was had… May well advance the vanity of that conceit of Plato’s and other ancients applauded by some of later times; that the taking away property and bringing in community into a Commonwealth would make them happy and flourishing; as if they were wiser than God. For this community open. So far as it was apparent it was found to breed much confusion and discontent and retard much employment that would’ve been to their benefit and comfort.”
Actually, getting closer to the procedural issues, in 1623 “the Governor (with the advice of the chiefest amongst them) gave way that they should set corn every man for his own particular, and in that regard trust to themselves; in all other things to go on in the general way as before.” That is, work towards a republic, exactly as Plato had said, without a self-entitling oligarchy stealing the productive resources of the governed.
To get closer to the facts, the crack about “socialist economic policies” cannot be sustained without an examination of the synthetic instrument that caused the pilgrims to be in North America.
In reality, each person transported by the stockholders in England had a patent grant to 100 acres of tillable land, provided that such patent not impede riparian rights, which remained with the government back in England rather than within the eminent domain of the Pequot. Management was granted an additional 1500 acres for the sole purpose of public works–schools, hospitals. That “granting of small plots” was no more than slowing down the plutocratic rollup. In addition, of course, the pilgrims got a license to “forcibly expel” anyone who got in their way, thereby inventing rogo-signed foreclosures powered by MERS.
Weinreich notes that, just as is as did Lenin shortly after the Bolshevik Revolution, the management of the pilgrims corporate enterprise, “allotted private plots on which families could form for themselves”–except of course that the land was already theirs, if one gives credence to the Crown issued patent. It was never management’s to give, either way.
In reality, the failure of the pilgrims to abide by their patent created an entitled social class. In 1623, the actual incident that Weinrich calls “small plots” was “In 1623, the Pilgrims divided up their land. The people mentioned in the Division of Land came on the Mayflower (1620), the Fortune (1621), and the Anne (1623). A couple may have arrived on the Swan (1622) or the Little James (1623), but these were small ships carrying mostly cargo. The Division of Land is recorded in Volume XII of the “Records of the Colony of New Plymouth”, and reprinted in the “Mayflower Descendant”, 1:227-230. Each family was given one acre per family member.
http://www.histarch.uiuc.edu/plymouth/landdiv.html
All the “Mayflower Compact”, an effort to legitimise a warrant-less land grab actually said about private or public ownership of resources was “We, whose names are underwritten, the Loyal Subjects of our dread Sovereign Lord King James, by the Grace of God, of Great Britain, France, and Ireland, King, Defender of the Faith, &c. Having undertaken for the Glory of God, and Advancement of the Christian Faith, and the Honour of our King and Country, a Voyage to plant the first Colony in the northern Parts of Virginia; Do by these Presents, solemnly and mutually, in the Presence of God and
one another, covenant and combine ourselves together into a civil Body Politick, for our better Ordering and Preservation, and Furtherance of the Ends aforesaid: And by Virtue hereof do enact, constitute, and frame, such just and equal Laws, Ordinances, Acts, Constitutions, and Officers, from time to time, as shall be thought most meet and convenient for the general Good of the Colony;…”
All the rest of the “story” about “socialism” “welfare” and “capitalism” is later created excuses and justification.
Weinreich complains that, “the notion that American should accept increased taxes and ’shared sacrifice’ in time of need, but the experience of our Pilgrim forebears shows that people will literally starve rather than work for the ‘Commonwealth’ policies that discourage free enterprise…. Do we not see in today’s foodstamp economy rise in brazenness by able people? It seems like a week doesn’t go by without a flash mob army, endowed with expensive cell phones, looting a convenience store run by some hapless immigrant.”
By my experience and training someone seeking financial advice will be well served checking the sanity of potential advisors. I encourage anyone reading this to use what ever Bouleian search algorithm satisfies them to determine the actual incidence rate of “flash mob armies”, the ” looting of convenience stores”, “stores owned by immigrants.”
Weinreich concludes by stating, “our forebears came to America seeking religious freedom, and learned the necessity of economic freedom”. The reality is – ask any Pequot – that the Puritans foreclosed on a hypothecated mortgage registered in a MERS database confirmed by Robo signature performed by European oligarchs whose world view demanded that the worlds wealth was the natural property of certain wellborn, well-connected, self entitling aristocrats. The Puritans’ business plan execution, as Weinreich notes, lacked capital spending allowance, resource management, inventory control, proper paper trail, and regard for the rights of others. It was, as Weinreich notes, strong on child labor and disregard for the weakness, inability and unpreparedness of the assigned labor class.
It was backed purely by the firepower of English weapons.
The current American experiment holds instead that wealth creation comes from an environment that makes putting either monetary, intellectual or labor capital at risk as safe a bet for all parties on all sides of the table a naturally occurring event. That is the point of view inherent in the recent comments by Warren Buffet and others concerning rational tax policy.
I have been told by many people (some of them clients) that they “made their own money” or “created their own wealth.” My standard reply is to demand to see the iron ore-bearing dirt beneath their nails or signs of having built and worked a smelter from which could come the base metals of an industrial age. None of them can. I have asked a few to show me the solder burns on their fingers from wiring up the computational devices they use to plan and execute wealth creation strategies. The most honest of them then admit that they believe themselves too precious to be sacrificed to the common good, too self-involved to be aware of the social capital bestowed upon them.
During the financial meltdown of 2008 a notable percentage of the wealth generation capabilities of the United States was destroyed. I have seen no one asking the rich to make sacrifice: I hear many voices suggesting to those who profited from the system that they pay the money back or leave the country.
Does your RIA reject the social contract? That may explain what happened to your 401(k).
If “19th Century rationalism” is going to be invoked, then the American economy is an engine. Any engine that loses energy through internal force transference– through cams, gears, chains, poppets, belts–unnecessarily is about to be an abandoned engine. Economic engines transfer raw energy and material resource into capital stores of cash, social environment, education and safety. Efficient ones do not empower garbage such as the torquing of American history into one of Ayn Rand’s sociopathic fairy tales.
Posted under business, finance, social
This post was written by admin on November 25, 2011
