As the market opened down again, Dow -300pts, a private, opinion paper on global economics from Gavekal happened to get me especially worked up. They had an interesting view of the world stemming from recent dissent and rioting. Tea Party here in America, revolutionary behavior in the Middle East, riots in Europe; they all lead to the same conclusion, governments are mismanaging and people are suffering.
Gavekal describes capitalism as a form of government favoring capital while communism is a form of government favoring labor. What currently exists in this country? Neither.
Current monetary and fiscal policy do not favor capital. Interest rates are at 0%. If you have capital to invest, where do you turn? There is no low risk return to be had for your earned wealth. Thus we find investors buying zero duration assets such as gold and investing in US Treasuries, in essence a claim on all of America.
As for government support of labor? Well, minimum wage laws, social security and payroll taxes are actually against labor as they are a negative incentive for hiring. Other regulations such as new health care legislation, discrimination laws etc may seem above board but in practice are barriers to employment. In general, just the uncertainty of what new laws or changes may be thrown at employers is reason enough not to higher. Gavekal quips that “in France two consenting adults can do whatever they want to each other without the state getting involved, except, of course, work for each other.”
So return on capital is low and regulation of labor is high. What is an employer to do. You may have guessed it, invest their capital in automation, replace people with robots. Again, the unintended consequence of government over-involvement, higher unemployment because of poor policy toward capital.
So government is not pro labor or pro capital, what is it? Our government is basically a misfit sector throwing money at problems, a misdirected, poorly run charity with a big ego and insecurity complex. More waste. They throw money at the unemployed laborer, though their policies have lengthened the unemployment lines. They throw money at the retired, though their policies have created higher medical bills and lower accumulations of wealth. They throw money at bank balance sheets, though their policies were complicit in a housing bubble. Whatever name you want to give it, this is a downward spiral. It is as ludicrous as Abbott and Costello, the Three Stooges or Keystone Cops only too real to be funny or entertaining.
Our government is not a group with a mission, they are a misfit missionary group attempting to solve problems that they themselves create and it is having an overly negative affect on our quality of life.
I’ve heard our government described recently as amateur, incompetent, self-interested and corrupt. These are not ideals I have for anything or anyone, they are definitely not adjectives I’d associate with leaders. The floundering we have today is more appropriately prostitutionism or botchulism than any past -ism used to describe government.