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The secret of the success of businesses, going way back centuries to letters of credit, is trust.  The success of Western business is trust supported by enforceable rule of law.  The current difficulties of the European Union (not causes but reasons agreements have been elusive) are a result of lack of trust.  In fact most foreign policy strategies between states is based on lack of trust – which derive, basically, from need for national security, however it might be defined.

Who do you trust?  Why?  I can answer the who, but not always the why.  Why do we trust?  Because we want to – because we must to survive.  Man cannot survive for long alone, but can quite well with mutual trust.  Ask any combat veteran about survival and he will tell you the same: it’s all about trust.  On what can it be based?  Throw out any number of words or concepts you like and it comes down to believing that the person being trusted can be counted on to do what he/she says they will do.  Honesty?  Reliability?  Select your own favorite.

In business, enforceability is more  important today when, due to volume, one must deal with strangers and not intimate friends as was once probably the norm.  The state, with contracts, laws, regulations and courts exist for that purpose, followed up with appropriate punishments; “the state is that agency within society which possesses the monopoly on legitimate violence” (Max Weber).  On the other hand corruption is the force that undermines trust and one of the most pernicious causes of lack of trust comes where those charged with enforceability are not trusted to administer it fairly.

Countries do not trust one another because of differences of outlook, but with each governed by the need to provide security to its population, however they might define it in light of self-interests, mutual trust can be elusive.  Different states, with different self-interests are continually faced with disagreement, some legitimate, some contrived, that must be dealt with, preferably by diplomacy; but can the words of diplomats be trusted?  Coming to an agreement over disputes is too often ruled by power differentials with compromise between non-equals more difficult to achieve.  But then is it not the same among individuals?  It all comes down to trust, but many things go into how that can be generated, and how easily it can be destroyed.

What of social contracts, such as marriage? is it not irrevocably based on trust?  Recall the old hand-shake; could we rely upon a hand-shake agreement between individuals in this day and age?  Many do, and with mutual trust it can work very well.  Think of all the things we accomplish day in and day out based on individual trust.  Of course the trust is not always justified, and almost all of us have experienced that sickening feeling of being taken, making us increasingly wary with each negative occurrence.  But it is rare that even those occurrences create an environment of a dearth of trust; they can’t if we are to get on with our lives; we need it too much in dealing day to day in what we do; much of our trust is not even considered, we just do it, because that is our cultural legacy.

That legacy is something we take for granted, but shouldn’t, for it isn’t universal.  Some cultures take devious pride in cleverly subverting trust for their benefit; others accept a level of self-aggrandizement by officials as being something which must just be accepted; still others accept that that goes with power, and accept it – grudgingly.  In yet others, including our own, unscrupulous individuals are able to aggrandize themselves without it being apparent, and no one ever knows until they stumble.  Corruption is something that exists or doesn’t, in degrees, in accordance with the importance trust is assigned within a particular environment.  As I wrote this I received a phone call from a political advertiser and with his message he used the word integrity; appropriate word, appropriate concept, and a timely addition.  Integrity begets trust and honesty is the base ingredient of integrity.  Words, words, but they make all the difference in our quality of life together.  There is nothing so detrimental to moral and confidence as justified lack of trust.

Ever heard that statistics lie and liars use statistics?  As everything else we are exposed to these days, for the most part, that is an oversimplification.  In fact, as with economics, most people do not understand statistics – not want to, I suppose.  An example is the simplistic response to the statistic that people with college degrees make a million dollars more over a lifetime than those that don’t.  Is that true?  Perhaps (maybe more when it was stated), but so what?  The unintended consequence? Joe Schmuck goes to college to study whatever, doesn’t graduate and  still owes twenty or thirty thousand dollars in college loan payments.

But even if he graduates; does he expect to make a million dollars more than he would have had he not gone to college?  How much might he have made if he didn’t go to college and opened a plumbing business?  Who knows?  The problem with statistics is, that is just what they are: statistics.  They take data, divide by other data and show the results, which are almost always a display of the distribution of more data, which have an average, extremes and a definition of the tightness of the extremes.  With college graduates that’s what comes out; think of the differences in the basic data element which is lifetime earnings (I suppose maybe including investment income as well; I don’t know).  What are the influences on these data?  Family connections?  innate intellectual ability? career field? family considerations (such as divorce)? world events?  Unintended consequences – if the degree recipient doesn’t make a million dollars more than his peers that’s an unintended consequence?  That’s not what statistics are all about.  Do they lie?  What you put in influences what you get out, data-wise.

It is not statistics that lie but those that use them to prove whatever it is they want to prove.  Statistics are data from past experience and users of it will extrapolate those data into the future, assuming the trend they show will continue, regardless of what else might change.  With the college statistics involved think of the high salaries – really high salaries that are included in the data; how many low salaries would it take to bring a stratospheric salary down to earth?  But beyond that, are the earnings pre-tax or after tax?  Do they include capital gains?  I suppose I could research and find out, but that’s not the point; the point is that a data distribution from statistical analysis shows – data distribution.  And the part that is usually used is the average; on an average…but as we were told of Lake Wobegon, all the children are above average, and today most consider themselves such, which, of course, by definition is impossible.  We don’t even know what average is any more.

So do statistics lie?  It would be more appropriate to say that they can be manipulated in many different ways, merely by selecting different day and different periods during which they were collected, resulting in an oversimplification of the event or situation that is being examined.  Which is not to suggest that statistics are not useful; they are data manipulated.  If one knows what he is looking for and addresses it honestly, statistics can be valuable; they are used regularly in business to good effect.  Thinking about it, perhaps we might conclude that once again the attempt is being made to make a science out of social, and there are too many variables in social, since social has to do with PEOPLE.

We all hear a lot about human nature but what is it?  Social Science was something the development of which was assumed to be possible – as just another branch of science by which we were convinced the world was ruled; they don’t often call it that any more; why?  Human nature.  So what is it?  Just the way we are.  That’s disputed too because some just don’t want to hear about a human “nature;” we are all different – and perfectible!  Are we?  That’s disputed too; maybe we are and maybe we aren’t, but I can’t see perfectibility happening any time soon.  Why not?  Human nature – or more precisely, the nature of our emotions and they way they tend to rule us.

Emotions? such as?  panic, fear, envy, ignorance, lust – just about any emotion that leads us to irrationality.  I enjoyed reading a book called The Myth of the Rational Voter by Bryan Caplan who discussed how it takes place in the voting process; very illuminating, I thought.  We pride ourselves, we humans, as rational animals, ruled by rational thought, and we are, until emotion takes over; emotion ignited by various installations of activity in our brain circuitry, influenced by other circuitry containing beliefs, knowledge, superstition – and propaganda.  The mind churns out what we have loaded into it, but as infected by the irrationality of emotions.  Wait a minute; ignorance an emotion?  Ok, so ignorance is not an emotion, but it generates irrational emotional response just as knowledge generates rational response; if it’s real knowledge.  But we know that two people who profess to have knowledge often disagree; how about that?  Knowledge is never complete; can I suggest that the ignorant quotient within the knowledge base leads to the disagreement?  And is disagreement irrational and emotional?  Sometimes it is, and that is when it turns irrational; reasoned (rational) disagreement is healthy and productive – and necessary.

Think about it.  The effects of competition and ambition in free markets are well known to produce better results than any alternative; so why does it sometimes go haywire?  Emotions; we panic and our panic turns us irrational.  And (to Caplan) voters often vote against their own interests; why? because not understanding what their real interests are they allow emotions to take over.  People get together through mutual interests and respect – and passion or lust.  So why do such rational relationships go asunder?  Emotions: anger, envy, jealousy.  Can’t the breakup be rational?  Probably, but I would wager that on one side or the other it is ignited by emotional irrationality, even if not entirely irrational.  Irrational emotion tends to be the catalyst.  Now reading that over the thought occurs to me that too often the generation of a thought by one can be quite rational, even connivingly so; but when the reaction is irrational the problem arises.

Doesn’t this all make perfect sense? No?  Then think upon it; which does not suggest that thinking about it will cause you to agree, because I might not be correct.  This, after all, is merely my opinion, and it probably has inconsistencies in it and dangling detours from reality, perhaps.  But rational thinking is what leads to knowledge and understanding, and we can recognize that much progress has been made when the thinking of one is proven wrong by another – and a different approach is suggested, even if the process is shot through with irrationality – though that does lead to frustration when one is on the side of rationality; no, perhaps frustration whichever side you are on.  Is frustration an emotion?

All my opinion, of course – or at least a train of thought that I find intriguing.

As with all words, patience has several meanings: calm endurance of hardship, tolerant perseverance, and the capacity for calm self-possessed waiting, according to the Oxford.  And of course because of that one can find positions in between.  As one who has always had patience challenges I have often pondered the word and solutions to its scourge – as I deal with my own frustrations with myself.  With this as a point of departure it is more than useful to sit back, emotionally detached, and study its footprint in life – or more accurately, where the footprints are faint.  On the other hand all meanings have common links, and for me that link with patience is avoidance of irritation.

Easy to say, difficult to accomplish.  On the one hand, for me, the irritation has led to taking shortcuts, or more accurately not waiting until what was being done was done completely – and checking it.  That was the original definition of patience that I espoused, as I was keenly aware of my lack of it.  But with the passage of time I have discovered that the more serious patience, or lack thereof, has been with others.  Why can everyone else not be, think and do as I do?  I contend that this is the most salient cause of frayed relations, one to another, and it has similar although different bases than the previous: specifically in that it entails irritation with another rather than self.

And why is irritation – lack of patience – with others so prevalent?  Because of our expectations that they will act and think as we expect them to.  But they don’t, and that goes back to the basic difference among people.  It is so frustrating that something that is so obviously true and clear to us is not so to others; in fact they even REJECT it.  How can that be?  It is equally prevalent among nations and peoples.  Christians and Muslims for example: they are both so sure they are right.  But nations as well, as each is driven by its own needs and internal pressures.  But also, of course, of people who live in close proximity physically and emotionally.  Why can’t he pick up his dirty clothes or make the bed, or any number of other oversights; or different outlooks?  Why does she get so upset over a little things like piles of dirty clothes?  I’ll get around to them – or she can; she is puttering around all the time anyway; why make it such a big deal?  And so we are over budget; it will be ok.  And the car rattles and needs maintenance; I’ll get around to it.

But worse by far are different beliefs – different views of life.  Vacations; why do we need to take an expensive vacation?  Discipline of the children?  Why doesn’t she understand the necessity?  Why can’t he be more patient?  And under pressure the explosion can come with little warning.  One two three four five six seven eight nine ten; it helps sometimes, but not always.  Another word – empathy – comes to mind; trying to see where the other is coming from; not sympathy, one still may not agree, but understanding the cause helps; and the cause is so often some level of exhaustion, real or perceived.  This is not patience?  I think it is, and I think empathy is a necessary ingredient in having patience.  Does that mean that patience is one of the most important ingredients in dealing with life?  Maybe so.

Which is why we will likely never see the end of disagreement, anger, emotional outbreaks – and violence.

Indexation is linking of increases in wages to the percentage rise in the cost of living.  The United States has practiced indexation (but does not call it that) for government employees and retirees – and Medicare recipients.  Brazil tried it until 1980 at which time inflation rose to triple digits.  Before going any further allow me to print a quote from an article in Wikipedia:

“When a government decides to index wages of government employees to inflation it is to transfer the risk of inflation away from government workers onto the government (read taxpayers). Such a policy is to attempt to reduce inflationary expectation and in turn inflation when it is rising rapidly. Research by economists is ambivalent on the success of such policies. Some have deemed it a success including Friedman (1974), Gray (1976), and Fischer (1977). Others have considered it less successful as they observed that indexation breeds inflation inertia (a reduction in the government and the central bank’s effort in fighting inflation leading to inflation rate remaining higher than targeted). This perspective is supported by Bonomo and Garcia (1994)”  Italicization mine). The U.S. government has recently weighed in on the policy of doing this by freezing government employee salaries; they have not done it with respect to government (at least military) retirees or Social Security recipients.

I am a beneficiary of retired military and Social Security salary indexation despite the fact that the government continues to claim inflation is under control; my salary has increased significantly over thirty years.  Lucky you, one might say, unlucky taxpayers, since these payments have transferred the risk of inflation from me to the taxpayers.  A private sector retirement salary that I receive is exactly what it was when I drew the first check.  Is this fair?  The argument for retirees receiving indexed wages is that they are helpless to do much of anything about it and would experience serious impact on living standards without it - and the government gave them a commitment that it would continue to be observed (for which it was made into law).  Note that the government doesn’t seem to concerned about current employees but it is about retirees and it is apparently less practiced outside the government.

With our current debt situation this appears to be untenable, but the indexation not only took place routinely this past year, nor was it even discussed.  To me this is proof positive that we haven’t really taken our debt situation seriously, since the government had the chance to make the point, and didn’t; it didn’t even suggest a reduced indexation.  This concerns me, even frightens me; I was prepared to do without the pay raise, but assumed at least there would be a reduction.  I guess I am not supposed to share in the pain; so then who will?

My fear is that when cuts come, as they must (my opinion), they will have to be much more drastic, such that no one will be willing to accept the pain.  Then what?  Several possibilities have been showed us; labor union employee demonstrations and strikes have been one, particularly of government employee unions, but eagerly supported by their private sector brethren.  Greece is another, with signs of discontent showing up on both the radical right and the radical left.  And of course, inflation.  One faction says, don’t worry about it; it will all work itself out.  The other wants to slam the door hard, right now.  I think both are wrong; but I would hope to see SOMETHING constructive.  Incidentally I wrote my congressman concerning my concern about MY COLA indexation increase, but did not receive a personal reply.

I might add that South America experienced rampant and debilitating inflation during the middle part of last century, and part of it was due to indexation of salaries – of everyone, from which we apparently have not even learned enough to be curious, much less concerned.  They also have made good progess lately, partially as a result of de-indexation; but I don’t expect us to learn from that either.  We, it seems, don’t think anyone can teach us anything, because we are NUMBER ONE.  We won’t stay number one for long with that attitude.

I am not about to launch into a discussion of U.S. foreign policy as it is massively covered elsewhere, and in much more detail and with much more knowledge than I could possibly bring to the table.  In fact it was in reading of stratfor.com, a very impressive private (for profit) intelligence company, that I began thinking along the more general lines.  And in so doing I have to make the observation that international foreign policy is one of the lowest priority considerations among Americans.  This has been made evident from the increased financial pressures on our media; to wit, cuts performed through necessity due to decreased revenue and unstinting expenses have been more heavily experienced in foreign news reporting.  Americans, it has been frequently observed, are much more interested in news that directly affects them, so foreign news is the least missed.  That fact seems to be permeating our national government as well, with much more interest in local power shifts than international shifts.  But, you might observe, with the European Union financial problems we will all clearly be affected, and the true strength of the presidency is in foreign affairs, not domestic affairs.  Well, that notwithstanding, Americans don’t see it that way; I call it ignorance – of economics, history, culture and geopolitics – but others might just say that our self-interest and immediate problems, locally focused, are more important and deserve whatever attention we might have available to focus.

Globalization has made the international picture, and its effect on us, greater, but lack of understanding has left us unimpressed save for the alleged outflow of jobs and because of local political interest and attention.  When politicians began bemoaning our loss of jobs overseas many prestigious sources, including Business Week, adamantly refuted it by pointing to statistics showing that for every dollar lost to overseas investment we got back more through overseas investment in the United States.  But since our economic understanding is limited, for the most part, to self-interest our focus is more shallow and more immediate, and influenced by political/media propaganda.  Besides, what is important to us is how we, individually, are affected and that’s what matters.

Through communications and transportation technology gains things have changed a great deal internationally.  That is not to say that international trade has not been important for centuries, it has, but that importance has exploded due to the ease of pursuing international economic interests.  Take for example, food; bad harvests as recently as several hundred years ago meant serious shortages and sometimes local starvation.  International trade has mostly done away with that threat through the ease of movement of produce (in temperature controlled containers) from and to almost anywhere in the world.  So we all just live happily forever after, right?  Well, no, at least to this point it really hasn’t happened that way.  Why not?

Because, alas, people are not like that – albeit for some good reasons.  Nation states each have problems of their own with which they must deal.  Security concerns real and significant and that is the first priority of any nation state (and individuals for that matter).  We have plenty of fairly recent proof, for those with any interest in history, of what that has entailed.  The resources of the world, after all, are not evenly distributed; I know, that’s not fair, but world fairness is another subject.  Neither are the populations of the world evenly distributed.  This generates competition for existing resources on top of security, and people being people they are unlikely to sit by docilely and accept that someone else has more than they have.

But that’s not the only things that are not evenly distributed throughout the world, and that gets much more complicated and controversial.   Education is important and it’s better, much better in some places than in others.  Many writers, for example, pointed out that in Latin America through the 20th century it was not the need that was not recognized but the way to deal with it.  Specifically, they said, they could not train teachers (while developing structure) fast enough to keep up with the increase in students – not only because of birth rates, but also because of increased percentages of children attending schools.  This may be changing, but it takes time to grow teachers and structure, and the pressure doesn’t go away.

There are also jobs.  When the world was almost entirely agricultural,  families could and often did feed themselves.  But increases in populations have resulted in rapidly increased pressure to flock to the cities.  Why?  Agriculture could no longer support the population and technology was aiding and abetting that – and the jobs were in the cities, all over the world.  But populations in the cities cannot feed themselves; they must have jobs.  Which brings up another poor distribution of resources: many locales are not as effective in creating jobs as others.  Why not?  Culture, capital, advantages, education, training, skills, government policies, transportation infrastructure, and motivation, to name those that readily come to mind.  Creating an environment that supports risk taking, motivation, and opportunity doesn’t just happen; and it also takes time.  It is happening, but slowly and at a time when the populations are still growing, extensive poverty still exists and governments are inexperienced – at least inexperienced.

And is that all?  Unfortunately not; it is all done (or not done) by people and people need to be organized and led if there are to be accomplishments.  We are back to the great intransigent – people, opinions, envy, self-interest and cooperation (or resistance to).  Notice that we are coming full circle; it’s almost overwhelming.  Why can’t we just all live together and get along?  All the above.  And if these are all viewed in terms of a single nation state, they are daunting; when viewed globally the daunt is staggering.  And it is so much “easier” to just take what someone else has – or destroy what he has so we won’t have to be bothered by it.  And we must always remember that leadership, individual and at the nation state level, to say nothing of international institutions must be provided by people, all of whom have their opinions, envies, self-interest, prejudices, abilities to develop cooperation (or resistance to), and so forth.

So what foreign policies develop?  Those that fit the needs of the individual states that can’t even agree within themselves what those interests are.  Challenging?  Oh my yes.

I was exposed to a series of articles on line today dealing with political correctness and the “Islamist situation” in the West.  It is not my objective to rehash what they said, but to take some of their points and try to generate independent thinking.

The gist of several was that political correctness – or fear of roiling the waters – is making it impossible, even deliberately thwarting, efforts to address the situation with any degree of objectivity.  Then there was one that pointed to incompatibility between democracy and Islam and suggested that that was the wrong point to make; this was written by a Turk so I took notice.  The Muslim religion is not compatible with democracy, he pointed out, but the point that needs to be made, as too many in today’s world see little beyond democracy than voting for leaders, the compatibility of Islam and liberty.  If that is the case, what comes of leaders might be anything at all, depending on their beliefs and objectives and more import is compatibility with Islam and liberty.

In that interest there was some agreement (in these articles, that is) that Muslims – at least many – emotionally still dream of restoring the Calafate and expanding it globally.  Religions have that tendency after all, because sharing basic beliefs tends not to be compatible with religion, especially when those beliefs are shaped by fundamental tenets, and supported as such.  Specifically, there is an unmistakable indication that Muslims, even many that are something lest than fundamentalists, are less interested in immersing into cultures to which they have immigrated than they are in changing those cultures to meet their expectations, or at least maintaining their own.  Cultural immersion is the expectation of all states vis-a-vis their immigrant populations, particularly the United States.  Immigrants we love you, respect you and want you; but we have trouble accepting a desire to change what we are to what you have left behind.

Hispanics have been accused of resisting immersion, and that is partially true, but probably for different reasons.  Many Hispanic immigrants, particularly illegal ones, lack education, are not committed to permanence, and live close enough so that they can visit “home” easily and conveniently.  Certainly that is not the case with all, but it seems to fit many – mostly because of numbers; they can create their own communities and maintain their own culture and language because there are so many of them; but not their own laws.  Immigrants have always clustered because they feel comfortable with those they understand, but often soon tire of the restrictions that places upon them, and their numbers seldom allow them to make demands.

But Muslims, with their distinct culture and demanding religious beliefs, seem to have a tendency to want to make demands – not all, certainly, but more than we are used to or are willing to tolerate lightly.  That brings up another argument of several of the articles, that this is deliberate: a third column sent to subvert the tolerant cultures they find and take advantage of the “politically correct” environments that aid and seem to make it possible.  To suggest such is an conspiratorial objective akin to an organized third column of moles intent on infiltrating every level of govenment for the purpose of overthrow is an extreme view.  But demands to live by their own system of law (sher’ia) have been experienced, particularly in places in Europe, and voting for what they want is just the next step of democracy, but only within cultural restrictions – at least up to now.  It is not beyond belief that this might be a normal desire, even expectation, of many serious Muslims.

So what is the true situation?  Could the United States be changed through such methods?  Many Eruopean countries seem to be feeling such threats to their political cultures; is it beyond belief here?  What is liberty worth to us?  and how far will we allow political correctness go?  The experiences of Great Britain, France and the Netherlands are instructive, as is the weakness we seem to have in our worship of diversity for diversity sake, including objection to honest discussion of differences.

Perhaps it is at least time to start thinking about it – or at least to stop resisting thinking about the possibilities it offers.

Progress, what is it?  There is disagreement, but most would probably agree that it has something to do with creature comforts – or perhaps life efficiencies.  A favorite allegory has been that the comforts of lives of many people who live today are greater than those enjoyed by monarchs in times past, and one does not have to be born into aristocracy to partake in them.  In short most of us live better than people did in the past.  No need to elaborate, but improved medications, running water, efficient sewage and electricity are examples – recognized as not being available to all, but to more and more as time passes; and they get more exotic from there.

We can also appreciate that they are both not enjoyed by all and enjoyed unevenly even where they are available, especially the more exotic ones; but an example of an exotic product that has added significantly to progress, and is available to a great number of people across the world, is cell phones.  But going beyond the creature comforts and luxury enjoyment there is perhaps an even more important benefit to progress, that many enjoy but perhaps too few give much thought to: means of support, to wit jobs, and the opportunities to partake of them.  For the most part I think we, at least in the West and much of East Asia take for granted – in fact see as an entitlement.  How, after all, can any of us survive without means of support?

Rather than address the details of the means of progress I would prefer to consider it from the point of view of opportunity; theoretically opportunity is available to any and all; practically it is severely limited by education (including learned skills), abilities, capital, supporting infrastructure, environment, man-made restrictions – and motivation.  And these can be conveniently divided between what is inate in us and what is available to us.  Intelligence, for example, (including motivation, which I consider an important part of intelligence) is one thing, but practical availability of capital, education or training and even  opportunity itself may be another matter.  Clearly we are not all either created equal or equally endowed with opportunity – and in some places people are positively denied pursuit of opportunity even if they possess the innate skills.

So to simplify we need to concentrate on where opportunity is available, even though it is not equally provided.  I am a great believer in different abilities because I have seen them and experienced them.  I am awed by intelligence, and skills far beyond mine and I am left greatly impressed by the gap between many that I have encountered and mine.  To think that although I can barely understand what they are pursuing, they not only deal with it successfully; they either create it or discover it.  Which brings me to two more aspects of the subject of progress: the effect of envy on the one side and of the result of what they discover/create on the other.

Envy first; I consider it a significant part of human nature, not that everyone suffers from it, but it is prevalent throughout and surely distributes itself among us in a normal distribution (bell curve).  To ask why it exists is to question human nature, or at least so I believe, although I realise there are those that even deny such a thing as human nature exists.  It is clearly an inhibitor to the second because with envy there are large numbers that, instead of appreciating the contributions of those that can discover or create, enviously persist in trying to pull them back down to our own level.  Specifically we the envious resent the accomplishments of the discoverers and creators and feel we should share in their success – just because.  The extreme – that to which we seem to be slowly but surely gravitating – suggests that the sharing should be equal – just because.  And this brings us back to motivation – and risk; why would one possessing sufficient motivation to do it (whatever it might be) assume the risk and effort if the result is merely sharing in the outcome?  There are some that might; that’s just the way they are made; but I suggest they are few.

Now clearly this bipolar argument is unrealistic; between the extremes (the highly capable and the expectators -I made that word up) are a rather numerous mass of something in between, from the unspectacular but conscientiously hard working to the deliberately (sometimes of necessity) dependent.  That mass surely complicates matters and makes dealing with the whole ball of wax more challenging, and frustrating.  And that requires us to take yet another step, and that is to recognize what it all means to all of us, specifically that it all ties together in a quite complex way.

Progress, or perhaps more explicitly its progenitor, innovation is merely the first step.  After that comes the less spectacular motivation that comes with pursuing opportunity the derives from it.  The innovator is often not he (or she) who makes it happen.  Henry Ford did not invent the motor car, but he created the process by which it could be made available to the average person.  But beyond this there were all of those whose opportunity was less spectacular; he, for instance who made the tires or the windshields or…well, the list is long.  The same is true with almost any innovation; and then comes the improvement cycle, including what Joseph Schumpeter called creative destruction: products that not only improve but replace; without it the process stalls.

And here lies the vast field of opportunity that CAN open up, if some governing entity doesn’t stand in its way with excess well-meaning but obstructive regulation.  That does not suggest that regulation is not needed (which is where rule of law comes in as well) but it should not stifle.  And there lies another mass of in between that must be dealt with: just enough regulation, but not too much.  And here is the key to real progress because it encourages innovation and opportunity but inhibits the free-loaders from overburdening it into oblivion.  All of this is generally described as free markets.  It has worked magnificently in the United States, and well elsewhere, but the balance it demands requires continual tweaking that in turn requires understanding and appreciation, patience and even sometimes forgiveness: it can be messy, and all do not share equally its success.

But as we all know, there are many who attempt to shortcut, take advantage, and even sabotage the process for their own benefit; that also is human nature and when that group becomes too strong or too successful the entire process can come to a grinding halt.  But there is the challenge.

Before leaving the subject I should like to direct attention to the hierarchy of opportunity which so many of us do not appreciate.  Back to the motor car example, which is appropriate because it entails such a signifcant part of our manufacturing process contribution, but it is similar to many others: airplanes, farm machinery, boats, military weapons – this list is almost endless.  I mentioned tires and windshields, but there are so many more, such as electronics, metal parts, trim, lights, plastic parts, seats, upholstery, fasteners, and so forth.  This is an important, and frequently almost invisible part of the economy of of which we are so rightfully proud.

Allow me an interesting if tangential example.  I was employed at an Army depot that renovated M-114 vehicles by disassembling those severely enough damaged and rebuilding them to specification.  The government in all of its wisdom inserted a requirement to utilize minority business repair parts contractors, which may not be unreasonable, but they also established quotas and probably encouraged some shortcuts in qualifying vendors.  We completed a year’s worth of vehicle renovation, all of which were warehoused as undeliverable (additionally requiring storage maintenance) because a minority contractor was unable to produce seat cushions of adequate quality.  Those vehicles could not be issued to the field until another contractor was found, qualified and began to produce.  Seat cushions?  Perhaps they could have been waved had wartime demand made it necessary; but this was not in wartime.  And before criticizing holding the vehicles  while waiting for seat cushions one should try navigating an all terrain vehicle at even moderate speeds without seat cushions while maintaining safety and requisite effectiveness.

Complexity, lack of appreciation, and unintended consequences have an interesting impact on more screw ups than many appreciate; so do labor disruptions; so do material shortages; and mandated design changes; to say nothing of accidents and mistakes.  There is so much out there in the world of free markets that goes unnoticed and unappreciated as we blithely mutter uninformed criticism and oversimplified observation.

Opinions, opinions opinions, there seem to be no end to them; but knowledge based discussion? one has to dig deep and search long to find that, and then wonder about the truth of the knowledge.  Why?  And what is so different about today?  Or is it different?

Education is a convenient whipping boy; we aren’t teaching our children.  Could it be that our children are less than ambitious about learning?  But then we also insist on teaching them confidence; the success of which is evidenced in their insistence that they are right about almost everything and know more than anyone.  But much of that is a matter of maturity that has always been with us, based on the very understandable lack of knowledge that the young have been able to amass.  But more than that, the problem of free floating opinion in seas of ignorance are rather typical throughout the world, and don’t seem to go away with age (let’s not even talk about maturity).

The greater problem of ignorance is the tendency to react emotionally and not give consideration to much else.  I was involved in a conversation the other night, having to do with traffic on a major artery that had recently been widened but was crowded once again.  Why didn’t they just build four more lanes than what they built?  A number of years ago one Robert Moses in New York set out to build enough roads in New York City to forever banish overcrowded highways.  Every time he built another, the traffic came to use it; anyone who has driven in New York City recently knows the end result.  Unintended consequences?  But how about cost? or projections – the success of forecasts in almost everything is well known.  What if Detroit had spent vast sums of money to build  highways throughout that city?

Another part of emotional ignorance stems from giving little or no thought (if it is even known) to what is required to do something – and then to maintain it.  We all know what should be done: what we want to be done, regardless of what is entailed or even mysterious unintended consequences.  Everything in our emotional – and self-serving – ken is so obvious, so simple; why cant’ “they” see it?  Our emotional superficial views of life are so pat – and often so lacking in understanding of what is entailed.  It is amazing how smart we are when details are ignored; it’s so OBVIOUS.

But that deters us not; we know what “they” should do through free floating shallow opinions unencumbered by knowledge of what is entailed; after all, without that what would we have to talk about?  And I have to throw this in, we seem to favor politicians who espouse the same.

How many times in how many ways have “we” come a’cropper – individuals and governments - through living beyond our means?  Apparently we haven’t learned yet from the experiences of others over so many centuries, and once there, there is no simple solution.  In fact one must assume that many wars began with an attempt at solution – taking from others; the situation was more complex, but an argument could be made that Hitler’s war was essentially just that.

Individuals have less options; when you’re broke, you’re broke, and it doesn’t take long for lenders to realize you are not worth the risk to help you.  Enter governments, “benevolent” governments riding in to save the day.  Of course their motive may very well be less compassion than fear of violent reaction from the broke and desperate; we have had our share of that throughout history.  But we, individuals and governments, still keep getting ourselves into that dilemma.  And lo and behold we are there today, surprise, surprise.

None of the alternatives are pleasant.  For individuals they are simpler though: cut spending until the accounts are once again balanced, play on someone else’s sympathy, steal from someone else or starve to death on the streets.  Governments have essentially two: stimulation or austerity.  Stimulation is like pump priming and assumes if you can do something to start the money flowing it will continue on its own and take care of the situation by increased individual spending and/or taxing.  The problem is that government spending usually does not have lasting effect, and when the stimulation is done there is just more debt – and interest payments to service it; and we know who has to shoulder that burden.  One solution that does seem to work – in time - is to reduce the barriers that inhibit individuals from investing in enterprises that will get the spending started again.  But governments have a hard time in giving up power – and tax revenue – so they mostly don’t care for that solution.  Besides, those who seek the power offered through working for the government almost always have very poor understanding of the science, or philosophy, of economics.

And austerity?  It can work for individuals who are living beyond their means; just cut back spending – if they are spending for more than essentials such as food, shelter, and increasingly medical care; and most of us these days are.  We have long been taught (although perhaps no longer) that one must not live beyond his/her means.  But the temptation to do so? it is so powerful.  Credit cards have been a prime mover in dissuading us from this approach, particularly when collectors are willing to allow paying over time, which too often (although not always) just exacerbates the situation.  Credit cards, after all, are nothing more than loans, with interest – but they are more open ended than the traditional type.  But the cry “cut up the credit cards” can still be heard, and it works if resorted to early enough; austerity.

Government austerity is more complex mainly because too many individuals have come to believe that government will always be there to bail them out, and count on that to meet their own debt problems.  So, simply put, government austerity usually just shifts the problem back to individuals and on we go.  It must be remembered – or perhaps learned, as many don’t seem to understand it – that governments have NO money; all their money comes from taxing individuals.

It must be recognized, however, that governments do have another solution: printing money.  Today that means selling bonds; even selling them to themselves, in a rather tricky slight of hand.  But the result – always comes back on individuals, because governments only exist through the enterprise of individuals; governments have no resources that don’t originate with the people that create them.  So what happens with the printing of money?  It is, after all, nothing more than assumption of more debt and as with individual borrowing, eventually lenders stop lending.  But before that happens a great deal of interest has been piled up and just adds more to the debt.  But something else happens as well: inflation; and what is that?  the value of everyone’s money decreases, usually dramatically, and if they have any it becomes increasingly worthless.  And then what? depression.  Jobs dry up, money becomes scarce, there is not enough food, people lose their homes; very nasty stuff.

We are not there yet and don’t have to ever arrive there again, but we could unless we all tighten our belts and pull back.  The problem is we don’t want to, or as we say today, we CAN’T.  And some won’t and will live by bilking others, which is another problem.  Many say, I am willing to sacrifice as long as everyone else does, equally, only it never happens that way.  Alas, people are not like that; too many will take advantage if they can.  The solution of course is less spending by governments and individuals and payment of more taxes, although that’s controversial too because paying more taxes means less money to invest in new enterprise and job creation.  But if taxes were paid to support building infrastructure to assist individuals in investing in new enterprise and job creation it would be worthwhile.  But we always come back to individuals who are not willing to sacrifice – often aggressively and violently; lets’ face it, many of us are hooked, and some got that way by trusting the government (retirees from government jobs and dependence upon social security).

Getting back on an even keel will be difficult and painful; but it can be accomplished with intelligence and cooperation, relatively little of which is in evidence.  We have been a long time coming to this point and many did not want to hear it – or change their ways; many still have not accepted it.  Furthermore the very world economy that has made our very pleasant standard of living possible will work against it, because failure anywhere will have an effect elsewhere.  but this is where we are and we are in it together.  Will it be cooperation or survival of the fittest?  Probably, based on experience, a little of each.

Wish us luck.