Alan Jewell is a grain farmer in Southwest Wisconsin. He has been honored four times as having one of the best-managed farms in the United States. Alan works with producers and processors, specializing in marketing and hedging their production. He is a featured speaker at many events involving the Agriculture community. He can be reached at 608.935.2596 and [email protected] This e-mail address is being protected from spambots. You need JavaScript enabled to view it . Past articles can be found at http://www.farmandlivestockdirectory.com/columns.html
There are rules that govern a high school football game, rules to govern vehicular traffic flow, and rules of natural behavior by people within society and its economy. Some rules are politically derived by legislative bodies for the good of the governed, (supposedly), while some rules are the distillation of human experience, formulated over a long period of time, which support the expectations from within a society.
Tiger Woods, while breaking no legislative law, was vigorously chastised when he broke a natural covenant with his family, sponsors, and fans. His sponsors fled from his transgressions, taking potentially many millions of dollars from his bank account. The PGA, also, is slated to lose perhaps a billion dollars of lost revenue from the absence of his previous avatar. All this was a logical outcome caused by his self-inflicted misbehavior. The world’s richest and most popular sports icon was felled by his actions quite away from the golf links. Finally, Mr. Woods’ fall from grace was when reality of his behavior was too large to conceal.
Economies can also be wrecked from the excesses of meddling government largess, uncontrolled corporate greed and mismanagement, and a government willing to change rules to repay political favors. When the United States, the richest nation on earth has fiscal behavior that is found abhorrent by the guy who is ultimately holding the fiscal bag, such as the Chinese government that is currently backing away from holding USA treasury bonds, a potential fiscal catastrophe awaits the citizens of the United States. But unlike a Tiger Woods meltdown that revolved around one man, his family, and the PGA, the inability of the United States government to sell bonds at reasonable rates could be catastrophic across the globe.
Economies have their own rules. There are rules made by governments and there are rules that naturally follow the logical flow of money when each segment of a society reacts to better their own interests. In an economy that allows the free market to flourish within set rules of law, self-chastisement should keep the errant’s action in check. In the current case of the United States however, the government has failed its citizens on any number of fronts with the net result of a loss of the normal checks and balances needed for the economy to operate fairly because the government has altered the rules to shower favor on its political élites.
The rules makers have failed us on so many fronts; in fact, they are too numerous to list. A few include rules that allow big businesses not to fail, management for big business to receive incomprehensibly high compensation regardless of performance, government largess that benefits its tawdry supporting voting blocks at the expense of others. When the public loses trust in the system of rules and then begins to realize the jig is up, the natural rules of nature will take over.
These realignments happen from time to time to time and usher in recessions and depressions. Humans are so arrogant to think, “This time will be different.” That is why when the ‘dot com’ boom went bust; it caught most people by surprise. When the housing boom went bust, the fancy banks shuffled their fiscal problems to the government, which passed on the banks losses to the taxpayers. When the car makers and their union friends went bust, the government passed on the bill to the taxpayers; when the big insurance companies went broke, the government passed on the bill to the taxpayers; when Wall Street went broke, the government paid the bill by passing on the bill to the taxpayer, and the story is yet far from ending.
The guy left holding the bag, forced by the government’s solution to the real estate realignment, now includes the next three generations of American taxpayers. What did the taxpayers do wrong to receive this governmental generosity? The taxpayers elected representatives that promised returns that were not and are not sustainable in the natural world.
The government should have allowed the poorly run businesses to fail and let those businesses shoulder the pain, not the taxpayers. For example, the government should insure a stable banking system, but let the poorly run banks fail. But yet in our current system, the banks still exist, large payouts of bonus money still flows to the bank’s management, and the taxpayers still are on the hook for the ultimate losses.
Ever wonders where the TARP money has been spent? Or where the accounting system says the money went? Or where the latest TARP money will go? Do you think the government knows or even cares? That is why in a recent survey, only 8% of the United States population believes the TARP money has done any good, leaving 92% of the people mad as hell.
Each succeeding generation will have its turn at recessions and about every third or fourth generation will reap a real cleansing economic calamity by suffering through a depression. Nikolai Kondratiev, the Russian economist, wrote extensively about naturally reoccurring business cycles that varied from 50 to 60 years apart. His execution in 1938, by orders of Joseph Stalin, was in part from the displeasure Stalin harbored from someone (Kondratiev) questioning the wisdom of a socialist system of government.
Socialists seem to believe that it is government’s job to redistribute wealth in a manner to please their power base. We have to look at history to learn about the future. It is the only thing that we know. Although socialism keeps making promises, it always fails in the end. One thing that constantly reoccurs is the statement “this time it is different.” History does have a pattern of repeating, but not exactly as it did before. The current repletion will usually include the brother or sister or cousin of the original parent with one caveat: there will be one new surprise that catches everyone off guard.
Any government formed with rules that deify natural rules will ultimately fail. In our case, someone has to pay the bills and not just print money to cover the lies. It is our duty to take time and energy to defend against bad actors in government, not to allow the government to take property from its people, and not allow the government to change the rules just to repay a political expediency.
What our government should have done in 2007, instead of trying to deify the natural laws of business common sense was to 1) not lower the interest rates, 2) not to throw money at the bad actors in management, 3) and say to the hoodlums that robbed our future: “All the folks that caused this fiscal manure by making bad bets---are going to get to eat it.”
The ensuing bankruptcies would have bankrupted many, if not most, of the major banks in the United States. But, with the addition of a couple of car makers, and an insurance company or two, it would have wiped out the debt that the taxpayers now get to repay. In the case of the banking system, we would have still had a viable system that was left, one guaranteed by the government, but the bad actors would be gone along with the mess they created.
Where is it written that we need behemoth banks that have the power to cripple a society and then force each taxpayer to work for untold amounts of years to clean up a mess that was not of their making?
Now, we are still at the mercy of the same business management that drug us into the malaise in the first place and have to pay for their mistakes for generations of United States taxpayers to come. And the bad actors are still here and allowed to receive their golden parachutes, their pensions, and their Midas sized bonuses.
Nobody has seemed to learn. If your name is Bernie Madoff and you run a Ponzi scheme to its logical end, the bad guy goes to jail. But, if you run a car company into a scum pond, or break open a Wall Street bank, or run a government and its people into a financial purgatory, then the rules of financial gravity have yet to apply. And they will eventually.
When the rules are changed in mid-stream or against the natural logic of limiting spending to the money government has in its coffers, or paying overdue bills with the money you have stolen from future generations, then that society stagnates, starts to fall behind better-managed societies, and perhaps ultimately falls into a great cleansing depression.
That is why playing by the rules is important.
There are rules that govern a high school football game, rules to govern vehicular traffic flow, and rules of natural behavior by people within society and its economy. Some rules are politically derived by legislative bodies for the good of the governed, (supposedly), while some rules are the distillation of human experience, formulated over a long period of time, which support the expectations from within a society.
Tiger Woods, while breaking no legislative law, was vigorously chastised when he broke a natural covenant with his family, sponsors, and fans. His sponsors fled from his transgressions, taking potentially many millions of dollars from his bank account. The PGA, also, is slated to lose perhaps a billion dollars of lost revenue from the absence of his previous avatar. All this was a logical outcome caused by his self-inflicted misbehavior. The world’s richest and most popular sports icon was felled by his actions quite away from the golf links. Finally, Mr. Woods’ fall from grace was when reality of his behavior was too large to conceal.
Economies can also be wrecked from the excesses of meddling government largess, uncontrolled corporate greed and mismanagement, and a government willing to change rules to repay political favors. When the United States, the richest nation on earth has fiscal behavior that is found abhorrent by the guy who is ultimately holding the fiscal bag, such as the Chinese government that is currently backing away from holding USA treasury bonds, a potential fiscal catastrophe awaits the citizens of the United States. But unlike a Tiger Woods meltdown that revolved around one man, his family, and the PGA, the inability of the United States government to sell bonds at reasonable rates could be catastrophic across the globe.
Economies have their own rules. There are rules made by governments and there are rules that naturally follow the logical flow of money when each segment of a society reacts to better their own interests. In an economy that allows the free market to flourish within set rules of law, self-chastisement should keep the errant’s action in check. In the current case of the United States however, the government has failed its citizens on any number of fronts with the net result of a loss of the normal checks and balances needed for the economy to operate fairly because the government has altered the rules to shower favor on its political élites.
The rules makers have failed us on so many fronts; in fact, they are too numerous to list. A few include rules that allow big businesses not to fail, management for big business to receive incomprehensibly high compensation regardless of performance, government largess that benefits its tawdry supporting voting blocks at the expense of others. When the public loses trust in the system of rules and then begins to realize the jig is up, the natural rules of nature will take over.
These realignments happen from time to time to time and usher in recessions and depressions. Humans are so arrogant to think, “This time will be different.” That is why when the ‘dot com’ boom went bust; it caught most people by surprise. When the housing boom went bust, the fancy banks shuffled their fiscal problems to the government, which passed on the banks losses to the taxpayers. When the car makers and their union friends went bust, the government passed on the bill to the taxpayers; when the big insurance companies went broke, the government passed on the bill to the taxpayers; when Wall Street went broke, the government paid the bill by passing on the bill to the taxpayer, and the story is yet far from ending.
The guy left holding the bag, forced by the government’s solution to the real estate realignment, now includes the next three generations of American taxpayers. What did the taxpayers do wrong to receive this governmental generosity? The taxpayers elected representatives that promised returns that were not and are not sustainable in the natural world.
The government should have allowed the poorly run businesses to fail and let those businesses shoulder the pain, not the taxpayers. For example, the government should insure a stable banking system, but let the poorly run banks fail. But yet in our current system, the banks still exist, large payouts of bonus money still flows to the bank’s management, and the taxpayers still are on the hook for the ultimate losses.
Ever wonders where the TARP money has been spent? Or where the accounting system says the money went? Or where the latest TARP money will go? Do you think the government knows or even cares? That is why in a recent survey, only 8% of the United States population believes the TARP money has done any good, leaving 92% of the people mad as hell.
Each succeeding generation will have its turn at recessions and about every third or fourth generation will reap a real cleansing economic calamity by suffering through a depression. Nikolai Kondratiev, the Russian economist, wrote extensively about naturally reoccurring business cycles that varied from 50 to 60 years apart. His execution in 1938, by orders of Joseph Stalin, was in part from the displeasure Stalin harbored from someone (Kondratiev) questioning the wisdom of a socialist system of government.
Socialists seem to believe that it is government’s job to redistribute wealth in a manner to please their power base. We have to look at history to learn about the future. It is the only thing that we know. Although socialism keeps making promises, it always fails in the end. One thing that constantly reoccurs is the statement “this time it is different.” History does have a pattern of repeating, but not exactly as it did before. The current repletion will usually include the brother or sister or cousin of the original parent with one caveat: there will be one new surprise that catches everyone off guard.
Any government formed with rules that deify natural rules will ultimately fail. In our case, someone has to pay the bills and not just print money to cover the lies. It is our duty to take time and energy to defend against bad actors in government, not to allow the government to take property from its people, and not allow the government to change the rules just to repay a political expediency.
What our government should have done in 2007, instead of trying to deify the natural laws of business common sense was to 1) not lower the interest rates, 2) not to throw money at the bad actors in management, 3) and say to the hoodlums that robbed our future: “All the folks that caused this fiscal manure by making bad bets---are going to get to eat it.”
The ensuing bankruptcies would have bankrupted many, if not most, of the major banks in the United States. But, with the addition of a couple of car makers, and an insurance company or two, it would have wiped out the debt that the taxpayers now get to repay. In the case of the banking system, we would have still had a viable system that was left, one guaranteed by the government, but the bad actors would be gone along with the mess they created.
Where is it written that we need behemoth banks that have the power to cripple a society and then force each taxpayer to work for untold amounts of years to clean up a mess that was not of their making?
Now, we are still at the mercy of the same business management that drug us into the malaise in the first place and have to pay for their mistakes for generations of United States taxpayers to come. And the bad actors are still here and allowed to receive their golden parachutes, their pensions, and their Midas sized bonuses.
Nobody has seemed to learn. If your name is Bernie Madoff and you run a Ponzi scheme to its logical end, the bad guy goes to jail. But, if you run a car company into a scum pond, or break open a Wall Street bank, or run a government and its people into a financial purgatory, then the rules of financial gravity have yet to apply. And they will eventually.
When the rules are changed in mid-stream or against the natural logic of limiting spending to the money government has in its coffers, or paying overdue bills with the money you have stolen from future generations, then that society stagnates, starts to fall behind better-managed societies, and perhaps ultimately falls into a great cleansing depression.
That is why playing by the rules is important.