Recent Posts

Why We Evangelicals Need a "12-Step" Intervention

Posted on Saturday, August 30, 2014 No comments

Saturday, August 30, 2014

I did not know whether to laugh or cry.

A cellphone video is making the rounds on social media showing Victoria Olsteen telling people that "when we obey God, we're not doing it for God... we're doing it for ourselves..."

As I get older, it gets painfully more apparent that if I want to be depressed, all I have to do is linger in front of the mirror...  I expressly remember looking at it recently and wondering who the heck let that old person in my house.  I looked with dismay yesterday at the black smock my barber threw over me before cutting my salt-and-pepper hair - which has a whole lot more salt than it used to.  That black smock makes what little pepper is left disappear.  No, ma'am, sorry but if Christianity is all about us I am not sure of what to make of those who call this the "Good News."

One of the things I want to do in this blog is blow up some of the stereotypes out there about Evangelical Christians - both in terms of our politics and what passes for "Christianity" (I am air quoting as I write) on TV these days.  The more I work in our community here in Mira Mesa with people from all walks of life the more I am confronted with the deep disconnect between how we Evangelicals see ourselves and how we are seen.  The first order of addressing that disconnect is getting involved with my neighbors - and then Olsteen goes on her riff about how it's all about us.

It's enough to send a guy screaming into the night.

So what I'll do is suggest that we Evangelicals desperately need a "12-Step" intervention.  I'll hyperlink to some passages from the New Testament so my non-Evangelical reader will understand some points of reference.  It'll be enough for me to provoke a little reflection on the part of those who share my faith.  I also hope to point out to those who do not that what you see on TV is careening further and further away from what most of us believe.

12 Steps to Faith and Community

Step #1: Describe for yourself the "celebrity culture."  For me it is about how we seem to want to live vicariously through the lives of others - which are, of course, manufactured for the media.  We replace real life interactions with more and more celebrity worship in the church of social media - and sometimes right there on Sunday morning itself!  We Evangelicals are not only not immune to this nonsense, in some ways we have perfected it.

Step #2: Ask yourself whether you are being conformed to this culture by social media, or are being transformed by the renewing of your minds (Romans 12:2).

Step #3: Read Hebrews 11.  Seriously; you can't take the next step until you take this one.  Click the link; it'll open a new window.  Read.

Step #4: Now listen to Victoria Olsteen and ask yourself whether what you just saw and heard bears even the slightest resemblance to what you just read.

Step #5: Read Hebrews 11 again.

Step #6: Think of the last time you really cheered on a sports team.  Try to find the video on YouTube.  Here's mine, with an absolutely hilarious dubbed over play by play of the Chargers beating the Steelers in the AFC championship game.  But before you enjoy your reverie too much, there's a test after whatever video you find is done.

Step #7:  Here's that test.  Ask yourself: Does Hebrews 11 allow you to sit comfortably calling the play-by-play?  Or does it call you to get your rear end off the couch and onto field to "run the race"?

Step #8: If you passed that test question, find someone who is discouraged, take them out for coffee and just listen to them for a while.  There are two things about this step: First, you WILL have to turn off the TV and put away your smart phone.  Sorry.  Second, you might discover why God gave us two ears and one mouth - that we might listen twice as much as we speak.

Step #9: Now read Hebrews 12:1.  Seriously; you can't take the next step until you take this one.  Click the link; it'll open a new window.  Read.

Step #10: Turn on 'Christian' TV again, but remember your discouraged friend. Consider the possibility that the "sin which so easily entangles" is the sin of being frivolous - It shouldn't be hard to get this after listening to your discouraged friend... it's right in front of you on TV.

Step #11: Read Hebrews 11 again. Now put yourself in the line of these heroes of faith in your spiritual race. Sorry, but the play-by-play and the seats in the stands are for those who have gone before us.

Step #12: However you pray, however you conceive of God, take this to Him in prayer for confirmation: If you want to guard yourself against the sin which so easily entangles, turn off the TV, stop worshiping your spiritual heroes and start becoming one!

Hi, my name is John and I am a recovering spiritual spectator...

Language Games and the Lessons of History

Posted on Sunday, August 24, 2014 1 comment

Sunday, August 24, 2014

One month ago I wrote about yesterday, the 75th anniversary of the non-aggression pact between Germany and the Soviet Union.  Hitler would use this pact as the cover to violate a similar pact signed five years prior by him and Poland shortly thereafter, and then turn and invade Russia itself.  At a minimum, 30 million people would die as a result - mostly Russians.

This history explains a lot when it comes to understanding current Russian motives and strategic thinking.  But it also offers us a lesson in the difference between words and deeds.  When Obama reacted to the recent beheading of journalist James Foley, his anger was evident.  But his comments leave us to wonder exactly what upsets him.

"One thing we can all agree on is a group like ISIL has no place in the 21st century," Obama has said.

It seems Obama is upset to see that his image of what the 21st century is supposed to look like is now in tatters.  When Russia invaded Crimea, Secretary of State John Kerry lamented Russia's "19th century behavior in the 21st century."  Only a fool would think that Obama's response to the former (Russia) did not factor into the strategic calculations of the latter (ISIL).

And now we see in Obama's rationale for his military response to ISIL that this administration does not have the faintest clue about the difference between words and deeds, tactics and strategy, and how these differences can have very real, tragic results.

By Obama's rationale, our airstrikes are designed to prevent a genocide of the Yazidi people and protect American personnel.  While the first is certainly a worthy use of American power, it is a purely tactical goal.  The second reason is frankly laughable; American personnel are usually protected in embassies and consulates with a detachment of Marines or other security forces (unless we are talking about Benghazi, of course).  What is missing in both reasons is a sense of strategic interests.

Obama has now found out - at James Foley's expense - what happens in the absence of American strategic initiative.  A big part of this problem is a complete failure to understand the nature of tyranny.  The thinking seems to be that American strategic initiative creates the pretexts for tyranny on the part of people like Qaddafi (before) Assad (now) and the nascent ISIL.  If we are to learn anything from history it is that tyranny is always its own pretext; if it is not the actions of America the tyrant points to, it will be the actions of someone else (e.g. Israel).  And if not that, the tyrant will manufacture the needed pretexts out of thin air.

And so the absence of American strategic initiative does not do one whit to prevent or avoid tyranny.  It merely leaves us without the ability to influence events ahead of time.  We are left to react after the fact to the near ethnic genocide of the Yazidis, the ongoing religious genocide of Iraqi Chaldean Christians and the brutal beheading of an American journalist.

But what really threatens the peace is how the Obama administration persists in reactionary tactics (air strikes), replacing genuine strategy with empty language games about holding people accountable in the 21st century.  Make no mistake, Putin is watching and listening very carefully.  We have already seen him invade and annex Crimea with troops that were not Russian - until they were.  The calculation is that as long as Putin holds out a few intellectual hoops that Obama can somersault through to avoid having to actually lead America and/or NATO in a military response to aggression, he (Putin) pretty much has a blank check.

About 100 years ago people used to talk about how far humanity had progressed, that war was a thing of the past.  And then World War I shattered the illusion that somehow human nature had changed.  75 years ago the world played the kind of language games Obama plays today, and paid an immensely tragic price.

The Roots of Ferguson: The 'Academic Definition' of Racism

Posted on Thursday, August 21, 2014 No comments

Thursday, August 21, 2014

My wife and younger son have taken a liking to NBC's talent competition The Voice.  One evening I joined them in watching and one of the show's judges, the musical R&B artist Usher, had with him fellow musician Aloe Blacc to coach two contestants who would be required to sing Aloe Blacc's hit single "The Man."

It was an interesting choice because one contestant was black and the other white.  The song is clearly born out of the African American experience and as the music video linked here to YouTube shows, evokes the protests of the 60's at the beginning.  As someone who has taken voice lessons (albeit quite a while ago) I imagined myself in the position of the white contestant.  It would be a challenge for me because in order to sing a song like that, I would need to find a way to get to a certain emotional place necessary to invest something of myself as a vocalist in the art of the songwriter.  But if I were the vocalist... well, I am white...  And the songwriter/original performer is black and is singing from the black experience in America.

So how to do this?

I would have wanted to ask both Usher and Blacc to tell me of things which happened in their own lives which they would have reached back to for the emotions the song calls for from a vocalist.  The problem is I have no idea how to go about asking questions like that without risking the questions being perceived as racist.  There are many reasons for this.  Some are uncomfortable for us to admit.  Others are imposed on us by what I'll call the "faculty lounge" and its "academic definition" of racism.

(The music video linked here is marked 'Explicit', but I did not find anything vulgar about it.)

The Soft Racism of Invisible Barriers

Before I challenge this "academic definition" I believe we have to have something more than mere disagreement with the ideas of others.  What I'll articulate here in place of the "academic definition" of racism is what I call the "soft racism of invisible barriers."  We can also note the "hard racism of ill intentions," but that is pretty easy to recognize.  My perception is that we have rightly pushed that mostly into the shadows of American life.

But this "soft racism of invisible barriers" is harder to see - especially for those who belong to the majority.  These invisible barriers begin with questions like "What do black people think of..."  If I were to ask that of a musician like Aloe Blacc I would basically make him invisible to me.  All I have to do is step back and ask myself when I was last asked what "white people" think about something.  It is likely I would respond with something like "I have no idea; no one appointed me to be a spokesman for white people."  But I have never been asked that - noticing that is the whole point.  And once we realize the foolishness of that kind of question if posed to us, the foolishness of us posing such a question to our African American friends or neighbors should be obvious.

It is for this reason that if I were asked to sing "I'm the man" I would need to ask Blacc about his own experience.  And that would then require something important of me.  I would have to allow Blacc to help me understand the significance of the American experience from his perspective, which cannot help but include a lot of difficult history.  We conservatives like to insist that the American experience means something common to all of us.  And I believe we are correct - the meaning of the American experience is fixed in our history and in our founding documents.  But the significance of this meaning simply cannot be the same for white and black America.  Pointing to slavery is the just the easiest way to illustrate this.  But there is something else much more current.

The American Ideal: "Anyone Can Become President of the United States"

This is something I remember from my childhood.  It is an idea we teach to our children.  So consider: A white child and a black child sit next to each other in class.  The same lesson is being taught by the same teacher using the same textbook.  The kids have it open to pages showing pictures of past Presidents (let's imagine this is before the Obama presidency).  What does the white child see?  Pictures of men who look roughly like he does - or will when he is older.  What does the black child see?  Pictures of men whom he can never grow up to look like.  The meaning of this ideal is fixed in our history and in our national identity of ideas (rather than an identity of religion and ethnicity).  The significance of that meaning simply cannot be the same, however, for both children.  Until now, of course.

This is not to minimize the challenges we face, as Furgeson shows us clearly, nor to suggest that somehow racism is no longer a problem.  The problem, however, is not as we have been taught: It is not a problem of "white privilege"; it is a problem of human nature.  If the faculty lounge insists on the "academic definition" of racism because American society was originally formed by and for a Caucasian Northern European people, this arises from the fundamental flaws of our common human nature.

What makes America exceptional is how we struggle and grapple with this.  We are heirs to a national identity forged around the idea of essential equality among human beings.  These ideas were quite radical in their day.  We knew no aristocracy idled to their own self-indulgence; everyone worked to build a new nation.  But as Frederick Douglass noted on July 5, 1892 in a speech delivered at Corinthian Hall in Rochester, New York, George Washington - who was compelled by his conscience to free his slaves upon his death - is memorialized by a monument built with slave labor.  The contradictions of our creed and our history are right in front of us.

But these are not contradictions of meaning.  Douglass understood this and strongly affirmed the meaning of our national creed.  They are contradictions of significance.  The question for us - not as Conservatives or Liberals, Democrats or Republicans, but as Americans, all heirs to a common national identity of ideas - is how well we understand the different significance of this meaning among ourselves and our neighbors of other races.

The "soft racism of invisible barriers" can be seen in things like the color of most Band-Aids matching lighter Caucasian skin, or in labeling the beige Crayon as 'Flesh'.  I can only think about a couple things like this at the moment.  I am quite sure my black neighbor could list a dozen without any effort at all.  By virtue of being in the majority it is probably impossible for me to "see" all of these "invisible barriers."  But if I am looking for them nonetheless, I might be able to learn how to ask the right questions.

The "Academic Definition" of Racism

When this subject is discussed in our universities the topic is dominated by the idea that racism is "prejudice plus power." Under this definition, we are naturally inclined to generalize about our experiences with those different than us.  When we generalize like this - again something that is a function of human nature - we develop prejudices.  Since we who are white have historically been the majority with the power to order society around these prejudices, we are therefore racist.

The problems with this are many.  The easiest among them to see is how this pushes us away from each other and from the conversations about how the significance of our common identity of ideas differs among us.  While a university might rightly expect its students to push past any offense taken in the classroom, in ordinary communities we are left ever more isolated to nurture our suspicions toward the other group.  The tragic death of Trayvon Martin was the direct result of this.  Both he and George Zimmerman kept each other at arms length, nurturing suspicions born of past experiences, instead of approaching each other to clarify their different perceptions.

The second and more subtle problem is how when we unpack this definition we discover that it rests on identity politics - the exact same problem with me asking my African-American neighbor "what do black people think about...?"  And when identity politics is challenged, the faculty lounge inevitably falls back on the history of racism - defined as it is as "prejudice plus power."  The reasoning proves to be circular.  When this definition and identity politics are pulled apart and each is demanded to stand on its own merits in our communities, its failures are both evident and tragic.

Our national conversation on race has been hijacked by the faculty lounge, where their academic definition of racism is the ideological price of admission to the conversation.  We deserve better - much better.

An Exercise We Can Do Together

Each year, on July 5 we should come together for a reading of Douglass' speech.  The reading should be done by multiple people of all races.  In the reading of the speech - in the choices we make with our voice to emphasize one part over another - we will reveal what we find to be significant.  And I suspect my black neighbor will likely find different parts more or less significant than I - his or her white neighbor - would find significant.  This would be an opportunity for us to listen to each other and discover how the significance of our national identity is different among us.  The meaning is the same - but we come to that meaning from different pasts and experiences, and thus the significance of that meaning will differ.

Aloe Blacc's music video for "The Man" is extraordinarily timely in light of the strife in Furgeson.  The video shows scenes from the 60's anti war and civil rights protests, eventually moving forward to a scene where Blacc walks among military personnel standing at attention - a clear reference to a sense of progress in the election of Barack Obama.  The scene then returns to what looks like an inner city with Blacc arm in arm with community leaders and an interracial group of protesters.  It almost seems like a question - why is it that the progress which has reached the White House has yet to reach places like Furgeson?

I still don't know how I'd do it if I was asked to sing his song.  But I hope there might be a brighter future if I wonder out loud about it with my African-American neighbors.

Hurricanes and Hedge Funds: What the Season Can Teach Us About Economics

Posted on Friday, August 15, 2014 No comments

Friday, August 15, 2014


The eastern seaboard is battening up the hatches as Hurricane Joaquin spins up in the Atlantic.  Even if the storm does not make landfall, it portends massive amounts of rain.

The imagery right now, though, is not yet dominated by destroyed buildings or flooded communities, but by those ubiquitous maps that project the path and intensity of the storm out a few days into the future.

This is a great opportunity to learn something about hedge funds and the casino that the supposedly free market has become under the money printing enterprise of the Federal Reserve.

This is pretty arcane stuff, and if you've read other posts in this blog you know I like to tackle arcane stuff and try to make it a little easier for everyone - especially you jocks out there - to understand.  In this post I am going to try and swim against a strong current among conservatives like myself by trying to explain the arcane world of what is called 'Knowledge Management' (KM) or 'Data Mining' in information technology, and how it is used in commodities speculation - and how this grossly distorts our economy.  But first I'll explain how this thing called KM works in hurricane modeling.

Data, Information & Knowledge

First we have to back up and define some terms.  'Data' can be any single piece of data like temperature or relative humidity.  That data is collected from certain places at certain times.  (I do not claim the following example is how data for storm maps is handled; this just a descriptive example.)  You can think of the date/time, location from the center of the storm and the relative humidity as the three dimensions of a cube, as in this graphic. (The top squares have the yards away from the center at the bearing on the compass, so 0/0° is the storm's center.  1,000/90° would be 1,000 yards away due east.)

The RH percentage, the date/time and the position with respect to the storm's center are all individually pieces of data.  When they are brought together like this - "data-in-context-with-other-data" - it is called information.  And when you "assemble" a single three-piece data set like this into a logical 'cube' by capturing the progress of time and the progress of things like RH away from the storm's center, you build out more and more information.

And as you build out this information over time from more and more storms, you can apply statistical methods to the information to predict the path and intensity of the next storm - this is called knowledge in Knowledge Management.  (See here for a great article on a 2012 improvement to the data modeling for hurricane forecasting.)  And the more information you gather over time, the more accurate your predictions become.

Apologies are in order from the Geek Tower; the propeller on my beanie is really spinning.  I just hope I haven't made you dizzy to the point of losing your lunch.

But this blog post is not really about hurricanes; it's about hedge funds.  And they are doing exactly the same thing with price activity in the energy markets (which is just one of many commodity markets where you will see this sort of thing).  The 'spot price' of crude oil today, for example, is like the center of the storm.  (West Texas Intermediate, or WTI, is at $45.28 as of this writing.)  Current inventory, current refining capacity, current transport capacity, and many other such variables are like relative humidity, air temperature, sea temperature, barometric pressure, etc. in storm modeling.  Each individual measurement (price, inventory, refining capacity, transport capacity, tracked over date/time) are all pieces of data.  They are brought together into logical 'cubes' of information.  And from this information, it becomes possible to predict future price activity - knowledge.  If you have noticed how the models for hurricane forecasting have improved over the years, the exact same thing is happening in the modeling of price activity in commodities markets.

The Blackjack Table of the Energy Market

Now think about this for a moment: Blackjack is basically a game of supply and demand.  The dealer has the supply, and it is 'inelastic' - the term economists use for a fixed supply - there are only so many cards in a deck.  Demand is a function of the number of players at the table.  So if you're one of them, you can watch as the low and high value cards are removed from play by previous hands.  If you can keep close track of this, you can bet big when the counts are in your favor - or bet small when they are not.

And you will, of course, get kicked out of the casino if management thinks you are doing this sort of thing.  It is considered cheating.

Now let's take up the energy market.  I am a hedge fund manager (not really - just playing one on the blogosphere).  I have a sophisticated KM system which is getting better and better each year at predicting price activity in the crude oil market.  Today the 'spot price' is about $45/barrel.  My system is saying, however, it will be driven to $65/barrel as a number of tanker ships go into dry dock for maintenance.  Leasing a ship is going to get a bit more expensive shortly, so the price for delivery of crude is going to rise with it.  Since I have clients who have invested in my hedge fund, I have to make money for them, so this is what I do:

I use their money to 'back' a contract for 1,000 barrels of crude at today's spot price of $45/barrel.  But this is for purchase within 60 days.  What I am 'betting' on at this Blackjack table is that the price will be $65 before I have to execute the contract.

And if my KM system is right, when that happens, my contract will then represent a $20/barrel discount to the spot price.  And the contract is for 1,000 barrels, so the contract is worth $20,000!

And you, dear reader, run a refinery.  You need the crude, and will refine it into things like gasoline for the motoring public and kerosene for the widowed pensioner on a fixed income who needs to heat her home.  Your competition is 'paying at the pump', as it were, buying crude for $65 per.  I drop by your office with an offer.

"I have this contract for 1,000 barrels at $45 per," I start my pitch.  "Your competition is paying $65,000 for that amount of oil today.  My contract represents a $20,000 discount.  So let's you and I split it!  You pay me $10,000 and I'll assign the contract to you."

This means you will have spent a total of $55K ($10K to me for the rights under my contract and $45K executing the contract) to get what your competition has to pay $65K for.  And I just made $10K for doing nothing substantively different than card-counting at the Blackjack table of the energy market and betting when the count was in my favor.  After taking my 'management fee' what is left of the $10K goes to my clients as part of their return on investment.

One of many myths in finance is that this sort of thing is highly risky.  It used to be.  And it still is for the investor who does not have sophisticated Knowledge Management systems.  But for the hedge funds who have these systems, as more and more data is collected and put in context with other data (information) over time, the reliability of price activity predictions (knowledge) inexorably decreases the risks of making bets like these - because the 'cards' at the Blackjack table of the energy markets are being 'counted' ever more accurately.

Economics & Conscience

Now while some might charge me with being a self-righteous scold over noting the unseemly 'card-counting' of this sort of thing, that really isn't the problem here.  And for opposing this, some might also accuse me of trying to repeal the laws of supply and demand.  The problem here is not with supply and demand; it is with the difference between true demand and false demand.

You, my erstwhile business partner in this transaction, have a refinery.  That means you can actually use the commodity to produce something that others need and will buy in the economy.  Me? I am managing a hedge fund from my home office - in my pajamas, no less!  I have neither the intention nor the capability to use the commodity to produce something others will buy.  It is for this reason your purchase is true demand, and mine is false demand - a mere bet at the Blackjack table.

But as a matter of how the price of crude rises and falls, affecting the price of things like gasoline and kerosene, my contract to buy 1,000 barrels of oil is registered by the market as demand.  When speculators like me pile in and sign contracts for oil, the additional false demand pushes the price up higher and faster than it would have otherwise gone if the law of supply and demand had been left truly free to determine price discovery.

The problem here goes back, as I wrote recently, to the problem of the dollar not being tied to anything of real value like gold.  This allows banks to extend credit without any effective limits.  If you can borrow money from the Fed at something for 0-0.25% and turn around and make 20% on that money by speculating in oil, that return is just way too good to turn down.

So let's start with the creation of all this new money.  It eventually chases the same amount of economic output, pushing prices higher.  The lower-middle class (who do not own a home) and the poor are left to watch as the dollars they do have buy them less and less.  The upper-middle class (who do own their home) and the rich have things like homes and stock - which rise in value along with inflation - to offset this loss of purchasing power.

But it gets worse.  Money available essentially for free which can bring a return of 20% at the Blackjack table of the energy market only guarantees that more and more of this excess money goes into speculation instead of production.  This is why the economy is not growing - speculation does not improve anything or produce anything, therefore it does not create any real wealth.  It only takes more money away from production, reducing supply and creating stronger upward pressures on price.  The mirage of hedge-fund wealth is merely the loss of purchasing power among the poor and lower-middle class being transferred to the already wealthy; the false demand of this speculation pushes prices up even higher and faster -  compounding the distortion of the underlying inflation.

Or to simplify: Imagine I am stalking a young man with a 25 kilo bag of rice over his shoulder as he carries it home from the market.  I furtively slice open the bag and catch the rice as it falls out - for my shareholders, as it were.  He thought he bought 25 kilos of rice.  By the time he gets home he realizes his 'purchasing power' somehow went from 25 kilos to 23 kilos just during the walk home!

What am I?  A hedge fund manager?  A conservative champion of the free market?  Or just a very sophisticated thief?

Striking a Pose for the Supposedly Free Market

I have very little patience for politicians and other so-called 'experts' who strike or tweet their poses for their concern for the poor.  I got grief for calling Paul Krugman an idiot in a previous post for doing just this.  I stand by that call.  But I will also call out my own side of the aisle here for how we like to strike our conservative poses for what we want to pretend is a free market.

We have not had a free market for over 40 years.  That died when the dollar was taken off the gold standard.  We have progressively gone from a free market to our version of a centrally planned market; what the Fed now calls 'macroprudential policies' is just central planning under an Orwellian name.

And there is nothing 'free' about speculation in commodities futures, either.  This does not mean, mind you, that commodities futures contracts are bad things.  A supplier is guaranteed a buyer at a set price, and that buyer is guaranteed a needed commodity at that set price.  The buyer actually uses the commodity to produce something and passes the discount to the wholesale spot price along to the customer in the form of competitive retail prices.  When the speculator card-counts at the Blackjack table of the energy market and inserts the false demand of their bets, however, the market is no longer free to allow supply and true demand to determine normal price discovery.

Again, all of this drives down to a sound dollar.    The Federal Reserve and the Treasury Department claim to be looking out for Main Street.  The claim is an absolute joke - all you have to do is look at how much of the new money goes into speculation and how that speculation distorts price discovery to see this for what it really is.  The Federal Reserve has turned the temple of the free market into a den of thieves.

The Minimum Wage: Greed, Money & Income Inequality

Posted on Friday, August 8, 2014 No comments

Friday, August 8, 2014

Back on July 25th I republished a post from December on the minimum wage.  I wrote the original post before I started buying stock graphics (from Shutterstock) for each of my posts, so I went online to see what I could find.  The drawing of a "greedy" business/banker type struck my fancy.

I chose it mainly because I figured I'd get some grief from "my side of the aisle" for suggesting that the problem of the minimum wage is a problem of greed.  And criticism I got - which is exactly what I had hoped for.

There are a number of different issues in the news today that have a number of different angles that we as conservatives - both social and fiscal conservatives - do not usually consider.  There is a reason for this, and it has to do with a book written back in 1971 called "Rules for Radicals."  But that is really a topic for another post.

And the minimum wage, as I have written about a couple of times, is one of those issues.  It is, in fact, an issue of "greed."  It is not, though, the greed of ordinary business people.  It is not even "greed" in the overt sense of the word as might have been suggested by the graphic.  It is a form of "greed" that does not recognize the distinction between self-interest and selfish interest.

Self-Interest & Selfish-Interest

The difference between these two is actually quite simple.  A "self interest" is something that not only advances your own interests but also has ancillary benefits to others.  Buying a home is a perfect example.  It is well documented that neighborhoods with a high percentage of home owners tend to have lower crime and better performing schools.  The relative affluence of the homeowner only explains part of this dynamic; the sense of being a stakeholder in the neighborhood where you own a home explains the larger share of why this is.  Most people - myself and my wife included - buy a home for its tax benefits and to start building some wealth toward retirement - that is our self-interest.  But the choice ends up redounding to the benefit of others as well.

A "selfish interest" is, by way of comparison, an interest which when pursued comes at a cost - usually a hidden and anonymous cost - to others.  And this is where we see the greed - if we are willing to have our assumptions challenged.

Example: Gold, Money, Debt & Speculation

A little history is needed here.  Before 1971 the U.S. dollar was backed by gold at a legally set price of somewhere around $35 per ounce of gold.  This restricted the amount of money which could circulate in the economy.  The restriction, however, was based on the assumption that only a certain amount of dollars at any certain point would be presented for redemption, so we could actually have more money circulating than we had gold in reserves at that $35/oz. rate.

This worked fine as long as everyone had confidence that the dollar would retain its value.  And after WWII, that confidence was high, not only here in the U.S., but throughout the world.  The dollar became the world's "reserve" currency (meaning international trade was all priced in dollars).  Lyndon Johnson and later Richard Nixon, and the Great Society and Vietnam War (as a matter of economics, mind you, not foreign policy) produced the start of deficit spending with their "guns and butter" budgets.

Questions started to rise in the minds of other countries about whether the U.S. actually had the gold reserves to back the inflation of the money supply to pay for the Great Society social programs and the Vietnam War.  So countries started to demand gold for their dollar reserves.  Once that started, no one wanted to be at the end of the line when there was no more gold.  It was a "run on the dollar" - and forced Nixon to remove the dollar from the gold standard.

We are over 40 years past that now, and the results are clear.  I'll list a few which seem to be completely unrelated to this discussion, but which are, in fact, a crucial part of the debate:

1) Campaign Finance: As people on both sides of the aisle debate the flood of money into politics, one side defends freedom of speech and the other decries corruption. Has anyone bothered to ask where all of this money comes from?

2) Debts and Deficits: I have shown in another post how the steep increase in the gross public debt started right after the dollar was removed from gold standard.  With no natural restrictions on the money supply, politicians are free to make promises with no actual plan to pay for them - at least no plan that can withstand even rudimentary mathematical scrutiny.

3) Income Inequality: In that same post I show how the increase in income inequality started at the same time.  This should not be difficult to grasp: The people to whom you owe money will always have more of it than you.  And the more you owe, the greater the disparity will be.

4) The Minimum Wage: As I have argued in the December 2013 post I republished, the problem of the minimum wage is a real problem because the loss of purchasing power (which is really what higher "cost of living" means) is actually lowering the minimum wage in the real terms of what it buys.  This is a problem - especially for me as a social conservative - because I believe that the inherent dignity of the human person means there is inherent value to their labor.

5) Speculation in Commodities: I have explained in yet another post how speculation in commodities futures works, and why it is probably the very best example of selfish interest - coming at hidden and anonymous costs to others.  But the same question applies here as applies to campaign finance - where is all this money coming from?

There are two things I hope the reader - from both sides of aisle - will come away realizing.  The first is that these issues cross the lines which have been drawn for us by conventional partisan orthodoxies.  Nowhere is that clearer than on the matter of the public debt and income inequality.  The Saul Alinksy-inspired framework for thinking about these things (i.e. "Rules for Radicals") tells us we should be off in our corners living vicariously through Rush Limbaugh or Jon Stewart as we try to out-ridicule each other.  The whole point of this blog and my book is to call us to something better - to both think for ourselves and talk to - not past - each other.  Even though I am a conservative, there is a reality to which the Occupy Wall Street folks are pointing - they just don't fully understand its origins.

And that brings me to the second thing: how this all drives down to a sound dollar.

The Occupy Wall Street movement has it partly right in complaining about the "1%."  They just have not yet figured out exactly who these people are.  There is a nice little game going on right now.  Once the dollar was removed from the gold standard, the banking sector saw this for what it was right away.  "Credit" is part of the money supply.  It is also how banks make money.  With no limits on the money supply there is no real limit to how much credit can be extended - and therefore how much profit can be enjoyed - by the banks.  And all that extra money doesn't just get lent out in the traditional fashion.  It also goes into hedge fund speculation on commodities - and into political action committees and campaign coffers.

Now before I go further, let's back up and look at this in terms of self vs. selfish interest.  Sound banking - and the profit it generates - is an example of self interest.  The bank shareholders win.  The small business person gets a loan she can repay; she wins.  Our neighbor who gets hired by that small business person wins.  And the retiree who owns the bank's stock in their retirement portfolio wins.  And at the end of the day we all win - as long as the banking sector is facilitating the exchange of real wealth represented by a sound dollar - otherwise standing in for the wealth of the nation as represented by reserves of gold held by the Treasury on our behalf.

But when that dollar is taken off of the gold standard - a situation forced, as it were, by public debt - the natural limits to the money supply are erased.  This then sets the free market against itself.  Banks are owned by shareholders.  Bank management has a legally enforceable duty to return value to those shareholders.  Returning value to shareholders now competes with sound lending practices.  In the short term, sound lending practices lose that battle every time; the excess money has to go somewhere.  Under these circumstances, our money supply gradually stops being an expression of the wealth of the nation and instead becomes an expression of the wealth of bank shareholders.  That gradual shift happens to be exactly correlated with an increase in public debt, speculation and campaign cash, and a decrease in purchasing power and the minimum wage in the real terms of what it buys.  And in the longer term, as we have painfully learned recently, everyone loses when there is an excess of bad debt.

Game On

The game, you see, is this:

"You guys," say the political sector to the banking sector, "seem to be doing quite well under this new monetary regime.  We want in.  We'll let you "print" money (and in the age of the computer this does not require a printing press) to your heart's content.  You just need to shovel some of it our way so we can keep making ridiculous promises and stay in power."

The wealth of bank shareholders today is tied mainly to the price of U.S. Treasury bonds (i.e. the public debt).  As the price of those bonds goes up, the interest rate goes down.  So in order for the government to keep borrowing, they need the price of those bonds to stay high.  Like anything else in the economy, that is a function of demand.  So the Federal Reserve inserts itself in the market for these bonds and bids them up (by using the big banks as proxy bidders) with money created out of thin air in what they call "Quantitative Easing."  By doing this, the Fed basically props up both government borrowing and the banking sector by propping up the price of Treasury bonds.  And they do this by manipulating the money supply.

Our money supply is now an expression of the wealth of the banking sector, at the behest of the political sector who want to remain in power.  If you want to know exactly who the 1% are, look no further.

And this, then, explains why labor is agitating for an increase in the minimum wage.  Only the problem is not, again, wages; it is the devalued money in which those wages are paid.  If labor and the Occupy Wall Street movement are truly interested in a just economic order where all enjoy an equal opportunity (not an equal outcome) to enjoy the creation of real wealth, they will join us conservatives in our call for a return to a sound dollar.

Like many, I place a quotation at the end of each email.  Mine comes from Steve Jobs in a commencement address to the graduates of Stanford University: Don't be trapped by dogma, which is living with the results of other peoples' thinking.

Dare to color outside the lines! The minimum wage is just one of many issues which calls us to set aside the conventional partisan orthodoxies and think for ourselves, and to start talking with rather than past each other.
Don't Miss