Thursday, January 27, 2011

More of the Same

Less than two full days after President Obama's State of the Union address on Tuesday, virtually all discussion and talk has faded away. Trying to cut the president every possible break — he is, after all, got one heck of a hard job to do, and not the best of times in which to do it — he really didn't say all that much worth remembering. Nor is this because he lacks the ability to make meaningful and memorable speeches.

Getting to the root of the problem, the reason that this State of the Union address isn't worth remembering is that President Obama came across with a lot of good-sounding language that, ultimately, didn't mean much. Yes, we're the greatest country on earth . . . but that starts to sound a little hollow when in almost the same breath the president of the United States starts talking about how other countries have surpassed us and continue to surpass us in many ways.

Then there's the repeated claim that we're out of the Great Depression III. Yes, we know it remains officially a recession, and we're in a period of economic recovery — the stock market is booming, corporate profits are at an all time high, and so on . . . but unemployment remains officially at very high levels and unofficially matches the worst years of the Great Depression II. How are high prices on the stock market — all speculative gains with no increase in the production of marketable goods and services to back it up — a good thing? This sort of speculation and money creation/spending without linking the money supply to the present value of marketable goods and services led to the current mess we're in (and we just read that housing is now in a "double dip" recession), as well as to the Savings and Loan crisis, the Crash of 1929, the Panic of 1907, the Panic of 1893, the Panic of 1873 . . . just keep going.

Back in 1937 in The Recovery Problem in the United States, Dr. Harold Moulton, president of the Brookings Institution, stated that there are two critical factors in any economic recovery: employment and production. He didn't mean artificial job creation financed by redistribution, or production for which there was no demand except for government subsidies. No, Dr. Moulton was quite specific. Forget about cutting consumption to force savings to finance new capital and create jobs. Forget about "reflating" the currency, keeping prices high so that overextended companies and those too big to fail continue to make enormous profits. Forget about "innovation" in new technologies that only replace workers from badly needed jobs. What needs to be done is to open up ways for people to be able to produce by means of both labor and capital.

Mr. Obama said that we need to raise American productivity. As he noted, steel companies that once used 100 workers now employ 10 to do the same thing. Evidently we need to do even more of this . . . thereby doing more people out of jobs. "Productivity" is, after all, defined as "output per labor hour." Productivity gains are therefore made by getting rid of workers and replacing them with increasingly advanced technology. Mr. Obama's solution to this is to innovate even more, thereby increasing productivity. This will eliminate jobs, but education will, according to the president, train people for the new jobs that will be created. What new jobs? Technology is eliminating them faster than they can be "created."

There is, however, a solution. Enact Capital Homesteading as soon as possible. As an old article about the ownership revolution many years ago put it, "If the Machine Wants Our Job, Let's Buy It." Does it really matter if you are paid for your ownership of labor, or your ownership of capital, as long as you own it?

#30#

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