BUSINESS – Page 5 – REVIEWS AND VIEWS OF LIFE

CAPITALIST SELF-INTEREST

Audio-book Review
By Chet Yarbrough

(Blog:awalkingdelight)
Website: chetyarbrough.blog

The Great Courses: Thinking about Capitalism

Lectures by Jerry Z. Muller

Narrated by Jerry Z. Muller

Jerry Z. Muller (Author, professor of history at the Catholic University of America)

Professor Muller offers an interesting and insightful defense of capitalism. Jerry Muller’s “Thinking about Capitalism” is an historical account of economic theory.

Muller explores three economic systems:
1) market, 2) command, and 3) mixed. In his journey through the history of economic systems, market (aka capitalism) shines brightest.

Muller notes that capitalism is pummeled by many anecdotes of history. Muller does not deny the excesses of market economies, but Muller suggests capitalism’s benefits far exceed its detriments.

There is nothing new in Joe Manchin’s self-interest in coal investment or representation of a state dependent on the coal industry. The question is whether he is representing his personal interest in wealth and re-election or the common good of the nation.

Adam Smith (1723-1790, Scottish economist)

Muller argues capitalism’s storied failures distort its multifaceted values. In the “Wealth of Nations”, a seminal work on capitalism, Adam Smith clearly explains the value of a capitalist (market) economic system based on self-interest. Muller notes Smith’s term “self-interest” is often misinterpreted by the public as greed.

Smith’s definition of self-interest is founded on virtue, i.e., behavior based on high moral values. However,
Self-interest comes in many forms.

One person’s self-interest may be altruistic in helping others to feel better about themselves. Another person’s self-interest may be to increase personal wealth to improve their family’s standard of living. And, self-interest may be associated with greed. The fundamental point is that everyone’s self-interest is a motivation that is ungoverned by an outside force. Self-interest is a part of human nature.

In a broader sense, there is some truth in the economic cliché of “a rising tide lifts all boats”. It reflects Adam Smith’s belief in the “invisible hand” that guides one’s life in a market driven economy. Every individual strives for their own self-interest which offers charity to some, employment to others, and individuated incentive to all.

Thomas Hobbes (1588-1679)

Thomas Hobbes notes that human nature is both good and bad. He tempers Smith’s argument for capitalism by suggesting government is necessary to mitigate self-interest that is harmful to the public.

Smith and Thomas Hobbes (author of “The Leviathan) believe self-interest is a universal human characteristic. Smith addresses self-interest as an enlightened Socratic understanding of virtue. Hobbes is less doctrinaire and implies Socratic virtue is not common in the general population.

Smith argues that capitalism takes the essence of human nature’s natural self-interest to advance civilization. This advance is not a smooth upward curve but an improving trend. Bad things do happen in a capitalist society. Hobbes might agree with Smith but only in the context of “rule of law” that mitigates non-virtuous self-interest.

Edmund Burke (1729-1797, Irish statesman)

Muller does not ignore critics of Adam Smith’s “Wealth of Nations”. Edmund Burke is a noted critic who argues that too many social conventions are sacrificed by disparate self-interests. He argues that the French revolution is a potential consequence of an economy driven by self-interest.

The social structure of France is decimated in the 1789 revolution. History shows “the terror” of the French revolution murdered innocents. On the other hand, it reformed an economy that left many behind. Prior to 1789, only the rich owned land, never went hungry, and inherited wealth. In the 18th century, France’s poor are mired in poverty, often hungry, with little chance for advancement.

Justus Möser (1720-1794, German social theorist)

Muller also cites criticism from Justus Möser , a contemporary of Burke, who believed the rise of capitalism (mercantilism) destroys craftsmanship in local economies. With trade from other parts of the country and world, Möser argues insular communities are harmed by prices of similar products replacing local artisan’s goods.

Möser argues mercantilism destroys the fabric of local communities; foments insecurity and social unrest. Muller, in part, agrees with Möser’s argument. However, Muller notes Möser’s argument is right and wrong.

With less money being spent for one thing, more money is available to buy or invest in other things. What Möser ignores is mercantilism’s benefit to consumers and the local economy. Consumers who buy a product for less money have more money to spend or invest in the local economy.

An amendment to criticism of Möser is that the consumers must have enough money to buy product being produced, whether in America or somewhere else.

Much of Möser’s argument is the same concern raised by those who support today’s trade war. Trump ignorantly pursues a trade war that weakens Adam Smith’s view of capitalist competition. America needs to adapt to a world economy that is increasingly intertwined.

Möser is right in suggesting free trade creates insecurity in local markets. It also demands adjustments in labor that harm local artisans, but Muller argues there is a net gain in public good and general welfare with free trade.

Max Weber (1864-1920, German sociologist, philosopher, and political economist)

Muller goes on to explain how a confluence of religion and capitalism benefits society with Max Weber’s melding of Protestant Ethic with the Spirit of Capitalism. Weber makes the idea of living aesthetically and putting aside savings as a prudent way of living life in an uncertain environment. Creating wealth became a religious calling to some.

Joseph Schumpeter (1883-1950, Austrian political economist)

Muller reviews Joseph Schumpeter’s contribution to the theory of capitalism. As a 20^th century Harvard Business School professor, Schumpeter lectures on the value of “the invisible hand”. Schumpeter advances the idea of “creative destruction” as a characteristic of capitalism.

Schumpeter outlines the value of entrepreneurs who pursue new ideas, new products, and innovation that replaces dying industries. He trumpets the growth of capitalism as an engine that perpetuates societal benefit. Some argue that today’s American governance discourages new ideas by dwelling on manufacturing at the expense of technological innovation and change.

Muller examines the other two economic systems, i.e., 2) command, and 3) mixed systems. Muller implies they fail to meet the historical successes of market capitalism. A command economic system is autocratic with primary economic decisions made by one ruling agency—like Mao’s communist party, Hitler’s Third Reich, and Stalin’s Great Turn.

Short term economic benefit of a command system economy hugely disrupts society. Economic improvement is evident in the short term, but momentum is lost as the gap between haves and have-nots grows.

In a command economy, the cult of personality takes over and image becomes more important than substance; i.e. who you know becomes more important than productivity.

Muller implies mixed economic systems are a work in progress. They are represented by leaders like President Xi in China, and President Putin in Russia.

Xi and Putin retain the concept of communist control of the economy but combine command economics with “Smithian” capitalist ideals. However, Putin takes a wrong turn by waging war on an independent country with its own mixed economy ambition.

China’s mixed economic policy began with Deng Xiaoping, but Xi expands its reach.

Both China and Russia have shown economic improvement in the late 20^th and early 21^st century. Xi’s “Road and Belt” plan is part of a command economy, but it relies on the capitalist market principle of influencing trade between nation-states. China’s long-term success remains to be seen. Whether it will be a more effective form of economic improvement than Adam Smith’s market-based formula is left to history.

Russia, like Xi, uses capitalist influence to grow its economy. Russia, in contrast to China, uses its natural resources (oil distribution), rather than a “Road and Belt” policy to expand its influence. Unfortunately, Putin chooses to waste Russia’s oil wealth on war.

Fundamentally, Muller infers no modern economic system is better than capitalism. One draws that inference by Muller’s cogent explanation of the value of capitalist self-interest. Because Adam Smith’s concept of self-interest is an inborn characteristic of human nature, it will prevail over any known economic system that requires command control.

America has been a successful capitalist country in great part because of checks and balances that mitigate command control qualities of mixed economies. Hobbes assessment of human nature demands some level of command control, even in a capitalist economy.

One might argue that America’s avoidance of near economic collapse in 2008 is evidence of the importance of a mixed economic theory. (Interestingly, a December 18, 2018 “…Economist” article, published under the Schumpeter byline, notes that China’s communist party’s mixed economic system during Trump’s trade war fared better than America’s government regulated free enterprise economy.)

American history shows lower taxes encourage higher production and job creation. What is missed by tax reduction is that it exacerbates income inequality. Tax reduction incentivizes corporate leaders to devalue worker wages to increase profitability. Human self-interest leads to higher income for corporate owners and executives. The consequence magnifies the wealth gap between have and have-nots.

AMERICAN RIGHTS

Audio-book Review
By Chet Yarbrough

(Blog:awalkingdelight)
Website: chetyarbrough.blog

Rights of Man

By Thomas Paine

Narrated by Arthur Morey

Thomas Paine (Author 1737-1809)

It seems time today to read Thomas Paine’s “Rights of Man”. Though his primary purpose is to refute Edmund Burke’s condemnation of the 1789 French revolution, his observations on British Aristocracy are the essence of today’s American “moneyocracy”.

Though President Trump is not the originator of American “moneyocracy”, he is its quintessential representative.

In spite of domestic mass murders by demented Americans, Trump and many of his followers insist on giving voice to the NRA’s belief in an American right to buy automatic weapons designed only to kill people.

Uvaldi, Texas elementary school shootings 5.24.22

It takes money to run a campaign for public office. Trump, like most politicians, panders to lobbyist’ and business’ interests that distort the American electoral process.

The appeal of Trump has to do with American’s desire to be left alone. Whether a misogynist, a gun toting individualist, a federal tax cheat, or an independent morally upright American, many believe that is their right. Trump exemplifies the right to be left alone.

Beginning with congress’s approval of tax reform, America’s ballooning deficit is a direct consequence of a mistaken belief that “a rising tide lifts all boats”. Contrary to the tired refrain “jobs, jobs, jobs” to make “America Great Again”, the current administration is setting the table for the world’s next economic crises.

The “Occupy Wall Street” demonstrations are an amorphous scream of disgust by an educated population that resents American “moneyocracy’s” control of the economy, elected representatives, the election system, and the “Rights of Man”. “Moneyocracy” is an inheritable line of an American aristocracy.

Instead of 18^th century Aristocratic control of British government, 21^st century America substitutes the wealth of individuals and corporations (classified as individuals) to control American Democracy. This is not a partisan issue in America.

Every President, Republican or Democratic, has sided with corporate interests in this era of corporate largess. The world is in a state of economic upheaval that is fueled by technology. That economic upheaval is not adequately addressed by corporate America. The government continues to subsidize yesterday’s economy at the expense of middle and lower income citizens.

Management executives that are employees of corporate America take salaries 50 times or more than salaries of their average employee.

The new controller of our economy, the primary interest group of elected representatives, and the master of the American election system is corporate America.

Wealth is the new hereditary right of succession. Corporate America is the thief and ruler of inherent “Rights of Man”.

Once individual compensation reaches beyond rationality, money becomes fuel to maintain America’s “Moneyocracy”, the new hereditary right of succession.

The controller of our economy and political representation is corporate America.

The primary interest group of elected representatives, the master of the American election system, and ultimately, the thief and ruler of inherent “Rights of Man” are corporations and the super-rich. Of course, the rich have always been in control of American government. However, now the rich are not just singular individuals. They are corporations classified as individuals.

The Supreme Court in “Citizens United v Federal Election Commission” in 2010 rules that corporations are persons with the right to support candidates for office with as much money as they want to influence government policy.

The Supreme Court’s unwise decision based on freedom of speech identifies corporations as persons. With that nose in Democracy’s tent, corporations could offer millions of dollars to election campaigns. What human being cannot be influenced by such largess? Excessive executive compensation perpetuates “moneyocracy”, but corporate influence is the cause of the loss of the “Rights of Man”.

Tax change is a smoke screen that obscures the real danger of American decline in the 21^st century. It is too blunt an instrument to bludgeon the rich. It smacks of false patriarchy and jingoist rhetoric.

American history shows that Americans believe that hard work is the source of success but being American does not guarantee a free ride. Equal opportunity is where America fails.

Education, anti-discrimination legislation, and equality of opportunity have to be strengthened. Corporate America needs to step up. Corporations need to quit wasting money influencing legislators and invest in human rights.

Corporations need to subsidize education by re-training their employees to meet changes wrought by technology.

Corporations must insist on equal treatment of employees, by gender and/or ethnicity. The government needs to re-enforce equal opportunity for all.

America needs to return to the ideals of equal opportunity by allowing entrepreneurs to create wealth through human productivity. Money is not an end but it has become an end that has no end; i.e. high salaries perpetuate themselves through an Aristocratic “moneyocracy”. If one says they make a $1,000,000 a year they are saying they are better then someone who makes $10,000 or $100,000 a year. Salaried compensation is perceived as human value.

Denying salaries that exceed 50 times average employee compensation is not denying the creation of wealth. Entrepreneurs that create productive companies that grow to multi-billion dollar enterprises have opportunity to become billionaires; not from salaries, but from building human productivity that creates wealth.

“Occupy Wall Street” is an unlikely precursor of another American Revolution; however, it may be a symptom of an American cancer that debilitates productive life without killing the patient. “Occupying Wall Street” is not a hippie “sit in” but a plea for reform of American “moneycracy” just as Thomas Paine’s “Rights of Man” was a plea for reform of Aristocratic inheritance.

ADDENDUM: Does the “right to be left alone” extend to pandemics? The question is raised when it comes to a pandemic that has killed over 783,000 people in the United States as of November 15, 2021. (Statistics provided by “worldometer”, a reference website that provides real-time statistics. Considered the best free reference website by the American Library Association.)

CHINA

Audio-book Review
By Chet Yarbrough

(Blog:awalkingdelight)
Website: chetyarbrough.blog

When China Rules the World

By Martin Jacques

Narrated by Scott Peterson

MARTIN JACQUES (AUTHOR, BRITISH JOURNALIST)

Martin Jacques has written an interesting book about China’s rise as a world economic power. His overview of the geo-political and Realpolitik relationships of the east and west are interesting; particularly in light of the Trump administration.

“When China Rules the World” has interesting details that inform but do not convince one that China will rule the world. The provocative title drives the bus but it does not reach its destination.

World control is a myth that causes wars and destroys the best and brightest, as well as the mean and maniacal.

What is happening in China is remarkable. China’s transition from Maoist communism to capitalist communism is a caterpillar turning into a butterfly; i.e. China has grown wings but it still lives in a world constrained by its environment.

Though President Xi is re-instituting some Maoist mistakes, China’s world wide investment in infrastructure is based on capitalist beliefs. Xi has an internationalist focus, just like that which made America great; at least, until Trump’s Presidency.

Chairman Mao’s cultural revolution and belief in enlarging collectivist ideology nearly destroys China’s path to prosperity

Xi is attempting to open new markets by financing infrastructure improvements in African, Middle Eastern, and Asian countries. He is creating customers for Chinese product.

Undoubtedly, Xi is also trying to seduce other nations into belief in Xi’s form of Communism. This is not unlike America’s intent to democratize the world.

Jacques argues that a 90% Han Chinese cultural domination of 1/5^th of the world’s population will change the nature of the 21^st century. In a limited sense, that is undoubtedly true. However, regardless of the type of government rule, human nature is the same.

Money, power, and prestige, are the primary motivations of humankind. Whether one is Han Chinese, Tibetan, Uighur, Indian, Hispanic, Black, or any singular ethnic group, all humans seek control of money, power, and prestige. These innate drives are the speedometer, brakes, and steering wheels of nation-state’ leaders and followers.

There are dominant factions in every culture that are not necessarily the majority of a culture’s population. Jacques’ early comments suggest China’s 5000 year history reflects a cultural conformity greater than any other country in history while later he acknowledges that the predominant Han population is highly diverse in its beliefs.

Cultural conformity is not the relevant issue; i.e., dominant cultures, whether a majority or minority of an indigenous population, are the game changers of a nation’s history.

Jacques argues that China’s cultural history of familial respect and veneration will have profound affects on the future of world economies. Jacques has a valid point. However, the history of modernization suggests that the fabric of extended filial obligation will be ripped apart in China just as it has in every industrializing nation.

China, just as all modernizing nation-states, will see deterioration of familial bonds.

Human nature is immutable. As an agrarian culture moves to the city and parents are compelled to work for wages, family structure and filial commitment deteriorates.

Of course, capitalism is not the same in China as it is in the western hemisphere. As Jacques reports, major capitalist businesses are state owned in China. They compete in the world market but government support mitigates much of the free enterprise ideal of capitalist economies. However, no nation-state operates as a free enterprise capitalist country; i.e. government has always played a role in capitalist nations. Government subsidy of industrialization is a matter of degree.

It may be that China will change the way industrialized countries compete but global economic domination is no longer possible in a tech savvy world that recognizes knowledge is power and natural resources are limited.

All the world knows how each culture in the world lives. With that knowledge, countries will gravitate to systems of government that serve its dominant culture best. Best is defined as what is most important to the dominant culture in the context of either money, power, or prestige.

Long term, China is facing a tougher road to modernize because of population, environmental degradation, and dwindling natural resources, but their short term prospects look better than most other nations.

New estimates from the U.S. Census Bureau put China in the lead with **1.34 billion** residents, followed by India with **1.19 billion**. The United States is a distant third with **311.1 million people**.Jul 6, 2011

As Jacques points out, China’s savings rate is over 20%, with a GDP growth rate 3 times that of America. The cost of dwindling natural resources is more affordable to China than most other modernizing countries. However, all economies are closely tied to each other and a major failure in America or Europe will have great consequence for the world economy which will significantly affect China’s short term advantage.

With a failure of a western countries economy, China’s drive toward modernization will be in danger. That danger is demonstrated today by America’s creation of a trade war with China.

Some argue this burgeoning trade war is hurting the Chinese economy more than the American economy. That may be true in the short term, but the efficacy of trade wars are questionable in the long term; particularly in our internet connected world.

Jacques’ book is worth its purchase price and a consumer’s time because he exposes some of the cultural biases of China that are not widely known. His suggestion that discrimination is as prevalent in China as it is in the United States is reprehensible, and disgustingly familiar. Globalization is real. Human nature is immutable. All mankind travels on the same space ship; i.e. our blue ball. At the very least, China is proving that our environment is fragile and natural resources are finite.

NEWSPAPERS

Audio-book Review
By Chet Yarbrough

(Blog:awalkingdelight)
Website: chetyarbrough.blog

Written by Sarah Ellison

Narrated by Judith Brackley

(SARAH ELLISON-AUTHOR, REPORTER FOR “THE WASHINGTON POST”)

The word “War” in Sarah Ellison’s book title exaggerates the reality of change at the “Wall Street Journal”. Exaggeration aside, Sarah Ellison succinctly reports big changes in the newspaper. Ellison writes a very straight forward and interesting account of the takeover of the “Wall Street Journal” by Rupert Murdoch and News Corporation.

(RUPERT MURDOCH, MEDIA MOGUL)

Ellison’s presentation does not have the depth and breadth of Halberstam’s “The Powers That Be” but it does provide insight to changes that are happening in the newspaper industry.

Murdoch is characterized by some as a devil but Ellison’s picture is not horned or tailed. The “Wall Street Journal”, like every mass circulation newspaper in the nation, is in the same life boat.

The internet and their communication speed have ripped holes in the “Chicago Tribune”, “Philadelphia Enquirer”, and “Los Angeles Times” sailing buoyancy. Even the “Washington Post” and “New York Times” have taken on water.

Murdoch is not painted as a white knight, but Ellison’s reporting suggests rescuer is a more apt description than devil. The same might be said of Jeff Bezos’ acquisition of the “Washington Post”. Also, though the “New York Times” has not changed hands, it has suffered through years of weakened financial viability.

JEFF BEZOS (CEO AND PRINCIPAL OWNER OF AMAZON)

Nationally read newspapers are threatened by the instantaneous reporting of the internet but every national paper is adapting to changing modes of delivery.

The “Wall Street Journal” and other daily papers are leaner today because they are following market demand for shorter stories, but the “…Journal” and other national market papers have not abandoned investigative journalism. Newspaper reporters plumb the inner workings of world crises. They reveal government malfeasance, and investigate corporate corruption. They remind the public that “freedom of the press” is fundamental to democracy. The depth of newspaper coverage is deeper and more comprehensive than rumor driven internet accounts.

The internet has democratized the news; i.e., individuals seek their own depth. Some suggest newspapers like “USA Today”, have taken a step too far by reducing print to twitter feeds about the news. Their reporter and news feed cutbacks have caused a loss in value (stock price decline) that has encouraged a hostile takeover by MNG (an offer recently rejected by “…Today” ownership). The complication for print media is monetizing web based reporting without decimating print coverage. Those newspapers that cannot meld one to the other seem destined to fail.

ARTHUR OCHS SULZBERGER JR. (PUBLISHER OF THE NEW YORK TIMES)

Murdoch and Sulzberger media conglomerates have specialization and editorial biases that serve their consumer cohorts. Subscribers have the option of reading their papers on the internet when traveling away from home. Income from internet add sales supplement print advertising. Those publications that refine the utility of their websites are a boon to both newspaper publishers and consumers.

Those newspapers that focus on substantive truth, website improvement, and delimited editorial bias will serve themselves as well as the public. Internet integration of print with internet reporting will sustain national newspapers’ future.

Media longevity is a matter of change, i.e., newspapers did not disappear with the advent of radio and radio did not disappear with the advent of television; they adapted, they changed. Murdoch has taken a creditability dive with the Fox network news settlement, but the WSJ remains among the best source of business news in the world.

Newspaper readers who stand and wait will also be served. Murdoch over paid for the “Wall Street Journal”; maybe for the wrong reasons, but with the right results. Ellison implies the “…Journal” is serving its customers better now than before Murdoch’s takeover. The “New York Times” return to profitability suggests the same. The jury remains out on “USA Today”, Chicago Tribune, Los Angeles Times”, “Washington Post”, “Philadelphia Enquirer” and other nationally recognized papers. Change is universal, survival is ephemeral.

FORGOTTEN TOO SOON

2008 was just yesterday but today’s attack on government regulation is destined to create America’s next crises.

Audio-book Review

By Chet Yarbrough

(Blog:awalkingdelight)

Website: chetyarbrough.blog

The Big Short & No One Would Listen

By Michael Lewis By Harry Markopolos

Narrated by Jesse Boggs Narrated by Scott Brick & Others

There are lessons to be learned from Lewis’s and Markopolos’s books that are forgotten in the pending impeachment trial of President Trump.

Both Adam Smith (the father of economics) and Thomas Hobbes (author of “The Leviathan”) argued self-interest is a universal human characteristic.

Self-interest led Trump to enlist the Justice Department to overthrow the election of President Biden. If that is not insurrection, one wonders what justifies any impeachment action.

Smith argued that capitalism takes the essence of human nature’s self-interest to advance civilization. He noted-the advance of capitalism is not a smooth upward curve but an improving trend. Smith was not saying that bad things do not happen in a capitalist society but they bend toward the good of society.

Hobbes would take issue with both of Smith’s assertions. Self-interest would not advance civilization unless it was regulated. Hobbes insisted on government control through “rule of law” to mitigate non-virtuous self-interest.

Hobbes feared unbridled self-interest in any form of government. Hobbes viewed human nature as brutish and unfair unless ruled by a Socratic philosopher king or, in a democracy, by tightly regulated and enforced “rule of law”.

The forensic reports of Michael Lewis and Harry Markopolos show what happens when efforts to regulate human nature are abandoned. One concludes from their books that Thomas Hobbes’ “Leviathan” wrecks havoc on society when “rule of law” is either not present, or unenforced.

Inept management by Fannie Mae, and Freddie Mac offered mortgage insurance for grossly over-leveraged mortgages. Companies like AIG removed investor risk by insuring banks against bad investments.

All of these foolish actions coalesced to bankrupt companies and families around the world. Individual lies, bungles, and missteps in the real estate industry created the worst recession since the 1929 stock market crash.

While this real estate debacle was developing, Bernie Madoff built a 50 to 70 billion dollar empire by making fools of the U.S. Government, European royalty, world wide charities, and working families. Madoff lied, cheated and stole billions of dollars from wealthy investors, charities, and mom and pop businesses with offers of bogus investment returns based on buying from Peter to pay Paul. He paid dividends to earlier investors by taking money from newer investors.

As long as people believed in Madoff, or deluded themselves, his wheel of fortune continued to roll. As the real estate market collapsed, old investor money was recalled and new money became unavailable. Madoff’s failure was inevitable.

Michael Lewis identifies seers that recognized “Quants” were packaging doomed mortgages into re-salable financial instruments called derivatives. These astute observers of the market, knew mortgage backed securities were at risk.

How could these things happen in a 21^st century, democratically elected and governed society? Hobbes would say “how could these things not happen”?

Madoff’s investment lies were exposed by Harry Markopolos in a “red flag” report to the Security Exchange Commission in the year 2000; way before the 2008 economic catastrophe.

The title of the book “No One Would Listen” tells the story. This book is an indictment of democratic government in free society. Markopolos’s story exposes an inept and failed SEC, an agency created by government to protect investors–when, in fact, it protected corporate interests.

The irony is that Madoff did not get caught by the SEC. He confessed in 2009 because his Ponzi scheme fell apart. along with the collapse of the real estate industry.

Lying is part of being a human being. That is a fundamental reason for government to have “rule of law”. It protects people from the abhorrent self-interest of the few from the many.

President Trump is impeached by the House of Representatives. It is the moral responsibility of the Senate to have a trial.

Hiding behind a loose interpretation of the rules of the Constitution is a disservice to the people. Guilt or innocence should be proven by the facts; not the parties of interest.

Regulation is not a perfect solution for control of bad actors in a free society. However, no regulation is worse.

INVESTMENT VALUE

Audio-book Review
By Chet Yarbrough
(Blog:awalkingdelight)
Website: chetyarbrough.blog

Capitalism Without Capital

CAPITLALISM WITHOUT CAPITAL

Written by: Jonathan Haskel, Stian Westlake

Narrated by: Derek Perkins

JONATHAN HASKEL (AUTHOR, BUSINESS SCHOOL PROFESSOR IMPERIAL COLLEGE LONDON)

STIAN WESTLAKE (AUTHOR, ENGLISH BUSINESS CONSULTANT)

In addressing 21st century technology, Haskel and Westlake argue that the tradition of hard asset value is diminished. In today’s technological economy, the authors suggest investment in intangibles is as important as investment in buildings and machinery.

Haskel and Westlake acknowledge intangibles have always been an important part of economic growth. They note worker training programs, specialized employee’ experience, and patented designs have always had value; but auditors rarely (if at all) quantified those intangibles as anything other than expense. Little of a company’s investment in training, employee experience, and patents is assigned as an asset by analysts who use pre-twenty-first century accounting rules.

Most intangibles have historically been classified as uncapitalized expenses. In part, because quantification of intangibles is difficult to measure. Before the tech-revolution, investments in training, patents, and experience were looked at as costs of doing business. They were most often expensed (with some exception for patents).

When companies are sold, value of goods (machinery, buildings, inventory), and historical price/earnings ratios are the principal determinants of value. Haskel and Westlake note that patents are unreliable values because competitors reverse engineer product that, with newly created changes, are arguably new “unpatented” products; e.g. cell phones, computer chips, software programs, etc.

COMPUTERS AND MOBILE PHONES — Haskel and Westlake note that patents are unreliable values because competitors reverse engineer product that, with newly created changes, are arguably new “unpatented” products; e.g. cell phones, computer chips, software programs, etc.

With growth of companies like Amazon, Microsoft, Apple, Google, Uber, Facebook, et al–standard accounting practice needs more than hard assets to determine value. Though it is difficult to patent intangibles, Haskel and Westlake suggest new accounting methods are, and should be, created for today’s and tomorrow’s industries. The idea of new accounting methods leads to “Capitalism Without Capital”.

With growth of companies like Amazon, Microsoft, Apple, Google, Uber, Facebook, et al–standard accounting practice needs more than hard assets to determine value.

information thief — Haskel and Westlake suggest information replaces capital as the fuel for economic growth.

Haskel and Westlake suggest information replaces capital as the fuel for economic growth. They extend their argument by advising investors, lenders, and governments to increase their capital commitment to intangibles. This seems ironic in view of a remaining need for traditional capital investment to energize 21st century economic growth. However, the authors are arguing capital is a smaller part of overall economic growth; albeit a critically important part. What they are suggesting is that investment should be recognized as an asset; not just an expense. Investors and lenders should look beyond bricks and mortar as a measure of security for capital investment. Some would argue that companies like Tesla should be able to carry a higher debt load because its value is greater than the sum of its hard assets.

GOVERNMENT VS. PRIVATE RESEARCH Further, Haskel and Westlake emphasize Governments continued subsidization and investment in research and development in those areas where near term return is problematic. The example the authors give is DARPA in its early invention as a precursor of the internet, but there are many more examples; e.g. nuclear power, computer hardware, weather prediction, space exploration, etc.

Historically, intangible value has always been with us but recognized as an expense. Haskel and Westlake suggest intangibles need to be partially and judiciously accounted for as assets. When recognized as assets, intangible values open the door to wider private and public finance.

PARADOX OF POWER

Kotkin’s first volume about Stalin’s rise to power offers lessons to modern American and Chinese governments. China seems on one path; America another.

Audio-book Review
By Chet Yarbrough

(Blog:awalkingdelight)
Website: chetyarbrough.blog

Stalin, Volume I: Paradoxes of Power, 1878-1928

Written by: Stephen Kotkin

Narration by: Paul Hecht

STEPHEN KOTKIN (AMERICAN AUTHOR, HISTORIAN, ACADEMIC)

Stephen Kotkin offers a remarkable and comprehensive view of Russia’s 1917 Revolution in “Stalin, Volume I”. Kotkin succinctly describes how power in the hands of one may advance a nation’s wealth, but at a cost that exceeds its benefit.

Kotkin’s first volume about Stalin’s rise to power offers lessons to modern American and Chinese governments. China seems on one path; America another.

The formation of “checks and balances” sustains America’s economic growth, even in the face of leadership change. In contrast, a “rule of one” has moved China’s economic wealth to new heights, but “rule of one” threatens its future success; particularly if it follows Stalin’s, and now Putin’s mistaken path.

In historical context, Kotkin profiles the three most important characters of the Russian revolution; e.g. Vladimir Lenin, Joseph Stalin, and Leon Trotsky. Kotkin documents the personalities and circumstances of the pre-U.S.S.R.’ economy; i.e. an economy based on the disparity between wealth and poverty, federalization and centralization, political idealism and pragmatism.

MAO ZEDONG (1893-1976, FOUNDING FATHER OF PEOPLE’S REPUBLIC OF CHINA.)

Three leaders in the Chinese revolution were Mao Zedong , Zhou Enlai, and Deng Xiaoping. Zhou Enlai is the moderate of the three in trying to preserve traditional Chinese customs. Mao is by some measures an idealist who attempts to expand the theory of communism. His idealism creates a bureaucracy that nearly derails China’s economy. “The Gang of Four” radicalized Mao’s idealism into a more Stalinist view of communism. “The Gang of Four”s radicalization of Chinese communism is eventually reversed with the leadership of Deng Xiaoping, but not until after the Tiananmen Square massacre.

DENG XIAOPING (CHINA’S CHAIRMAN OF THE CENTRAL ADVISORY COMMISSION 1982-1987)

After Tiananmen Square, Deng recognizes the power of public dissent. Rather than increasing suppression, Deng opens the Chinese economy to a degree of self-determination. Deng does not abandon communist ideology. However, he recognizes the importance of economic growth and how less doctrinal communist policy would unleash the power of people as demonstrated at Tienanmen Square.

Deng dies in 1987 and the government of China is reshuffled. Deng’s eventual successor, President Xi, emphasizes the idealism of communism that threatens return to a Stalinist-like terror in China; i.e. a terror enhanced by technological invasion of privacy, and “big brother” control.

XI JINPING (GENERAL SECRETARY OF THE COMMUNIST PARTY OF CHINA AND PRESIDENT OF THE PEOPLE’S REPUBLIC OF CHINA)

President Xi returns to Mao’s authoritarian belief in enforced collectivism with the idea of expanding China’s new-found wealth through government subsidization of industry. Xi renews emphasis on rule by the Communist party, headed by himself.

The growing disparity between rich and poor in both China and America is widely seen in the internet, and with increased international travel. China’s rapid rise in economic wealth is unevenly spread, just as it is in the United States. The difference is in how that economic disparity is addressed.

In America, private dissent is an inherent part of its history which lauds individualism, self-determination, and freedom (within the boundary of “rule of law”). But, these characteristics denigrate American citizens who are unable or unwilling to reap the rewards of individualism, self-determination, and freedom. These are the Americans sleeping on America’s streets and living in their cars.

America’s system of governance allows a rift between the rich and poor because it is based on a system of “checks and balances”. America’s system demands debate, and more broadly considered human consequence, before government action is taken.

LIVING ON THE STREET IN AMERICA

In China, the homeless are compelled to work at jobs created by the government. China’s system of governance is driven from the top, with limited debate, and more singularly determined public consequence. Government action is autocratically determined.

BEIJING CHINA HIGH RISES (TYPICAL IN MAJOR CHINESE CITIES 2018)

BEIJING-In China, dissent is discouraged and freedom is highly restricted, but homelessness is addressed with housing for the poor at subsidized prices.

In ancient China, singular autocratic rule offered a mixed blessing. Some of the world’s wealthiest and most cultured governments were created in China. These ancient dynasties successfully expanded their economies to make China a world leader in science and industry. At the same time, with few checks and balances, the history of China’s “rule of one” resulted in periodic social and economic collapse.

In some ways, China’s ancient civilization’s rise and fall is reminiscent of the rise and fall of the U.S.S.R. after 1917. Kotkin describes the turmoil surrounding Russia in 1917. The beginning of WWI and Germany’s invasion exaggerate the paradox of power in Russia. Modern European, Asian, North American, Middle Eastern, and African countries are experiencing some of the same economic, and political disruption.

On the one hand, the peasant is a proud Russian; on the other hand, he is a slave of the landed gentry; indentured to preserve the wealth of others at the cost of his/her life.

In 1917, the Czar and wealthy aristocracy depend on a population of the poor to defend the government. Russian peasants are faced with defending a government system that recognizes them as serfs, agricultural laborers indentured to wealthy landowners. (A similar system existed in China prior to 1949.)

In 1949, Mao recognizes the same inequity and judiciously separates landlords from their vast estates and re-distributes it to tenant farmers who worked for them. Ownership restructuring improved agricultural production until Mao tried to make small collectives into large collectives with Communist party oversight. Formation of a Chinese Communist Party bureaucracy distorted actual production and de-motivated farmers that did the real work of farming. The result of production over-estimation caused a nation-wide famine.

KARL MARX (BORN TRIER, GERMANY 1818-DIED LONDON, ENGLAND 1883)

Kotkin notes Russian social and economic inequity is a breeding ground for a Leninist/Marxist revolution. Marx’s dialectic view of the wealth of nations suggests that governments will change based on the growing recognition of the value of labor; i.e. beginning with agrarian feudalism, growing through industrialized capitalism, and socialism; reaching to a state of equilibrium in communism (a needs-based and communal sharing of wealth). Marx suggests all nations will go through this dialectic process.

Lenin bastardizes Marx’s dialectic idealization. Lenin believes the process can be accelerated through revolution and centralized control of the means of production. This idea is adopted by Mao Zedong in China in 1949 with early success. However, Mao expands the collectivist policy with “The Great Leap Forward” in 1958. Mao’s broader collectivist policy collapses the Chinese economy in 1962. Thousands of Chinese die from starvation as communist overseers exaggerate food production quotas.

Collectivist expansion is an oversimplification of Kotkin’s explanation of Vladimir Lenin’s form of communism but it shows the risk of “rule of one” governance. Even Lenin is conflicted about how Russia will grow into a communist society.

VLADIMIR LENIN (1870-1924, LEADER OF THE 1917 RUSSIAN REVOLUTION)

Lenin recognizes the social and economic distance that Russian peasants must travel to gain an appreciation of a new form of government.

Much of the Russian population, like the Chinese in 1949, were illiterate and living at a subsistence level; bounded by a non-mechanized agrarian economy. Lenin vacillates between growth through education and growth through autocratic command. Kotkin suggests that Lenin gravitates toward centralized command because of the need to consolidate power within the revolution.

What Lenin needed in 1917 were followers that could get things done. Before being felled by brain disease and stroke, Lenin relies on the abilities of men like Joseph Stalin. Mao relies on his revolutionary Red Guard. Kotkin argues that Stalin became close to Lenin as a result of his organizational skill and his penchant for getting things done without regard to societal norms. For Mao, close associates like Deng Xiaoping, were his enforcers. Stalin becomes the most powerful enforcer in Lenin’s revolution. Deng eventually becomes the leader of Communist China.

Though Stalin wields great enforcement powers, Kotkin infers Trotsky is the intellectual successor to Lenin. Stalin and Trotsky are shown to be at odds on the fundamental direction of the Bolshevik party, the successor party of Russian communism. However, the exigency of getting things done, as opposed to understanding the goals of creating a Leninist/Marxist government, were paramount goals for consolidating power after the revolution. Kotkin explains how Stalin became a defender of Leninist doctrine while Trotsky became an antagonist and eventual apostate because of Stalin’s manipulation of events.

MAO AND STALIN IN 1949

China waits and observes Stalin’s method for rapid industrialization of Russia. Kotkin explains that Stalin gains an intimate understanding of Lenin’s doctrines while Trotsky chooses to compete with Lenin’s philosophical positions. The threat of factionalism accompanies Trotsky’s doctrinal departures.

The irony of the differences between Stalin and Trotsky are crystallized by Kotkin. Stalin’s intelligence is underestimated by both Lenin and Trotsky. Stalin carefully catalogs and memorizes Lenin’s communist beliefs. In contrast, Trotsky chooses his own communist doctrinal path based, in part, on Lenin’s writing. Here, another similarity is drawn with the near religious following of Mao’s Red Book with aphorisms about governing oneself and China.

Kotkin suggests Lenin views Trotsky as a more likely successor than Stalin as leader of the country. Lenin appreciates Stalin’s organizational ability but views Stalin’s temperament as too volatile for long-term government control. In 1922, Lenin is said to have dictated a “testament” saying that Stalin should be removed from his position as General Secretary. Lenin’s “testament” critiqued the ruling triumvirate of the party (Stalin, Zinoviev, and Kamenev) and others like Bukharin, Trotsky and Pyatakov but the pointed suggestion of removal for Stalin is subverted.

After Lenin dies, the triumvirate chooses to ignore Lenin’s “testament” for Stalin’s removal. After all, Stalin is a doer; i.e. he gets things done. Just as Stalin suppresses opposition to his interpretation of Lenin, China suppresses opposition to the Communist Party’s doctrines. Doctrinal differences are successfully suppressed in China until the the failure of “The Great Leap Forward” in the 1950’s. The consequence of “The Great Leap Forward”s failure is the cultural revolution in the 1960’s.

In America’s history the economy slugs along with setbacks and successes. Though 1929 sees the collapse of the American economy, it recovers with government intervention, the advent of WWII, and the push and pull of a decision-making process designed by the framers of the Constitution. That push and pull is from leadership that is influenced by the checks and balances of three branches of government. That same process saves the American economy in 2008. The power and economy of America has grown to become the strongest in the world.

Kotkin’s research suggests young Stalin is something different from what is portrayed in earlier histories. Stalin grows close to Lenin because he is the acting arm of Lenin’s centralized command. Lenin relies on Stalin to get things done. He is Lenin’s executor. At the same time, Lenin turns to Trotsky as an economic adviser to ensure a more comprehensive understanding of what needs to be done to stabilize the revolution. Trotsky believes in the importance of centralized control of the economy.

Both Lenin and Stalin believed in communism but the first acts on a vision of the future; the second acts on the “now”.

China’s Deng and Xi seem to reverse Lenin’s and Stalin’s reasoning. Rather than Deng being like Lenin, he acts on China in the “now”.

Xi seems more like Lenin and looks at China’s future based on the ideals of communism. However, from an American perspective, all autocrats common failing is belief in “rule of one”. The rising dictatorship of Putin is doomed to fail but there is no guarantee that his replacement will either be soon or less repressive.

Glasnost and perestroika fail to overcome that belief.

Kotkin puts an end to any speculation about Lenin being poisoned by Stalin. Kotkin argues that Lenin died of natural causes, strokes from a brain disease. What Kotkin reveals is the internecine war that is waged between Stalin and Trotsky while Lenin is dying. The strokes steadily debilitate Lenin and suspicious written pronouncements are made that may or may not have originated with Lenin. Lenin’s secretary is his wife. Some evidence suggests a missive from Lenin saying Stalin should not be his successor, noting Trotsky as a better choice. Kotkin suggests such a missive is unlikely. Lenin seems to have had his doubts about both men.

Succession in modern China seems less filled with intrigue than communist Russia but the opaqueness of China’s politics makes the rise of Xi a mystery to most political pundits. What seems clear is that China’s rise and fall has always been in the hands of the “…one”.

PRESIDENT XI’S ONE BELT, ONE ROAD PLAN FOR CHINA’S FUTURE

History will be the arbiter for President Xi’s success or failure with a road and belt plan for China’s economic future. The same may be said for President Trump’s focus on the virtue of selfishness for America’s economic future. The fundamental difference between America and China is Xi has no “checks and balances”; American Presidents have the Supreme Court, Congress, and a 4-year-election-cycle to assuage arbitrary government action.

AYN RAND (1905-1982, AUTHOR WHO FIRMLY BELIEVED IN THE VIRTUE OF SELF-INTEREST AND UNREGULATED CAPITALISM.)

In Russia, Trotsky is characterized as an intellectual while Stalin is a pragmatist. In China, Deng is characterized as a pragmatist while Xi seems a doctrinal theorist.

In America, Trump is no intellectual but carries the torch of pragmatic materialism (in what might be called a “moneyocracy”–a government focused on dollars, cents, and self-interest; without regard to morality or common good).

In history, Trotsky is highly opinionated and arrogant. Stalin is street smart and highly Machiavellian. Trotsky thinks right and wrong while Stalin thinks in terms of what works. In China, Deng is Stalin and Xi is Trotsky. In America, Trump is Stalin and his opposition is Trotsky-like do-nothings.

Trump lost the election in 2020 because–from an American perspective, all autocrats common failing is belief in “rule of one”.

Stalin is reputed to be temperamental while Trotsky is aloof. Though Trotsky insists on centralized control, Stalin argues for federalization. Stalin paradoxically argues for federalization because he knows Russian satellite countries want independence, but he will act in the short-term for centralization to get things done. And of course, Stalin clearly adopts centralized economic planning for the U.S.S.R.; i.e., another of Kotkin’s paradoxes of power.

Ironically, though Putin is now showing himself to be as ruthless as Stalin, he is unable to exercise the same level of dictatorial control. Unrest is not quelled in the face of the Russian people’s assessment of Putin’s justification for the Ukrainian war.

There is much more in Kotkin’s powerful first volume about Stalin and the Russian revolution. Germany’s role in the revolution is a case in point. The writing is crisp and informative. The narration is excellent. After listening to “…Volume I”, one looks forward to Kokin’s next which is published this year.

The past is present in Kotkin’s excellent biography of Joseph Stalin.

COMMUNISM

Audio-book Review

By Chet Yarbrough

(Blog:awalkingdelight)

Website: chetyarbrough.blog

Karl Marx: A Nineteenth-Century Life

By Jonathan Sperber

Narrated by Kevin Stillwell

JONATHAN SPERBER (PROFESSOR AND AUTHOR)

Having just returned from China (more about the trip in a future blog), it seems apropos to revisit Jonathan Sperber’s biography of Karl Marx. In many respects, China’s resurgence as a major economic power suggests Marx may have outlined an economic system with some strengths, but communism and China’s form of communism have catastrophic weaknesses.

Johnathan Sperber has gathered an impressive amount of data in his history of Karl Marx’s life. Sadly, his presentation is not equal to his collection. Unlike biographies done by Robert Caro (who wrote “The Power Broker” about Robert Moses, the land planner of New York, and former President, Lyndon Johnson) or William Manchester (a Winston Churchill Biographer), Sperber fails to bring his subject to life.

KARL MARX (BORN TRIER, GERMANY 1818-DIED LONDON, ENGLAND 1883)

Marx is considered by some to be one of the three most influential economists that ever lived (Adam Smith and John Maynard Keynes being the other two.) That high praise is not forcefully presented in Sperber’s biography. Sperber offers facts but leaves coherence to the reader.

Marx means something to the 21^st century. Some might argue America is reaching a point in the history of capitalism that is foretold by Marx’s theory of socialist economics. As Sperber notes, Marx believed capitalism was a step in the economic evolution of the world, leading to a governmental revolution. Marx believed capitalism would reach a nadir of conflict between haves and have-nots because of social inequity inherent in capitalist economies.

As Sperber notes, Marx lived through and wrote about social conflict created by feudalism and capitalism in the mid-nineteenth century. Marx is raised in Prussia, ruled by a Czar in a feudal economic system. He witnesses growing discontent of feudalistic working-class Russia.

'Remember, an economic boom is usually followed by an economic kaboom,'

Marx created a theory of economic evolution showing feudalism, capitalism, socialism, and communism as progressive improvements in the lives of all people.

Feudalism grew out of the rule of Kings and Czars with a small aristocracy receiving privileges of wealth and property with the bulk of human civilization indentured to the privileged class.

As the indentured, under-privileged population grew, discontent led to revolution.

In 1776, America broke with English aristocracy to form a “checks and balances” democracy; in 1789, the French population broke with absolute monarchy to form a populist democracy; in 1848, German states rebelled against the aristocratic Prussian confederation of thirty-nine states ruled by an aristocracy and chose various forms of government to establish their own nationalist identities.

DENG XIAOPING (CHINA’S CHAIRMAN OF THE CENTRAL ADVISORY COMMISSION 1982-1987,) In 1980 Deng Xioping, though maybe not in a revolutionary sense, changed the direction of communism in China.

Each Chinese change in governance led to more liberal, slightly more democratic, and capitalist economies.

China did not abandoned communism but insisted on a more pragmatic way of governing. Deng’s famous quote, “It doesn’t matter whether a cat is black or white, as long as it catches mice. …. “, crystallizes China’s insistence on a communist form of government.

XI JINPING (GENERAL SECRETARY OF THE COMMUNIST PARTY OF CHINA AND PRESIDENT OF THE PEOPLE’S REPUBLIC OF CHINA)

The current President of China, Xi Jinping, reinforces Communism in China by imposing party rule over China’s semi-autonomous provinces; e.g. Tibet and Hong Kong.

Hong Kong is presently in the throes of resistance to China’s encroachment on their semi-autonomous existence. Hong Kongers’ discontent could be seen in traveling to Hong Kong months before today’s demonstrations.

As nations prospered during the industrial revolution, more mercantile economies formed. Aristocracy became broadly defined by wealth rather than inheritance. Parliaments and congresses were created to represent wider population interests.

However, Sperber explains Marx believed that the greatest part of nation-state citizens remained in poor economic condition; even when based on mercantilism. Marx, looked at the economic condition of the world, and noted that transition from feudalism to mercantilism only marginally improved living conditions for the majority of state citizens and, in fact, actually worsened the condition of the young and impoverished who worked long hours for little pay. To Marx, capitalism just exacerbates the mercantile economic condition of the poor.

CHINA MOVING 250 MILLION PEOPLE INTO CITIES ACCORDING TO THE NEW YORK TIMES

CHINA IS MOVING 250 MILLION PEOPLE INTO CITIES ACCORDING TO THE NEW YORK TIMES (Housing is un-affordable for a large percentage of new city dwellers. The government of China subsidizes housing for many Chinese that come from rural areas.)

In 2018, it seems China may be reaching a capitalist tipping point where low wages do not cover the cost of living. Though many Chinese have moved from rural areas, wages remain low in comparison to the cost of living. Housing and health coverage is un-affordable for a large percentage of new city dwellers. The government of China subsidizes housing for many Chinese that come from rural areas to mitigate the plight of the poor.

ADAM SMITH (1723-1790, AUTHOR OF -THE WEALTH OF NATIONS) Marx developed the labor theory of value to suggest that classical economic theory suggested by Adam Smith leaves too many people in the gutter.

Marx felt Smith did not properly quantify the value of labor. Marx argued that capital was created to benefit owners at an unfair expense to labor.

Marx believed capitalist aristocracy continued to victimize the working class, trading one form of indenture for another. Marx suggested democracy was an evolution for economies that widened the benefited population but still left most workers underpaid, undernourished, and disadvantaged.

Sperber clearly points out that Marx did not believe that communal ownership of property redressed the inequities of state’ economies; i.e. Marx argued that inequity is caused by capital creation that only benefited ownership and undervalued labor that created capital.

China’s current experience seems to show Marx may have been right to believe communal ownership has little to do with state’ economics because communal ownership remains a dominant factor in China’s extraordinary economic resurgence. Property is not owned by individuals in China. Land is either owned by a collective or by the State.

Though land cannot be owned by Chinese citizens, distribution of capital has been widely increased through rising prices of high-rise condominiums. Many high-rise condominiums are owned by individual Chinese. Some citizens inherited or bought condominiums at such low prices–appreciation made them rich.

The fly in the ointment of their newfound wealth is the price of sale must be agreed upon by the government which creates an artificial bubble that may burst into hyper-inflation, with the potential for a nation-wide economic collapse.

China moves to address a potential economic collapse in an inventive and creative way. What China is doing--is trying to widen their market for goods with an economic growth plan called "Belt and Road".  China invests billions of dollars in other countries infrastructure.  China is betting that these improvements will create consumers for Chinese manufactured products.  A side benefit is that these infrastructure improvements offer employment to Chinese citizens and businesses.  (As can be read in news magazines like the Economist and papers like the Wall

Street

 Journal and New York Times, some nations resent China's investments in their countries for various nationalist and economic reasons.)

China is also investing in the world's natural resources to expand their manufacturing capability.  The question is whether these long-term investments will pay off in time to stabilize China's construction market. The construction market is where individual Chinese citizens carry their wealth. Condominium prices will reach a limit.  In 2018, a 300 square foot condominium sells for over $500,000 in China's larger mainland cities.  That is nearing $2,000 per square foot (and Chinese buyers do not own the land).  In the United States, most housing is less than $200 per square foot; including the land.   Continued wealth distribution in China depends on the success of the "Belt and Road" program.

Marx supported worker unionization’s effort to equalize benefit through a more equitable distribution of capital. He was deeply involved in the “International Workingmen’s Association” (aka First International). Herein lays the evolution of capitalism to socialism and Marx’s belief (and maybe Xi’s belief) in the fairness of economic communism. Modern China seems to be addressing the idea of a more equitable distribution of capital on paper, but the paper is based on what appears to be an unsustainable real estate market.

Piketty argues that the income gap widens once again, after World War II. He estimates 60% of 2010’s wealth is held by less than 1% of the population; with a lean toward the historical 90% threshold. Moneyed interests have become the new aristocracy, as repressive and privileged as the Kings and Czars of the mid-19^th century.

One can disagree with Marxian theory but the widening gap between haves and have-nots (the 1% and 99%,) is a real-world concern in the 21^st century.

Marx’s solution for economic inequity is flawed but the condition he describes in the evolution of economies seems prescient. To most Americans, Marx’s communism is not the answer.

When CEOs of companies are making over 200 times average laborers’ income, there is a glaring problem in the current condition of capitalist economies. Instead of income differences, it is housing value in China. China is on a razor’s edge that may as easily cut their throat as shave their face.

This is a disappointing book because it garners too little interest in the power and influence of Marx’s economic theories. However, it offers insight to what Marx may have had right (the importance of distribution of wealth) and what he had wrong (communal productivity). China is using a different vehicle than America for distribution of wealth but the principle of wealth-distribution addresses what ails all forms of government.

PARODY OF LIFE

Audio-book Review
By Chet Yarbrough

(Blog:awalkingdelight)
Website: chetyarbrough.blog

Babbitt

Babbitt

Written by: Sinclair Lewis

Narration by: Grover Gardner

SINCLAIR LEWIS (1885-1951 AMERICAN NOVELIST-FIRST TO RECEIVE THE NOBEL PRIZE IN LITERATURE)

Sinclair Lewis’s “Babbitt” is categorized as a satire, a parody of life in the early roaring twenties, but its story seems no exaggeration of a life in the 20^th or 21^st century. Published in 1922, it is considered a classic. It is said to have influenced Lewis’s award of the Nobel Prize for literature in 1930. (Lewis is the first American to receive the Nobel Prize in Literature.) Lewis is highly praised for describing American culture. “Babbitt” is the eighth of thirteen novels Lewis published by 1930. Lewis creates a body of work that intimately exposes strengths and weaknesses of American democracy and capitalism.

Reader/listeners are introduced to George F. Babbitt, a man in his forties. Babbitt is a realtor. He is successful financially; bored, and relatively happy in his married-with-children’ life. His best friend, Paul, is equally bored, less financially successful, but deeply unhappy in his marriage. Paul is harried by a wife that men categorize as shrewish. Babbitt’s best friend chooses to cheat on his wife. When Babbitt finds Paul in a clandestine meeting at a Chicago restaurant, he waits for him at a hotel to try to understand what is happening.

VIOLENCE AGAINST WOMEN — DOMESTIC ABUSE VICTIM (Lewis writes a satiric vignette where women are rarely viewed as equal to men, and expected to forgive men for violent treatment.)

In a male-bonding moment Babbitt forgives Paul and agrees that his friend’s wife is a shrew. Babbitt offers to mislead the betrayed wife by lying about her husband’s out-of-town business trip. Later, the spurned wife argues with Paul. Paul responds by shooting her in the shoulder. Babbitt sticks by his friend; even when he is convicted and sentenced to prison for three years.

After a year of his friend’s incarceration, Babbitt tries to get the spurned wife to forgive her husband and petition the parole board to release Paul early. She neither forgives nor forgets. She chastises Babbitt for his deluded belief that her husband deserves any leniency. This seems a satirical vignette where women are rarely viewed as equal to men, and expected to forgive men for violent treatment.

In his mid-forties Babbitt is becoming more restless. He rationalizes infidelity and discounts the value of his wife and family. He chooses to cheat on his wife because he feels his wife does not understand him. Babbitt deludes himself with the idea that another sexual relationship in his life is his right, and that it will not hurt anyone. One may presume this is another satirical vignette. On the other hand, how many men and women rationalize their way to extra marital affairs today?

Lewis, through his characters, infers there is a struggle for fair, if not equal treatment, in women. In “Babbitt”, Lewis never gives women a role as superiors or equals that have intellectual interests in government, society, or culture. Rather, Babbitt suggests women often feign interest in a man’s thoughts for the desire of companionship, attention, and affection.

GENDER INEQUALITY Babbitt implies women rarely seek intellectual stimulation or sexual gratification. Men are shown to classify women as shrewish because they are pushing husbands to be more expressive and attentive. There are many ways of interpreting Lewis’s intent but this is not an exaggerated satire, it is a truth of many men’s view of women.

WOMEN AND THE LADDER TO SUCCESS — An underlying theme in “Babbitt” is the inequality of American capitalism. Women and most minorities are less equal because they are either not in the work force, or in the work force at a lower wage.

An underlying theme in “Babbitt” is the inequality of American capitalism. Women and most minorities are less equal because they are either not in the work force, or in the work force at a lower wage. The union movement is struggling for recognition in the 1920s because of low wages being paid by business owners. Lewis suggests Babbitt begins to modify his opinion about the labor movement as he becomes entangled in the lives of less successful Americans like Paul and his spurned lover.

Wealthy capitalist see the answer to the union movement is electing a business President that cracks down on unions. Capitalists who have money and power classify the union movement as anarchic, communist, or socialist. (This sounds familiar today.) Babbitt suspects there is something wrong when he sees some union supporters are from the educated class. What makes Lewis’s observations fascinating is that they are written when America is in the midst of the roaring twenties; before the 1929 Wall Street’ crash. In the early 1920s, capitalism seems to be a tide raising all boats when in fact it is a torpedo being readied for launch.

Trump Cartoon About Unions — Wealthy capitalist see the answer to the union movement is electing a business President that cracks down on unions.

Babbitt experiences peer pressure that causes him to recant any perceived support of union sympathizers and eventually returns to the fold of do-nothing conservatism. He recants his libertine ways and returns to hearth and home. But Lewis offers a twist by having Babbitt’s son shock the family by rebelling against standards of upper middle class life. He decides to marry without the blessings of his family or his church. George F. Babbitt is the only family member who whole heartedly supports his son’s unconventional act.

Babbitt writes in the midst of a burgeoning American industrial revolution. It seems what happened in the 1920s is similar to what is happening today. The industrial revolution is now the technology revolution; women are still undervalued, many Americans want a business President elected, and unions are being busted. Today’s young men and women are still breaking social conventions. The stage seems set. One hopes 2018 is not America’s roaring twenties; pending another economic crash.

TSAR PUTIN?

Audio-book Review
By Chet Yarbrough

(Blog:awalkingdelight)
Website: chetyarbrough.blog

The New Tsar: The Rise and Reign of Vladimir Putin

Written by: Steven Lee Myers

Narration by: Rene Ruiz

STEVEN LEE MYERS (DIPLOMATIC CORRESPONDENT, WASHINGTON BUREAU, THE NEW YORK TIMES)

Steven Lee Myers, NYT’s reporter and author.

Steven Lee Myers has written a highly polished and informative biography but fails to convince one that Putin is a Tsar. Putin is more Richard Nixon than Catherine the Great. Putin, like Nixon, is smart and thin-skinned. Putin, like Nixon, makes personnel decisions based on loyalty, and views the world in real-politic terms.

Myers shows Putin comes from a family of Russian patriots with a grandfather and father that fought in Russian armies in different generations. Each lived during the Stalinist years of Gulags and terror but none rebelled against the power of Russia’s leadership.

Myers explains how Putin becomes interested in the KGB at the age of 16 and grooms himself for a life in the secret service. Putin’s KGB-influenced’ career-path is to become an attorney. He learns German and is assigned to East Germany in his first years as a KGB agent.

Myers explains how Putin’s steely disposition grows in East Germany, and later St Petersburg, Russia. Putin keeps a low profile but exhibits bravery, independence, and initiative when his country’s leaders are overwhelmed by the fall of the Berlin Wall and the Iron Curtain.

ANATOLY SOBCHAK AND VLADIMIR PUTIN (ST. PETERSBURG, RUSSIA)

Putin becomes the “go-to” guy for the Mayor of Leningrad (aka St. Petersburg). Putin’s relationship to the Mayor of Leningrad, Anatoly A. Sobchak, is founded on loyalty.

Sobchak is initially recognized as a representative of new Russia but the power of his position is diminished by the ineptitude of his administration. In spite of Sobchak’s mistakes, Myers shows that Putin stands by him. Loyalty is a characteristic of Putin that is expected of all who work with him. Eventually Sobchak is electorally defeated and Putin is left out of a job.

Putin’s relationship with the mayor of Leningrad reminds one of his support for Lukashenco, the President of Belarus, who illegally diverted a commercial airline to capture a government political dissident (Roman Protasevich).

Roman Protasevich (Belarusian journalist and political dissident.)

Alexander Lukashenko (President of Belarus)

In a televised June 4th, 2021 confession by Protasevich, Lukashenco embarrasses himself and his country with coerced praise by the Belarus President. This reminds one of Stalin’s show trials.

Russia is unlikely to return to hegemonic control of adjacent countries. Ethnic nationalism and desire for greater freedom are unquenchable thirsts. Ukraine, Georgia, and even Belarus, seem unlikely to rejoin Russia in a new Socialist Republic.

Russia is equally unlikely to be ruled by a Tsar again because its population is better educated; aware of the value of qualified freedom, insured by relative social stability, and security.

Russia will remain a major international power and influence in the world. Nuclear capability and cybernetics (particularly as a weapon of political and economic disruption) guarantees Russia’s position in world affairs.

Forcing Ukraine or Georgia to return to the Russian block is beyond the military strength of Russia’s Putin or his successors. Putin successfully destroyed Chechen resistance in Russia but only by severe repression within the Russian state’s border, mobilization of the press against Chenchen terrorism, and co-optation of a Chechen leader who is now a Putin’ mercenary in Ukraine. Reassembly of a form of the U. S. S. R. is only conceivable based on political accommodation based on economic influence or volitional federation. Neighboring countries can only be seduced, i.e., either by economics, or cybernetic influence. A majority vote of neighboring countries; not military dominion, will be the “modus vivendi” for Russian expansion.

But what about the Crimea. It is a part of the Ukraine.

An argument can be made that territory of the Crimea is not an exception. Millions of dollars were spent by Russia to modernize Crimea for the Olympics. Undoubtedly, a great deal of time was spent influencing Crimea’s population (which is ethnically 65% Russian). It is conceivable that a majority of the Crimea residents voted to become part of Russia.

Of course, this sets aside the truth of Crimea’s territorial and nationalist connection with Ukraine. One might argue this is analogous to Hitler’s invasion of Czechoslovakia. Hitler used the excuse that ethnic Germans were being abused in the Sudetenland. In this view, Putin is no Tsar; i.e. he is more Stalinist accolade.

(To make Crimea the equivalent of the Sudetenland one might ask oneself if the majority in the Sudetenland were ethnic Germans, and was there a vote by Sudetenland residents.)

Undoubtedly, a great deal of time was spent influencing Crimea’s population. 65% of the Crimea’s population is ethnically Russian. It is not inconceivable that a majority of Crimea residents voted to become part of Russia

Myers cogently reveals the strengths and weaknesses of modern Russian rule. In a limited sense (limited by Myers’ independent research and fact checking), Myers’ corroborates the experience noted in William Browder’s book, “Red Notice”. Putin is certainly capable of undermining the influence or action of any person who chooses to challenge his authoritarianism.

WILLIAM FELIX BROWDER (AKA BILL BROWDER-CEP AND CO-FOUNDER OF HERMITAGE CAPTIAL MANAGEMENT, NOTED CRITIC OF PUTIN)

American-born British financier and political activist.

In spite of Putin’s great power, Myers shows there are chinks in his invincibility. Putin’s sly manipulation for re-election after Medvedev’s only term as President fails to quell the desire for freedom of Russian citizens. Just as Watergate exposed the hubris of Nixon, Putin will suffer from the sin of being a flawed human being. Putin, like Nixon, is a great patriot of his country but neither exhibit the inner moral compass that make good leaders great leaders. This is a reminder of the 45th American President who focused on the business of America; not its role as a beacon for freedom and equality of opportunity.

An odd article in the NYTs (4/6/22) notes America is perplexed by what Putin owns in order to punish him with confiscation or restriction of assets. Putin is a true believer in communism. His position and property are owned by the State. In one sense that makes Putin vulnerable because his money, power, and prestige is dependent on his government’ position. In another, his position insulates him from international economic sanction.

U.S. President Donald Trump and Russian President Vladimir Putin shake hands as they hold a joint news conference after their meeting in Helsinki, Finland, July 16, 2018. REUTERS/Leonhard Foeger

Myers creates a convincing portrait of a man who is subject to the sins of most who rise to power. Putin believes he has become a god among men. He rationalizes his greed by thinking the fate of Russia’s re-ascendance lies in his hands. Even in the days of Stalinist governance, relationship to the leader was the sine ne quo of wealth and power. Putin carries on that tradition. Putin’s friends and associates from the KGB and his tenure in St. Petersburg are critical components of Putin’s control of the economy and government.

Putin is no Tsar but he could have been if education had not advanced society and freedom of expression had not entered the internet age.

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