The modern multinational corporations, situated in
gleaming glass and steel buildings all over the world, are not as they are
popularly presented and commonly understood.
Generally
speaking they are no longer run by business entrepreneurs who successfully
read the ebb and flow of supply and demand; nor managers who live or die
based upon the success, or not, of their predictions. They are overseen by
bureaucrats whose sole function is to ensure that the decisions and
management responses of another time are successfully kept in place. They
don't respond to observations of the current state of affairs, coupled with
predictions of the future; they show blind obedience to the echoed
revelations of the past.
As
long as the market remains within the confines of a similar supply/demand
situation all is well. The problems begin when the necessarily temporary
state of the market (the 'new era') predictably morphs into the paradigm of
the past. In a healthy economy, business constantly responds to the
incessantly changing demands of the market. In an unhealthy economy,
legislative bodies attempt to force markets to adhere to the corporate status
quo. The former is as blessed with success and affluence for all except the
unproductive, as the latter is doomed to failure and poverty for all except
the elite.
The
freeloaders occupy different ends of the spectrum depending upon whether a
market is free or controlled.
Huge
corporations are not so much businesses, as profit producing machines with a
'use by' date. They do what they do because that is what they have always
done and once upon a time it was successful. When what they do ceases to make
sense, they yet continue to do it anyway. Why? Because business acumen and
management competence have been replaced by bureaucratic inertia. The media
portrayal of these corporate bureaucrats as Titans of Industry is as far from
the truth as it is possible to get. They are more correctly viewed as
splendidly attired attendants mincing along behind, and deferentially holding
up the skirts of, an aging past success… not an attractive sight.
Corporations
are doomed when they become so unwieldy that they are unable or unwilling to
react to external market circumstance. Eventually they degenerate to the
point where they fail to even appreciate the significance of the external
forces at play. The smartest of the corporate bureaucrats understand this and
seek to extend the spasms of their soon-to-be corporate corpses via the
political process. Political corruption and corporate monopolies unresponsive
to market needs are the result.
Such
is where we find ourselves today; surrounded by corporate corpses which
remain upright only because of the wads of money that have been stuffed up
their rectums. The people doing the stuffing are the same people who are
quaintly described by our droolingly compliant
media as 'world leaders'. Why do politicians not let these quasi-businesses
fail and do themselves and the taxpaying serfs a
favour? Because being entirely uneducated in economics, and still relying on
the drivel of Keynesian twits who have ignorantly taken us to the edge, they
simply have no idea of the destruction that they are causing. Governments are
still listening to the experts who got us into this mess in the first place.
They borrow ever larger amounts of money creating debt sends us even further
into the third world. The belief that prosperity can be borrowed into
existence is right up there as an economic theory with the Papua New Guinea
Cargo Cult.
The
constant toppling of the largest corporations is a sign of a properly
functioning economy. In a genuinely free market, large is not strong, big is
not better. Small and flexible leaves large and ponderous in the dust. The
free market is characterized by nimble and aggressive newcomers garnering the
market share of cumbersome and flaccid old-timers. Success in the free market
is a measure of energy as much as anything. Large corporations are like old
batteries. They still look fine, they usually just
don't work anymore.
If
old wasteful and capital destroying businesses are not allowed to fail then
there is no room for dynamic, capital forming businesses to enter the market.
If there is no destruction to make way for creation then there can be no
economic growth. The consequence can only be a falling standard of living.
The
modus operandi of an economy run by government dictate is that large
businesses with powerful political connections legislatively destroy smaller
businesses that seek to compete.
In a
free market new, small and efficient businesses squeeze out older and more
unwieldy business incumbents. Vibrant new entrepreneurs and business people
enter at the bottom of the market and push the plodding old geezers out at
the other end. The free market serves all consumers equally, and everyone of
course is a consumer. A genuinely free market is a wholly egalitarian affair
which pays neither heed nor reward to any elite.
It is
not only products that become defunct. Obsolescence reaches into all aspects
of the demand and supply chain. Everything is in a constant state of
evolvement. Sometimes imperceptibly slow, at other times bewilderingly fast.
A free market simultaneously both creates and responds to the constancy of
change, and thrives on the process.
Governments
resist change with all their might. Whole government departments are set up
to ensure that no changes are possible. Governments are the nemesis of
commerce and wealth creation in that their whole raison d'être is based
on the constant effort to hold in suspense that which is naturally fluid.
The
elite of the free market achieve that status because of their superior
ability to produce goods that are needed and wanted at a price people are
willing and able to pay. The elite of a controlled economy are the unproductive
who managed to cut the best deal for themselves via the political process.
The controlled economies of our modern world are designed to keep the rich
permanently rich and the poor permanently poor. Only the free market allows
for easy migration from poor to rich and, as importantly, from rich to poor.
Today
we have vast corporations vainly trying to masquerade as businesses. Most of
Wall Street should more properly be viewed as a museum; ditto for G.E., Ford
and Chrysler and many of the other behemoths. They are relics of a bygone
era. There may or may not be a cultural case for supporting museums, there is
certainly no case for supporting yesterday's superseded and defunct business
models in the forlorn hope that a sudden demand for the equivalent of
cutthroat razors delivered by horse and buggy will again render them economy
builders. They are finished; it is just a question of how much further
financial damage will be caused in the vain attempt to keep the smelly
corpses upright.
The
folly of John Maynard Keynes' belief that the government is better equipped
to run the economy than free people acting volitionally is demonstrably
absurd by any rational measure. The current state of the world economy should
put the end to that lie for all time. Yet the most egregious failures of
Keynesian practise are more visible in the area of morality.
Those
of you of a delicate disposition should grip the sides of your chair firmly
prior to reading the revelation in the next sentence… or close your
eyes.
Standards are falling.
There
are those who point out that standards were falling toward the end of the Roman Empire. The fatuous implication is that if moral
standards have been falling for 2000 years then they are obviously not. The reality
of course is that they do not fall continuously. Moral standards are
inversely proportional to the coercive power of government and fall and rise
accordingly.
The
perennial journey of governments from weak to strong and then from strong to
despotic parallels the rise in immoral behaviour, not only of the politicians
and their bureaucratic enforcers, but of the public at large. We live in a
deeply and pervasively immoral time.
The
moral problems created by the ability of the majority to vote themselves the
money of a minority is the Achilles Heel of any democracy unrestrained by a
constitution. Immorality with a less obvious cause also flows from government
debasement of currencies via inflation. Such debasement makes honest and fair
exchange between people almost impossible. Any sort of credit/debt
arrangement becomes suspect because neither party can accurately predict the
future value of the irredeemable paper coupons which they are forced to use
for the exchange.
The
ubiquitous inflation of irredeemable currencies destroys the free market
concept of trading for mutual advantage. The resultant, distorted concepts
become entirely negative and consist crudely of "how can I screw this
other fellow so that I make more whilst he makes less?" In a practical
sense right now one such equation would be: "if I borrow money to buy a
house is it likely that I can pay back the lender with money that is worth
less than that which I borrow?" The automatic Win/Win of the free market
operating with honest money, becomes a Win/Lose, or
even Lose/Lose proposition. Shifty people and dealings have consigned
principled people and exchanges to the state of seeming charmingly naïve
and old-fashioned.
Wealth
cannot be produced with either dishonest money or dishonest people; it is the
former that encourages the latter. Despite some philosophical and religious
tenets to the contrary, one of the more obvious lessons of life is that the
vast majority of people are basically honest and decent… not
necessarily right or smart, but honest and decent. Such qualities are not
legislated into existence, but it has become apparent after 70 years of
Keynesian inspired inflation, that the qualities of honesty and decency can
be submerged by legislation that rewards the opposite. For that insight (and
only that), we should be grateful for the ill-fated Keynesian experiment.
Mind you, Plato did point that out quite a while ago. "What is
rewarded in a country will be practiced there."
It is
not people who are basically bad and who need controlling, though it well
suits government to propagate such a myth; it is government issued
irredeemable currency that is basically bad, and governments who need
controlling.
It is
imperative that governments be again constrained by the Gold Standard. We
desperately need to instate gold in its rightful role as honest broker. Not
because bail-outs would not be possible under a Gold Standard, but because
the immoral logic that proposes and supports such bail-outs would not even
exist. The giant corporations and banks should be allowed to collapse. Let
those who were foolish enough to invest in them lose their money. Yes, it
would be hard, but the alternative being implemented right now is going to be
very hard for everyone. Instead of the losses being restricted to the
criminal and the foolish, society itself is being sucked into poverty.
Nothing,
absolutely nothing, has the power to stop this vast destruction of wealth
other than the instatement of the multifarious disciplines of the Gold
Standard. There is a natural cohesion between the prosperity that results
from the use of sound and honest money and moral standards. They are two
sides of the same gold coin.
It is
for this reason that The Gold Standard Institute has now been established.
www.goldstandardinstitute.com
Sam Mathid
sammathid@yahoo.com
Also by Sam Mathid
Because of the success of Professor Antal E. Fekete's seminar in Australia last year Marcus
Matthews is organizing another. Details are: University House, Australian National
University, Canberra, 2 to 5 November 2009
Peace
and Progress through Prosperity: the Gold Standard in the 21st Century
This is the first conference organized by the
newly formed Gold Standard Institute.
E-mail feketeaustralia@gmail.com
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