Capitalism

There's a lot going on around the world right now. It reminds me of an old protest song.

They're rioting in Africa,

They're starving in Spain,

There's hurricanes in Florida.

And Texas needs rain.

The whole world is festering with unhappy souls,

The French hate the Germans,

The Germans hate the Poles.

Italians hate Yugoslavs,

South Africans hate the Dutch,

And I don't like anybody very much.

The fellow in the video reminds me of a comment made by Will Rogers to the effect that while everybody seems to know a lot, unfortunately most of what they know is wrong. And one of the things many, many people are wrong about is unions. They would whole heartedly agree with this fellow's opinion that the only reason anyone gets decent wages is because of the unions.

The tirade is part of the nationwide union tantrum in the US that started with Wisconsin Governor Walker's initiative to rein in public spending by curtailing some of the power and expense of unionized government employees. I have been following the coverage fairly closely on the conservative outlets and listened to the governor's statements, and I believe they are using the wrong arguments. The budget has to be balanced, has been the oft repeated message. But the reason for the budget shortfalls is that the economy is not producing enough to cover the bills. The protesting union members don't seem to understand that businesses will be bankrupted if taxes are raised to pay their wages and benefits. What unions do not and never have understood is that in order for a business to compete it has to constantly reinvest in upgrades. If it doesn't do that it will go out of business and then where will the jobs be. This lesson should have been learned by the unions long ago... if, that is, they really care about their members.

For a graphic illustration of what I am saying, take a look at the history of post war Britain. The unions there effectively destroyed the British Auto industry. The sickness of the auto companies in North America is also largely due to the unions, and for the same reasons. They took away money the companies needed to reinvest in new technologies and equipment. If union leaders were really concerned for the welfare of their members you would think they would be deeply concerned with the health of the industry. You would think they would be interested in seeing the industry under intelligent management. But no. For union leaders the employer is the enemy.

Maybe we have a hard time understanding the principle of capital formation because we were hunters and gatherers for many thousands of years. Itinerant hunter gatherers were not capitalists. They simply took what they could from the land and when it was exhausted they moved on. They followed migrating herds, they exploited resources as they became available at different times of the year, but they since they could not carry much on their travels, possessions were liabilities instead of assets. There had to be a pretty good reason to justify lugging something around from place to place.

Farmers were the original capitalists, and seed was the original capital. It's very nice to have a good harvest so that everybody can feast and enjoy themselves. But if you want to feast next year too then you had better make sure that you save some of your harvest for seed. That's what capitalism is all about.

The conflict between socialists and free enterprisers is not about capital so much as who gets to control it. Capital is what's left over after the fundamental needs of the community are met. Over the centuries the way capital has been accumulated and allocated has changed, It seems that the first civilization based on large scale farming was the Sumerian, located in Mesopotamia, where Iraq is now. It happened rather suddenly. Primitive neolithic farming had been practiced in many parts of the world, but because of the seasonal patterns of flooding the Sumerians didn't have to worry about the exhaustion of soil. They learned that by building canals and dams they could control the water supply. This required a much higher level of organization than the kind of slash and burn agriculture that was still practiced in North America by the Iroquois up until modern times. In ancient Mesopotamia a system of absolute kingship, a priestly class, and cities organized around temples sprang into existence. The kind of farming practiced there was the first to produce enough of a surplus to support an entire class of people who did not directly participate in the acquisition of food. It was the first bureaucracy. Ever since then all bureaucracies have had a tendency to expand beyond the ability of the economy to support them. When they do that they choke off the motivation of the producer to produce, and then the culture begins to decline.

This has happened over and over in history, and it's happening now. That's really what the fight in Wisconsin is about. And Greece, and Ireland, etc. Oh, and I noticed the Alberta budget has gone into the red this year. We retirees better hope that the adults win this fight. More than anyone else we depend on the economy producing enough of a surplus to keep us in reasonable comfort. This is especially so since we have been systematically killing the oncoming generation so that there will be fewer and fewer young people to support more and more old people.

It's still cold here in Victoria, sunny and cold. Tomorrow we are supposed to get back to normal- soggy and mild.

I usually only post my own photos here, but the top one today, of the buddha in the snow, is by an acquaintance of mine who calls herself Lotus Johnson. In one of my posts I opined that maybe I was taking more pictures of Victoria than anyone else. I was wrong. In my updated reading list you will be able to access all of her wonderful photos, as well as those of Gordon Handford.