Economics on the back of a napkin
Well, actually in the intro of a book that came out more than a year ago. I read this a long time ago and really thought it did a good job of describing why American consumerism was non productive and non sustainable.
Today I searched around and found this intro on the web under someone else’s blog.
Sometimes I agree with Peter Schiff (the author) and sometimes not. But for this little parable, I have always thought he was right on target.
If you are interested in his book, you can buy at Amazon. Just click the image of the book below.
Crash Proof - Peter Schiff.
Let us suppose six castaways are stranded on a desert island, five Asians and one American. Their problem is hunger. So they sit down and divide labor as follows: One Asian will do the hunting, another will fish, the third will scrounge for vegetation, the fourth will cook dinner, and the fifth will gather firewood and tend the fire. The sixth, the American, is given the job of eating.
So five Asians work all day to feed one American, who spends his day sunning himself on the beach. The American is employed in the equivalent of the service sector, operating a tanning salon that has one customer: himself. At the end of the day, the five Asians present a painstakingly prepared feast to the American, who sits at the head of a special table built by the Asians specifically for this purpose.
Now the American is practical enough to know that if the Asians are going to continue providing banquets they must also be fed, so he allows them just enough scraps from his table to sustain them for the following day’s labor.
Modern-day economists would have you look at the situation just described and believe that the American is the lone engine of growth driving the island’s economy; that without the American and his ravenous appetite, the Asians on the island would all be unemployed.
THe reality, of course, is that the American is not the engine of growth, but the caboose, and the best thing the Asians could do would be to vote the American off the island–decoupling the caboose from the gravy train. Without the American to consume most of their food, they’d have a lot more to eat themselves. Then the Asians could spend less time working on food-related tasks and devote more time to leisure or to satisfying other needs that now go unfulfilled because so many of their scarce resource are devoted to feeding the American.
Ah, you say, but that analogy is flawed because in the real world the United STates does pay for its “food” and Asians do receive value in exchange for their effort.
Okay, then let’s assume the American on the islands pays for his food the same way real-world Americans pay, by issuing IOUs. At the end of each meal, the Asians present the American with a bill, which pays by issuing IOUs claiming to represent payments of food.
The castaways all know that the IOUs can never be collected since the American not only produces no food to back them up, but also lacks the means and the intention of ever providing any. But the Asian accept them anyway, each day adding to the accumulation of worthless IOUs. Are the Asians any better off as a result of this accumulation? Are they any less hungry? Of course not.
Suppose an Asian Central Banker suddenly washes up onto the island and volunteers his services. Now each day the central banker taxes the other Asians on the island by confiscating a portion of the scraps of food the American throws them each day from his table. The central banker then agrees to return these morsels to the other Asians each day, in exchange for each Asian’s daily accumulation of the American’s IOUs, less a small percentage for himself because he, the central banker, also has to eat.
Does the existence of a central banker change anything? Do the Asians have any more to eat because their own central banker gives them back a portion of the food he took from them in the first place? Do the American IOUs have any more value because they can now be exchanged in this manner? Of course not.
The Asians will be better off without us
The real world lesson is that if it doesn’t make sense for the six make believe Asians to support millions of real-world Americans. The fact that they do so in exchange for worthless IOUs in no way alters this reality.
There is no question that in the short run, by allowing the U.S dollars to collapse (in effect, voting millions of Americans off the island), there will be some disruptions of Asian economies. Of course, there will be some initial losers, particularly among those Asians who currently profit from the present arrangement. However, these profits come only at the expense of greater losses borne by the entire Asian population.
In the end, the cessation of America’s excess consumption, which is not a benefit Asians enjoy but rather a burden they now disproportionately bear, will be the best thing that can happen to them. Like the serfs being liberated from their lords, their scarce resources will be freed to satisfy their own needs and desires, and their standards of living will rise accordingly. As their savings finance increased capital investment, rather than being squandered on American consumption, their future standards of living will rise that much faster as well.
Today I heard a message from Obama that was clear to me
I love to hear Obama speak. There is something about what he says that appeals to something deep rooted in me. I have not been able to quite figure it out until today, when I heard his “closing argument” speech in Ohio. I’ll try to explain it.
First, let me say that I agree with some of his policies, and I disagree with others. For example, I like the idea of policies that encourage a fairer tax policy - I mean, who can say it is fair when a CEO walks away with millions and does not have to pay taxes on it due to big loopholes. And that money he or she walked away with was earned through, basically, fraud. And now my taxes are going towards cleaning up that huge mess while I see my savings shrink to nothing.
And who thinks it is fair when Bush provides tax incentives to mining companies who rape and pollute the land for their own gain, then leave the rest of us with a toxic landscape to clean up.
The current administration should be prosecuted in my opinion. I see them as criminals.
But I digress. These behaviors really get under my skin and I am ashamed of these people. But I do not see them as part of me or my country really. I know what makes me proud to be an American. I think of the day after 9/11 when I was in Manhattan and I saw strangers helping and comforting each other. When I see small communities bind together to help neighbors who have gotten ill and cannot pay their hospital bills. When my neighbor Edwin and his wife take an afternoon and mow the lawn and clean the yard of the fellow down the street who has injured his leg. I think of the members of Flight 93 who, in one of the more heroic times in our history, joined together and gave their lives to save others.
Americans come together and we help each other. We solve hard problems as a team, we boost one another as a community, we show compassion to other countries as a nation. Our strength is in our unity.
The babble babble of the right lately about Obama has rung hollow to me. Oooooh, socialist, liberal, marxist, blah blah. What childish name calling. They are basically saying “he’s going to rob you to give your money to someone else.”
That is what the GOP has been pushing since Reagan. Instead of America being about community, it is all about “me”. My money, my ideas, my buddies. Me me me me me. Good Lord, what are we, two years old?
In Obama’s speech today what I heard was, it is about “us”. All of us. We are stronger together than apart. We have a responsibility to not only ourselves, but to each other. And if we work together, and support one another, we will all benefit and as a whole we will be stronger. We are a family, and it is time we started acting like one.
A new spin on “Don’t shoot the banjo player”
D and I worked our butts off this weekend on the property. I have to say, I find it so enjoyable to be out with the tractor and chainsaw and horses. At least at the end of the day you can see what you accomplished.
Anyhow, I came in about 5:30 this evening, feeling like a truck had run me over. Repeatedly. Took a hot shower, fixed dinner and fell into my easy chair to check my mail and watch some football. Hot chocolate is on the stove. Ahhhhh.
My Old time music newsgroup sent a great link. If you have any softness in your heart for the banjo, spaghetti westerns, Lee van Cleef, cheesy movies… well you are gonna love this. Just remember - don’t mess with the banjo player!
HBO’s “In Treatment” - worth watching
A few weeks ago we got a call from Dish Network - a special deal on HBO. We figured we’d give it a shot. Well, I must say that it has really been enjoyable. I cannot quite figure out the schedule and so I just sort of stumble on things. It does appear that Sunday evenings some interesting things come on.
One series I have found is “In Treatment”. Again, I have not figured out the schedule, but it seems that early on Sunday evenings they show about 4 or so 30 minute shows back to back. I find myself totally absorbed. Basically the series shows people who are in therapy as if you are a fly on the wall. There are a lot of tortured souls and a lot of tears, but it is interesting to sit in on these people’s problems, thoughts and reactions. On the one hand it can be pretty depressing. But on the other hand I end up feeling grateful that - despite gripes I have here and there - my life is so much more fulfilling and complete than the lives of these folks. I am glad I do not have screwed up kids, a hatred of my parents, or a relationship that is going down the drain.
The writing is good - I guess in some ways it is sort of like a soap opera, except that the problems these people have are so commonplace that they have relevance. The acting is quite good too - at least so far.
Anyway, I am pleased I stumbled upon this little gem. And I am immensely thankful that my life is simple and happy.
In Memory of Pam Jackson
On Saturday evening October 11, my Dad called me as I was driving home to tell me that Pam Jackson - our friend, and a beloved friend to scores of people within and outside of the horse community - had passed away suddenly and unexpectedly. I had seen Pam less than 2 weeks before this, and I was immensely stunned and saddened at this tragic news. Yesterday I was honored as I was asked if I might write a tribute to Pam. I have been thinking of what to write, and I came to the conclusion that I should write about Pam as I knew her – as my friend and part of our Friesian family. So this is a personal story, but I hope from this story readers will get to know or remember Pam and feel the love and respect I have for her.
In 2002, Karen Waldron hosted a keuring at her estate in southwestern Virginia. The “Belle of the Ball” was a stunning mare named Lies van Bommelsteyn. Lies became Model mare and Best of Show that day. My parents were vocally enthusiastic as Lies took the honors. “That’s Pam Jackson’s horse!”, my mom exclaimed. “You remember Pam, she used to show saddle horses with your sister and Karen Waldron when y’all were kids”. I could not quite remember (I was a kid a long time ago), so my dad just grinned and said “Pam is a great lady”. After all those years, my parents still had an obvious affection for Pam, and that was how I was reintroduced to her.
Over time I would see Pam more and more – at inspections, shows, FHANA meetings. She and her husband Bill were inseparable in their devotion to one another and their love of their horses. Pam became a breeder of some of the best Friesians in North America. I would look for Pam and Bill at each Friesian event. Often I would see Bill first. He’d give me a big hug and ask about my family and I would kiss him on the cheek and ask how he and Pam were. Soon I’d ask about the horses – where they were showing, and what the plans were for the next breeding season. Bill would just laugh, point to his wife, and say “you’ll have to ask the boss!”. Very few knew Friesian horses as well as Pam. As soon as I could, I’d monopolize Pam’s time, asking her about the new crop of stallions or how the training of her show horses was going. I remember her laughing that infectious deep belly laugh followed by some incisive quip in her smooth South Carolina drawl. I loved the sound of Pam’s laugh; sometimes I would try to say something funny, just to hear her laugh.
In 2004 Pam persuaded our family to bring two of our horses to Statesville, NC for a Friesian under Saddle class Pam was organizing at a big saddlebred show. We are not really into the show circuit, but Pam was a woman on a mission and it was tough to say no to one so passionate. She felt very strongly that the Friesians needed to be performance horses. “Jeannine”, she would say (Pam would start many sentences to me by saying my name first. This is an old southern trait that shows friendship and respect to the listener). “People need to see these horses. It is good for the breed”. After that show it took us 2 hours to get our horses from the stable to the horse trailer 100 yards away. We were swamped by crowds of people wanting to know about this beautiful, impressive breed. Once again, Pam Jackson was right and had done yet another positive thing for the Friesian horse and our Friesian community.
Later on Pam became heavily involved in the Friesian performance horse group, IFSHA, and her horses competed all over the southeast. I saw Pam’s mare Tessa van de Zuiderwaard in Roanoke at one of Tessa’s first showings as she blew away everything in the ring that night. I was so impressed that I meandered to the stables to see the horse, not knowing a thing about her. The rider, Ashley Walker, told me a lady named Pam Jackson owned the mare. “Of course”, I thought. “Who else…” Tessa went on to win nearly every class she ever entered as she had the show career of a lifetime for a Friesian in saddleseat. Pam and Bill became good friends of Tessa’s breeder, Femmy Fien from the Netherlands. Femmy has since visited the Jacksons often to see Tessa and Tessa’s brother Maurice compete. And so, through her horses, Pam is loved in the Netherlands, just as she has been loved here in the US.
Pam has hosted the South Carolina keuring for the last three years and it was at that keuring this past September that I last saw Pam. She was running on all cylinders to get through the keuring as organizer and owner of a number of adult horses and foals. She excitedly told me about her and Bill’s plans to go to the IFSHA show with Femmy in late October. Thinking of hauling those expensive horses for thirteen hours to attend a show sort of made my eyes glass over. Pam saw this and said, you guessed it, “Jeannine, people need to see them. It is good for the breed.”
At the time, we were standing over by Tessa’s stall. Tessa is now retired from the show ring, but was there in the keuring stall with a little filly by her side. “I thought she was not pregnant this year”, I said. Pam’s face softened and she stroked Tessa’s nose. “Tessa was not pregnant. This baby’s mother rejected her and Tessa took her in and has adopted her.” I could not believe it – Tessa adopted this baby without even having any milk for her (and thus – one would think – no maternal instinct). I commented on that to Pam and Pam just said “Tessa is special. She has a heart of gold”.
You know, you can tell the character of a group of people by the character of their leader. In a similar way, you could tell the character of Pam’s horses by knowing Pam. Like Pam, her horses are tough and impressive. They are also kind and dedicated. When I think of Bill and the horses and all of us without Pam, I get overwhelmingly sad. I have to think of something to cheer me up. Somehow I imagine Pam is with her own angel now. An angel, who like Tessa, took a wide-eyed newcomer and is teaching her the ropes. And no one deserves that angel like Pam does – Pam was, and always will be, special, with a heart of gold.