Oct 5, 2013

October 5, 2013: Dead End Proposition, Experience Trumps Ideology, Knee-Jerk Reaction

“Conservatism is a dead end proposition” ---From The Quotations of Chairman Joe

 It should be clear from the foregoing posts that conservatism, brought to its conclusion, is a dead end proposition.  While it is true that, as old Ben Franklin would remind us, a penny saved is a penny earned, it is also true that one can save oneself out of business.  This was certainly true of the Butterfield Corporation and, as I left property maintenance in Athens, management faced with over 50% vacancies in the office building raised rents at the apartment complex.  This, because of the student base upon which the business rests and because yearly migrations produce high turnovers, resulted in a few short months of reducing occupancy at the apartments from 97% to around 75%.  The downward spiral had begun demonstrating, once again, that bedrock conservatism is not only a poor model for governance, but doesn’t even produce a workable model for small businesses.

 Every election cycle the citizenry is bombarded with loaded political messages.  Propaganda is another term for it.  The oracles on the political Wrong would have us believe that if we would only exercise enough discipline and work ourselves into a debt-free condition a new era of unlimited prosperity awaits us.  The problem with this “Morning in America” mentality is that it never did and never will work.

 Conservatism is always running amok not only science and reason, but the historical record.  The facts are overwhelming, in fact bordering upon universal observation and experience, that—as Professor Galbraith has more than once reminded us—all eras of economic advancement have involved debt.  Sometimes a great deal of debt.  The debate should be about how much debt, not about whether there will be debt at all.  For as was demonstrated here in the microcosm, a debt-free condition does not produce strength but weakness and, in the end, collapse.  Had Butterfield borrowed money and kept up with the times,  using its business leverage by having the stock holders let the customers, in effect, finance the expansions, it could very well have survived the times.  The same is true with the operations in Athens.  But the ‘ideological’ imperative was at work forcing management into a series of knee-jerk budget cuts that in the end hollowed out the enterprises.

 The “Ideological Imperative” manifests itself in the rhetoric of the Wrong.  Appeals are made to the fears and anxieties of the political marketplace by asserting that we must adopt policies of austerity lest we fall into a pit of fire and brimstone.  You’ve heard the message:  families have to balance their budgets, so must the government.  Overlooked is the fact that the government is responsible for the value of the currency and the health of the economy; but that is in large measure beside the point.  The fact is that families don’t live on balance budgets in the first place.  It is worth noting that prior to the financial meltdown of 2007, when government had to do some serious borrowing; private debt was far greater than public debt.  Experience trumps ideology.  Every household knows that there will be no home ownership, no automobile, hell no refrigerator or washing machine or indeed lawn mower without accompanying debt.  Debt, it emerges, is not a bad thing.  In fact it can be quite the opposite. 

 Nevertheless, we are now in the grips of a government ‘shut-down’ orchestrated by the teabaggers and their malignant representatives stalking the halls of Congress.  At issue is financing the Affordable Health Care act, otherwise known as Obamacare.  Once again the idiot Wrong is willing to drive us to the point of economic crisis in a knee-jerk reaction to further investments in ourselves.  As the experiences of life in the marketplace suggests when we recoil from investing in ourselves nothing but hardship can be the result. 

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