Economic Growth: The Organized Ontology of Purpose

Expansion of the pie, or economic growth, is the "organic growth" that government regulators say they will not inhibit as they act to "resolve" our problems by regulating financial markets.

Economic growth is the touchstone for resolving our economic woes. It is a cure we can all agree on, but ideologically disagree over the organized means for ministering the medicine. The organized means is critical. It will determine whether the cure is effective. The cure, in other words, is a dependant variable. It is dependant on an organized ontology of purpose.

The ontology is an objective process that everyone, and no one, is responsible for organizationally. It is a kind of force majeur that just happens, like when free markets determine prices by collective action in the marketplace. No one person is responsible for the outcome. Prices and the distribution of the proceeds, therefore, are ontologically legitimate.

The legitimacy is dependant. It depends on no one person, or interest group, being responsible for the outcome; that is, a free market is legitimately organized with ontological purpose.

When considering the effectiveness of regulating markets, it is necessary to ask, what attention is being given to the organized ontology of purpose? Or is the purpose, considering it is the regulation of free markets, to give the marketplace an organized ontology? The latter suggests we did not have a free marketplace. Someone apparently has more power than anyone else to effect, or skew, the hypothetically legitimate outcome. The regulatory authority is, then, acting to give legitimacy to the outcome if it is not operating to ensure the legitimate process, the legitimate means (the ontology) of the outcome.

We see, then, that the legitimacy of the end (the outcome) is dependant on the legitimacy of the means. The ends is not justifying the means. If the regulatory authority is not ensuring the means is justifying the ends, it is in fact, then, an illegitimate process of the ends justifying the means. Rather than achieving an ontological purpose, the regulatory authority is exercising an organized teleology of purpose. Rather than ensuring an ontology for the legitimate exercise of power, the authority is the power being exercised. The result is not liberty, but authoritarianism.

While the current regulatory authority is indicating it will resolve what is "too big to fail," it is at the same time, however, indicating that mergers and acquisitions, or "growth" by consolidation, may be considered "winning" market share like in a free market. "Buying" market share in a cyclically deflationary trend that favors firms too big to fail may be considered a legitimately free-market ontological process.

Remember that in a free market, winning market share requires an investment with risk. M&A buys into the market with little-to-no risk because the consolidation (the economy of scale) avoids the alpha risk (the ability of consumers to sanction with the measure of the profit margin) of an expanding marketplace (a growing economy). The result is a reward (a margin of profit) by avoiding the risk. The risk is avoided, not eliminated. It is shifted to the system and presents as the systemic risk to be managed by the regulatory authority.

Not only does the profit margin not accurately reflect the measure of free-market success in a consolidation environment, but erroneously suggests the reward is disproportionate to the risk. The result is that equity becomes overvalued with an irrational exuberance that presents with cyclically volatile micro trends that accurately reflect that no one really knows what anything is worth.

Once the risk too-big-to-fail firms avoid presents in a macro-deflationary trend, if the consolidation that occurs is considered by the regulatory authority to be "organic" economic growth when it is really contraction, the error is magnified and supported with the force and legitimacy of government authority. It supports a process, a pro-cyclical trend, an organized ontology, that makes the problem worse, like we have now.

If the regulatory authority considers consolidation to be "organic growth" despite avoiding the risk, it is not promoting the needed growth that results from ensuring a pluralistic ontology of purpose. Instead, it supports an elitist ontology of purpose that relies on pro-cyclical treatments rather than the cure. The problem is foolishly applied as the solution.

Our regulatory authority supports the problem and resists the solution, perpetuating the problem and the need for government to "gain" a means-to-ends legitimacy that, if it was a genuine free market, should already be legitimate without application of government authority.

America is essentially organized to achieve a zero-sum with the legitimacy of economic expansion, whether it obtains or not, by government authority; and when growth does not obtain, the presence of government authority in the marketplace is readily available for blame and ready to pro-cyclically bailout the systemic failure. The result is an organized ontology for the purpose of processing a false legitimacy for an outcome that does not indicate the distributive efficiencies of free-market economics, but the distributive inefficiencies of economies of scale, and structural crises.

It is important to recognize the ontological aspect because it indicates a process, a procedure, that is blameworthy. A mechanical, organizational device suggests being difficult, if not impossible, to change, yielding results that just happen.

For example, liberal and conservative legislators who agree financial markets need to be more regulated cite the mortgage crisis. They agree to identify the problem as, loans were made to people who could not afford them, not as, people need to be able to afford the loans that were made.

We see, then, the problem getting regulatory support and the solution getting resistance. Rather than indicating an unclear business environment that resists economic growth, the support is clearly indicated pro capital, which is supposed to expand the pie and create jobs.

Economic expansion is at the root of problems identified to need complex and unreliable regulatory attention that will do little to reduce unemployment. Without employment (economic growth), the demand necessary to support that growth is resisted, and that in turn supports the need for government spending (accumulation of the public debt).

If the objective is to cut costs and reduce the size and influence of government, something to which a vast majority agrees, we need a regulatory authority that resists the accumulation of capital that reduces the demand necessary to support economic growth and full employment.

The regulatory authority needs to act in support of a distribution that effects economic growth. That is exactly what it had not been doing with a catastrophic cyclical effect, is not doing now, and is indicating it will not do in the future.

The regulatory authority is pro cyclical--it gets worse before it gets better from here.

Without supporting demand, economic policy cultivates cyclical trending, which is currently deflationary. The stimulus package and unemployment compensation have prevented the trend from tracking into sustained negative growth, but it has not reversed the trend because the regulatory authority is status quo.

Keynesian economics supports demand enough to resist deflation (complete economic catastrophe), but not enough to cause employment which, according to the working hypothesis, is caused by capital accumulation and distribution (investment). The capital has been formed (the accumulation) but the investment (the distribution) has not, supporting the cyclical deflationary trend.

The effect of the pro-cyclical trend (the organized ontology of purpose) is consolidation of wealth and power. The trend will not reverese until a more progressive tax code becomes imperative to pay the accumulating Keyesian debt that supports demand.

A more progressive tax code would defeat the pro-cyclical trend, so it will not happen. It will then be a function of the regulatory authority to be sure the distribution that will occur causes economic growth and effects employment--to maintain an organized ontology of purpose that cultivates economic growth.