Where's the Supply?

December 27. 2008

If you recall, the promise of the trickle-down economics that has brought our economy to its knees was to add supply (so called, supply-side economics).

Instead of adding supply, the capital amassed was arbitraged to finance a leverage that exceeded 100/1 in some cases, and a false fundamental shortage was organized and executed to both inflate prices and deflate the economy, effectively, deliberately, short selling the entire economy.

The aggregate effect is to deliberately engineer payment of the leverage (the macro economic rent) at the highest possible rate through a complex routine of seemingly inchoate political-economic events. While it all looks disconnected, it all acts to pay maximum leverage at the lowest possible cost until the tax liability increases the cost.

Back when Bush was selected chief executive he declared, along with a Republican congress, that a regressive tax code would yield a supply-side benefit. It instead yielded a demand-side management, command, of the economy--a maldistribution of income that gives the power to command markets into a supply-side deficiency, causing stagflation, deflation and unemployment, as I said it would at the time.

Inflation has been controlled--commanded--by deflationary means (by reducing demand), not disinflationary means (by increasing supply).

A disinflationary (supply-side) means not only adds supply of goods and services but the number of firms available to produce it so that there can be full employment with low inflation due to the adequate supply. It also relieves dependance on just a few firms organized to be "too big to fail" which, as we have seen very well, does not produce an economics that resembles a free-market economy, but a result that can only be described as command economy--an elitist, not a pluralist, model of power and political economy.

Instead of The People deciding who is best to survive through pluralistic means of a free market, the worst survive the crisis they create, by virtue of their bigness, and consolidate even more. The worst survive and accumulate even more power by elite decisional process, deciding with techno-bureaucratic expertise who should survive to prevent the crisis they cause, and it will philosophically suffice to call this the inevitable "will to power" of our natural elite.

Pure and simple, the supply-side argument of the neo-conservative coalition was a lie. It has been very clearly disconfirmed by the evidence in the very biggest way once again!

Command control of the economy is the fully organized intent of the neo-conservative coalition now operating with political-economic complexity in the hope that We The People will not condemn their ideology to the dustbin of failed economic policies and programs empirically tested to a fare-thee-well.

The rhetoric now being proferred by neo-conservatives is the fear We The People should have of the alternative "ism" with its alternative set of beliefs and organized means of validation over verification--a self-similarity of organized means to ends that re-iterates the elitist model of power and political economy. Where a pluralistic process of verifiable accountability and legitimacy is needed, an elitist process will be iterated as a progressive, historical extension, and validation, of itself.

The method of neo-conservatives to determine "truth" is mostly an ideology of beliefs that are based on lies. They proclaim that they organize a free-market economy, for example, that they have done well to entirely discredit. The People should now fear the alternative ideology, effectively defining a re-iteration of the model as the alternative.

The non-iterative alternative is not ideological.

The People voted for freedom and democracy that comes with organizing for a real and verifiable free-market economy that not only provides plenty, supply, but that supply affords real and immediate, direct accountability that is not a function of ideology but of a pragmatic empiricism in which the truth has no ideological dependance and provides us with what we can all legitimately believe in despite all our differences.

If the captains of industry cannot, will not, subordinate to the rigors of a free and unconsolidated marketplace, out of greed, out of avarice, squandering what they have and coveting what they have not, organizing to deprive under the guise to provide, then We are not dependant on them as long as We ensure an organized free-market economics in priority. Someone else is always waiting to replace them and subordinate their greed, or the will to power, to the complete satisfaction of the consumer--the free marketplace that is The Will of the People and the legitimate profit that is its measure.

When the profit is not sufficiently reinvested to add supply but to deprive it on the demand side (the engrossment of capital, or the illiquidity we have now), the profit is then less a measure of preference than the power to determine the choice. The profit then becomes a measure of power and not of preference.

To correct for the distorted measure of the profit--the source and meaning of power it is supposed to empirically measure, instead of The People being subordinated to conservative ideology and the elite model with a bail out, the captains of organized micro means are subordinated to the clear and decisive macro means of a verifiable legitimacy that a free and unconsolidated marketplace provides and the "will to power" cannot avoid.

The "will to power" organizes to avoid being denied access to the marketplace rather than denying it. The only declarative knowledge is verification of a pluralistic process when the economy is freely participated independent of any "ism" declared to be absolute truth or knowledge. Adding supply is not dependant on belief, but maximum participation that leads to maximum innovation and productive efficiency dictated by the profitable demands of a free and unconsolidated marketplace.

Organizing for Needed Change

If We The People want to effectively reverse and eliminate the cyclical crisis we are now experiencing, not only is trickle-down economics an empirically disconfirmed hypothesis that demands much-needed change, but the organized consolidation of the economy that it operates to produce and maintain demands change as well.

We see the congressional delegaton attempting to apply solutions to our economic woes that are the problem. It can hardly be characterized as "change we need."

From the price of commodities to the way public and private entities plan what we produce, the problem is organizational.

Bailing out what is "too big to fail" just perpetuates the problem--too big to fail--and effectively validates the "belief" that it is the model of efficiency when it is a hypothesis clearly disconfirmed by the evidence (massive unemployment and massive monetary support).

The massive monetary support will not reorganize the problem. It will provide a short term monetary stimulus that will forget the cause of the problem--the acquired belief that bigger is better, or most efficient.

The evidence that it is not is overwhelming!

Organizing for the consolidation of the political economy, for the consolidation of power, is the status quo ante, not change we need.

Instead of a point at which change is to naturally occur for a continuous, empirical improvement, our current crisis is being used to reinvent the problem into a confirmed consolidation of practical power that allows for elitist command and control of our political economy and for a continued false self-determination of The People.

If we do not reinvest, reorganize, consolidation of economic factors into small factors of manageable efficiencies that are quickly responsive to supply and demand costs and benefits and the tastes and preferences of the consumer (the public) with an equally quick accountability, the public is condemned to elite management of the political economy that in no way ensures a rational, objective, pragmatic decisional process that the collective will of The People is most apt to provide with a clearly verifiable legitimacy.

It is not impossible, and surely more possible and less complex than what we are doing now, to invest a small entrepreneurial economic system in which the stabilty of the system is not dependant, and therefore less apt to be corrupt, abusive and inefficient, if the failure of one industry or market entity does not condemn the entire system to short or long-term cyclical crisis.

Instead of how big you are being the measure of success, surviving the pluralism of the free marketplace is the measure of success.

Allowing for organized consolidation renders as the measure of success how corrupt and abusive a business can be and still stay in business (like securitizing--consolidating--debt obligations too big to let fail and impossible to renegotiate so that the debtor must fail and the lender must be bailed out). The abuse includes the margin of profit (inflation and unemployment to be managed politically) and a decisional process that leads to clearly verfied inefficiencies of current form that are shown to be difficult at best to reverse even with the force of public funding and authority. Reversing this measure of success is the change we need, and is entirely possible.

More than $2 trillion of monetary and fiscal stimulus (investment) is best spent to pluralize (deconsolidate) the economy, and power. The reason this alternative is ignored if not discouraged is because it will effectively cure what ails us. It will minimize the probability of crisis by not maintaining a consolidated model of power in which its huge costs are rendered a predictable, recurrent benefit of a power elite and a means to apply power rather than properly deny it.

Instead of denying access to power the inefficiencies of aspiring to be big enough to be corrupt and abusive, what access to financing provides and largely determines, the rigors of pluralism are discouraged for a systematic structure of power in which the pursuit of life, liberty and happiness is largely the discretion of a ruling class, enforced by the self-determination of the masses to be in service to it. It is antithetical to a structural model for freedom, morality, and efficiency.

Maintaining the model we have now is to commit to a proven model for encouraging inefficiency, immorality and a lack of freedom that interact to be a cause for crisis and, historically, acquiesence to an elitist model that cyclically reinforces and reinvents itself. An elitist model always deliberately discourages the natural tendency for a peaceful and prosperous pluralism. It cultivates and ensures its succession with the promise of a short-term comfort and security that assures the probability of an insecure future.

Invest pluralism of the marketplace in priority, not its continued consolidation as we are determined to do now despite the domonstrable political will for "change we need."