Growth Before Jobs?

According to Treasury Secretary, Geithner testifying before a House subcommittee on financial reform, "growth comes before jobs."

The hypothesis is that the accumulation of capital is invested to produce growth and, therefore, jobs.

With trillions of dollars having been accumulated, why is employment continuing to decline?

The logical inference, based on the working hypothesis (the practical model in operation), is that the economy is still in an accumulation phase of the business cycle.

The deprivation of the capital accumulated is considered an investment that, a la Reaganomics, will cause employment by causing unemployment--by readjusting the cost basis of the capital's value. The logical inference from that is: being unemployed is beneficial because it leads to employment.

This is what a political-economic tragi-farce looks like in the purest form of the art.

No Weak-Dollar Recovery

Organization of the economy over the last decade, and perhaps going farther back, anticipated a weak-dollar recovery as events predictably transpire (or conspire) into the current recessionary trend.

Despite the CFTC's effort to regulate futures, a weak dollar will continue to be a program price-signal to buy energy futures. The support for energy prices is deflatonary, resisting support for the dollar, recovery, and employment.

Indeed, this program trage conspires to continue the accumulation phase of the business cycle despite the mounting regulatory resistance.

Discouraging an asset class from futures contracts is easily circumvented with structured investment vehicles that do not appear on balance sheets. The program not only hides the reward of the intended deflationary effect, but the risk to that reward.

The hidden risk systemically appears as an ontological, cyclical trending that is, nevertheless, deliberately program generated.

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.

Economy-of-Scale Efficiency: Restatement of the General Case

Instead of "economies" of scale, we should have a singular "economy" of scale being the incentivizing model of efficiency.

Rather than each individual firm seeking an economy of scale that consolidates into a too-big-to-fail ontology, we should organize with a free-market, pluralistic ontology ensuring in priority a macro-economic singularity.

With the gamma-risk ontology being organized in priority, instead of being managed in posteriority, we can proceed with a process organized for both economic growth and stability. Gaming for power becomes a function of operating within established parameters organized "a priori." An organized economy-of-scale efficiency that is too big to fail "a posteriori" will be rendered obsolete, and the abuses of power characteristic of being to big to fail will result in certain failure of the firm.

Ensuring a macro economy of scale will incentivize continuous economic growth in priority rather than continuous consolidation and economic contraction to achieve the measure of success--the profit margin.

Rather than an economy of scale being the natural model of economic efficiency that supports the exploits of a power elite, it is an ontology (a naturally occurring process) of efficiency to be ensured by the sovereign for the purpose of securing the general welfare and the domestic tranquility. It is an incentivized process purposefully applied in priority to ensure deconsolidation, rather than consolidation, of power, economic or political.

Just as absolute monarchy became the absolute sovereignty of The People organized into the absolute authority of the state, alien still but functionally, more pluralistically, dependant on The People for the source of its power, the economy-of-scale singularity consolidates the interests of The People with the ambitions of power in priority.

Just as monarchs organized mercantilism to serve their interest before The Revolution, capitalism was organized to effect a more equitable distibution of sovereign power among the mercantile elite to serve their interest by authority of the state.

The Enlightenment, like The Revolution, is both old and new.

It is time for a restatement of the general case.

Instead of organizing for an authoritarian effect, we can wisely organize for a free-market effect. The tendency to consolidate (the gamma-risk that cannot be avoided) can be harnessed to ensure an effective pluralism, and the sustainable incentive for economic expansion that comes with it, in priority.

The False Efficiency-of-Scale Argument: The General Case

Being too big to fail provides optimal efficiencies of scale. It also provides accumulation of errors and distortions, costs and abuses, on a massive scale, that cannot fail.

It is critical to understand that an organizational model that is scaled too big for failure creates risk of equally large size. Since it cannot fail, it is immune to the risk. If you are not the beneficiary of that risk, then you are "at risk" to the reward. Your savings, your home, your income is at risk of being consolidated into capital that is supposed to finance your savings, your house, and your income. It is intended to sacrifice the benefit to you for "the general welfare" which is seeing to the welfare of the rich in priority. It is a zero sum.

Being organized "too big to fail" causes risk, it does not take the risk. No. The risk is caused to consolidate assets in the form of legitimate market risk that is not at all legitimately ontological. The risk, rather, is created by an organized teleology just for the purpose of failure. It is intended to effect a reward by causing a detriment through organized means.

Being "too big to fail" effectively creates a "detrimental reliance" which is considered by law to be an abusive relationship typically associated with theft by scheme and the product of a criminal intent. The organization is the cause, the failure is the effect. The result is a profit without risk, or an illegitimate zero-sum game.

On a macro-economic scale, instead of forming the capital necessary to create jobs, being too big to fail has formed massive systemic risk and created massive unemployment.

Massive capital has been formed. So, where are the jobs?

Unfortunately, if you need a job, unemployment is the capital amassed. It has been converted and consolidated into private property. The property will not again be capital until it is used to expand the pie (what currency derivatives and credit default swaps will not do). It is a massive failure of the system, managed to a consolidated, too-big-to-fail level of incompetence (to the gamma-risk limit of power).

While the system has failed, the parts that comprise the system failure are too big to fail, and the system stubbornly persists in error.

Organizing firms so big that they cannot fail is to organize for failure, not success. It allows for the system to persist in error by managing, rather than preventing, the systemic risk. The system is then driven to a level of managerial incompetence. It is dysfuntionally organized with the "peter principle."

A free-market pluralism technically avoids the organizational problem of the "peter principle." Instead of allowing the pursuit of power to support an accumulation of errors, pluralistic organizational technologies provide a self-corrective, empirical ontology that awards power based on the merits and not an accumulation and consolidation of power itself based solely on the ability to game the system. It will resist the pursuit of power without the qualification--the merits--for having it, like a practical moral intelligence.

A free-market pluralism ensures the means of gaining power is not an end in itself, so it must be ensured in priority. Managing markets after the dirty deeds have been done ensures markets fail and produce the success of consolidating power by defeating the meritorious mechanism of free-markets.

Regulated markets with firms too big to fail do not produce a free-market effect. They do, however, give dirty deeds the legitimacy of public process and the force of public authority.

Today's organizational techniques and financial instruments become the clever innovations of tomorrow that evades the letter of the law, or deliberately encounters the ignorance of a like-minded regulatory authority.

Rather than resisting the incentive for dirty deeds, a regulatory regime that does not ensure operation of a free-market mechanism in priority supports the incentive to produce outcomes that elicit a populist sentiment. The trick then, of course, is to give the outcome legitimacy despite the negative sentiment.

Allowing firms to "grow" too big to fail because it is economically efficient supports the probability the negative effects will occur. What is to be prevented by popular demand (like having to sell your assets at a loss because you lost your job while big bankers reap record profits and salaries by investing in derivatives rather than economic growth--i.e., consolidation of industry, markets, and the wealth) will innovatively occur as unintended, ontological crises.

The argument for needed change then takes this form: it does not matter what we do, the crises that continuously consolidates wealth and power will (ontologically) occur. It is a law of nature. It is the result of natural processes that cannot be avoided; and since crises cyclically occurs no matter what, the argument that it is futile to try (a la Ayn Rand and Friedrich Nietzsche) is empirical truth.

The ontological argument for the consolidation of wealth and power is a conservative argument that is generally accepted across the ideological spectrum. It is an argument of the general case: organized consolidation (an economy of scale) is a gamma risk that can only be managed, not ontologically avoided, or prevented.

We should be quick to test this hypothesis by ensuring a free-market pluralism in priority. It will be interesting to see who objects and why.

A pluralistic ontology prevents the accumulation of power into the pursuit of a criminal intent. It is a pursuit that has been described as "crony capitalism" or "robber-barronism" in which power is accumulated from the privation, rather than the provision, of others. (The current health care debate, for example, includes insurers admitting they are so non-free-market organized that they can deny access and raise prices all they want without, by definition, market sanction. The power to sanction is the exclusive domain of the firm too big to fail the marketplace.)

Capitalism is organized to prevent economic growth in the name of expanding it.

Through an efficiency of scale, the ever-larger "growth" of a consolidating corporate body intends to defeat free-market economics (the incentive for growth) for a tyrannical effect that commands the free-market measure of success--the profit margin (but without growth). The lack of economic growth is expressed as an efficiency of scale that prevents failure and ensures success by empirical proof of the profit margin.

The corporate body must include government, and its regulatory authority, so that it does not act to produce a free-market effect by popular demand. The tyrannical, non-free-market effect (the false free-market measure of success by being too big to fail) then has the force and legitimacy of democratic, government authority (state capitalism).

It is time to reject the organized model of a too-big-to-fail efficiency. It is time to reject the false ontology that legitimizes the consolidation of wealth and power and accept a true economic, ontological scale of efficiency.

We should reject the traditional, conceptual ontology that forms the elitist model of economic efficiency in which economies of scale are the statement of the general case.

The False Efficiency-of-Scale Argument: The Particular Case of Health Care Reform

The President proposes a "health care exchange" that will create an economy-of-scale efficiency. It will simulate, he argues, the effect of a free-market economics through collective bargaining power.

Why is it necessary to simulate a free-market price through non-free-market means?

The President's exchange plan keeps the decisional process a product of consolidation which affirms the belief that centralized control is the model of efficiency despite having produced the Great Recession.

According to the President, the exchange is a proven, too-big-to-fail model of success that will benefit "The People" instead of insurance company profits.

By organizing massive bargaining power "like Wal Mart," the President says (which is organized to be "too big to fail" despite the Great Recession), We (The People) will have all the benefit of a proven organizational technology on our side to effect the change we need.

While the President argues the benefit of a too-big-to-fail organizational technology to a fare-the-well, he does not consider the detriments.

The Wal Mart Model, for example, has for many years consolidated the marketplace. While it affords a competitive price, its has meant the demise of small businesses that are our best source of employment. It is no coincidence that the demand now is for "jobs jobs jobs!"

Since Wal Mart is too big to fail, the detriment (the organizational error and distortion that is inimical to a free-market economics like lower prices but with a diminishig demand that causes delfation) is turned into a success that accumulates along with the benefit. Organizing for this kind of success, whether it is consumer retail or health care, is to also organize for massive failure that the marginal beneficiaries (like shareholders, and in the case of health care, its providers) are immune and, even worse, have a stake in conserving.

In a marketplace that is allowed to consolidate, the error (the detriment, the failure) proliferates and the benefit accumulates. In a free-market system, the benefit proliferates and the risk dissipates. Instead of our MBA graduates organizing a highly innovative, pluralistic economy, they are paid huge bonuses from the accumulated profits of organizing a consolidation of industry and markets in the name of efficient economies of scale. The result is the Great Recession, very expertly accomplished with the value of The People's debt being worth more than the value of their assets.

Is this where the organizational plan for health care is headed? The probability, based on experience of using this model, is very high. It is a risk we do not have to take.

In the case of health care, consolidation of the market will benefit all those health care professionals sitting around applauding the President's initiative when he announced putting the plan to a vote. It will conserve an accumulative benefit with an accumulative cost that deflates the economy and causes Great Recessions through consolidation of industry and markets.

Whatever cost savings can be had from an organized bid-exchange will be easily countered by the organized consolidation of the providers. The cost of health care will be perpetually parked on the ask, never on the bid.

The market will be organizationally rigged with an economy-of-scale efficiency.

When the revenue stream on potato chips runs out to support ever-increasing costs in the authoritarian name of public health and welfare, it will be something else ad infinitum. Freedom is crushed under the weight of holier-than-thou elits interested more in accumulating wealth and demonstrating power than administering the general welfare.

The benefit will be consolidated by health care providers at the expense of insurers. Costs will not be reduced, they will be a consolidated benefit--an accumulation of wealth and power that causes crises with the highest dergree of predictive utility.

The People should not allow elite authorities to persist in error.

Job Creation and Organizational Complexity

Trillion dollar bailouts caused by an economy overleveraged by trillions of dollars has made job creation so salient the master-mind Ivy Leaguers who engineered the Great Recession now have to consider how to reinvent a recovery.

Engineering huge profits and a record consolidation of wealth despite declining demand is a monumental feat of Nobel-Prize proportion. The great mind that devises the scheme for creating jobs without actually creating jobs is due to win the prize for the most complex practical modeling ever conceived. It will make Tyco Brahe's retrograde motion look like basic math.

Quantitative masterminding is what gets us into these messes. It will not get us out, but will add more complexity which, the truth be told, is the master plan.

How it is that a massive, quantum bailout did not result in an improving economy, but an economy projected to get worse, is mired in a complexity we are not allowed to credibly talk about except in the most technically indirect ways. We can talk about point-scoring or any number of other abstruse quanta until we are drawn into a hypnotic, soporific stupor, prepared to accept unemployment and recession as a positive economic force, building an immunity, a tolerance, to what ails us, making us stronger; but not this time.

Depsite "dark markets," the effects are bright as day and have solicited the undivided attention of the masses perfectly capable of knowing when they are being needlessly distracted and bamboozled with questionable quanta of empirical, objective value.

Unemployment consolidates the capital gained into wealth, or private property that does not have the status of capital till it is used to expand the economy and create jobs.

As long as jobs are not created the capital can continue being converted and consolidated into wealth (private property). Property of the jobless, including savings, is converted into capital to be reinvested (redistributed, recycled) without a redistributon of an original accumulation of wealth and value that is inflated. That inflated value is used for the distribution necessary to create jobs that pays the inflated value and, if not more important, the rising tax burden. The remaining value is safely conserved, undistributed wealth (and power to command and control the macro trend).

The value lost through unemployment is gained in the form of capital and converted into private property. Part of that converted value, imbedded in all manner of cryptically descriptive, quantitative analyses, is consolidated into permanent property. It becomes accumulated wealth that can be reconverted into the power to accumulate more wealth. It is a cyclical algorythm, a recurrent process that, over time, is cumulatively steeped in quantitative, and organizational, complexity. It masks the simplicity of the cause-effect relationship between the value created and to whom the value accumulates.

The trick is to not have to liquidate wealth and, therefore, risk it in the form of capital to effect economic growth that creates jobs. The goal is to keep capital consolidated in the form of permanent wealth that cannot be risked, or lost in a free marketplace.

The best way to eliminate alpha risk is to eliminate the free market and create (organize) a barrier that only allows access to capital (the value that creates jobs) on favorable terms that keeps the wealth consolidated. An organized complexity results that minimizes if not eliminates the risk to
accumulated wealth and power.

Without the complexity, the value of unemployment gains retributive value. There is, however, a point of diminishing returns in which the cumulative mass, the quanta, is so overaccumulated that the value must be retributed.

Accumulated retributive value has a gamma risk that cannot be avoided. The risk will not reduce, but increase with added orders of complexity. The value must be redeemed in order to conserve the means of distributive power and, more important, the moral legitimacy--the ethical distribution--of productive value. That ethical value is not only a moral sentiment, but also represents a practical, distributive value, a realpolitique, that ensures public health, safety, and welfare.

It becomes readily apparent that unemployment produces useable value. If that value is not used for productive purpose (the demand--the distribution--that fuels economic growth), despite whatever cryptic quanta may be attached (like a value point score on each dollar cut from the marginal tax rate or cut from the budget returning more than a dollar in revenue, for example, that is both absurdly too good to be true and always suffers an unobjective verification), the probability that more accumulated value can be lost than won becomes equally apparent. The trend will be reversed to conserve the power to retribute the value and control the ontological risk.

A "jobless recovery becomes a more secular "jobs recovery" when a loss to accumulated value gains a probable gamma-risk. The accumulation phase will stop and reverse to hedge the risk.

The useable value unemployment produces can take many transitional forms. Hiding in the labyrinth of a technically structured complexity, the cost and benefit is carefully dissembled to demonstrate the distributive outcome as a net benefit to the unemployed, literally banking on the ignorance of the masses.

While mainstream economists refer to unemployment as the tendency to hord employment in hard economic times (never mind, of course, that it causes hard times if that value is not invested in employment but horded in dark markets accumulating inflated value with a huge systemic risk), the unemployed see the value being horded to make someone else rich at their expense. It is not seen as a means of enhancing their value in the future, as the mainstream analytic suggests, but to diminish it in order to elevate someone else.

Rather than a Jeffersonian self-determination, the actual scenario of unemployment perfectly fits the Hamiltonian model of distributive justice: ensuring the welfare of the rich in priority ensures the general welfare.

So, as the budget deficit grows ever larger to finance the value lost to the elite in priority without the unemployed starving in the streets as beneficiaries, the employed must shoulder the tax burden of that benefit. It is argued to be a systemic ontology. It is a requirement since taxing the rich removes the capital from the marketplace necessary to create the jobs that must be sacrificed to create the jobs that must be sacrificed. It means they will also lose their jobs if they do not pay the tax burden because the model in operation requires jobs be horded to produce investment value--capital.

The employed, then, by dictate of the elitist model in operaton must pay a greater share of taxes proportionate to income than the upper income class in order to keep their jobs and not suffer being demoted to a lower class status--being on welfare.

Jobs are not created to relieve unemployment but to take on the increasing pressure for a progressive tax burden. It must be prevented at all cost to conserve the means of accumulating value, wealth, and power. It is worth the distribution (the capital) necessary to relieve the pressure because it will avoid empirically testing the regressive tax-burden hypothesis which is that it ensures economic growth. That expansion will occur to perpetuate the problem (the boom-bust cycle) with the illusion of empirically confirming the regressive-burden hypothesis by not having tested the probable cure.

There will be clever attempts at simplicity, like the "job sharing" scheme. Despite its apparent simplicity it is confounding because it is a symptomatic treatment, and when used instead of a cure, the disease and the diagnoses become evermore complex and a matter of opinion.

Let's say, for example, you have a chronic headache. "Two aspirin...call me in the morning." The remedy cycles over and over again. It keeps the patient coming back but there is a point of inflexion where the patient realizes the remedy just recycles the problem. The doctor's credibility is diminished and must come up with a better remedy or, at least a different one (and most certainly not a cure) to keep the patient coming back.

The doctor is likely to come up with a remedy with a longer cycle, but the headache comes back with less resistance to the pain. It is necessary to inflate the dosage. The inflation becomes cost prohibitive and so the remedy recycles to "take two and call me in the morning."

Without introducing a cure, the remedy must be innovated. Instead of a red pill, a blue pill. Instead of the blue pill, the red pill. These shorter termed sub-cycles can be varied enough to prevent introduction of a cure till the next generation of patients ready to begin a new macro cycle with all the values conserved.

Increasing pressure for a more progressive tax code rather than tax and budget cuts will strongly indicate the distribution required for significant job creation and a quick recovery.

The cure for that chronic headache: "progressively" apply tax pressure to the accumulus monetus locus (where the value is accumulated).