Wednesday, January 21, 2015

Bureaucracy Is Almost Feudal, Where Free Enterprise Is Not.

"Washington has become this place that people don't leave. It has become this permanent feudal class."

Mark Leibovich
New York Times Magazine

The feudal economic system carried the load for much of the Middle Ages.  It was the ruling economic system on many continents.  It took hold, and spanned the 5th to 12th centuries, more or less!

What replaced it?  Free market economics - capitalism - free enterprise!

It is said that William the Conqueror (to whom I am said to be distantly related) brought feudalism to England to create loyalty.  Taking over as he did made him king over the land.  As the king, he was therefore responsible for his new subjects, those who lived in his new territory.  The system is such that as a king died, one of his sons or other relations would take over, and this kingship was passed along to subsequent generations.

William's territory would today be called Great Britain, but was then a disparate group of disparate areas and disparate people.  So, how does a king bring all that together?
He buys them off!  What does the new king William have to buy off loyalty?  Land.  So he appoints, or selects, barons to manage his business, awarding them land for such loyalty.  Barons were often selected from the family tree.

The barons, in turn, are responsible for that area so granted. Loyalty is created by them in much the same way, further down the line through the selection or appointment of knights.  The knights are the local managers, with the peasant rabble as their responsibility.  They are also the soldiers in the kingdom, even with power to recruit the army.  The knights were given land for their responsibility, with a small portion of it for personal use, and this entire grant would incorporate that local area of responsibility, along with the peasants that came with it.

The peasants were the local "blue collar" working class.  The peasantry had almost no ability to move up in the system.  They were without any rights, except what privileges that were allowed them by the local knight in charge.  Their work was forced.  They worked the land.  They worked for the king.  They had no ownership of anything. 

This began to change in 1215 when a group of nobles forced, that's forced, King John to sign the Magna Carta, or "Great Charter."  It began to change rights, incorporating new rights for the "citizenry," and even forced the king to obey some laws.  With time more and more ways were found to limit the powers of the king.  Councils developed, eventually into a representative Parliament, and the lawmaking began.  Kings had less and less ability to just do things - they needed Parliament's support.

This was not only a step toward democracy, but toward free market economics.  Individual rights were extended in private property rights.  And the free-enterprise games began.  

The "technical" definition of free enterprise is where goods and services are priced in an economy based on the laws of supply and demand (yes, LAWS), and the market-perceived benefits or quality of those goods and services.  Prices eventually reach a maximum point of equilibrium and are sustained by competitive market forces.  Competition can lower prices by making goods and services more prevalent and therefore less expensive.  Free enterprise demands competition and private ownership of one's idea, good or service.

Feudalism has not died, however.  It is alive and well in the gubment bureaucracy!  People come to Washington, set up their territories based on political "grants," and go about protecting it.  They want to live on in perpetuity!   And Washington becomes a career.  And the bureaucrats become permanent fixtures.  The Ben Franklin statement that visitors and fish begin to stink after three days could not be more applicable!


Tuesday, January 13, 2015

Free Enterprise Allows Go-Getter People To Happen To Things

“It had long since come to my attention that people of accomplishment rarely sat back and let things happen to them. They went out and happened to things.”

Leonardo da Vinci (1452 - 1519)

Happening to things.  That is very much a part of the philosophy of the free enterprise thinker.

And a free-market environment which allows the free enterprise thinker to think and become is essential to the process!  And the advancement of product development, and innovation, and production, and marketing, and - well, you name it.  Think about all of the "ands"  that follow.

One big  "and"  is the risk involved in all of that.  Risk may be the biggest reason that people of accomplishment, those free enterprise entrepreneurs of accomplishment, do not sit back and let things happen to them.  If an entrepreneur wants his product/idea to come to the market there must be a lot of making things happen! 

Look around!  This only happens in free enterprise spheres.  Where is the new thinking, new science, new tools, new ideas, new music, new art, new CONTRIBUTION, the new whatever (!), that advances everyone, that lifts everyone, that improves the lives of everyone, coming from?  All of the controlled people?  The people under the "gentle care" of dictators?  The economies where the wondrously-smart bureaucrats make all the decisions for the rest of their societies? 

Where do so many in the world go to get educated?  Go for training in things like medicine, aerospace, global business, technology, or you name it?  Where do people go to advance themselves as individuals, as world participants who make a difference, as members of a worldwide, corporate team?

They go to environments that are conducive to all that happening.

According to Leonardo da Vinci, they would want to go to where they can make things happen for them.

Free enterprise allows go-getter people 
to happen to things.

Wednesday, January 7, 2015

Free Enterprise Does Great Good To The People

"There have been abuses connected with the accumulation of wealth; yet it remains true that a fortune accumulated in legitimate business can be accumulated by the person specially benefited only on condition of conferring immense incidental benefits upon others. Successful enterprise, of the type which benefits all mankind, can only exist if the conditions are such as to offer great prizes as the rewards of success.

The captains of industry who have driven the railway systems across this continent, who have built up our commerce, who have developed our manufactures, have on the whole done great good to our people. Without them the material development of which we are so justly proud could never have taken place."

Theodore Roosevelt (1858 - 1919)

The term "Robber Baron" is an interesting one.  Of course it's a term intended as a slant, intended as a swipe at reality, and intended as a means to sway readers of history away from capitalism as a viable form of economic development.

But how did the west, how did the United States, grow so rich, and so fast?

Because monopolistic capitalists preyed on the poor and built huge business entities by suppressing all advantages to the ignorant and the slow?

No, not really.  Were there abuses, a word used above by Mr. Roosevelt?  Certainly.  There always are.  And the gubment provided a backlash toward what they perceived as monopolistic growth by trying to crush it with antitrust legislation.  What that succeeded in doing was breaking up a whole into smaller parts which each grew larger than the previous whole.  But that is another story.

The brilliant organizers of the American industrial revolution did so because they took advantage of new business organization techniques, and took huge risks.  They developed technologies and utilized natural resources to such an extent that out of nothing that previously was they created a vibrant something!  Not only did their businesses (and industries) grow, but all of the ancillary businesses (and industries) grew as well.   Think, for example, of all the towns, and businesses in those towns, that sprung up because of thousands of miles of railroad tracks that connected left to right, and up to down?  Goods and services could move from place to place, and thrive.

These Business Barons took advantage of free-market economics, which they called "enterprise," and combined it with the politics of freedom and rugged individualism, attracted a work force made up of natural-born citizens and immigrants who came to share in this growth, and utilized the diversity of skills (not heritage) and knowledge and energy of this work force, so well that these Fortresses of Free Enterprise made lives better for everybody.  They were EXCEPTIONAL at it.

If these immigrants were so badly mistreated why did so many keep coming for decades to take advantage here of what they could not take advantage of from where they came?  These immigrants kept coming because the word got out!  It was better here!  Was the work hard?  Yes.  Did they deal with personal and religious prejudices?  Yes.  Was there severe mistreatment at times?  Yes.  Was the life easy?  No.  But opportunity was in abundance, and futures were staked.

No group of men, these Business Barons, put a bigger stamp on the cultural and charitable and educational institutions in our society.  They established museums, art galleries, cultural halls, theaters, schools and universities, libraries, church buildings, orchestras, and other social and educational entities in virtually every city in which they prospered.  Indeed, no group of men in history has contributed more to these kinds of social things, and in particular to charities, than this group of men.

These so-called "Captains of Industry" created extraordinary economic privilege for all.  And how?  By employing an uncommonly forceful defense of laissez faire gubment policies and the protection of private property rights to form these new economic systems.  The means of finding, developing, producing, combining, transforming, manufacturing, transporting, communicating and financing a nation's natural resources came to be.  This is what T.R. meant by "material development" in the quote above, about which "we are so justly proud."

And the west, and the country, and the people, grew rich.  Let's keep it that way.

Free enterprise does great good to the people.

Tuesday, December 30, 2014

Free Enterprise Produces The Want For Consumption

"What a country wants to make it richer is never consumption, but production.  Where there is the latter, we may be sure that there is no want of the former."

John Stuart Mill (1806 - 1873)

Isn't that interesting?  This sounds suspiciously like supply-side economics.

As we know that consumption makes up the better part of Gross Domestic Product (what a country produces in a year), and some say it's over 60%, how does that consumption come about unless there is something to consume?

So the question is, what is the best means of getting something to consume?

What kind of economies do it better?  Controlled economies or free-market economies?  It's the new/old debate all over again - socialism or capitalist free enterprise?

Look at history.  Look around the world.  How are the countries controlled by dictators and bureaucrat planners doing?  How has the U.S. been doing these past few years while sinking deeper and deeper into socialist planning? 

What does the future hold for growth, and investment?  What has made up a larger and larger portion of the GDP in the past few years?  Production (and therefore consumption) or gubment spending?

Even though productivity has been redefined by the gubment planners, and GDP has been redefined by the gubment planners, and unemployment has been redefined by the gubment planners, ad nauseum.

Why all the changes?  To rewrite history!  If history can be rewritten (and by history we mean back to 1929) then the current condition can be redefined!  It's simple!

GDP was never intended to measure the economy's well being, but since WWII that is pretty much how it has been used.  And the contents that go into it's measurement are a bit like a soup recipe.  But the soup recipe had not changed until the last couple of years!  Now new ingredients are being put into the soup!  But these are not substantial new things.  "They" want it to appear like real "investment."  But instead, it's a bit like adding smoke.  Better put - it's a bit like adding smoke and mirrors.  And to add to the fun, pay no attention to the man behind the curtain...

What's new in the GDP soup pot?  Such important criteria as adding Hollywood royalties, and revenues from scientific R&D.  Real investment, don'tchano!  You want to pump up GDP, how about a sugar high?  But the sugar high has to be redefined way back.  If not adding it now doesn't look right.  The economic GPS is being force to, um, recalculate.

But why the sugar?  To cover up the severe unemployment circumstance that is still anemic even though IT  has been redefined!  To paraphrase one economist, whose name sounds a bit like Shrugman, we are creating a permanent class of jobless Americans.  How can they consume if they are jobless?  Easy - what they consume is magically provided!  They are entitled to it, after all.  And the rest of us can only shrug.

But again, why the sugar?  Because if the GDP looks sweet the cattle in the pen won't take so much notice.  Gee, doesn't that sound a little like how the wondrous health care system was foisted upon us?  Truth can't be a part of the mix or the agenda won't get passed?  Boy, that "revelation" got quickly swept under the rug!

But will adding the smoke and mirrors to the soup pot, the so-called sugar high, spur production?  Think carefully.  With so many jobless or underemployed (notice all the part-time jobs "created" that are counted to sound like full-time jobs?) how much money will there be for the cattle in the pen to spend on, well, on production?  Think carefully.  Will those having to pay abnormally huge premiums and deductibles for their new and wondrous health care plans (mostly to fund those who will be "subsidized") have discretionary incomes to be buying and buying all the new production?  Think carefully

So, Mr. Mill has it right.  How would it be said today?  Let's see - how about, "If you like your slow economy, you can keep it!"

How about a clever twist on the quote above?

Free enterprise produces 
the want for consumption! 

Tuesday, December 23, 2014

Free Enterprise And Self Expression Go Hand In Hand.

"A virtue of the free enterprise system is that it offers every individual the greater opportunity for self expression."

Lawrence Fertig (1898 - 1986)

Notice the key word there - greater.

There is greater opportunity for self expression in a free enterprise condition.  And he says that is "a" virtue, meaning one of many, "a virtue of the free enterprise system."

If history's best and brightest have shined in free enterprise economies, it is because there they were left free to express themselves.

If history's best and brightest inventions and innovations shined in free enterprise economies, it is because there they were left free to be expressed!

The idea in a free enterprise system is to put yourself out there.  Take a risk, find a way to introduce an idea (in the form of good or service) and express it!  See if others have the same reaction to receiving it as the purveyor of the idea thought they would! 

Sometimes it wins and sometimes it loses.  But at least, AT LEAST, in a free enterprise economy there is the environment in which to try.  If a bureaucrat or agency decides what will be offered, there is little room for invention or innovation.  There is a "lesser opportunity for self expression," to paraphrase Fertig's quote above.

History has shown us consistently that this is the case.

In fact, in a command and control economy, and name your label - socialist, communist, fascist, and the innocuous "managed" - self expression cannot be tolerated.  The gig is that everyone be the same!  Well, except for a certain few.  The certain few are the elect, the chosen, the put above and the wondrously smart.  To describe this condition, one author conceived of an Animal Farm  and barnyard and called those self chosen the "two legs." 

At first the Two Legs were really four legs, like the other animals, and criticized the humans controlling them - the humans who walked on two legs.  But then some of the four legs who decided that they were indeed elect, chose, put above and wondrously smart needed to find a way to set themselves apart and they did so by walking on two legs. 


And walking on four legs was said to be not so good.  At least not any longer.  And those four legs all needed to conform, and be the same.  There was to be no self expression among them.

There COULD be no self expression among them!  That was not a part of the formula!  They were not free.  And self expression was not a virtue the four legs enjoyed.  Their ability to express themselves, in the form of songs and chants, was controlled by the Two Legs.  Everything was Two Leg Approved!

The brilliance of the simple quote at the start is in its simplicity.  Virtues abound when there is free enterprise.  Such a concept, and therefore the virtues, extends far beyond the economic aspects.  It extends into the very fabric of the society.  Everyone is made free and can enjoy freedom's gift.

Free enterprise and self expression go hand in hand.

Monday, December 15, 2014

Free Enterprise Encourages The Proliferation Of The Extraordinary

"One machine can do the work of fifty ordinary men.  No machine can do the work of one extraordinary man."

Elbert Hubbard (1856-1915)

While describing himself politically as an "anarchist and socialist," Hubbard apparently understood that free enterprise is the way to go in business!

Going into business with John D. Larkin, he helped to found The Larkin Soap Company in 1875.  The company was innovative in many way, including being one of the pioneers in the mail-order business.  This method of sales soon became known as "the Larkin method."

The Larkin method involved two things - door-to-door sales and mail-order sales, both of which had "premiums" attached.

A premium consisted of soap which came in its own box.  They produced three soaps - a so-called "Sweet Home" yellow laundry soap and a bathroom soap, called Oatmeal Creme.  A color picture of the company's logo came in every box, and a certificate for a free gift.

The premiums soon became an important part of the business.  Hubbard proposed making the mail orders smaller, offering only three cakes of soap.  The premium that came with the next  order of bath soap was a handkerchief, towels with the laundry soap or one-cent coins.  The soap packages were sold for 10 cents, so this amounted to a 10% premium.  The idea took off.

Soon the Larkin Company became one of the first large-scale manufacturers to eliminate their wholesalers, retailers, salesmen, and brokers.  This was quite innovative!

Hubbard then introduced a "combination pack" and a $10 box of soaps.  It contained enough laundry and bath soap to last a family about a year.  The $10 was roughly the equivalent of one week's pay.  So the  premium included with the purchase amounted to $10, and could be redeemed for any of the then hundreds of products in the Larkin catalog.  The Larkin idea crystallized into a company motto:   "From Factory-to-Family: Save All Cost Which Adds No Value."  Selling the products directly to the consumer like this the savings could be passed on to the consumer, so purchasers felt like the products were "free."

Further, the Larkin Company introduced cooperative buying clubs, and consumers felt a part of the family.  Called "The Larkin Club," soon it allowed consumers to purchase products on an installment plan, with interest attached, and you can see the development of what is so common in today's business environment.  Small Larkin Clubs developed in towns and neighborhoods where 10 families could each contribute a dollar to join their own little club and enjoy club savings and their own special club product savings and premiums.

Catalog offerings expanded to include "pure" foods, glassware, leather goods, pottery and furniture.  This became a huge part of the marketing plan and helped the company survive the economic downturn of 1893.

The company peaked in sales in 1920, to an eventual low in 1939, and done in by the depression it ceased operations in the 1940s.  Among the corporate changes it introduced to its employees, and American business, included paid vacations, a thrift plan, life insurance, medical benefits for illnesses, tuition for attending night school, free coffee, lunch, and an annual summer picnic.  It even created its own chapter of the YWCA in 1905.  Quite innovative!

No anarchy or socialism here!  The success of mail order as a marketing idea was soon picked up by many other companies.  Its other ideas are rife in our modern marketing and sales companies.  Elbert Hubbards' ideas and innovations extraordinarily changed the business climate nationwide.  His statement above rings true today, for people and machinery.

Free enterprise encourages the proliferation
 of the extraordinary.

Tuesday, November 18, 2014

Free Enterprise Creates More Efficiently, And More Cheaply, And More Abundantly

“Every man has a property in his own person. This nobody has any right to but himself. The labor of his body and the work of his hands are properly his.”

John Locke (1632 - 1704)

Protecting the individual from tyranny and individual rights is the very basis behind the idea which established the United States of America.

Private property, including the property of the person, is integral to that idea.

What is the point of coming up with an idea, developing it, creating a new product or service, and risking one's fortune to implement it into the market place, only to have it acquired and stolen by a tyrant?

And what if that tyrant is indeed the gubment, or gubment-sanctioned business?

This is the very basis of natural rights, God-given, Constitution-protecting, natural rights.  Life, liberty, pursuing happiness, self preservation and protection - natural rights.

Natural rights are natural!  They simply are.  They are not created by the human mind, or laws, or regulations, or somebody's idea of how others should behave.  They simply are.

Natural rights are also the very basis behind the idea of free enterprise and free-market economics.

We own our ideas, in the natural rights sense!
We own our liberty, in the natural rights sense! 
We own our persons, in the natural rights sense!
We own our happiness, in the natural rights sense!

They are private, they are protected, and they are God given.

Business works better when it is free to act.  Does that mean with impunity, stepping unfairly on any slower slug that gets in its way?  Of course not.

We are a society based on the rule of law.  Laws are to define limits, and provide guardrails preventing the over reaching of some who think it's their "right" to smash another.  We have no right to smash another.

There must be a careful balance, however, between those rights to act for oneself and those laws which limits such actions.  Some behavior is unnatural, and some laws which limit behavior are unnatural.  Laws should never be unnatural.  Laws can and should flow freely, naturally, and not be an unfair imposition of feelings.  If my competitor for a very similar product or service to mine is gathering more market share, I am in no position to demand a law to hold him back.  My competitor should be able to act freely in an environment so long as it is lawfully fair.

When gubments choose an industry for political gain (pick your industry) and support and sustain it, and at the same time prevent and hold down another industry of lesser political gain (pick your industry) it is not lawfully fair.  It is unnatural.  It leads to cronyism.  It is the beginning of tyranny, if not tyranny itself.

If one industry provides the same ends more efficiently, more cheaply, and to more people than another, the dictates of the natural course of property rights and God-endowed rights would say to go on!  What is gained by holding it back?

Free enterprise creates more efficiently and more cheaply, 
and more abundantly.