Tag Archives: capitalism

Tied to the tipping point

“When philosophy paints its grey in grey, one form of life has become old, and by means of grey it cannot be rejuvenated, but only known.  The owl of Minerva takes its flight only when the shades of night are gathering.” – (Georg Wilhelm Friedrich Hegel, Elements of the Philosophy of Right, 1821)

In this month’s issue of National Geographic Magazine, the cover story entitled “The Super Trees” by Joel Bourne describes the current trends in Redwood forest management.  With only approximately 5% of the old growth redwood forests remaining and under protection, the challenge is now to bring sustainable forest management back to  2nd or 3rd generation growth forests.

The tale of the redwood forests mirrors the tale of most of human resource management.  In a sad irony of human history, the story of earth’s largest trees is a microcosm of the drama still playing out across the globe.  If the current patterns continue we shall only recognize the error of our ways when, like the redwood forests, only a fraction of the world’s ecosystems remain.  Then, with the shades of night upon us, as a species, perhaps we will understand how to begin to restore in some way the planet we have destroyed.

In terms of the history of the Redwood forests Bourne tells the story of Charles Hurwitz who in 1985 with underwriting from Michael Milken, engineered a hostile takeover of Pacific Lumber.  As Bourne goes on to say:

“With Pacific Lumber, Hurwitz inherited roughly 70 percent of the remaining old redwoods in private hands. In his first meeting with the employees, the dark-suited businessman told them—in a now famous quote—that he believed in the golden rule: “He who has the gold, rules.” Hurwitz then proceeded to break up the company and sell its assets…  Most important for the redwoods, Hurwitz adopted a business model of clear-cutting, doubling—and some years even tripling—the annual amount of timber harvested from the company’s holdings, which eventually reached 210,000 acres.”

The application of this business model based on high yield and short term profit pitted loggers against those outraged by the company’s practices.  According to this model the leveraging of junk debt is used to acquire a company in order to extract every ounce of productivity at the expense of its capital resources.  This model functions to the point where the productive capacity of the company is unable to continue to service the acquiring party’s debt.  At this point the company collapses into bankruptcy, its capital siphoned off and exhausted.  The acquiring party then moves on to another “victim” repeating this process ad nauseam.  It’s not difficult to see how according to this model the incentive to sustain both the business and the resources was absent due to the inherent lack of a vested interest in the stable and long term growth of the company.

In 2008 Pacific Lumber ended up in federal bankruptcy court and is now known as the Humboldt Redwood Company, part of the Mendocino Redwood Company. Bourne’s article goes on to detail the efforts now being made on the part of responsible owners of the 2nd and 3rd generation Redwood forests to create a business model based on sustainable forest management.  This example illustrates classic issues with capitalism.  How can society foster the responsible application of capital to the profit of its owners, while at the same time regulating its use in order to maintain a secure and lasting social order?

Year after year, decade after decade we have continued along a path that the vast majority agrees is leading to systematic collapse.  The reliance on regulation of companies and industries whose products and by-products cause harm to individuals and society’s interests has proven to be counterproductive from a systematic perspective.  To maintain a system which regulates the same broken business model allows very profitable companies to pay symbolic fines and allows politicians to claim defense of the public good.  In the meantime business as usual continues, profits are made, and the capital resources of society as a whole are exhausted further and further.

We can see the same dynamic playing out in the debate on American health care, in the response to the financial crisis, and in the response global warming and mass extinction which is underway across the globe.  The question in each of these cases is do we have the collective will to choose to take preventative measures to at least slow the rate of decline, if not to solve the underlying causes in time to avoid the tipping point?  Or will we again claim ignorance and impotence in the eyes of future generations to the dialectic of history?

In each case entrenched opposition on both sides will vehemently defend their vested interests and fight any change to the current model.  The time however is almost past for us to have the ability to choose to move the old dichotomies.  Very shortly we will be faced with the ruin of both the current financial interests and remaining natural resources themselves.  We have the supposed luxury in economics to stave off systematic financial collapse through our ability to change the rules of the game in order to avoid ruin.  But unlike economic systems, ecological systems are not the products of human invention.  Once ecological degradation reaches the point of crisis we will be unable to stop it, and once that occurs the very foundation upon which our economies are based will collapse.

What is necessary is to reorganize the way we quantify natural resources in terms of economic units to better align our measures of economic value to those ecological significance.  The value or liability of a given resource must be able to be measured and quantified in the market place.  In this way standing forests, marshlands, prairie, etc.. could all have an economic value equal to their ecological value.  The current model of resources being economically null in value until such time as they are “harvested” or utilized and transformed into some derivative product builds into the system the incentive to pillage functioning ecosystems in the quest to create wealth and value.  By fundamentally reorganizing the way in which we quantify a given resource’s value in terms of its carbon impact, its ability to provide clean water and clean air, the economic incentive will be built in to not only preserve, but to restore and manage living biosystems.

It is a foolish assumption on our part today that we consider the basic elements upon which our societies and economies are based as given to us from either God or from Nature.  While quantifying the natural world in terms of economic value will be opposed by both classical economics and by traditional ecology, a synthesis of two zero-sum gain problems to create a win-win solution is at the heart of the issue.  It is a question of universal significance as to whether humanity can finally learn from its past and apply those lessons to the present. Can we as a species reach a synthesis with the planet without having the harsh logic of history force change upon us, or will history’s dialectic again force humanity’s hand into reacting to catastrophe?

Redwoods Owl

Redwoods Owl

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The Bail Out: Just say NO!

  Bloomberg reports today that the European Union is contemplating regulating hedge funds: 

http://www.bloomberg.com/apps/news?pid=20601087&sid=aPD_prVa1owQ&refer=home

     Nothing the U.S. Treasury or FED does will mean anything until hedge funds are regulated. The reason we are in this mess to begin with was a long period of artificially cheap credit and lax regulation of entities like hedge funds which use borrowed money and shares to leverage and speculate on anything from stocks to bonds to oil to grain… These are private pools of capital which in their heyday returned double and even triple digit percent gains with little to no regulation or tax.
     We may blame the mortgage crisis for the failure of banks and investment houses, and indeed the mortgage market was a bubble… But the real question is what supported the mortgage bubble? It’s the same thing that supported the tech bubble before it and has supported the commodities bubble since the mortgage bubble burst… Artificially cheap credit and leverage.

     Truly a casino economy in which the investment banks lend money to hedge funds which bet wildly (sometimes leveraging up to 30 times their original capital investment). This drives up the prices of investments in a bull market and drives down investments in a bear market.

     Each time the excesses of easy credit wreak havoc on a segment of investments such as technology stocks, or mortgages, or commodities… The hedge fund capital moves onto the next sector.

     The problem is now that the easy capital has dried up, the investment banks stop dealing the easy credit drug and the hedge funds act like desperate addicts and do anything to get more.  Now the US is being robed to feed the addiction.

     The banks now have the administration demanding free passage of a no strings attached bail out. What this amounts to is the banks asking the government… aka… the taxpayers, for a loan or a mortgage. When you go get a mortgage how much of a down payment do they require? How much interest do they charge? We as taxpayers should demand at least as much from the banks as they would from us as borrowers.

     The same tactics which got us into Iraq are being used again here… Hurry! Don’t think, just re-act. Give us a blank check. Just as Iraq was not responsible for 9-11 and just as the invasion of Iraq was preconceived before 9-11 as a way to reward the military industrial complex. So now this bail out is not going to go to the people who need it, but to reward the banking industry and the hedge funds. It’s a devilish model we’ve seen before… Remove all impediments to greed and let the profit gorging go on to the point of crisis, then create fear and panic in the population and rush them into giving up their money and their freedom as citizens to save those who created the problem and who have already reaped all the rewards.

     It’s corporate capitalism in the good times and corporate socialism in the bad times. Have you ever wondered how capitalism and democracy have been able to co-exist in America? The answer is they haven’t. It’s not real capitalism because the government protects the corporations. It’s not real democracy because the citizens have given up their freedom and become consumers… Locked in a debtor’s prison on the outside world.

     If the government takes on all the risky “toxic” assets of the banks do you think they will in turn wipe out your credit card debt, or your car loans, or your mortgage? Of course not. But they are trying to make you afraid that if you don’t give them your money they will stop giving new loans. My question to the American people is do we really need more loans, more debt, more credit? Show them that it’s really them that are afraid and not US.

     Stand up and say no to this. In the coming months and years economic times are going to be tough enough. We don’t need more debt from the credit-drug pushers. We need the money the government is going to use to bail the banks out to fund our schools, our social security, our new industries, our health care.

     It’s a critical juncture in American history right now and each of us can do what we can to stand up and say no more! Do you want 30 more years of the corruption, the scandals, the wars, the fear…? All in exchange for a credit card to go shopping with. Or do you want a real country where the real engines of American growth… The American workers are able to work and have time to be with their families, can afford to put good healthy food on the table, can afford health care for their children and themselves when they’re sick, can afford to clean up the environment, can afford to give their children an education?

     Do we not realize that if we agree to this bail out we agree to let the next generation of Americans be the first to do worse than their parents? And for what? For fear that we won’t get that extra credit card, or the extra vacation, or that new car.

     If we choose to let the financial version of the invasion of Iraq happen because we are afraid of the financial version of 9-11 we have really learned nothing over these last 8 years. It’s time today to do something.  Speak to people you know, write emails to your senators and congressmen, stand outside with a sign… Anything. But it must be done NOW before this bail out passes through the legislature.

     Don’t let Bush and Cheney get away with another trillion dollars of our money before they leave office. It’s our tax money and we need it more than the banks do.

     http://www.congress.org/congressorg/home/

 

 

 

Radical Dislocation

So again, “Northern Illinois University on Friday identified the man who fatally shot five people in a classroom as Steven P. Kazmierczak, whom police described as an award-winning student “revered” by colleagues and faculty.” according to cnn.com

Another violent dislocation in American Society, the motivation of which is in question.  Culminating one’s life in an act of shooting others and then shooting and killing oneself.  Such an overt dedication to fighting the ills of society and such an atypical overreaction to the opposite extreme. 

The question is what was the medication that Steven Kazmierczak had stopped taking in the weeks leading up to this event?  Which doctor prescribed the medication he was taking? Why did he exhibit erratic behavior in the weeks leading up to the murders? Could those symptoms have been interpreted as indications of possible violence?

Many various reasons are said to contribute to such a bloody dislocation with society on the part of otherwise passive individuals. 

From violence in media, to U.S. military aggression, to the neurosis of the American psyche over its conflicting values of democracy one the one hand and capitalist economic growth on the other, to the use of powerful anti-psychotic medication many explanations are offered for killings like this.

Access to guns as the problem or the answer?  Surely the easy web access to the purchase of firearms has accelerated the scope of the trend of mass killings in America over the past 15 years.

Is it a coincidence that “A Web site used to buy gun accessories by Steven Kazmierczak is owned by the same company that operates a site patronized by Seung-Hui Cho, the company said.”?

Of the simplest reasons for this is mere imitation and longing to fulfill a dark romantic fantasy of revenge to avenge all the perceived wrongs which have accumulated over years of mental illness.  Managed with medications that often cause issues as potentially damaging as the ones they are supposed to cure.  The containment of the dualistic schism in the individual’s psyche through the use of medication and without addressing the underlying psychological understanding of this individual’s mental condition leads to isolation of aspects of the self and often leads to latter subconscious dislocations of personality.

The fact that in America this very day another otherwise good, intelligent individual executes his premeditated dream of the glory of appearing for a moment before society to express some sort of maladjusted need for recognition.  Too weak to face the reality of their own lives by killing themselves, and incapable of creating meaning in their lives in any other way. 

The choice to kill, the deliberate act of murder point blank and the successful execution of one’s own self to avoid repercussions cannot be wholly explained by any one cause.  That does not mean this act was not preventable given proper treatment.  The means of identifying and treating mental illness in America remain in question.

In a society at war the collective consciousness of a people is shaped by its own fears.  The manufacture of fear in America is the great unheralded force behind it’s people’s actions.  Fear will lead a people to war and will also keep a population from thinking and questioning the actions of its government.

All excuses for cold blooded murder and suicide aside, the desperation for any sort of expression, for any type of recognition as someone real to another is real.  Such a heavy expectation of life. 

Said Martin Wnuk of Friendswood, Texas  “..We are creating these seemingly soulless ghouls who are in reality desperate, lonely, hopeless and ill … and capable of unthinkable random violence. I have no answer to it. In a few weeks this will be forgotten, except by the fathers, mothers, sisters, brothers and friends of the slain, who will live with it forever.”