Learning from History: Influenza and the Economy

[Originally published in the spring of 2020]

In October 1918, the so-called Spanish Flu killed 195,000 Americans -- the nation had just 103 million at the time. What happened to the US economy? Nothing. The Spanish flu killed many young and productive workers -- something that had a real effect on the US economy, but the economy kept growing. It was more than a year later that the economy suffered a brief, sharp deflation blamed on (1) wages dropping due to an increased supply of labor as soldiers returned after WW1, (2) dropping prices for agricultural products due to the end of the war. It lasted 18 months and was followed by the spectacular economy of the 1920s.

Fast forward to 2020. This time, government caused a severe recession, then manufactured currency and distributed it in the hope this would trick people into spending money. When this falls short, as it seems likely to do, it will manufacture more money.

That was the solution employed in Germany when it was unable to pay reparations after WW1. When the German Government didn't pay the reparations, France took over the industry and Germany told workers to give no aid -- and paid them not to work. The result: a hyperinflation and a financial collapse.

The German currency lost about half its value during WWI -- but when the war ended, the value of the currency declined at a faster and faster rate -- going from about 8 marks to the US dollar in 1918 to about 4 quadrillion marks to the dollar by 1924.

The intervention and the expansion of the US Government launched the Great Depression and maintained it for a decade. This time, confidence in the belief that government is the solution to all ills, economic difficulties may go on longer.

There Is No Money Any More

In 1977, I wrote a magazine article about gold for Medical Economics. The paper money of the US was said to be backed by gold for decades, but this "gold standard" had been abolished. Even foreign governments could not ask for the gold in Fort Knox in exchange for the paper promises of the US Government.

Gold wasn't money any more. 

Some thought this was the time to buy gold. Inflation was high and gold had for centuries held its value -- it would buy as much tomorrow as it did yesterday. 

But people are swayed by emotion -- they fear missing out and they fear getting caught in, so gold was not quite so predictable. The value of gold, as measured in US dollars, rose dramatically. It clearly seemed the ideal way to preserve one's wealth. 

Except it wasn't. In the summer of 1977, gold was worth $700 an ounce in today's currency. By the spring of 1980, gold reached more than $2,500 per ounce. Then, over the next 20 years, gold fell -- dropping below $500 in the year 2000. Then, over the next decade, it rose again above $2,300 in real terms. Then it dropped below $1,400 before rising again above $2,300 as the covid pandemic created turmoil.

In the past month the price has ranged from $1,912-$1,977.

In other words, the value of gold has not been something stable or certain. It fluctuates with the mood of those who might feel comfortable or uneasy about other ways of storing value. As predicted nearly 50 years ago, gold will buy roughly the same thing today as it did long ago. But as noted then, it is a volatile investment -- not to be trusted as if it were money.

Meanwhile, we seem forced to rely on the declining value of our currency. The US Dollar is not money either. 

Money must be a store of value as well as a medium of exchange. Money is something that not only can be used to buy things -- that would be currency -- it is also a trustworthy way to have the same purchasing power tomorrow that you have today. Money will be worth as much in ten years as it is now. 

In ancient times unscrupulous governments and greedy citizens would cut a bit of gold or silver off of coins, diminishing their value. Today it is the policy of the US Government to do just that -- to steal 2% every year, sometimes more. Since the creation of the Federal Reserve in 1913, the theft has averaged just over 3% per year. If a 1913 dollar were money, it buy would $30 worth of goods today. Looked at another way, today's dollar is worth about three cents. Tomorrow it is likely to be worth less.

The Fed creates currency out of thin air -- more at some times, less at other.  As God said "fiat lux" -- let there be light, Government says "fiat pecunia" --  let this [paper, metal, electronic signal] be money. And people believe.

In such a world, what is money? What is a reliable store of value that can be used to buy and sell things?

There is no money.

Black Crime Matters

Americans are often criminals -- more than 25 million have been convicted of a felony -- one out of 12 people, and a much higher percentage of adult men of all races. Extrapolating from a study made in 2010, an estimated 10 million Americans have been convicted and jailed for committing a felony. Most of these criminals did not go to prison -- about 10 million did, including 3 million black men (about 1 out of six).

We often see police seem to target blacks -- and some claim this is racist. But one-third of all black males have been convicted of a felony, and one in six have been in jail. This means that there are 7 million black male felons -- one in three. Among all other groups, there are about 18 million -- one in ten men.

So, black men are three times as likely to be convicted felons. Black Crimes Matter. It is unfortunate that innocent black citizens may be detained by police because of the criminal behavior of others whose skin color is the same.

Are We Arming Ukraine to Enrich the US Military-Industrial Complex?

What most people believe about the workings of the world is not based on actual experience. Most people have never worked for the Federal Government. Most people have never worked for a non-profit. Most people have never worked for a large corporation. Most people have never lived and worked in a foreign country.

Most people are dependent on others and come to believe what they are told. They are told, too, for the most part, by people who have no direct experience. These influencers build on and pass along the opinions of others who think as they do. What passes for knowledge in modern society is the summary of a long chain of opinion that often has its origin in speculation, in theories about the way things work. 

Few people in this daisy chain of opinion stop to do even the most basic research. Even fewer take time to reason about how things work. To believe what you are told, even by sincere people with impressive credentials, is likely only to confirm your biases. Humans avoid listening to contrary views and readily discount anything that challenges their beliefs. Confirmation bias assures that we will continue to firmly believe what we believed to begin with.

Still, I offer this to those willing to learn.

There are more than 4,000 US companies large enough to be listed on a stock exchange and owned directly or indirectly by millions of people.

The largest companies? Walmart, Amazon, Exxon Mobil, Apple, United Healthcare, CVS, Berkshire Hathaway, Alphabet (Google), McKesson, Chevron — the next ten are health, computer, oil, and retailing companies. You will find more than 50 companies larger than any corporation supplying the military.

In 2020 the defense industry contributed about $50 million to elect Democrats and Republicans — roughly half to each party. That year $14.4 billion was spent by all candidates. So the defense industry provided about 1/300th of the money spent to win a typical office. Is this enough to control any of the people actually elected?

The defense industry spends about $125 million a year on lobbying. Once people are in office, you want to do what you can to influence them. More than 800 lobbyists represent more than 300 different defense corporations. While they might conceivably work together to get a paragraph into a 2,000-page tax bill, that is usually the limit of their power.

What of companies like Walmart and Exxon. If they were to elect Biden and the Congress, would they direct them to go to war in Ukraine with the goal of increasing their wealth.

As a corporation executive I sat on the strategic planning committee for the largest defense division of a Fortune 100 company. Our strategy was to figure out what the military would be looking for and to determine how we might best supply it. 

Division executives donated a small amount of money to candidates for Congress, but this was little more than a courtesy. The local congressman would meet with us because we employed 5,000 people in his district. Our parent corporation had a Washington representative, but he was useless and everyone knew it. When I attempted to recruit a close friend of Bob Dole (and a former NASA head of legislative affairs) to help us in dealing with Congress, the company was unwilling to spend even an amount equal to 1/4th of my salary for this purpose.

The idea that (1) a single corporation might influence anyone in Washington to go to war is silly, and (2) while a large and powerful group of defense corporations might, in theory, conspire to foment military action, companies are competitive and have no ready mechanism to work together in any way that would be likely to directly benefit the entire industry, much less one company’s bottom line. The military-industrial complex benefits by constant saber-rattling, not by the letting of blood. Fear provides profit. War is unnecessary.

A good example to show how things actually work? Sperry Univac sold a computer system to the USSR. Unfortunately for the corporation, Jimmy Carter and Zbigniew Brzeziński, his Polish National Security Advisor who hated the Russians and wanted to play the Great Game (he later wrote The Grand Chessboard), had decided to destabilize Afghanistan, which had a pro-Russian government. When the USSR came to the aid of the Afghan Government, Carter & Co. called it an invasion and  canceled US participation in the 1980 Olympics. The Carter Administration then raised a trial balloon suggesting it would cancel Univac’s computer sale — worth about $40 million in today’s currency. I proposed we speak up before the sale was actually blocked. The corporation was unwilling to stand up to the Government and the sale was denied on specious “national security” grounds.

That is the reality. While you may wish to believe that candidates are the servants of the rich, once elected, they are loose cannons and thousands of contributors rush to pacify them for fear that a cannon will be aimed at them. When I asked about our local congressman, the division president said that business leaders on Long Island couldn’t find anyone willing to run — and that the candidate who finally took on the task was an idiot member of a local city council. When I was later recruited to work for the House Science Committee, I found that its chairman was dim-witted and turned the offer down. 

That, sad to say, is the reality. No one hires these bozos and no one would trust them to do as they were told. Give them power and it will go to their heads. While the influencers in the public square — media pundits, intellectuals, professors, ex-officials, authors — may affect what politicians do, money alone would never suffice.

The First Presidential Debate: Trump v Biden

What is the purpose of a presidential debate? Why is it that it is never staged as a debate, but is rather a question and answer and rebuttal -- then move on?

How would a debate be conducted? It cannot be about one's past performance, both candidates will lie or rationalize or avoid answering. It cannot be about what will be done in the future, both candidates will promise and imagine and pretend they can predict the future.

What does that leave? What do debates typically have as topics? I have recast the first debate topics as they might appropriately be used. I might add that no moderator should preface the question with any comment whatsoever. These specific questions, I believe, would direct the candidates to speak clearly on issues of importance. I believe they would also show clear differences in the two candidates.

(1) Should a president nominate a candidate for the Supreme Court and ask for the Senate's consent in the weeks before a presidential election?

Analysis: Biden, I believe, would argue that presidents in the past did not go through the confirmation process during the period before an election. This allows voters to affect the choice of Supreme Court justice. Trump would argue that this is his sworn duty and the duty of the Senate is to advise the president and consent if it deems the candidate worthy. I believe, in such a debate, Trump would have the winning hand, Duty supersedes any claim about what may have happened in actual practice. Supreme Court justices are not elected by voters, so elections should be irrelevant to appointments. Trump might also note that just 114 justices who have served over the past 231 years, so appointments occur about once every two years. The chance of an appointment occurring just prior to a presidential election are relatively small.

(2) Should businesses, sports, and other activities be limited by government action in response to a virus?

Analysis: Biden has publicly stated that businesses cannot resume until the virus is controlled. However, this practice has never been adopted in response to past viruses, despite the tens of thousands who have died each year. He would win with the public, which has accepted this approach as necessary. Trump might choose a weak view of the opposite, that such things should be limited to a very slight degree. On his side would be that it is not practical to destroy the lives of millions in the vain hope of preventing an airborne virus from infecting people. When some businesses are closed, many must remain open for the society to function, and these will permit the virus to continue its course until humans adapt.

(3) Should government direct the economy?

Analysis: Biden clearly takes the socialist position on this. He would use taxes and spending to redirect the economy to accomplish goals that he and his fellow politicians would select. Trump would argue that the private sector should be given the maximum freedom to do what works. The public might split on this. Most people have accepted government regulating, taxing, subsidizing, and managing large parts of the economy. Others still believe the market economy makes the best use of resources and produces the best results for people.

(4) Should limits be placed on protests as a means of reducing violence?

Analysis: Biden might have some trouble here. I believe he would argue that protests are a constitutional right and cannot be limited or controlled by government. Trump would argue that restrictions to prevent violence would be appropriate and necessary. I'd give this round to Trump.

(5) Is it possible for an election to be won by actions that distort the will of the voter?

Analysis: Biden would say that it is not possible and that there has been no significant fraud in past elections. Here, if Trump is properly armed with the facts, he might lay out in detail all of the frauds that have occurred and the ease with which they might occur. I'd give this round to Trump.

Judgment: I would score this 3-2 for Trump. 

Equality or Privilege?

Equality is not anyone's goal -- everyone thinks "fair" means I get more than others. If you reward good and evil equally, you reward evil unjustly. If you reward laziness and hard work equally, you get laziness. If you reward intelligence and stupidity equally, you get politicians.

Do some of us have greater opportunity than others? Do some of us have privileges that others do not have? Are these opportunities merited or not? Are these privileges deserved or not?

We are never equal. For each role in life, we should have an equal opportunity to show our suitability. To know we cannot play in the NFL, the NBA, or major league baseball, to know we cannot easily learn to speak in public or do differential equations, to know we lack the skill to build a house or repair a car, to know we are not qualified to teach a college course -- this knoweldge helps us find our place in society.

Each day I am becoming less sympathetic to "liberal" causes. Those espousing these causes seem more and more to demand that the productive people in society be forced to enrich the unproductive. They treat honest, hard-working people as if they must be slaves to serve the needs of the dishonest, the lazy, the ignorant, the incompetent.

In a democracy, of course, politicians have long recognized this way to power. Politicians either promise to protect the successful or they promise to protect failures -- and there are always large numbers of people who see themselves as failures because they have less than the rich, the powerful, the admired. Perceived failures easily become a voting majority.

These days, liberal whites feel guilt at their success. They recognize that they have not worked for what they have. They inherited it or obtained it through their wealthy family, friends, and connections. Their work often consists of little that benefits anyone -- they are political hacks and hangers-on, bureaucrats, corporate paper shufflers. They do not build the roads, the homes, the airplanes, the cars, the furniture, the clothes, they do not raise the food we eat, they heal no illnesses, they do no necessary and important research. For many of them, guilt seems the reasonable response.

However, to working people, pride in their accomplishments seems more sensible. So when they are told their achievements are due to "white privilege," it must be extremely annoying.

In 1965 President Lyndon B. Johnson issued E.O. 11246, requiring all government contractors and subcontractors to take affirmative action to expand job opportunities for minorities. For 55 years, "black privilege" has been endorsed and commanded at every level. In colleges, in hiring, in protection against firing -- black privilege applies.

Whites are, in this, "underprivileged." They must do much more and much better to get admitted to colleges or to get or keep jobs, which are sometimes only available to blacks because government and the established powers have demanded that more of these be filled by minorities (which means blacks and Hispanics, but not necessarily Pakistanis or Arabs or Chinese).

Equality of opportunity benefits everyone. Equality of outcomes benefits no one. If we reward without regard to ability and effort, we abuse those who do their best and benefit those who do not.

True Faith

True Faith

I am who I am. I do not exist because I think so.

People love to have opinions. Knowing the truth creates a barrier to their faith. If their beliefs are false, they find others who share their opinions, and by joining arms, they are insulated from truth. They call their faith, the truth.

People find it difficult to learn what is true, but that is only the first problem. Even where the truth is found easily, once it is found, sacred opinions must be abandoned.

Lies, for some, seem better than the truth. They pride themselves in their skill in lying. They love to deceive, mislead, misinform. They value what lying achieves for them — money, love, power. They enjoy deceiving others and they deceive themselves. Sometimes they believe that others wish to be deceived, that they need to be deceived.

To those who love lies and live their lives surrounded by lies and liars, Truth is boring, They wonder how it is possible to live a life without lies and lying. To those who rely on false things for entertainment, for profit, for their social interaction, to abandon this seems impossible.

To enjoy fiction need not be harmful, but confusing fiction with truth, believing fiction is truth, conveying fiction to others as if it were truth, we become prisoners of our delusions and we delude others.

To seek the truth, to know the truth, to believe the truth — these empower every human. Truth frees us from conflict, it frees us from harm, it frees us from confusion, from error, from dispute, from ignorance. These produce cooperation and bring about harmony.

To indulge in lies, to fill our lives with lies, to believe that lies are the truth — these destroy us. Lies create conflict. Lies lead to confusion. Lies prevent learning. Lies keep all of humanity in a state of war. to confusion. Lies lead to death.

Only a permanent devotion to the truth can change humanity from cacophony to symphony. Only the endless pursuit of the truth can bring an end to conflict. Truth surrounds each of us with people we trust and love. Without truth, we are lost.

Death and Tragedy

Death is rarely tragic. It is normal and to be expected.

"Men must endure

"Their going hence, even as their coming hither:

"Ripeness is all."

             -- King Lear, Act V, Scene II

For good Christians, death is a comedy -- a happy ending to life, no matter when it may come. For the unreligious, it is a disorganization of those atoms which life had organized, freeing them for new roles. For all, death is loss only to those among the living who are unwilling to accept the way the universe works.

"Death, be not proud, though some have called thee

Mighty and dreadful, for thou art not so" 

            -- Donne, Holy Sonnet #10

What is tragedy?

To me it is something so extreme and unexpected -- that it affects us long after the event. It is Oedipus striving diligently to avoid Fate, and failing. It is Hamlet, paralyzed by shock, depression, grief, and uncertainty, wanting to act, but able to do so only when dying.

Tragedy affects our emotions and our thoughts, Tragedy teaches us a lesson that strikes us in our heart and mind equally. Tragedy requires a rare combination of circumstances and events that we cannot ignore, cannot diminish, and cannot forget.

The End of Government

When I attended college in the early 1960s, I was a member of the Intercollegiate Society of Individualists — a libertarian organization created in response to the Intercollegiate Society of Socialists. So, in some sense, you could say I have always been a libertarian. I want freedom — for myself and for everyone.

But when I read the platform of the Libertarian Party in the 1990s I thought what was offered was just yet one more way of government doing things — a change without much difference.

Over the years, as I learned more, perhaps inspired by a mentor,  Benjamin Victor Cohen sometimes called the “Architect of the New Deal,” I realized that what I believe is derived from the teachings of three people of unusual brilliance.

First, it is to reverse Plato’s pattern of decline that begins with “government of the best” (i.e., those best able to govern people wisely) but descends to democracy and then tyranny. We have reached the bottom of this decline, ruled by what John Stuart Mill called “tyranny of the majority.” It would be a great improvement to be governed by the best — as exemplified by the mandarins of China and the Confucian scholars who advanced to serve the government in Korea.

Second, it is in keeping with the views of those who want a smaller government — the view of libertarians. This might best be understood by the first words of Henry Thoreau’s “Resistance to Civil Government” (“Civil Disobedience”):

“I heartily accept the motto, ‘That government is best which governs least;’ and I should like to see it acted up to more rapidly and systematically. Carried out, it finally amounts to this, which also I believe ‘That government is best which governs not at all’ and when men are prepared for it, that will be the kind of government which they will have.”

Third is a teaching  Friedrich Engels attributed to Karl Marx: “The society which organizes production anew on the basis of free and equal association of the producers will put the whole state machinery where it will then belong — into the museum of antiquities, next to the spinning wheel and the bronze ax.” As Engels phrased it elsewhere: “The interference of the state power in social relations becomes superfluous in one sphere after another, and then ceases of itself. The government of persons is replaced by the administration of things and the direction of the processes of production. The state is not ‘abolished,’ it withers away.”

Marx predicted that in the most advanced countries [i.e., Germany and England], ten developments would be most likely. Now these are also seen in the US: government (public) free education, property taxes, graduated income taxes, a national monopoly of credit through a central bank (the Federal Reserve), government highways and airports, industrialization of agriculture, outlawing of child labor, and more.

The desirable future progression of the all-powerful and dictatorial state, which we currently experience, is toward leadership of the most able and then to the orderly withering away of the State. Those most able to lead will have a clear understanding of how this might be achieved in an orderly way that benefits the entire society.

State of Emergency: the Emergence of Totalitarian Socialism

After reading that Michigan governor Whitmer had ordered gardening centers closed (excepting in smaller stores), I had to wonder what authority governors have to disrupt the economy to such an extent. Not long ago, President Trump called illegal immigration into the US from the southern border an "emergency," and used the claim to bypass Congress and spend money intended for the military. He was accused of acting like a king or dictator. Now we find the governors of every state free to become dictators -- far beyond merely misappropriating appropriated funds. "Government of the people" now turns out to mean "government by the people" only to the extent that they may chose a dictator from two presented by the political duopoly.

Here is what Michigan law MCL 10.31(1) says:

"During times of great public crisis, disaster, rioting, catastrophe, or similar public emergency within the state, or reasonable apprehension of immediate danger of a public emergency of that kind, when public safety is imperiled, either upon application of the mayor of a city, sheriff of a county, or the commissioner of the Michigan state police or upon his or her own volition, the governor may proclaim a state of emergency and designate the area involved. After making the proclamation or declaration, the governor may promulgate reasonable orders, rules, and regulations as he or she considers necessary to protect life and property or to bring the emergency situation within the affected area under control. Those orders, rules, and regulations may include, but are not limited to, providing for the control of traffic, including public and private transportation, within the area or any section of the area; designation of specific zones within the area in which occupancy and use of buildings and ingress and egress of persons and vehicles may be prohibited or regulated; control of places of amusement and assembly and of persons on public streets and thoroughfares; establishment of a curfew; control of the sale, transportation, and use of alcoholic beverages and liquors; and control of the storage, use, and transportation of explosives or inflammable materials or liquids deemed to be dangerous to public safety."

This law completely obliterates all laws -- and it does so by a governor merely saying that in her (or his) opinion, there is an emergency or crisis. The rights of every individual are tossed aside (a separate paragraph of the Michigan law does not allow guns or ammunition to be seized, however) by a single action. There is no protection against tyranny. None. The governor has even ordered advertising to be banned if not for essentials.

Consider that a virus is not a tornado, hurricane, earthquake -- not something that hits an area of a state or that is finished in a matter of days. This is a virus that may make someone sick, and may cause death in some cases. Viruses and bacteria beyond counting are present at all times and places, and many make people sick or cause their death.

Governors generally have not designated an small area to be commanded by their decisions -- even areas with no case of this particular coronavirus disease are under draconian orders. Everyone, everywhere, is subject to a dictatorial rule whenever a governor may choose. If the governor feels fearful, she takes command. The fearful are always afraid of something.

People who are ruled by fear have no business ruling others. Yet here we are, a nation of sheep ruled by one who just learned there are wolves in the world. We have nothing to fear but fearful rulers.

We are currently under what amounts to a peacetime version of martial law -- the "state of emergency." The State has emerged to be the totalitarian socialist rule that most politicians so dearly admire.