..and when the sun rises again tomorrow, we'll see how far we've come ...

..and when the sun rises again tomorrow, we'll see how far we've come ...

... just to remind myself why I'm doing this ...

Depending on our personalities, the world can be a crowded place or a very lonely one. For those who seek comfort in numbers, there is no shortage of hangers on, but for those who avoid that circus, keeping thier own counsel can leave them feeling quite alone and disengaged from the mad place we call home. Life is a trade off and most of us choose how we live it.

For me, I'd rather work things out as best I can, using my own thoughts and feelings to sort things out. Following the crowd has never been a temptation to me, but that has its price, one that I'm totally comfortable with every day I get to stand up and be the person I aspire to be. When I sometimes lose track of who that is, I come here to remember, to reconnect and to resume my quest.

These posts are a reflection of some of what matters to me and it's a privilege to have the opportunity to collect these thoughts as they form in my head, as they prepare the way for my life, as it evolves from one day to the next. They re-inspire me when things seem to be floating about, with no particular aim or purpose, and it does happen from time to time.

So, today I had these thoughts that I think are worth writing down for the future me to look back on when I need to ...

Saturday, March 21, 2009

Free market system - the only bright spot in a corrupt economy.

A free market society fancies itself as an optimizer of all things business. That’s so, it seems, only as long as there are benefits that outstrip the costs, for when the wheel turns to reveal the less than profitable aspects, those on the free-market bandwagon quickly seek out targets on which they can lay all the blame for its shortcomings.
It reminds me of a friend who thinks he is a staunch fan of his beloved NHL team. His team didn't make it into the playoffs. That prompted him to castigate the whole NH League and its governor as a poorly run organization with nothing but a profit motive to drive it. Consequently it does not deserve his attention and he has declared his intention to not watch anymore hockey. Because one sector performed below his expectations, he has demonized the whole industry and its underlying principles. That's dumb, really dumb, and I daresay its not uncommon. We want only the upside of everything. Idiots all!
If we truly embraced the fee market system, we would stop interfering in its ups and downs and allow it to establish its own levels while it administers the necessary self-corrections that are essential in any system if it is to survive.
Like most others, the Auto industry is both a product and a victim of the free market principle. The “Union” industry is likewise. Both have a product to sell and both need to do so to survive. When their respective products loose some or much of their relevance in the ever-changing marketplace that “birthed” them, the free market system ignores them until they are again relevant to the market. Subverting that free market process only disrupts the system and screws up its efficiencies without being able to fix things to be as we would like them – ideal and without any downside – an impossible achievement. Gain must come at a cost – of something, and all costs are seen by most as undesirable sacrifice or downside.
Auto industry thinking, particularly the North American sector, did not acknowledge the changes happening in the consumer psyche. It only interpreted those changes in terms of their products’ superficial aspects, without any thoughts to the psychological ones. The union industry simply followed suit, with little or no imagination applied to its own long-term role in the future of a gradually and naturally aging human-based industrial mammoth. Their own product was losing relevance and they were stubbornly blind to the fact. Why then, do we now lament the fact that free market forces are doing exactly what they should and must to ensure that the market survives in the long run? Painful, yes; problematic, yes; manageable, maybe; alterable, not a particularly wise course to take, because when it is in a positive cycle, there is no will to change it then, and if it needs changing, then it must also affect that side.
After all, we’re just not that smart if the system demands these adjustments from time to time, to correct all the fiddling that is done to it year after year and it still doesn’t work with only the up-cycles and no down-cycles. For every win, there’s a loss, for every winner there’s a loser. There’s no fiddling with that so we must accept the downs as important and use them to prepare for the ups that follow. Conversely, we must accept the ups with the knowledge that the downs will follow and use that opportunity to prepare for them as well. Prudence and reason. With failures come vacuums, and vacuums provide opportunities without a lot of the baggage of past mistakes to get in the way: opportunities to change attitudes, directions, methods and most other things that just can’t be done any other way. Painful, yes; hopeless, no; full of potential, absolutely!
If we try to “fix” the free market system, we’ll only break it worse. Either we live by it, all in, or we abandon it completely – there is no in between, and we’ve got to stop thinking there is and insisting we know how to make it so. We’ve proven over and over, generation after generation, that’s just not ever going to be the case.
The buzzwords of our most recent extended market rally of the past number of years included "wealth creation". As arrogant as we are, we actually believe that wealth can be created! That's bull! Wealth can no more be deliberately created than can our natural resources, or land or air or water and on and on. Wealth can only be converted, and thus it must come at the cost of something else. The deliberate avoidance of that truth has, is and will always lead to a significant readjustment of what we call assets, that re-establishes a relative balance of assets and their real value in our global entity.
The affluent segments of our global entity use their creativity to amass assets with inherent values that are far less than what they can support and then proceed to distribute those overvalued assets in exchange for more secure and sustainable ones. However, eventually they begin to harvest the unsupportable assets which have circulated and mutated into a state that keeps them from being recognized as those very same unsupported assets that were being exchanged at the beginning of the cycle. That's when the paper walls collapse and the roof caves in, bringing everything back to a realistic valuation in terms of the aggregated global assets. Of course, to stave off, or at best delay the ultimate consequences, we fiddle around and try to 'fix' the problem which is just not fixable in terms of avoiding the ultimate revaluation of wealth rooted in fantasy.
That's the beauty of the free market concept. It will always find the true value of our assets. Trying to jig it so that it won't do that is futile and only makes things worse later. As an example, just imagine what would have to happen for governments with debt loads the likes of USA and Canada to balance their books. It cannot happen, ever! The underlying system can't be 'fixed' while they're in their present state, and that isn't going to get one dollar better than they are right now. Today, right now, they are in the best shape they'll ever be, as long as they function under the present system which pretends it is equipped to make infinite adjustments to keep it 'working'. 'Work' is something it will never do on this earth.

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