There’s an old story which illustrates the heart of what I consider to be conservative political philosophy.
There’s a road with a fence down the middle. You come to me and say “let’s get rid of this.”
My response is, “tell me why it’s there, and maybe I’ll let you remove it.”
You should never, ever, make a policy change unless you can say why the policy was enacted in the first place. You should never, ever, make a policy change unless you are able to make the argument for not changing it.
This is a constant problem. People want “reform” (the most debased word in the political lexicon, since most reforms aren’t) but they never seem to understand the costs of change.
When you reduce capital gains taxes you push money into the secondary securities markets and reduce consumption demand. You make the rich richer, and people who work for a living comparatively poorer.
When you get rid of estate taxes you will increase the amount of money that living people have to pay in taxes and help create a class of rich people who never earned their own money.
When you reduce the progressivity of the taxation system overall you reduce growth in demand for general goods and services and increase the demand for financial products and luxury goods.
When you reduce funding for public health you increase the spread of STDs and you create a pool of people who will act as carriers for infectious diseases, thus making even rich people more likely to suffer from and die from disease.
When you make it impossible for rich people to cut large checks to politicians, and don’t allow public funding, you make fundraising take up much more of the time of politicians and require many more compromises, not fewer compromises. They wind up owned by more people, not fewer people.
Examples are endless.
The rule of “reform” is that it moves in cycles. First the rich are taxed lightly. Money concentrates in their hands, the economy financializes, real economic activity grows more slowly than before, the poor and middle class borrow themselves into bankruptcy. The economy crashes. Taxes are shifted to being highly progressive, demand improves. Once things are good for long enough that those who remember are dead or retired (once the Lost Generation lost power) it begins to seem “unfair” to tax the rich so heavily. They get rid of most of it. The economy financializes, real economic activity grows more slowly than before, etc…
In businesses the same things happen. Some manager decides costs are too high and outsources operations. Costs are reduced, and he gets a promotion. The new manager discovers service is worse and that anything extra he wants done costs a lot of money and requires contract renegotiation. He decides that the loss of control is costing them more money than its worth. He brings the operations back inside the company. Control increases, the amount of money being generated increases, but costs also accelerate. He gets promoted. A new manager comes in. He notices that costs are too high….
Those were cyclical examples. Sometimes things aren’t cyclical. Sometimes they’re just bad and lead to bad places. When Spain financialized its economy, it never recovered, because by the time it was clear that there was a problem that the next treasure ship wouldn’t solve, the middle class had been destroyed to the point where it couldn’t be rebuilt. All that was left were poor people and rich useless people living on “incomes.”
When GM and Ford decided that they were finance companies, when they decided to stop being controlled by men who had been engineers, and have suits control them, they let their engineering cultures decay. Now, building lousy cars that aren’t worth what they cost to build, they keep trying to dig themselves out by new financing schemes, by promotions, by cost cutting… But the problem isn’t their financing, the problem isn’t their sales force, the problem isn’t primarily their costs (they could get rid of their pension obligations, their health obligations and cut wages in half and they would just go bankrupt slower), the problem is that they have a lousy engineering culture. And none of what they’re doing is designed to fix that - it’s all spreadsheet management, running around trying to change the numbers in the cells on management’s excel sheets. Which doesn’t make better cars.
Before you make changes, always ask yourself “why was the old system created? What problems was it meant to solve?”
You’ll save yourself endless grief and wasted time if you do. And every time some politician tells you he’s going to “reform” something, ask yourself what the benefits of the old way of doing things were. Make the case for keeping it. Then compare and decide if “reform” is really reform.
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Aloha, Ian!
Policy as institutional memory of mistakes. “Whew, that was not good at all. let’s not ever do that again. To make sure. let’s make a new policy that …” Kinda like the Constitution.
An apt description of the Bush family. Why do we turn to them to solve our problems when they have never lived in the real world?
That was a great post Ian.
But Ian…
…that’s so…..conservative.
BINGO!
most corporate restraint was brought on by the corporation themselves, they caused issues we had to pay for, they caused negative return against the economy or the society they earn their profits and their depraved conduct had to be restrained…very simple stuff here
corporate restraint forces these companies to pay their own bills, it keeps them from rendering our country a wasteland, it forces them invest back into the economy, back into technology, and it forces them to be responsible tools and champions of our society and the very reason they make any profit at all
it forces them to clean up their crap instead of dumping it in my back yard, and it keeps them from getting everyone else to pay for the damage they create
corporate restraint and regulation forces them to produce innovation for the good of that society they gather their profit…rather then for the good of their bank accounts which they would otherwise export to other countries (when they can find one that doesn’t ask them to pay their own bills)
incorporating is not a right it’s a privilege, if they want the privilege WE set the rules, not them…people like ron paul don’t want to hear that, why, they want no rules at all, yeah, that’s the ticket, no rules for us, let the market decide…yayyyyyy, weeeeeee.
too bad, they can dissolve their corporation if they don’t like the operating rules, this is not their country to exploit, we allow them profit so long as there is positive return for US, we deny them the right when it’s negative return for us, very simple stuff
their marketing strategy is designed to convince us the restraints they brought on themselves don’t are “bad”
it’s a ridiculous position but there it is…their very goal is to remove the regulations that force them to pay their own bills…they want everyone else to pay for their operational costs and they get people to fall for it.
while it’s obvious this is their plan I am surprised people want to allow them to “let the market decide”.
without restraint, the only purpose of a corporation is profit, it is mandated by law, they must make all decisions on behalf of the shareholder
Hey Ian!
Hilarious example of management going back and forth between outsourcing to save money and insourcing to achieve better control over the product. And everybody gets promoted.
Here’a a conservative philosophy. Stop foreign adventures and trying to force our brand of Democracy down other peoples throats. Quit trying to be the the world’s policeman. Cease trying to steal other countries natural resources. Stop the Iraq and Afghanistan war. Invest the monetary savings here at home and in certain foreign type Marshall Plans. Raise taxes. Spend the money on repairing infra structure, education, health care and environmental projects.
Ian… I finally figured out how and where Trickle down economics work…..
In the financial markets….. deregulate mortgage industry….. create the subprime mortgage industry….. create that debt as a security and sell it as a bond and rate it AAA which is sold to union pension funds and then it all goes to hell in a hand basket which now is trickling down through the whole financial markets…. So Reagan policies really work….. kind of…
Two notable ‘reforms’ that has heavily impacted us, was reforming Glass-Steagal and welfare… Each has had an insidious impact… One has shredded the regulation of the financial system and the other has shredded our safety net…
Great post, Ian, as always.
When you here someone like George Will or Thomas Sowell described as conservatives,
don’t believe it. They both signed off on many of the worst, most radical policies of
the Reagan and Bush years, until things went south.
…hear…
I can spell when I want to.
Within the next few years protectionism will be firmly in place.
From your mouth to gawd’s ear.
There is a difference between neo conservatives and conservatives.
ahh, that might be true but the real concervatives have not distanced themselves from neo concervatives
if they were to do that, they would become democrats
i truly love that man,sorry i missed the book salon,however im always happy to be on the esteemed Ians threads…..
I read somewhere recently that Ford Motor Company can no longer engineer a modern automobile transmission inhouse. Scary, that.
Oh, and Jaguar’s being sold by Ford to Tata, the Indian auto giant.
they work 100 percent for what they are designed
they are designed to dismantle the middle class, they are designed to align our economy with rober baron economics
they are not really disigned to give the wealthy more assets, they are designed to take assets and knowledge from the middle class, they want there to be as great a divide as possible
please tell me one thing they have conserved,besides their bank accounts,stock portfolios and land holdings?
I guess I have a skewed thought about the inheritance tax. Let’s say a member of a poor family works their way up and ends up throughout their lifetime able to save for example $200,000 for which they paid tax on (that mostly went to pay for war and defense) when they made the money. Let’s say, that person has 5 children, and the person dies. The $200,000 should be taxed again at a really high rate (40% or something) by the government who will use it mostly for war and defense. I think that the $200,000 should be divided up and passed on to the person’s children, who could use it for education or housing or whatever…to improve their lives and the money would go back into the economy. I don’t think they should have a bunch of it go to the government just because they didn’t personally earn it. Just sayin’.
wonder how all the vegan hindus are gonna like the Conelly leather hide seats
‘Tain’t the spellin’ that’s the problem for me, though I appall meself sumtymes, no ’tis the mind/finger/synapse/collapse (M/F/S/C) thingie that catches me out, specially went brain functions too rapidly or idea runs risk of escaping afore I gots it firmly pinned down…. ‘
Grumble, grumble
i believe there is no inheritence tax till 2 million $$$$$
Outsourcing, Teddy…
Many have become Democrats. My former Repug state senator was primaryed out of office by a fundie repug and their machine. He now is a proud Democrat, a precinct committee person and ran for state office as a Dem. The current candidate running as my state senator was a former repug who was run out of his party at an actual party meeting.
I was speaking philosophically. ;0)
Unless it has changed, it is way lower than that.
Welcome home to the Golden State egregious! Snoopy dancing in celebration. ;~)
mercy! you made mistake, it’s the DEATH Tax
oopsie just spilt the cheetos in da bed….hold the phone…they messy
*waves* Hello firepups. Sorry for not being by earlier–travelling.
$200K is not really any money these days, I mean, the tax laws just don’t really care about it, unless it is your annual income. . .
Super post Ian … very good points!
TMI
Going up to $3.5 mil next year, infinity the year after, and then who the hell knows.
‘zactly
the democrats are the concervatives, WE are here to concerve the air for our kids, the water for our selves, the economy for our grandchildren, the constitution for the planet
democrats are the real concervatives, “convervatives” are using “the code” thom harman speaks about, they claim they are one thing which they clearly are not
How to frame de-regulation……
It is driving without brakes, speed limits, stop lights and road signs… or running amuck with scisors
Hey Ian! Dugg it just now.
What label to we attach to a political party that cuts taxes and increases spending (on the wrong things)? At the same time.
We should sign all our emails and faxes “from a Conservative”, so that when our Democratic Congress people receive them they will be quick to do our bidding.
good that idea, good indeed
Democrats are conservatives — they stand for “new deal” policies which are 60 to 70 years old… that’s conservative. Republicans are reactionaries, who want to go back to the Gilded Age and repeal the New Deal.
Wow! What a super, sneaky idea! It will work like a charm, I’m sure, on my DINO Congresscritter John Barrow. Can’t wait to try it out… I like the way your mind works!
There are ‘producers’ and there are the ‘money men and women’. We have too little of one, and way too much of the other.
we should call ourselvers CONSERVATORS …i like iyt!!!
Ian, I have no idea why this decision making skill is lacking in our Congress and White House other than for the reason that serving We the People is not on their to do list.
You would call WPA, the Conservation Corps, Social Security, the right to form unions, unemployment compensation, “conservsative”? You would term FDR a conservative? Is that correct? Are with we dealing with matters of definition here. As in Abraham Lincoln would be considered a liberal today?
Hello Ian - Well, done. I love this subject. It’s one of my favorites. It demonstrates the mish-mash of capitalistic ideas thrown out there to make a square peg fit in a round hole.
Today, executives in corporations think the purpose of the corporation is to make money. They don’t understand that making money is the result of the company’s purpose and mission statement. They think by formula. An example is the organizational chart. They use a classic blue print without the slightest notion of the needs of their organization to accomplish their purpose. After years as a consultant to companies I finally concluded that executives and management no longer could think.
What caused this degradation of management that at one time was the hallmark of a company? I suspect when companies go public they answer to shareholders who want a return on their investment, no matter how. The product is incidental. The purpose is irrelevant. The means by which to accomplish the purpose changes from meeting to meeting. It is amazing to me that anything is produced at all and that is usually the accomplishment of some lower lever manager who needs his/her job to support the family. He needs the company more than the company needs him.
But no one is watching how the product fits into market trends, so this is outsourced to a third party company that has a bunch of formulas they use to squeeze the client company in to and make suggestions accordingly. They know about as much as I do about the company but it covers management’s butts and places the blame on an outside source. They pass one more Board of Directors meeting, for this quarter.
I have no idea why the democrats aren’t able to say;
“the regulations were brought on by the industry who refused to pay their bills, when they demonstrate they want to pay their own bills we will see if the regulations that forced them to be responsible can be repealed.
regulations were caused by the industry they affect but they don’t want the people to remember that”
hehe
that would send them over the friggin cliff
I worked for GM in 1984. They were 1950’s WASP and thought it was easier to buy Congress rather than build fuel efficient cars.
I was brought in fron Law School to offer outside the box analysis. Quit 6 months later! What an opportunity cost!
And, failing that, they are happy to trash everything, everybody and the planet’s capacity to support human life.
Looks a lot like their Gilded Age is here for many of them and the New Deal ain’t for the rest of us.
I’d say these um …people, call them what you will, have mucked things
‘up’ quite successfully over the past, almost thirty years.
here’s some outside the box analysis for gm;
WHY THE HELL DID YOU SELL YOUR BATTERY TECHNOLGY TO THE FRIGGIN OIL INDUSTY?
howz THAT for analysis?
Thanks npb, happy to be here.
Agreed or Greed, I’m not sure which*g*
Pretty much as long as i’ve been alive. The only reason i’ve had exposure outside of this type of system? Is because i’ve all that family in canada and i’ve also been to britain twice. So i’ve seen successful systems other than our own.
I wonder how many others haven’t seen anything outside this, that are my age or a lot younger. It makes a helluva difference when you know. I’m also one of those weirdos who long for long range light rail for trips across country and intra state. The UK spoiled me for that! I’d love it, but it isn’t going to happen here very easily or very well, because all the talent to build it? Is leaving the country in droves.
sad but true
fore referance
Original conservative philosophy holds that people are created evil, and it is the lifelong duty and struggle to overcome that propensity to do bad. Thomas Hobbes’ “The Leviathan” treats parts of this issue somewhat adequately.
it couldn’t have been greed, if it were greed they would have kept the technology and they would have continued researching the field and they would be the leaders in auo manufacturing, instead now they have to actually buy hybrid technology from japan
Here is one of my favorite quotes fromt the CEO of one of my client companies. When the CFO brought up a financial concern to him, he shrugged his shoulders and said “It’s not my money.”
Remember that when you invest in a company. Like real estate, you may get in at a higher price and their may be fools who are greater fools than you and will pay even higher per share. Wow! You make money. However, it they smarten up over night, you just lost your PJs.
All trading is day trading. It’s just some days are longer periods of time than others.
That loss of talent or worse, its denigration, has been part and parcel of the ‘wisdom’ of the dark side in its so-far-successful attempt to bamboozle and hoodwink.
Question for everyone. Ian perhaps you can shed some light. How many women respond on this thread? I have a feeling males dominate this conversation. Please, prove me wrong. I have a need to know.
It has been inquired of me if I have thought about being hungry. The question has been posed by my lady. The conservative answer is: Yes (now that you mention it). Time to fix supper.
I believe this is related, one of the first things Governor of Indiana Mitch Daniels did was ask for the resignations of the the boards in Indiana, Water Board etc, saying institutional memory is over rated.
Note: No other Governor of Indiana had ever done this.
DRGH (pronounced to rhyme with blergh) - deregulated greedheads
I’m totally lost, I never heard the term “institutional memory”, how is that referanced in your post?
But kiddo, it is your ‘liberal’ appreciation of ‘KP’ which completes the circle and leads to domestic tranquility.
Dang, QG, why is there a reason to prove you wrong? We don’t bite, nor harbor ill will…!
The hostility to anyone that shows even a little bit of intellectualism here culture wise doesn’t really help, DW. I’ve pretty much felt it all my life, but i’m too stubborn to let it beat me. I pretty much don’t really care what they think of me. So in the end on that score, they can’t intimidate me. But i can’t do anything worthwhile here either, unless i do it under the guise of ‘playing stupid.’
I’m working poor, therefore even the fact that i’m intellectual means nothing. I don’t have money, i don’t have clout and any upwards mobility is basically screwed over. What i’m doing has horizontal mobility, but i have to get beyond my current spot to do that. (and i’m trying!) If it was possible to knock idiotic corporations upside the head for the ‘profiling questions’ that everybody uses nowadays? I would.
A conservative defends the status quo.
A progressive wants to move on to new stuff.
A reactionary wants to roll back the clock to a better time.
I would also note that New Deal policies are relatively “conservative” as the world understands such things. What is “left” in the US is at best centrist in most of Europe and the rest of the world.
I don’t know if you mean “respond” as in “reply to” or “resonate with.” I’m not an economist, although a LOOOONG time ago I worked at the Federal Reserve Bank in NY and managed to soak up some knowledge, so “respond” not so much. “Resonate?” You bet.
You need to understand dear girl, that econimics is beyond the capacities of the female brain. Fact of the matter is… it’s beyond anybody’s brain. When was the last head of the Fed. a woman? Men have surely done a fine job on the economy. Now haven’t they?
Lahoma.
A lot of it has to do, I think, with MBA culture. MBAs think that management is pretty much all the same, and that you can manage anything even if you don’t really understand the business.
Damn. That may be one of the single stupidest things I’ve ever heard in my life.
Seems that way, yes.
Institutional memory is the knowledge of way the fence is in the middle of the road. Why was the dam built, things like that.
Shhh… Lahoma, don’t tell eCAHN that… ;-)
There are ebbs and flows, even circularity which attend such gatherings,
your presence graces us here and, genderly speaking, these issues do, obviously, affect and/or afflict us all regardless of whether we are right-handed, left-handed or just all thumbs.
I’m luuuurking.
Ooh, Busted…! ;-)
I agree totally, one of the others was Ohio’s “lets invest in rare coins”, what can go wrong?
Actually I have a funny story in that regard. Got together some good friends from high school about 10 years ago (and 30+ years after high school). One remembered that I was a chemistry major, and wanted to know why I’d become an economist. Without thinking or blinking, I said: “Because science is hard and economics is easy.”
LOL. Glad you’re here. Hear! Hear!
I’m off to fix a very conservative supper. Basic meat and potatoes. And Lahoma is getting wound up. Look out.
Good evening Eli.
“When GM and Ford decided that they were finance companies, when they decided to stop being controlled by men who had been engineers, and have suits control them, they let their engineering cultures decay. Now, building lousy cars that aren’t worth what they cost to build, they keep trying to dig themselves out by new financing schemes, by promotions, by cost cutting… But the problem isn’t their financing, the problem isn’t their sales force, the problem isn’t primarily their costs (they could get rid of their pension obligations, their health obligations and cut wages in half and they would just go bankrupt slower), the problem is that they have a lousy engineering culture.”
True, when Honda,Toyota and Nissan opened shops in the States and Canada, they raided the big three to hire the best designers and engineers out there. But the problem was also “conservative”, holding on to beliefs that bigger is better, that nothing beats a good american V-8. To this day, those companies and the media, are still pushing more power and bigger cars. Car and Driver and Road and Track magazine still think that a smaller Honda Fit is not made for highway travel, that a Toyota Matrix is made for teens, while the clientele is mostly over 45…
Besides, as I told my son when he was little and wanted to know how I knew something he had done, “Mothers have eyes in the back of their head.”
Now, back to my book. But I’ll be close by, so watch yourselves.
Hopefully not because of me…? *g*
I expect to be asked why i didn’t stay in the military after school. And why instead of music, i’m in science(pharmacy). Um lesse. Washed out of the military, and there’s very little to do in music outside of teaching unless you manage to land a record deal(and i despite the current industry). So at this point? Science is easier to work in, than my actual calling. I intend to go back to that, but i like the science job at the moment. *grin* There will be science in my long term goal for music, but getting schooling for that is harder than pulling teeth when you’ve got health problems!
Heh! Reminds me of the joke about the college professors who were worried because all the exam questions had been stolen from the Dean’s safe. Everyone but the economics professor, who didn’t care. When asked why he replied that in economics the questions were the same every year, and only the answers changed. (Badda bing, badda boom… I’ll be here all week, try the veal.)
Great post Ian, one of the best I have read in quite a while. I especially like your GM/Ford analogy and find this statement to be just so true.
I wonder in this age of “spreadsheet managment” (and of course, PowerPoint) how many other companies, indeed industries suffer from the same issues and difficulties. Management that really doesn’t get the business, but can read (they think) a P&L can often be more destructive than an act of god to many enterprises.
Without making a long story out of it, I worked for a company once run by some folks who had marginal knowledge of our industry and they decided at the “dawn” of the www/internet era (mid 90s) to have some software built that would allow employees to book travel simply for clients. Instead of asking IT folks how to do it and agents who would use it what they wanted, they hired a consultant who told them to rebuild everything in an arcane language that ended up costing over 10 million dollars and was never used. Meanwhile, competitors that adopted Java and associated tools had products to market sooner and faster. They ended up writing off the whole project, but damn that consultant sure had “cool” powerpoints!
The expertise to actually run companies well and profitably has been replaced as you point out by MBA’s with no feeling for either the people who make the company work, the firms “stakeholders” and of course customers who depend on getting actual value for their dollar spent. It is a sad state of affairs when we bitch about our global competitiveness even as we ship whole industries overseas to add $0.10 to the margin of each product, and quality suffers but damn, costs are down!
My cousin was the first female electrical engineering graduate from UCLA.
okk
Ian just who comes up with economic policy ideas for the President and the Dems and GOPers in the House and Senate….Lobbyists?!?!
If so that might be the problem right there that and Senators like McCain (at least he admits it) don’t know much about economics. Although why McCain now thinks he can fix the economy by cutting taxes is beyound me.
I think econ should be a requirement in high school.
Lahoma and like you very much. ;0)
Ian if your still here, care to comment about MBA’s and Citibank, they destroyed 50% of the stock price in record time. All the time talking about how they manage risk.
MBA is that master bullshit artist?
((( Ian )))
TSF, whaddya wanna bet that Tata makes Jaguar profitable in a few years …
Companies like Ford & GM are run by CEOs and Boards that cater to their bonus packages and move numbers around like a shell game to get the highest packages.
Ah, but you have your mind, and a fine one it seems, indeed. Despite much press, ignorance is not bliss, and besides, judging from your comments, you will be here, fighting the good fight, for some time after I have shuffled off.
True, the anti-intellectual tenor of our society is pervasive and, at times, quite dis-spiriting. W.W. Rostow wrote, way back in the sixties that intellectuals in America were probably doomed to watch, powerless, as their society destroyed itself.
But, the final call is not yet in, and we can take solace and comfort in the thought that we are not alone.
It is ‘meeting’ people such as yourself which gives me hope. You are younger, but you see the truth. Help those younger than yourself, and your peers to understand.
Communication is our strong suit, we must better use it.
Well, that makes two, all told … *g*
((( CT )))
Gotta love those platinum parachutes… BTW, this year’s Marleyfest isn’t in Pahoa, but, Kailua-Kona… A block party no less… ;-)
I’m working on that blasted Publishing deal … *g*
The egregious has landed! One small step for mankind….
Well!
Don’t miss the Book Salon thread…I caught up with it after the fact and it’s well worth reading…for Siun’s intro and for the wonderful exchange of commentary with Thom Hartmann on how we can do better on communicating our issues and viewpoints.
Their theory is more failed bullshit Reaganomics/Bush trickle-down: Cutting Taxes creates investment (often they include the word jobs, but McCain has ommitted the jobs part.) McCain is going strictly for the GWOT impaired fear buyer, the investor-class voter and the chauvinist or racist voter (applicable accordingly to the selected Democratic nominee).
thank you,im half way through
I wonder if our Dems have the guts to go hybrid for all cars in America. That would save our auto industry more than another bailout. Which given the high oil prices seems likely.
Ian -
I don’t think we will see a change in the way companies are run until investment rules change. Companies see people with common shares as the piggy back that continues to overflow with no regulations and safeguards. The investor is sold a capitalistic noti