I am by no means a financial guru. I understand economics, some investing theory and philosophy. So what I'm good at is understanding things by first breaking them down into their component parts and gaining insight. Often times you have to discard existing frameworks of thinking and start over again.
Well, last week our friend The Beard (aka Ben Bernanke) held a news conference on his take on the economy and his expectations of "letting off the gas" on "QE" (quantitative easing). The resulting reaction by the markets was an acute downtrend on all three major indices as well as bond prices collapsing. A lot of people in the precious metals market were confused why the price of gold, and silver, also dropped very significantly. After all, if people are moving out of stocks and bonds, why aren't commodity prices rising? After all the money has to go somewhere right? Not necessarily.
What happened most likely spooked the market speculators in all markets (stocks, bonds and precious metals) and they all poured into cash and want to wait it out. Keep in mind now, the Federal Reserve hasn't done anything. The chairman was just speaking and that's all it took for the speculators to be spooked and sell their positions. They wanted to be the first ones out before the mass exodus.
That's sort of what I wanted to illustrate here. A lot of confusing signals occurred after The Beard had spoken. All the normal activity evaporated and a lot of trends were bucked. I like to envision the market as a glass of both oil and water. In its natural state, the oil sits on top of the water, the way it should. However, what the Fed Chairman did was equivalent to shaking up the glass and now there's oil and water all mixed in together. If your scope is limited to just inside the glass, things are in a confused state and the oil mixed together with the water doesn't make sense. But as time progresses, things go back to their natural state and the oil begins to rise above the water.
The question is, what state are we going to be returning to? There's no real baseline for a so-called "natural" state since the the market is heavily manipulated by the Fed. But what options do the Federal Reserve Board have? I would say little to none. Ever since the '08 crash, the Federal Reserve started QE1, QE2 and QE-Infinity. They are buying $85 billion of MBS each month. It's obvious the market can't even tolerate the mentioning of scaling down. Remember, Bernanke didn't talk about selling their bonds. They will continue buying bonds but at a slower rate. This means their balance sheet isn't shrinking. It's expanding. They've added more than $3 trillion to their balance sheet since '08 and it will have no choice but to keep it up and perhaps even increase their MBS purchases.
As of now, the bond prices haven't recovered yet. The 30-year bond yield rose 16 basis points since Bernanke spoke. Mortgage rates on a 30-year fixed is now above 4%. The bond speculators were definitely spooked by the news conference and the only way to entice them back in is for the Fed to reverse policy and continue buying but perhaps to buy even more bonds. Once you think you've escaped from the bottom falling out, it's going to take a lot more assurance to jump back into the game.
But Bernanke can only play that game for so long without destroying the value of the dollar. You can't manipulate market for IOUs for dollars and destroy the value of those dollars at the same time. At least not in the long run. Eventually he's left with only two choices: Destroy the dollar or let interest rates rise. The only thing delaying making that choice is the perception by the market, mainly our export partners, that the US will not default on its bonds.
But between now and then, I would expect Bernanke to reverse course on his news conference and say the economy is 'weaker than expected' and will continue their $85B a month purchases of MBSs. That should settle the markets for a while and entice the speculators back in.
"Come on in....the water's warm!"
Friday, June 28, 2013
Monday, June 17, 2013
Problems with health care - their root causes...
I was at a BBQ at a friends house not too long ago. A bunch of friends got together and at some point the topic of health care had arisen. It was interesting not really participating and just listening to each person put in their two cents. Each person focused on one particular thing, starting their sentences with, "Well, you know what the problem is..." Some pointed to corrupt politicians and others pointed to the high cost of service and others also pointed to the insurance companies.
I knew I couldn't really get involved because they were focusing simply symptoms of the problem. Examining root causes requires re-evaluating things you hold true and I knew no one in a party setting was ready to do that. I felt very much like the Oracle talking to Neo. When you're ready, you will ask the right questions. No one wants to answer the questions why politicians become corrupt or why prices are high or why insurance companies play such a huge role.
When people say, "The problem is..X, Y and Z" they are really saying that are problems X, Y and Z are things that have no solutions they can figure out. Usually the next thing that comes out of their mouth is "We need a law to fix X, Y and Z." It's a bit egotistical when you think about it. The person who has this line of thinking must believe that if they can't find a solution, no one can.
But I'm going to lay out the root causes for the problems in our health care system.
1. The Great Depression ushered in two concepts that affected the health care industry. The first was when the federal government issued wage controls on employers during WWII. Since employers could no longer compete by offering more attractive wages, they offered more benefits which included health benefits. The second was hospitals, with their fixed costs, lacked the flexibility to lower prices during this time-period and turned to insurance plans to guarantee a steady cash flow.
2. In 1929, Baylor University Hospital was the first to offer a group of 1500 school teachers a pre-paid monthly fee in exchange for health care services should they need it.
3. The Baylor University Hospital model started to catch on with non-profit hospitals and they started to group together to offer multiple plans to make them more attractive to subscribers. This was a crucial turning point in history because the word 'insurance' no longer meant a hedge against unforeseen risk for consumers as it would in any other area. It really meant a safety net for hospitals from going out of business.
4. Blue Cross and Blue Shield - In 1932, BCBS modeled their business off the multiple-hospital version of the original Baylor University Hospital plan. The inherent flaws in this model, if left alone, would have fixed themselves over time but that never happened. The AMA (American Medical Association) and the AHA (American Hospital Association) lobbied Congress for BCBS to be exempt from the normal insurance regulations at the time in addition to the tax exemption status as a non-profit business. This essentially granted BCBS near-monopoly status in the market since they had this special privilege. For nearly 50 years, BCBS's share of the market place never dipped below 40%.
5. Introduction of 'Cost-Plus' - In 1965, the Blues introduced a reimbursement procedure called 'Cost-Plus' which allowed physicians to be reimbursed according to "reasonable and customary" charges, and hospitals were reimbursed on a percentage of their costs which included equity and working capital. This allowed all health care providers to basically charge whatever they wanted. Combine that with the consumers not caring since the costs were carried by a third-party, the healthy supply and demand curves were hijacked from doing their jobs by keeping prices in check. As a result, prices soared.
6. The IRS - The IRS ruled that providing health insurance to their employees, employers could deduct the amount from their taxable business income. Employees were also allowed to exclude the value of the benefits when calculating their taxable income.
7. The Unions - the unions started to leverage health benefits in their collective bargaining agreements. Not only did more union members had coverage, they also negotiated the percentage the employer must pay. In 1945, only 10% was paid by the employers. By 1950, that number rose to 37%. In one particular case in 1959, United Steelworkers Union ended their 166-day strike until the steel companies paid the entire premium for health insurance. By 1961, the big 3 autos (GM, Ford and Chrysler) also followed suit.
8. First-Dollar Coverage - First dollar coverage refers to paying for expenses related to routine care. This was the result of both employers and employees maximizing their tax exemptions. The concept turned the idea of insurance completely upside down. Insurance was to cover the rare but extremely expensive medical event and everything else would be out-of-pocket.
9. Medicare and Medicaid - By the time the 60s hit, there was a push to expand health care to those who were unemployed, poor or old. Thus, Medicare was born and who did they model after? You got it, the BCBS model. Since they were so "successful." All this did was amplify the flaws and inflate prices to never-seen-before levels.
10. In 1992, the Resource Based Relative Value Scale (RBRVS) was in effect which is basically the government's idea of determining prices, instead of using supply and demand. Basically this scale would try to measure how much resources it would take to perform a medical procedure and determine prices that way. This alternative to the pricing mechanism simply ignores supply and demand and simply indoctrinates the Marxian concept of the labor theory of value.
As you can see, the history of how health care is muddled with government intervention in the form of protectionism, tax exemptions and countless more indirect involvement like protection of unions and wage controls. This is hardly the result of the free-market. It's a classic case of government failure and then blaming the failures on the free-market.
All these examples I cited is still secondary to the real root of the problem - government. Until we address the violent nature of government, the root cause will always be invisible and we will be swimming - lost in the sea of symptoms.
I knew I couldn't really get involved because they were focusing simply symptoms of the problem. Examining root causes requires re-evaluating things you hold true and I knew no one in a party setting was ready to do that. I felt very much like the Oracle talking to Neo. When you're ready, you will ask the right questions. No one wants to answer the questions why politicians become corrupt or why prices are high or why insurance companies play such a huge role.
When people say, "The problem is..X, Y and Z" they are really saying that are problems X, Y and Z are things that have no solutions they can figure out. Usually the next thing that comes out of their mouth is "We need a law to fix X, Y and Z." It's a bit egotistical when you think about it. The person who has this line of thinking must believe that if they can't find a solution, no one can.
But I'm going to lay out the root causes for the problems in our health care system.
1. The Great Depression ushered in two concepts that affected the health care industry. The first was when the federal government issued wage controls on employers during WWII. Since employers could no longer compete by offering more attractive wages, they offered more benefits which included health benefits. The second was hospitals, with their fixed costs, lacked the flexibility to lower prices during this time-period and turned to insurance plans to guarantee a steady cash flow.
2. In 1929, Baylor University Hospital was the first to offer a group of 1500 school teachers a pre-paid monthly fee in exchange for health care services should they need it.
3. The Baylor University Hospital model started to catch on with non-profit hospitals and they started to group together to offer multiple plans to make them more attractive to subscribers. This was a crucial turning point in history because the word 'insurance' no longer meant a hedge against unforeseen risk for consumers as it would in any other area. It really meant a safety net for hospitals from going out of business.
4. Blue Cross and Blue Shield - In 1932, BCBS modeled their business off the multiple-hospital version of the original Baylor University Hospital plan. The inherent flaws in this model, if left alone, would have fixed themselves over time but that never happened. The AMA (American Medical Association) and the AHA (American Hospital Association) lobbied Congress for BCBS to be exempt from the normal insurance regulations at the time in addition to the tax exemption status as a non-profit business. This essentially granted BCBS near-monopoly status in the market since they had this special privilege. For nearly 50 years, BCBS's share of the market place never dipped below 40%.
5. Introduction of 'Cost-Plus' - In 1965, the Blues introduced a reimbursement procedure called 'Cost-Plus' which allowed physicians to be reimbursed according to "reasonable and customary" charges, and hospitals were reimbursed on a percentage of their costs which included equity and working capital. This allowed all health care providers to basically charge whatever they wanted. Combine that with the consumers not caring since the costs were carried by a third-party, the healthy supply and demand curves were hijacked from doing their jobs by keeping prices in check. As a result, prices soared.
6. The IRS - The IRS ruled that providing health insurance to their employees, employers could deduct the amount from their taxable business income. Employees were also allowed to exclude the value of the benefits when calculating their taxable income.
7. The Unions - the unions started to leverage health benefits in their collective bargaining agreements. Not only did more union members had coverage, they also negotiated the percentage the employer must pay. In 1945, only 10% was paid by the employers. By 1950, that number rose to 37%. In one particular case in 1959, United Steelworkers Union ended their 166-day strike until the steel companies paid the entire premium for health insurance. By 1961, the big 3 autos (GM, Ford and Chrysler) also followed suit.
8. First-Dollar Coverage - First dollar coverage refers to paying for expenses related to routine care. This was the result of both employers and employees maximizing their tax exemptions. The concept turned the idea of insurance completely upside down. Insurance was to cover the rare but extremely expensive medical event and everything else would be out-of-pocket.
9. Medicare and Medicaid - By the time the 60s hit, there was a push to expand health care to those who were unemployed, poor or old. Thus, Medicare was born and who did they model after? You got it, the BCBS model. Since they were so "successful." All this did was amplify the flaws and inflate prices to never-seen-before levels.
10. In 1992, the Resource Based Relative Value Scale (RBRVS) was in effect which is basically the government's idea of determining prices, instead of using supply and demand. Basically this scale would try to measure how much resources it would take to perform a medical procedure and determine prices that way. This alternative to the pricing mechanism simply ignores supply and demand and simply indoctrinates the Marxian concept of the labor theory of value.
As you can see, the history of how health care is muddled with government intervention in the form of protectionism, tax exemptions and countless more indirect involvement like protection of unions and wage controls. This is hardly the result of the free-market. It's a classic case of government failure and then blaming the failures on the free-market.
All these examples I cited is still secondary to the real root of the problem - government. Until we address the violent nature of government, the root cause will always be invisible and we will be swimming - lost in the sea of symptoms.
Saturday, June 15, 2013
We're running outta oil...so what?
There is a series of videos out on youtube when you search: The most important video you will ever see.
It's about Peak Oil theory and the power of compounding. Being a math major, the math isn't in debate. In fact, it's used all the time to calculate doubling-time in investment theory. I'm not even going to debate that Peak Oil is real. It seems sound enough since all resources are finite. However, what I am going to talk about is the bigger picture and beyond Peak Oil.
First of all, we will never consume all the oil on the planet. It won't happen. How can I make this claim? Well imagine being stuck in a barn filled with peanuts. As you start getting hungry, you start to discover you can crack open the peanuts and start consuming them. As you eat them, you start discarding the shells in the barn since you're stuck inside it. Initially, finding unopened peanuts is easy. You can pretty much go anywhere you want and find an unopened peanut. However, at some point, you start running into opened shells in search for peanuts. Eventually, there will be so many opened shells and not enough peanuts that finding peanuts become a fruitless exercise, even though you know there are unopened peanuts somewhere in the barn.
The Peak Oil theory basically describes a method in which to estimate how much oil you have left based on how much you've consumed...i.e.where you are in the peanut consumption process. So while we are indeed running out of oil, there will be a point where finding the remaining oil becomes way too expensive. Combine this process along with the population growth and demand for energy increases. This has only one effect on prices - they will rise.
Prices in the free market are simply signals to find alternatives. Soon, oil will become more expensive than alternatives that are expensive today. Alternatives like solar, wind and geo-thermal. Nothing brings out the entrepreneur in each of us than extremely high, unmet demand.
Back when telephones were invented and the network effects were kicking in, the only way to build the infrastructure was to run copper lines. Believe it or not, people started thinking we were going to run out of copper because every household in the country, and ultimately in the world, would want a telephone. Add to that the dependency companies had on this marvelous invention to dramatically increase sales, a shortage would threaten the very economic livelihood of millions.
But it turns out the world didn't end. Today, we have alternatives to copper telephone wiring. We've replaced it with fiber optics and wireless technologies. Not only did we did we satisfy millions of more users today than back then, but the quality is much greater.
Most of us under 40 will likely see this change in energy in our lifetimes. As consumption continues at its 7% annualized growth rate, we will consume as much oil in the next 10 years as we have so far in our entire history. Yes, prices will rise but that will just spur innovations in every direction until another viable solution is found. Yes, some people will lose their jobs and will have to find new ones. Just like the old-fashioned telephone switchers and operators got replaced by computer controlled switches, an oil rigger today will have to find another job as well as the CEO of Exxon-Mobile.
Transitions aren't always easy but are necessary. I'll close with a favorite blurb from one of my favorite songs, Tom Sawyer:
"He knows changes aren't permanent. But change is."
It's about Peak Oil theory and the power of compounding. Being a math major, the math isn't in debate. In fact, it's used all the time to calculate doubling-time in investment theory. I'm not even going to debate that Peak Oil is real. It seems sound enough since all resources are finite. However, what I am going to talk about is the bigger picture and beyond Peak Oil.
First of all, we will never consume all the oil on the planet. It won't happen. How can I make this claim? Well imagine being stuck in a barn filled with peanuts. As you start getting hungry, you start to discover you can crack open the peanuts and start consuming them. As you eat them, you start discarding the shells in the barn since you're stuck inside it. Initially, finding unopened peanuts is easy. You can pretty much go anywhere you want and find an unopened peanut. However, at some point, you start running into opened shells in search for peanuts. Eventually, there will be so many opened shells and not enough peanuts that finding peanuts become a fruitless exercise, even though you know there are unopened peanuts somewhere in the barn.
The Peak Oil theory basically describes a method in which to estimate how much oil you have left based on how much you've consumed...i.e.where you are in the peanut consumption process. So while we are indeed running out of oil, there will be a point where finding the remaining oil becomes way too expensive. Combine this process along with the population growth and demand for energy increases. This has only one effect on prices - they will rise.
Prices in the free market are simply signals to find alternatives. Soon, oil will become more expensive than alternatives that are expensive today. Alternatives like solar, wind and geo-thermal. Nothing brings out the entrepreneur in each of us than extremely high, unmet demand.
Back when telephones were invented and the network effects were kicking in, the only way to build the infrastructure was to run copper lines. Believe it or not, people started thinking we were going to run out of copper because every household in the country, and ultimately in the world, would want a telephone. Add to that the dependency companies had on this marvelous invention to dramatically increase sales, a shortage would threaten the very economic livelihood of millions.
But it turns out the world didn't end. Today, we have alternatives to copper telephone wiring. We've replaced it with fiber optics and wireless technologies. Not only did we did we satisfy millions of more users today than back then, but the quality is much greater.
Most of us under 40 will likely see this change in energy in our lifetimes. As consumption continues at its 7% annualized growth rate, we will consume as much oil in the next 10 years as we have so far in our entire history. Yes, prices will rise but that will just spur innovations in every direction until another viable solution is found. Yes, some people will lose their jobs and will have to find new ones. Just like the old-fashioned telephone switchers and operators got replaced by computer controlled switches, an oil rigger today will have to find another job as well as the CEO of Exxon-Mobile.
Transitions aren't always easy but are necessary. I'll close with a favorite blurb from one of my favorite songs, Tom Sawyer:
"He knows changes aren't permanent. But change is."
Wednesday, June 12, 2013
Violence by proxy...
We definitely live in a world where things aren't as they seem. People like to think they live rather peaceful and rational lives but it's quite the opposite. It's very violent, chaotic and we're basically out of control. It only appears that we're not because we've learned to twist reality through the manipulation of language to buy us some time before we feel the effects of our actions but like the Merovingian said in Reloaded, 'You cannot escape the nature of the universe.'
The reason why many think their world is generally peaceful and, for the most part, in order is because they're so far removed from the actual violence that is taking place to create that peace and order. Sure, there are instances of 'random acts of violence' you hear on the news but that's just to maintain the illusion that anomalies are a fact of life. But rest assured, it is just another reason to maintain the illusion.
People generally are good and moral in their own little world. They're not going to walk over to their neighbor and point a gun and start threatening them. They don't eat food off their friend's plate in a restaurant. When it comes to their immediate actions, they understand right and wrong and understand property rights. Even the religious folk, you often hear, "I wouldn't force my beliefs onto another." There's a general respect for a person's mind, body and property in the immediate realm.
It's outside this realm that things get interesting. People tend to equate "doing good" by doing it directly and have difficulty seeing it indirectly. At the same time, people see "doing bad" indirectly as easily as they do as if done directly. Let me illustrate with some examples:
Doing good directly: Going to a soup kitchen for the afternoon and volunteering to feed the poor.
Doing good indirectly: Donating money to the Red Cross.
Doing bad directly: Approaching a stranger at knife-point and stealing their money.
Doing bad indirectly: Hiring a contract killer to kill your business partner.
As you can see, if you act through a third-party to do good, for some reason it's less noble in the eyes of society. Is this fact? No, but it's the impression I get. However, if I ask you if I'm more or less culpable of murder if I hire someone to do it for me rather than doing it myself, I'd bet some good money that you'd say there is little to no difference.
This is why Fathers Day and dads get less love than moms and Mothers Day. You can immediately see the kissing of the boo-boo and understand the goodness and love from mothers. Fathers, usually the breadwinners, go out and work and provide for their families. There's lots of goodness there but it's indirect and therefore unseen.
I'm starting to digress here but my focus is on the indirect violence. If somehow I could teleport some dark-skinned person from the Middle East and put them in front of you and then handed you a gun and claimed they have information that would put your fellow citizens at risk and you had to kill them, would you pull the trigger? I'd think you'd have a very difficult decision on your hands.
But this is what we do but it's done indirectly. Through the political system, the military and the "chain of command" we are doing exactly that. It's only because we are so far removed from the actual pulling of the trigger that the moral rippling effect make very little waves personally. Make no mistake, because through the voting process, as I have explained in an earlier post, we lose our individual preferences for war or peace. The group, embodied as the country's government through democratic representation, has decided to go to war in Iraq, Afghanistan and all the other countries we've gotten ourselves into.
All the laws for texting, drinking and driving, insider-trading etc. as well as all the countless regulations is simply another way of inflicting violence upon each other through local police. We pay men and women in blue costumes to threaten the use of force if we do not comply. How many of us sit there and talk about how important drinking and driving laws are and then go to a bar, have a few, and then get behind the wheel? I have yet to meet a person who say they are in favor of drinking and driving laws who hasn't drank and then got behind a wheel. Of course the law is to prevent "other people" from doing it. If one of your friends had one too many and was about to get behind the wheel, how far would you go to stop him? Sure you'd try to take away his keys or try to plead with him to crash with someone but what if he insisted on driving himself home? Would you resort to pulling out some kind of weapon and start threatening him? Would you bind his feet and arms and then kidnap him to your basement? Sound extreme? Well, this is what the police do almost on a daily basis on your behalf. They are simply instruments of policy that you voted for so if you think it's extreme for you to personally do it, the extremity isn't diminished to any degree simply because there are proxies in between you and the drunk driver, or texter, or the tax payer, for that matter.
See, we all hire contract killers, against each other for every law that we pass by vote. The contract killers don't really kill but they walk around with guns and will use them to subdue those who resist them. Under the light of consensual proxies, our world is plenty violent. Guns are being pointed in all directions. It only appears peaceful because we're not the ones who are carrying the guns. The enforcement of these laws aren't without repercussions. All these wars inflicted upon other countries do not leave orphans who think their dead parents were bad people and side with the US. This is what Ron Paul refers as 'blowback'. Same thing goes with some inner city kid who can't get a decent education because of a state-run monopoly on education protected by a teachers-union who then tries to gain some unskilled employment but can't because of the minimum-wage laws. What options are there? Most of them are illegal but those become the only real choices to get out. Either that or simply ride the gravy train called the welfare program. Women go into prostitution and men go into dealing drugs or something else illegal. It's only a matter of time some kind of altercation happens in this black-market and "random acts of violence" happens. But make no mistake, this violence isn't random at all. It is a natural consequence of the existing indirect violence we have placed ourselves into.
Of course, those who have been put in charge will make it seem like it's completely random and can't be predicted and so it further strengthens their argument to pass more and more laws. This is why it's only natural for governments to grow at the expense of individual liberties.
The core of our problems is the collective belief that something false is true. And that falsehood is the following: You can protect property rights by violating property rights.
You cannot protect something by first destroying it. It's a logical contradiction. The reason I say this falsehood is because the concept of government is built on this falsehood. Governments are established to protect people from murder and theft. But how do governments get the funds to do so? It must first tax the people. But taxes aren't voluntary but imposed. If one argues that people donate money for collective protection then we're no longer talking about a government but a free-market solution to the problem of theft and murder. But take a look around. Governments are the opposite of the free-market. Taxes aren't voluntary. There is no social contract.
We must first get past our denial. We must accept that governments are built upon a contradiction. That is the first step, in this twelve step program. That is the choice that we all must make: Do we want truth or do we want the world exactly as it is? You can't have both.
The reason why many think their world is generally peaceful and, for the most part, in order is because they're so far removed from the actual violence that is taking place to create that peace and order. Sure, there are instances of 'random acts of violence' you hear on the news but that's just to maintain the illusion that anomalies are a fact of life. But rest assured, it is just another reason to maintain the illusion.
People generally are good and moral in their own little world. They're not going to walk over to their neighbor and point a gun and start threatening them. They don't eat food off their friend's plate in a restaurant. When it comes to their immediate actions, they understand right and wrong and understand property rights. Even the religious folk, you often hear, "I wouldn't force my beliefs onto another." There's a general respect for a person's mind, body and property in the immediate realm.
It's outside this realm that things get interesting. People tend to equate "doing good" by doing it directly and have difficulty seeing it indirectly. At the same time, people see "doing bad" indirectly as easily as they do as if done directly. Let me illustrate with some examples:
Doing good directly: Going to a soup kitchen for the afternoon and volunteering to feed the poor.
Doing good indirectly: Donating money to the Red Cross.
Doing bad directly: Approaching a stranger at knife-point and stealing their money.
Doing bad indirectly: Hiring a contract killer to kill your business partner.
As you can see, if you act through a third-party to do good, for some reason it's less noble in the eyes of society. Is this fact? No, but it's the impression I get. However, if I ask you if I'm more or less culpable of murder if I hire someone to do it for me rather than doing it myself, I'd bet some good money that you'd say there is little to no difference.
This is why Fathers Day and dads get less love than moms and Mothers Day. You can immediately see the kissing of the boo-boo and understand the goodness and love from mothers. Fathers, usually the breadwinners, go out and work and provide for their families. There's lots of goodness there but it's indirect and therefore unseen.
I'm starting to digress here but my focus is on the indirect violence. If somehow I could teleport some dark-skinned person from the Middle East and put them in front of you and then handed you a gun and claimed they have information that would put your fellow citizens at risk and you had to kill them, would you pull the trigger? I'd think you'd have a very difficult decision on your hands.
But this is what we do but it's done indirectly. Through the political system, the military and the "chain of command" we are doing exactly that. It's only because we are so far removed from the actual pulling of the trigger that the moral rippling effect make very little waves personally. Make no mistake, because through the voting process, as I have explained in an earlier post, we lose our individual preferences for war or peace. The group, embodied as the country's government through democratic representation, has decided to go to war in Iraq, Afghanistan and all the other countries we've gotten ourselves into.
All the laws for texting, drinking and driving, insider-trading etc. as well as all the countless regulations is simply another way of inflicting violence upon each other through local police. We pay men and women in blue costumes to threaten the use of force if we do not comply. How many of us sit there and talk about how important drinking and driving laws are and then go to a bar, have a few, and then get behind the wheel? I have yet to meet a person who say they are in favor of drinking and driving laws who hasn't drank and then got behind a wheel. Of course the law is to prevent "other people" from doing it. If one of your friends had one too many and was about to get behind the wheel, how far would you go to stop him? Sure you'd try to take away his keys or try to plead with him to crash with someone but what if he insisted on driving himself home? Would you resort to pulling out some kind of weapon and start threatening him? Would you bind his feet and arms and then kidnap him to your basement? Sound extreme? Well, this is what the police do almost on a daily basis on your behalf. They are simply instruments of policy that you voted for so if you think it's extreme for you to personally do it, the extremity isn't diminished to any degree simply because there are proxies in between you and the drunk driver, or texter, or the tax payer, for that matter.
See, we all hire contract killers, against each other for every law that we pass by vote. The contract killers don't really kill but they walk around with guns and will use them to subdue those who resist them. Under the light of consensual proxies, our world is plenty violent. Guns are being pointed in all directions. It only appears peaceful because we're not the ones who are carrying the guns. The enforcement of these laws aren't without repercussions. All these wars inflicted upon other countries do not leave orphans who think their dead parents were bad people and side with the US. This is what Ron Paul refers as 'blowback'. Same thing goes with some inner city kid who can't get a decent education because of a state-run monopoly on education protected by a teachers-union who then tries to gain some unskilled employment but can't because of the minimum-wage laws. What options are there? Most of them are illegal but those become the only real choices to get out. Either that or simply ride the gravy train called the welfare program. Women go into prostitution and men go into dealing drugs or something else illegal. It's only a matter of time some kind of altercation happens in this black-market and "random acts of violence" happens. But make no mistake, this violence isn't random at all. It is a natural consequence of the existing indirect violence we have placed ourselves into.
Of course, those who have been put in charge will make it seem like it's completely random and can't be predicted and so it further strengthens their argument to pass more and more laws. This is why it's only natural for governments to grow at the expense of individual liberties.
The core of our problems is the collective belief that something false is true. And that falsehood is the following: You can protect property rights by violating property rights.
You cannot protect something by first destroying it. It's a logical contradiction. The reason I say this falsehood is because the concept of government is built on this falsehood. Governments are established to protect people from murder and theft. But how do governments get the funds to do so? It must first tax the people. But taxes aren't voluntary but imposed. If one argues that people donate money for collective protection then we're no longer talking about a government but a free-market solution to the problem of theft and murder. But take a look around. Governments are the opposite of the free-market. Taxes aren't voluntary. There is no social contract.
We must first get past our denial. We must accept that governments are built upon a contradiction. That is the first step, in this twelve step program. That is the choice that we all must make: Do we want truth or do we want the world exactly as it is? You can't have both.
Monday, June 10, 2013
Seraph was right...
As a big fan of the Matrix trilogy films, I find a lot of one-liners I have an affinity for. One, in particular, came to mind when I was at a party not too long ago. A couple, who I've known for a few years, I'm good friends with disclosed that they never fought. Keep in mind now, they are married and to have claimed they've never had a fight floored me. They both said they're laid back and just never fought. This immediately made me think of what Seraph said in his encounter with Neo in Reloaded, "You don't truly know someone until you fight them."
That quote is very true and it is especially true when it comes to relationships. It should be obvious to everyone that no two people are exactly alike. From that one fact alone, we can logically deduce that no two people think alike and therefore will eventually run into a difference of opinion, given enough time and assuming both parties are honest with their opinions.
I like thinking about people, or individuals, as water balloons. They come in different shapes and experience is the water that fills them up that defines their current state and shape. The shape and lines demarcate its limits. When left alone, the water balloon is in its natural form and in the state it wants to be in. I call this the comfort zone. But sometimes the water balloon is put under pressure and is pressed up against its limits (e.g. the elasticity of the rubber). And this is how people also react to pressure. Some tend to focus and hone in like a laser and others fall apart. The pressure is too much and they react badly.
The point is, anyone can make easy decisions because we are not confronted with our own limitations. If you ask Usain Bolt to run 100m in one minute, that's easy. In fact, that's easy for almost anyone who can walk. It's easy because we are not pressed up against our limitations. Perhaps that is how the word 'easy' is defined. I never really thought about it until now. However, keep halving the time requirement to 30s, then 15s and suddenly, many of us start dropping off like flies because at the cellular level, we can't produce enough ATP (adenosine triphosphate) to contract the muscles to propel us to travel 100m in 7.5 seconds. Even the speedy Usain Bolt runs into, perhaps the human limit. Maybe what defines being human, when it comes to 100m sprinting, is the production of so many ATP units per millisecond that only Usain Bolt, with his genetics, has discovered through intense training. For a cheetah, it's something much higher and maybe that's what defines the difference between humans and cheetahs, when it comes to this specific task (running 100m).
Whatever defines us as humans can also apply to whatever defines us as individuals. If the definition of a species can be defined as a set of limitations then defining oneself can also be described as a set of limitations. Each person has a 'breaking point' for various things like patience, love, hate, cleanliness, organization, disorganization, etc. Most of us live in the middle somewhere and we call that the 'comfort zone.' But to understand or know someone is to know their limits. The only way to do that is to push those limits and see how they react.
Children test limits all the time - almost instinctively. You set a rule and immediately children are out there testing them. They want to see what you will do and if you really believe in the rule or not. They are constantly checking for consistency in the real world and the ones we create for ourselves. It is only through testing boundaries and limits that we come to gain any kind of knowledge at all. This applies to everything in the universe and other humans are not exempt from this.
Proper relationship building is precisely this process being repeated over and over again. It's not that you want to look for a fight but fighting is the natural outcome of two individuals being honest with themselves and then bumping into the boundaries of their partner. After a while, you gain an understanding of where the boundaries are and realizing you can honestly be in your comfort zone while your partner can also do the same.
The reason why people have to argue in a healthy relationship is because the dating process requires both parties to slowly open up as they get more comfortable with each other. The beginning of the dating phase requires not being in your comfort zone. In fact, you have to put yourself into an extreme limit of yourself (e.g. presenting your best face). In fact, this makes sense to some degree. It's the most efficient way of weeding out those you are incompatible with. If you can't stand someone who is presenting their best version of themselves, you will never be able to tolerate that person in their comfort zone.
If you don't fight with your partner regularly, you don't know really know them. You are either not being honest with yourself or you do fight but want to create the illusion that you have a perfect relationship. Either way, there are unresolved issues for avoiding the truth.
That quote is very true and it is especially true when it comes to relationships. It should be obvious to everyone that no two people are exactly alike. From that one fact alone, we can logically deduce that no two people think alike and therefore will eventually run into a difference of opinion, given enough time and assuming both parties are honest with their opinions.
I like thinking about people, or individuals, as water balloons. They come in different shapes and experience is the water that fills them up that defines their current state and shape. The shape and lines demarcate its limits. When left alone, the water balloon is in its natural form and in the state it wants to be in. I call this the comfort zone. But sometimes the water balloon is put under pressure and is pressed up against its limits (e.g. the elasticity of the rubber). And this is how people also react to pressure. Some tend to focus and hone in like a laser and others fall apart. The pressure is too much and they react badly.
The point is, anyone can make easy decisions because we are not confronted with our own limitations. If you ask Usain Bolt to run 100m in one minute, that's easy. In fact, that's easy for almost anyone who can walk. It's easy because we are not pressed up against our limitations. Perhaps that is how the word 'easy' is defined. I never really thought about it until now. However, keep halving the time requirement to 30s, then 15s and suddenly, many of us start dropping off like flies because at the cellular level, we can't produce enough ATP (adenosine triphosphate) to contract the muscles to propel us to travel 100m in 7.5 seconds. Even the speedy Usain Bolt runs into, perhaps the human limit. Maybe what defines being human, when it comes to 100m sprinting, is the production of so many ATP units per millisecond that only Usain Bolt, with his genetics, has discovered through intense training. For a cheetah, it's something much higher and maybe that's what defines the difference between humans and cheetahs, when it comes to this specific task (running 100m).
Whatever defines us as humans can also apply to whatever defines us as individuals. If the definition of a species can be defined as a set of limitations then defining oneself can also be described as a set of limitations. Each person has a 'breaking point' for various things like patience, love, hate, cleanliness, organization, disorganization, etc. Most of us live in the middle somewhere and we call that the 'comfort zone.' But to understand or know someone is to know their limits. The only way to do that is to push those limits and see how they react.
Children test limits all the time - almost instinctively. You set a rule and immediately children are out there testing them. They want to see what you will do and if you really believe in the rule or not. They are constantly checking for consistency in the real world and the ones we create for ourselves. It is only through testing boundaries and limits that we come to gain any kind of knowledge at all. This applies to everything in the universe and other humans are not exempt from this.
Proper relationship building is precisely this process being repeated over and over again. It's not that you want to look for a fight but fighting is the natural outcome of two individuals being honest with themselves and then bumping into the boundaries of their partner. After a while, you gain an understanding of where the boundaries are and realizing you can honestly be in your comfort zone while your partner can also do the same.
The reason why people have to argue in a healthy relationship is because the dating process requires both parties to slowly open up as they get more comfortable with each other. The beginning of the dating phase requires not being in your comfort zone. In fact, you have to put yourself into an extreme limit of yourself (e.g. presenting your best face). In fact, this makes sense to some degree. It's the most efficient way of weeding out those you are incompatible with. If you can't stand someone who is presenting their best version of themselves, you will never be able to tolerate that person in their comfort zone.
If you don't fight with your partner regularly, you don't know really know them. You are either not being honest with yourself or you do fight but want to create the illusion that you have a perfect relationship. Either way, there are unresolved issues for avoiding the truth.
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