THE FREE MARKET SYSTEM AS AN ECONOMIC BIOFEEDBACK MECHANISM

THE FREE MARKET SYSTEM AS AN ECONOMIC BIOFEEDBACK MECHANISM

A Holistic Approach to Economics

Linda G. Davis

July 2, 1982

Los Angeles, California

Biofeedback is a process whereby Cause and Effect (information) is made visible to an observer by means of certain monitoring devices. It therefore becomes possible to alter the cause (i.e. the specific thoughts of the individual) in order to change the effect (i.e. the biological feedback—such as an illness—reproduced in the monitoring device). With practice, this process can become as smooth and sophisticated as our modern radar guidance systems. (Suggestion:  It is the measure of the mercy of our Creator that we’ve been allowed this distance between cause and effect—i.e. Time—and that this distance is decreasing at a pace that will allow us to re-enter Simultaneous Information Exchange*--S.I.E.—as smoothly as possible).

Since all products and services are, originally, the result of a single thought in a single human mind (collaborations always follow this), the Free Market System functions as a biofeedback mechanism. Intervention in this system will spoil the integrity of the information, and, since the quality of the information is directly related to its growth, affects the well-being of the individual. Many people die trying to preserve or to achieve this economic life-support system.

If this system is allowed to function naturally, it becomes a constant source of quality information—food for growth—because survival within this system demands (1) a constant search for better ideas (e.g. products and services) for (2) the lowest possible cost (i.e. the highest efficiency). A Natural Monopoly may occur, but only as long as (1) and (2) are serving the needs of the people. A Coercive Monopoly can exist as long as there is intervention (which we have) in the natural free market system.

The government of any group of people who enjoy and employ this system should function as a good gardener who, watchful and attendant, pulls the weeds of corruption and deception so that the people may eat and enjoy the fruits of the garden.

*Eternity:  Love looking in a mirror.

(C.S. Lewis, who held the Chair of Medieval and Renaissance English Literature at Cambridge University until shortly before his death in 1963, discussed the phenomenon of Simultaneous Cause and Effect in the chapter entitled “Good infection” from his book, “Beyond Personality: The Christian Idea of God.”)

There's no socialism in the Nordic countries, no matter what the Left keeps repeating

What the Left Gets Wrong About Scandinavia

By

Chris Matthews

January 26, 2016

https://fortune.com/2016/01/26/democrat-bernie-sanders-scandinavia-socialism/

Sanandaji thinks that a much better explanation for the economic success of Scandinavia is culture. If you look at the years in which these countries built the wealth their citizens now enjoy, it was long before leftist ideas took hold. For instance, from 1870 through 1936, Sweden was the fastest growing economy in the world. But after 1975—when the Swedish state began to expand in earnest—Sweden’s economy noticeably slowed, falling from the 4th richest in the world to the 13th by the mid 1990s.

And Nordic voters are starting to take notice. Scandanavian governments have been paring down the size of their governments. Since the 1990s, the total taxation of the Swedish economy as a percentage of GDP has fallen more than 5%, while labor market reforms, such as Denmark’s cutting of unemployment benefits have helped Scandanavian economies rocket up measures of economic freedom. Don’t tell Bernie Sanders, but as Sanadaji puts it, Scandanavia is slowly “returning to its free market roots.” 

The Myth of Scandinavian Socialism

The Nordic model is far from socialist.

Thursday, February 25, 2016

In response to Americans frequently referring to his country as socialist, the prime minister of Denmark recently remarked in a lecture at Harvard’s Kennedy School of Government,

I know that some people in the US associate the Nordic model with some sort of socialism. Therefore I would like to make one thing clear. Denmark is far from a socialist planned economy. Denmark is a market economy.

https://fee.org/articles/the-myth-of-scandinavian-socialism/

Who said this?

"Evil is powerless if the good are unafraid"

"The most dangerous myth is the demagoguery that business can be made to pay a larger share, thus relieving the individual. Politicians preaching this are either deliberately dishonest, or economically illiterate, and either one should scare us...
Only people pay taxes, and people pay as consumers every tax that is assessed against a business."

"We cannot play innocents abroad in a world that is not innocent"

"Peace is not the absense of conflict; it is the ability to manage conflict by peaceful means"

"Of the four wars of my lifetime, none came about because the U.S. was too strong"

"If the Soviet Union ever let another political party come into existence, they would still be a one-party state... 
because everbody would join the other party"

"How do you tell a communist? He reads Lenin and Marx. And how do you tell an anti-communist? 
Someone who understands Lenin and Marx."

"Freedom is never more than one generation away from extinction; it's not something we pass along in our bloodstream.
It must be fought-for, protected, and passed-along for them to do the same"

"Entrepeneurs and small businesses are responsible for almost all the economic growth in the United States"

"If you can't make them see the light, let them feel the heat"

"They say the world has become too complex for simple answers... they are wrong"

"The most terrifying words in the English language are: I'm from the government, and I'm here to help"

"Recession is when your neighbor loses his job; a depression is when you lose yours"

"Before I refuse to take your questions, I have an opening statement..."

RONALD REAGAN

‘Top-Down’ vs. ‘Bottom-Up’

Which path to job creation and prosperity do we prefer: A continued emphasis on trusting government with top-down economics, or greater emphasis on trusting consumers and entrepreneurs with trial-and-error bottom-up economics?

READ MORE

THE GREATEST BLOG POST EVER WRITTEN

Liberty Law Blog:

Deidre McCloskey has a post entitled Factual Free Market Fairness, which has received a great deal of attention and praise, including the claim by more than one person that it is the greatest blog post ever written! McCloskey’s specific point is that the story told by philosophers who defend what she calls “high liberalism” (and what I would call modern welfare liberalism) rests on a factual mistake.

McCloskey writes:

READ MORE

The Secret Knowledge...

EXPLOSIVE NEW BOOK THAT WILL ROCK THE LIBERAL MIND AND DEMOLISH THE IDEA THAT ONLY "STUPID" MEAN PEOPLE ARE CONSERVATIVES!

(And, it's a big 'f*ck you' to Bill Maher who really IS stupid and mean.)

Milton Friedman Puts A Young Michael Moore In His Place

Why haven't I seen this before?

The preceding is from a 15-part lecture series delivered by Milton Friedman from 1977 - 1978. The lectures were originally intended to be the core content of what became the Free to Choose television programs and subsequently the best selling book of the same title.

For more information visit www.freetochoose.com

Regulations: That phrase is uttered like an incantation, the magical answer...

...there is nothing simplistic about proposing the market as a solution to an economic problem. It’s short way of saying: let the multitude of knowledgeable people seeking profit, risking their own money, and responding to incentives find a solution based on persuasion not force. Translated that way, it sounds like a promising approach.

Ironically, those who don’t appreciate markets are in fact the ones who offer a simplistic, even empty alleged solution to economic problems: government regulation. That phrase is uttered like an incantation, the magical answer to all doubts about how, in the absence of fully free markets, problems would be solved. The irony is that while “let the market handle it” can be unpacked and made specific, “regulation” cannot. It can only be interpreted this way: Appoint a czar or a committee to somehow watch over things, and all will be well.

We’re hearing this idea a lot these days...

The Pretense of Regulatory Knowledge

SAVING OUR ECONOMY

LACA (Los Angeles Conservatives Alliance) interviews Richard McDonald

Reseda, CA 1-11-11

Over the next eleven months, LACA will be featuring a series of articles by the Ownership Society Institute. They will outline a plan the Institute calls Rise Up America (RUA). This plan has been designed to change the way the United States government works in a manner that will substantially increase the material wealth of the nation and each individual as well as their social well-being.

LACA: Our series is authored by Dick McDonald (DM). Dick believes conservatives should adopt RUA to solve many of the economic and social problems the country faces. Please tell us something about yourself and your RUA plan.

DM: I am retired now but I spent my working life as a tax man helping rich people avoid taxes. As a young CPA working for an international accounting firm I did the personal and corporate income taxes for very rich clients like Jimmy Stewart and J. Paul Getty. After ten years there I spent the next 30 years designing and operating tax shelters.

For the last six years I have been perfecting the RUA plan that does for the poor and middle class what Ronald Reagan’s so-called “trickle down” economic theory did for the rich. In other words it creates wealth for the little guy. If adopted it would create enormous wealth for the country as well.

LACA: Dick your background sounds impressive but just how does doing tax work for billionaires equate with creating wealth for poor people?

DM: That is simple. It is so simple that it escapes most people’s radar. I use the same tax shelter for the poor and middle-class people as a tax man uses for the ultra rich – the non-taxability of appreciation in the value of stock. Think about it. Bill Gates is worth $54 Billion in the latest Forbes survey. He didn’t pay income taxes to create after-tax wealth of $54 billion. His wealth is in the stock of Microsoft. He didn’t pay tax on the appreciation in that stock.

LACA: I see where you're going – most people don't think of appreciation as a tax shelter. I see how rich people use it but how can your plan generate wealth for the poor. They don't have the money to invest in stock.

DM: You're right – they don't – and that is where my plan begins. Today the country needs a kick in the economic pants. We need jobs and a better growth rate. But no one is hiring and few are investing in new products and services. So my plan calls for an annual investment (from the private sector) of over a trillion dollars in the stock market. In the first year it should create millions of jobs and jump the country's growth rate towards 10%.

LACA: Dick that's a great idea but where are the poor and middle class going to get new investment capital of a trillion dollars each year.

DM: Here again that is relatively simple – we privatize the Social Security, Disability and Medicare programs, place the 15.3% of payroll taxes in each taxpayer's personal investment account and have it immediately invested at their direction and for their sole benefit into secure index funds for their 40-year working life.

LACA: Wow – that brings up so many questions we don't have time to cover all of them today. But let's take some obvious ones. First there is a great fear of investing in the stock market. How do you overcome that fear.

DM: First of all the average American household makes over $50,000 a year and pays slightly over $7,500 in Federal payroll taxes. Over a 40-year working life they would have invested $300,000 with the government. However such taxes invested weekly in the stock market grow into a $4 million nest egg through accumulation and compounding. The rate of return we use is the same 10% average rate of return the S&P 500 has returned in long-term 40-year investments since 1871.

Now when the recent stock market crashed and the $4 million dropped to $2 million, the taxpayer only had invested $300,000. He was still way ahead of the game. As the stock market has gone from 12,000 on the Dow to 6,000 and returned to 11,500 the taxpayer's account has come almost back to $4 million. The citizens understand simple arithmetic – they just have to be informed.

A $4 million stock account should throw off a $33,000 a month Social Security check which will make a mockery of the $1,300 the government presently pays. On top of that the taxpayer is worth $4 million whereas under our present system they get no nest egg.

LACA: I'm sorry we only have space for one more question. Presently the payroll taxes collected by government are used to pay current retirees. By abandoning these entitlements what happens to current retirees and where will the money come from to pay them.

DM: Our plan will immediately reduce the over $100 trillion unfunded entitlement debt to a manageable $6 to $8 trillion as the growth in each account will eventually eliminate the need to fund retirees. In the meantime we can fund the benefits by privatizing unneeded departments of the government, selling and leasing back government properties such as lands, buildings and rights (oil, airtime) and a myriad of cost cutting steps. We also can borrow a little as we have made such a massive dent in the overall debt of the country.

The increase in economic activity will swell to the point that the private sector will open jobs up to absorb the government workers displaced by privatization. It can be done.

LACA: I'm sorry we'll have to continue next month. Where can the readers presently get more information about RUA.

DM: They can go to www.ownershipsocietyinstitute.com. Your readers should be aware that many benefits emanate from such a plan including cutting the size of the government by 40%.

A Tutorial on Wealth Creation(Tea Party Pay Attention!)

Dick McDonald

According to a recent Rasmussen Poll 63% of the people believe the American Society is fair and decent. Let’s check and see how you feel about that after you read the following.

Super rich people hardly pay any income taxes on their billions.

Bernie Sanders, the socialist Senator from Vermont, last week was railing against the passage of the Bush Tax Cut legislation by informing us that the super rich, according to a recent study of 400 billionaires pay on average only 16% in income and payroll taxes.

That is bunk. I say they pay at a maximum a small fraction of 1%. Generally their wealth is derived from stock ownership and their enormous wealth comes from the appreciation of that stock(s) over the years. As the appreciation in the value of stock is not taxed their wealth is accumulated FREE OF TAX. It is the ultimate tax shelter.

Warren Buffet’s wealth increased $10 billion in 2006 and he claimed in front of Congress that he paid 17% in taxes on his income that year. He testified that he should pay more in taxes because his staff paid on average 32%. He said that was unfair and that rich people should pay more in taxes.

What a whooper that was. He didn’t pay $1.7 billion in taxes he paid less than $10 million (or 10% of 1% - .oo1) in taxes because stock appreciation (his business) is not taxed. Now through some deceptive method of computation he probably said he paid 15.3% in payroll taxes on his $100,000 salary from Berkshire Hathaway and 1.7% in total in capital gains taxes to arrive at his fictitious 17%.

Of course Warren Buffet knew as did all billionaires the Bush tax cuts were of little consequence to them. They don’t pay tax on appreciation of their stock. And even in the case of dividends, they don’t have to pay them if the rate returned to Bush levels. Bernie Sanders and all the uninformed citizens and their propagandists in politics and media swallowed this tax cut propaganda.

Those who really get hurt are the millionaires who don’t use the tax-free stock ownership route and pay these absolutely confiscatory taxes on income. They are the primary job creators – small businessmen on the way up who use Subchapter S corporations and pay taxes personally to avoid corporate double taxation. Double taxation, of course, is just another fallacy. The super rich avoid all taxation on “income and wealth.” Double taxation for the super rich is a myth for public consumption.

Super rich people do not pay estate taxes

One of the stumbling blocks in the tax bill that passed was the rate of estate tax. Liberals were fiercely resisted lowering that rate to 35% for estates over $5 million. They wanted it to remain at 55% on “taxable estates” over $1 million. On the other hand conservatives grumbled that such wealth had already been taxed and to tax it again was unfair double taxation.

Well as any tax man will tell you billionaires don’t pay estate taxes. They take a deduction from the “taxable estate” for all amounts given to charity. As those charities are usually created by the billionaires themselves they can control their money from the grave.

All this publicity by Bill Gates and Warren Buffet getting billionaires to give half their estate to charity is so much baloney for public consumption. These guys are not going to pay any estate tax; they will give it all to charity.

Really intelligent super rich people’s kids don’t pay taxes on wealth

There are a number of devices available to the super rich to avoid having their kids pay estate taxes on the accumulated wealth. Here again the trick is to transfer the ownership of the assets – usually stock – to the kids early on in life and let the non-taxable appreciation accrue for the benefit of the kids. Those assets are then passed on to the kid free of tax at death of the super rich man or woman.

J. Paul Getty, the “first” billionaire, transferred 2/3rds of all he ever owned to his grandkids in trust in his 30’s. At death the remainder of his estate went to his Museum. He personally as well as his corporations paid no income taxes during his lifetime because of percentage depletion and the deductibility of intangible drilling costs; his corporations’ share of payroll taxes were paid for by passing those costs on to the consumer and he paid no death taxes nor did his kids or grandkids. As I said, the super wealthy pay no taxes.

The wealthy make the free market grow and the country prosper. Poor people are in line to do that too.

Now you may believe as many working men and liberals do that it is very unfair that the super rich pay little or no taxes. You may believe that the rich store that wealth in a way that it never comes back to benefit the economy. You would be wrong. Wealth is always at work benefitting the economy. If it is invested in stocks – it is working. If it is in the bank the bank has to lend it therefore – it is working.

The Pitch to the Tea Party

This little tutorial on wealth creation was written to expose the poor, the middle class and even the rich to the wonders of tax-free appreciation in stock. As you know we are in a world of hurt economically. If we could get all those citizens to follow the lead of the super rich and invest in the stock market two things will happen – (1) the less than super rich will get wealthy and (2) the economy will take off and millions of jobs will be created.

In this crucial time in our history, America needs new ideas on how to reform our government. I contend that to do that we need to avoid the austerity the politicians are planning to impose to make the government more solvent and promote a new blueprint that solves poverty, income discrepancy, freedom and free market problems at the same time. It is time we focus on prosperity. Are you listening Tea Partiers?

There is a blueprint of new ideas that you might consider. Going down the path the Debt Commission and all politicians are promoting will lead to riots in the streets. Those interested in a logical redo along the lines our Founders designed see here. More importantly it outlines where the poor get the capital to invest in stocks as well as where to get the funds to pay for our existing entitlement obligations.

Dick McDonald is a former Arthur Anderson C.P.A. who did the taxes of the richest man in the world at that time, J. Paul Getty

How Free-Market Capitalism Saved the Miners

From CARPE DIEM on today's WSJ article by Daniel Henninger.

Free markets help the poor more

By Walter Williams

Listening to America's liberals, who now prefer to call themselves progressives, one would think that free markets benefit the rich and harm the poor, but little can be further from the truth.

NOVEMBER: Americans must make a choice in favor of their traditional free enterprise system or else they will lose it.

Last week, Congressman Paul Ryan and I published an op-ed in the Wall Street Journal entitled “The Size of Government and the Choice This Fall.” The article argues that Americans must make a choice in favor of their traditional free enterprise system or else they will lose it. Why? Because otherwise the choice will be made for them—a rejection of free enterprise and an embrace of big government, not in one fell swoop but one seemingly small, creeping government expansion at a time.

Our Journal piece ends with this:

Every day, more see that the road to serfdom in America does not involve a knock in the night or a jack-booted thug. It starts with smooth-talking politicians offering seemingly innocuous compromises, and an opportunistic leadership that chooses not to stand up for America’s enduring principles of freedom and entrepreneurship.

The article provoked a great deal of reaction...

Read more

Many people today continue to accept critiques of free-market capitalism that are unjustified and support government policies that are economically destructive...

Great Myths of the Great Depression

How Federal Policy Triggered the Mortgage Meltdown

The best way to ensure against future bailouts is to terminate the federal government’s too-big-to-fail guarantees. That’s right: End them, don’t mend them. So long as guarantees are in place, primary lenders, Fannie Mae, Freddie Mac and every other mortgage industry player will continue making loans to large numbers of people unable to pay them back. Risk must be driven by market rather than political forces. Writing on the mortgage meltdown, Barron’s columnist Gene Epstein recently noted, “Crony capitalists love to take foolish risks, dependent as they are on government’s rigged markets, often to the point that they would not be able to cope with free markets if they do.”

Many political leaders, under the guise of “reform,” prefer assigning to government the role of underwriter-in-chief. Frankly, it’s hard to imagine the federal government getting much more involved than it already is...

Read the whole thing

America's new culture war: Free enterprise vs. government control

Excerpt:

The goal of our system should be to give all Americans the greatest opportunities possible to succeed based on their work and merit. And that's exactly what the free enterprise system does: It makes earned success possible for the most people. This is the liberty that enables the true pursuit of happiness.

To win the culture war, those of us in the 70 percent majority must reclaim -- and proclaim -- the morality of our worldview.

Unfortunately, we often fail to do this...

To win, the 70 percent majority must come together around core principles: that the purpose of free enterprise is human flourishing, not materialism; that we stand for equality of opportunity, not equality of income; that we seek to stimulate true prosperity rather than simply treat poverty; and that we believe in principle over power.

This final idea is particularly challenging.

Read the whole thing

Arthur C. Brooks is the president of the American Enterprise Institute and the author of "The Battle: How the Fight Between Free Enterprise and Big Government Will Shape America's Future." He will be online on Monday, May 24, at 11:00 a.m. EST to chat. Submit your questions before or during the discussion.

While American politicians and intellectuals have not reached the depths of tyrants such as Lenin, Stalin, Mao and Hitler, they share a common vision...

Tyrants denounce free markets and voluntary exchange. They are the chief supporters of reduced private property rights, reduced rights to profits, and they are anti-competition and pro-monopoly. They are pro-control and coercion, by the state.

These Americans who run Washington, and their intellectual supporters, believe they have superior wisdom and greater intelligence than the masses. They believe they have been ordained to forcibly impose that wisdom on the rest of us. Like any other tyrant, they have what they consider good reasons for restricting the freedom of others.

A tyrant's primary agenda calls for the elimination or attenuation of the market. Why?

Markets imply voluntary exchange and tyrants do not trust that people behaving voluntarily will do what the tyrant thinks they should do. Therefore, they seek to replace the market with economic planning and regulation, which is little more than the forcible superseding of other people's plans by the powerful elite.

We Americans have forgotten founder Thomas Paine's warning that 'Government, even in its best state, is but a necessary evil; in its worst state, an intolerable one.'

--George Mason University economics professor Walter E. Williams

From the PatriotPost.us newsletter

The Roadmap for America's Future

by Republican Rep. Paul Ryan:

It's a remarkably comprehensive, daring manifesto that tackles every part of the budget on a presidential scale, from Social Security to tax policy to health-care reform...

Obama's new adversary

Hurtling Down the Road to Serfdom

by John Stossel:

Government is taking us a long way down the Road to Serfdom. That doesn't just mean that more of us must work for the government. It means that we are changing from independent, self-responsible people into a submissive flock. The welfare state kills the creative spirit.

F.A. Hayek, an Austrian economist living in Britain, wrote "The Road to Serfdom

" in 1944 as a warning that central economic planning would extinguish freedom...The book was a hit. Reader's Digest produced a condensed version that sold 5 million copies.

Hayek meant that governments can't plan economies without planning people's lives. After all, an economy is just individuals engaging in exchanges. The scientific-sounding language of President Obama's economic planning hides the fact that people must shelve their own plans in favor of government's single plan.

At the beginning of "The Road to Serfdom," Hayek acknowledges that mere material wealth is not all that's at stake when the government controls our lives: "The most important change ... is a psychological change, an alteration in the character of the people."

This shouldn't be controversial. If government relieves us of the responsibility of living by bailing us out, character will atrophy. The welfare state, however good its intentions of creating material equality, can't help but make us dependent. That changes the psychology of society.

I'll explore this tomorrow night on my Fox Business show, 8 p.m. Eastern (rebroadcast Friday at 10 p.m.).

Read more

The sheer absurdity of 20th century American liberals rewriting all of human history in keeping with their one idee fixe, class struggle, is a demonstration of the lasting influence of Marxist dogma on leading figures on the American left such as Howard Zinn, Michael Moore and Oliver Stone

The real secret history of America, the one that Oliver Stone would never film and Howard Zinn would never write about, is that the American left would never have had a fraction of the success that they did in the 20th century without corporate backing...And that indeed is the paradox of the left, that its attacks on the free market are so appealing precisely to those who don't work for a living, both on the corporate and the intellectual side.

From Sultan Knish: The Secret History of the Left ...and don't miss his excellent piece on Obama and the Democrats: The Great Dictator