The Fallacy and Failure of Communism, Socialism, and Keynesian Economics: Academic Research and Study to Make America Great Again

By William N. Spencer

The hiring, firing, retention, compensation, and control of employees in the American workplace is the realm and domain of Human Resources Management. But who, or what, really controls the Human Resources department?
But of course, the yo-yo American economy, both a leading and a lagging indicator of the good and or bad, the right and or wrong, of life in Corporate America.
And nothing affects the flow of the American economy more than our great and mighty American government. Forever taking more and more money away from the richthat is, anyone with a job and a paycheckand funneling that money into the deep abyss of government bureaucracy; primarily for the purpose of rewarding political friends (crony capitalism), which keeps that massive amount of money from flowing to American businesses and eventually to American workers.

• Language: English
• Publisher: Xlibris US
• Release date: Mar 16, 2017
• ISBN: 9781524591212

William N. Spencer

A life-long advocacy of youth ministry and teaching, with over forty years of work in the unionized labor sector, both public and private, has given me a strange perspective of the American workplace. After starting college at age 51, and ending with post-graduate degrees in both Management/Leadership and Human Resources Management, I have acquired the astuteness and discernment to put these shortcomings and faults into print.

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Copyright © 2017 by William N. Spencer.

Library of Congress Control Number:   2017903880

ISBN:      Hardcover      978-1-5245-9123-6

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TABLE OF CONTENTS

Acknowledgement

Why and What

Dedication

Dictionary Definitions

How and Why

From the Beginning

Facts are Facts

Starting With

Cause and Effect

Telling it like it is

Liberal Lies

ACKNOWLEDGEMENT

A FTER THE JANUARY 1, 2016 publication of my sixth book, I was at first hard pressed to find a particular topic of prodigious significance for America today; and lo and behold, the current Presidential Primary elections presented a plethora of pertinent fodder. Couple this with the overabundance of accusations, allegations, innuendos, and just plain flat out lies flying around like bats in the night, and of course, it make for endless possibilities of page after page of political and economic, and primarily Human Resources self-examination.

The stark and blatant juxtapositions between the Republican and Democrat stances pertaining to life in America, treatment of the American people, the corruption of the voting/election system, and the national criminal/justice system could not ever be publically presented more than they are today.

Make America Great Again; the Republican Party mantra, regardless of the candidate! Compare this to the two Democrat Party candidates on the ticket; Gimme, gimme, gimme, free anything and everything. Promise whatever it takes to buy the most votes. Never mind that in honest, truthful, factual, and actual reality, that nothing is free! Somebody, somehow, somewhere, must pay for everything. Compare the one hundred percent communism/socialism espoused by ‘Crazy Bernie’ Sanders, in relation to the half-way communist/socialist views of Hillary Clinton—the difference being the extra hundreds of millions (billions) of dollars which Bill and Hillary will undoubtedly mis-appropriate for themselves; just as they did in Arkansas, and in Bill’s two terms as America’s president.

And what do these platforms, programs, and policies really show about the thinking, or nonexistence of thinking, about life in America today? If nothing else, the absolute lack of economic/financial education; along with a zero percent teaching of the precepts found in the American Constitution in all of America’s public education systems—at all levels.

I am honored and proud to do my small part to correct this educational need!

WHY AND WHAT

E CONOMICS IS A study conception that can convey assistance, aid, and comfort to almost everyone, by providing answers to many relevant and pertinent financial questions. Economics can actually be explained in a few different ways: it is the study of lack and scarcity, the study of how we use our resources—for good or bad—how and why we pay to borrow money, and why we get individual policy-making. Economics also encompasses themes such as finance and banking, wealth, recessions and depressions—which leads to the pre-eminent mis-conception that the ‘stock market’ and ‘big-money’ institutions are not for the ‘little guy’. In actual factuality, economics is a much immense and extensive field of study that helps us to interpret past historical trends, understand what is happening today, and make predictions towards preparing for the future; whether we have millions or just hundreds, we all need and should want to ‘protect’ whatever we do have.

Bernhard and Leblang (2006) provide vision and awareness to this concept: "Financial markets, where economic actors trade financial assets such as bonds, stocks, currency, and real estate, are indispensable to a well-functioning economy. These markets allow economic actors—individuals, firms, and/or governments—access to pools of capital by matching borrowers and lenders. Borrowers forgo future consumption for present consumption by borrowing today and repaying tomorrow, with interest. Lenders give up immediate consumption in the hopes that future consumption will be enhanced by making a profit on their investment.

In these markets, assets are bought and sold at different prices. Two factors condition the price behavior of these assets. First, the price is a function of the demand for and supply of capital. When little demand for (or large supply of) an asset exists, the price will be low. Strong demand and limited supply, on the other hand, results in higher prices.

Prices also reflect the risk associated with holding an asset. The pay-off from owning an asset often occurs in the future. Consequently, the expected return may not be realized. Risk is a relative, rather than absolute, concept: we can only compare the risk of two assets at a single point in time. Typically, investors require compensation for holding a risky asset. For instance, a stock of a start-up company may pay a slightly higher rate of return than a blue-chip stock, because the risk of the company going bankrupt is higher."

The study of ‘economics’ in one primitive form or another has been around since the beginning of man on this earth. Trading three piles of berries for one mastodon leg was the forerunner of economic comparable worth. And we are still debating the equivalent value of everything we buy and sell. A small allusion to this very fact is presented by Diana Wood (2002): "Economics at its most basic was, and is, concerned with material matters. Economic thought is concerned with all aspects of material resources and goods and with the underlying ideas that regulate their acquisition, consumption, supply, and distribution. In the course of these processes, economic relationships are formed, and these are regulated by the society in which they occur, and reflect its morality. Scholastic thinkers considered the society in which they lived to be the Roman Catholic Church. The morality which governed economic, and indeed, all relations are therefore the morality of the Church, in theory a universal Christian society.

There was once a hungry ass (Borodin’s) who was standing between two stacks of hay. Each heap was equal in every respect. Because the ass could not decide between the two, he starved to death. This famous story exemplifies the seriousness and the difficulty of making many modern-day moral decisions—there really is no only black or only white answer for many issues—but it can also serve as a useful introduction to ancient medieval economic thought.

The medieval world was not one of econometrics and global markets, but one of ‘theological economy’. Economics as a discrete discipline did not exist, so that, strictly speaking, ‘Medieval Economic Thought’ is a misnomer. All thought, whether political, philosophical, legal, scientific, or economic would have been regarded as an aspect of theology. This means that much economic thought has to be harvested from theological works, written by scholastics, many of whom were mendicant friars. Not surprisingly, medieval economic ideas are heavily imbued with questions of ethics and morality, with the motives rather than the mechanics of economic life. It was not until the early Renaissance period that people started to reflect on specifically economic topics."

Ebenstein and Fogelman (1985) add a few more poignant interpretations of this subject: "The Greeks fought the Persians 2,500 years ago not primarily to protect Athenian investments and trade interests in Asia Minor, but because they knew that a Persian victory would undoubtedly have entailed serious economic and financial losses for Greeks, the main effect would have been the destruction of the Greek way of life—with its devotion to the search for truth and its appreciation of human values.

To take more recent illustrations, the core of the conflict in the two world wars was not the protection of British investments in Africa or of American loans to Britain and France, but rather the more fundamental issue of whether totalitarian militarism was to rule the world. Again, there is no doubt that a German victory in either war would have entailed profound economic losses for the vanquished, but the economic effects would have been relatively minor compared with the effects of forced reversion to a way of life based on the denial of the Western liberal traditions."

Just a few hundred years ago, the world was not ‘one small interconnected global family’ as it is today, even neighboring countries such as France and Germany, or France and England had very little unification of trade, commerce, or interaction at official political levels. A great example, when one Italian explorer landed his ship on an island in the Caribbean Ocean, he mistakenly thought that they were on the continent of India, their original destination, hence the name of ‘Indians’ mistakenly being applied to aboriginal Americans.

Eric Helleiner (2003) further informs: "Monetary systems around the world before the nineteenth century thus were characterized by the lack of stable connection between the value of low-denomination money and that of high-denomination money. With a fluctuating or unclear exchange rate between these two types of money, a tiered monetary order was created rather than a coherent territorial one. Indeed, a number of monetary historians have highlighted how this tiered monetary order corresponded with the different spheres of economic life that the poor and the rich primarily inhabited in the preindustrial era. In the European context, different classes used different types of money. The low-denomination money such as copper coin was the ‘currency of the masses’ that served popular needs in localized economic contexts, while higher-denomination gold and silver coins were used primarily by the wealthy and served the needs of large enterprises and long-distance trade.

Domestic monetary systems differed from the territorial model before the nineteenth century in a third way: even the officially sanctioned domestically issued money of each country was not standardized. In regions of the world where state authority was very weak, the distinctions between official and unofficial forms of money was hard to draw.

In other regions where states took a larger role in declaring what money was officially sanctioned, official domestically issued money was rarely homogenous. To begin with, domestically issued silver or gold coins in circulation were rarely of uniform quality. It was not uncommon for the value of the same official coins to vary considerably region to region, or even from town to town."

This naturally leads us into a discussion regarding the value of ‘money’ itself, money being ‘capital’—half of the equation of economic life. Whether said money is backed up with an equivalent value of gold, silver, or other precious commodity, or supported by nothing more than the full faith and confidence of some near-worthless, semi-criminal entity or organization such as the United States Government, it is still, in essence, only worth the paper it’s printed on. Kalyan Sanyal (2007) explains: "Clearly, capital is self-subsistent only when it possesses the conditions of creation of new values without exchange, i.e. for expanded production of capital, there is no need to engage in exchange with a non-capitalist outside. The implicit assumption is that when capital’s economic conditions of existence are created and can be reproduced, the political and ideological conditions of existence are automatically ensured. But once we take into account the wasteland and its inhabitants as an outside of capital, the latter ceases to be self-subsistent even though it is capable of creating and reproducing its economic conditions of existence on its own. For its political and ideological conditions of existence, capital is not self-constituting and to secure the legitimation of its existence, it has to address the outside in politico-ideological terms. In other words, capitals political and ideological conditions of existence require that the dispossessed producers inhabiting the outside be reunited with means of labor so that they can subsist by engaging in economic activities outside the domain of capital.

The particular aspect of merchant capital in a pre-capitalist society is its relationship with the sphere of production. On one hand, merchant capital is indifferent to which particular mode exists in the sphere of production, but on the other, it has a strong incentive to undermine the pre-capitalist modes and reorganize them along a capitalist line. Confined to the sphere of circulation, merchant capital in such societies has no control over the labor process and the organization of production. The class that is dominant in the sphere of production controls the labor process, extracts and appropriates the surplus labor from direct producers and brings it to the sphere of circulation. The merchants are thus dependent upon this class for their own existence. What is important for the merchant is not the mode of production that prevails, but the fact that the produced goods take the form of a commodity, and are exchanged for money."

Therefore, just as these concepts of protecting and defending ‘an established way of life’ for a nation or an individual country are deemed vital and essential, the exact same theories of proper defense and self-utilization apply towards the continued existence of any corporation or business. Allen Sykes (2000) further explains: "The efficient use of resources is a main pillar of capitalism. One of the most important ways to achieve such efficiency is to change the ownership of assets when a new owner is willing to pay more for them than the existing owners. In the case of corporate assets, i.e. companies, this takes the form of either an agreed merger, an agreed takeover (often called a merger in the interest of the morale of the acquired company’s management and staff), or a hostile takeover. Fund managers are usually keen to accept most takeover offers—the resultant investment premiums enhance their performance rankings, at least in the short term.

The takeover and merger process is a necessary concomitant of efficient market capitalism. It is, however, seen to be riddled with conflicts of interest for managements, investment institutions, and corporate advisors. While often beneficial and necessary, there are too many poorly thought out and badly executed deals, many of which owe more to current fads and fashions for more and bigger deals than to business realities. Over half destroy shareholder value. Mergers, and more particularly takeovers, are one of the few means of holding underperforming management accountable, but they are nevertheless a costly, disruptive, and long-delayed means of attempting beneficial changes. The remedy for all these weaknesses and inadequacies is effective and disinterested corporate governance."

Understanding the complexities of economies and economics is an essential study for all people involved with all government entities at all levels—that is, the proper study of meaningful and realistic fiscal and financial programs, platforms, and policies—if any politically-minded person desires to do the right things for the right reasons; and not the application of crack-pot, touchy-feely, politically correct, emotional schemes and dreams; which does nothing more than act as an opaque smoke screen allowing thousands of democrat bureaucrats—both elected and or appointed—to make themselves rich.

Hubbard and Kane (2013) shine the light of truth on this matter: "Empires and nations often lose their balance without understanding the tectonic economic forces in motion. On the other hand, rulers are often unable to adapt even when they understand those forces, an eerie and fascinating parallel to the Great Powers in our time. Imperial Spanish rulers went bankrupt again and again, even as shiploads of New World silver flooded Spain. They remained oblivious to the productivity revolution that empowered their rivals. Great Britain panicked in 1900, as European rivals caught up to its industrial might. Partially in denial of relative decline, Great Britain could not imagine expanding the level of potential engagement with its subject territories beyond free trade.

Indeed, if America’s global economic power ends, it will almost surely be due to a loss of fiscal balance that forces it down the well-worn path of history’s Great Powers. The cracks we hear—a minor credit warning from Moody’s or acrimonious political fights over the debt ceiling—confirm that the only existential threat facing America is from America itself.

America today faces a financial imbalance, threatening its world leadership as an economy and a power. The threat comes not from foreign enemies, but from a break down in long-term fiscal discipline."

Just in the past few years, my personal income—pensions and Social Security—has increased at most, five percent, while in the past seven to eight years, the American dollar has been devalued by well over fifty percent, perhaps as some of my colleague’s profess, a one hundred percent devaluation—being worth only half of what it was worth eight years ago. And that, my friends, is the gist of this particular academic missive, in one small little nut-shell. In truth and fact, your great and mighty United States government—through its inept and mis-managed fiscal policy—has stolen half of every dollar that you or I had, or what we have been saving in the bank or in the stock market.

If nothing else, this one point alone should wake up millions of mis-educated/uneducated American citizens. But alas, it won’t in any way; they are all content to remain fat, dumb, and ‘happy’ while listening to all of the ‘fake news’ from ABC, CBS, CNN, NBC, or the worst of all, MSNBC.

The study of economics ranges from the very big to the very small. On the ‘individual-person’ level, is microeconomics; the purview of individual paychecks, mortgages, car loans, and even the children’s’ allowances.

The study of corporations, governments, banking, and all business is called macroeconomics. This encompasses the study of America’s two conflicting economic policies. The first, keeping corporations in America, keeping them viable and profitable, and therefore, keeping the majority of American citizens employed, self-supporting, and paying more taxes into the federal treasury. Or the second, that of our esteemed Liberal Democrats, of how to keep a greater majority of American citizens unemployed, in poverty, not working or paying taxes, and therefore eternally grateful to the Democrat Party for their meager and minimal subsistence.

This mention of politics intermingling with economic systems—money providers, lenders, and or banks—is an ever changing point of contention, depending upon which political party is supporting which economic issue at which particular time, and for the benefit of which particular group of people.

Colonna and Hagermann (1994) reveal a few basic economic facts of life: "In an economy operating according to a generalized process of market exchange, prices are the fundamental parameters of economic activity. The calculation of profit and loss, whether individual or corporate, is the stimulus to consumption and production. Understanding how prices are determined, and what their role might be in all aspects of economic behavior, is therefore the key to understanding how the economy works. A satisfactory explanation of any economic phenomenon, whether, for example, the demand for individual commodities, the overall level of employment, or the rate of technological change, must include an examination of the role of prices—even if only to demonstrate the prices have no role.

Competition creates an environment in which ‘price’ is, at once, an empirical fact and an analytical category. An empirical fact because competition defines the common economic characteristics of objects (commodities) and an analytic category because competition validates the idea of the natural or normal price as a ‘center of gravitation’ and hence the legitimate object for the study of the general characteristics and role of prices in a market economy. It is the persistent assertion of competitive forces which allows economics to move from description to analysis, by creating the general category: price.

The exact definition of competition is therefore