Monthly Archives: July 2017

Culture

Culture Change

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Culture is a composite of a society’s accepted way of doing things; the way they dress, how they treat each other, how they make decisions, what they value and what they dismiss.  All of these kinds of things combined are what defines a culture.  Cultures generally evolve over the course of hundreds of years.  As a result, changing a culture is incredibly difficult.

In our latest wars in the Middle East, our objective was to change a couple of societies (Iraq and Afghanistan) into functioning democracies.  Iraq, which had something of a functioning middle class, was supposed to become a “Beacon of Hope” to the region.  They were supposed to embrace democracy just like Germany and Japan embraced it after the end of World War Two.

The problem for us was that Iraqis didn’t embrace democracy.  Their culture didn’t change the way the Germans and the Japanese did.  Instead, once we had quickly conquered the county, Iraq devolved into anarchy and a long term insurrection.  In Iraq, culture is based on clan/tribe loyalty.  Eventually we figured out enough about how to leverage their tribal culture to reduce the insurgency.  We paid the tribal leaders to employ their young men in the “Sons of Iraq” program.  This stabilized the situation enough that we could get out while claiming success.  But the country never embraced true democracy.  Iraq’s culture didn’t change.

The situation in Afghanistan is similar.  But we haven’t been able to tamp down the insurgency by bribing the tribal leaders, as most of the problem is coming from tribes and Madrassas (religious schools) in Pakistan.  Afghan society isn’t embracing democracy, nor are the areas of Pakistan bordering it.  The ancient tribal structure isn’t changing.  And they certainly aren’t viewing outsiders and non-muslims as people there to help them.

So why did Germany and Japan change while Iraq and Afghanistan haven’t?  We need to understand why the Germans and Japanese cultures changed after World War Two in order to understand why it is so difficult to change other cultures.  This is crucial because culture change in the Middle East must happen before we can end the current problem of radical Islamic terrorism that plagues us.

Germany and Japan both had militaristic cultures with fanatical devotion to their supreme and dictatorial leaders.  Both of these cultures evolved over a significant period of time in response to their country’s particular situation.  Both societies were very willing to expend every ounce of their national will and strength to maintain their cultures.  But by the end of World War Two it was readily apparent to every single citizen of Germany and Japan that their enemies were ready, willing, and able to kill every single last one of them, if that is what it was going to take to make them surrender.  Every city in both countries was bombed to oblivion.  Both suffered millions of casualties, both military AND civilian, and their entire populations were economically ruined and starving.

This is what it takes for a culture to be open to short term radical change.  The society has to recognize that its culture has brought upon itself death, destruction and ruin.  Even then, it might still take a generation or two.  Germany, after all, had to go through not one, but TWO world wars for it to finally abandon its militaristic culture.  The American South’s culture of racial supremacy didn’t totally disappear after the American Civil War, even though that war brought their society to almost the same point as the Germans and Japanese in WW2.  But this is what it takes for rapid culture change to happen.  And it has not yet happened to radical Islam.

What to Do

Terrorism is going to be with us for quite a while.  We do not yet view Radical Islam as the same threat to us as we did Nazi (or Kaiser) Germany or the Empire of Japan.  But their objectives are really the same.  They want to enslave the rest of the world because they view themselves as racially and religiously superior to the rest of us.

Unfortunately, we have to deal with them the same way.  How would we treat areas under Nazi control?  How would we view people espousing Nazi doctrine during wartime?  How would we handle them?  Until we do the same thing with radical Islam, terrorism is going to remain with us.

Economics

Lack of Interest

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One of the major reasons our economy is so messed up is lack of interest.  Not lack of individual interest.  Near zero of interest rates at banks.

The reason banks now offer almost nothing in terms of interest is that the rates are not set by market conditions.  Instead, interest rates are set by the Federal Open Market Committee (FOMC) which is part of the Federal Reserve Bank.

In a free market, banks, investment houses, and others would compete to have you deposit your savings with them.  The more demand for deposits, the higher the interest rates.  On the other side of the coin, demand for loans would also either increase or decrease interest rates.  This way, interest rates were regulated by the supply and demand of the entire economy.

Interest rates in this country have not been determined this way in a VERY long time.  Really not since before World War One and the creation of the Federal Reserve Bank in the United States.  Since that time, the Government, not the free market, have determined interest rates.  Decisions about where to set the interest rate are one of the main ways the Government attempts to manipulate the economy.

The FOMC uses interest rates mainly to either battle inflation or try to increase economic activity.  In the early 1980’s, when inflation was viewed as “out of control”, they raised interest rates to previously unheard of levels, well over 10% per year.  Since about 2006 they have put interest rates at or near Zero in attempts to increase economic activity.

With interest rates set at almost nothing, there is little to no incentive to save money.  People are generally risk averse.  You save money not just because you want it to be there in the future, but you also want that money to work for you by gaining interest.  If there is no way to make a gain safely, people start to look for riskier and riskier investments.  Today almost all of this money has been put into the Stock Market, as people think it is the only way nowadays to make their savings grow.

Low interest rates mean that money is moved from Investment to Speculation.  This is the root cause of almost every single financial crisis in history.

Low interest rates also mean that people and institutions borrow more and more money.  They view the cost of borrowed money as almost nothing.  Trouble is that most of them borrow the money on variable interest rates, meaning that the cost of the loan is not “locked in”.  So as interest rates go up, they find themselves owing a LOT more money than they ever planned to pay back.  And this is how people and even Governments find themselves bankrupt when interest rates rise.

Today the FOMC knows that it has painted itself into a corner.  So much money is owed by both the Government and individuals that it can’t raise interest rates without risking severe bankruptcies.  So it can’t raise interest rates to reduce speculation and move people back into investments.

So increasing speculation will eventually end the way that it almost always does, with a financial crisis, one that the FOMC will not be able to do anything about.

What to Do

Government control of interest rates did not start recently.  It’s been in place for more than a hundred years.  Drastic change from the current situation is warranted, but it has to be done carefully and slowly.  We should return to predominantly free market conditions, but we should try to do so in an orderly fashion.

Unfortunately, I have absolutely no faith that this is going to happen.  Almost everyone, individuals as well as Government, wants interest rates to stay low.  So they will remain low until there is a crash.

Again, recognize that the world is currently engaging in a speculative mania of epic proportions.  It involves Government, banks, corporations and individuals.  The best way to protect yourself is to stay out of it.

Politics

Party Failure

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Every year things seem to get worse and worse on the political stage.  The last US Presidential election saw two incredibly flawed candidates put forward by each of the two major political parties.  Congress is no better.  Neither side seems to be helping the country.  The point is that both parties have failed in a way that affects all of us.

The Democrats have failed in their attempts to save the poor.  The war on poverty was started in the early 1960’s.  Since then it has cost the country over $20 Trillion.  There is just a high a percentage of poor as when it started.  Along the way, this well intentioned idea destroyed the family structure of the people it intended to help.

The Republicans failed to keep the nation’s finances under control.  A hundred years ago they actually ran on the principle of “sound money”, which meant they were opposed to inflation.  Nixon made the decision to formally declare that our currency is backed by nothing but good faith.  He also put wage and price controls in place that put inflation at the time on steroids.  But Reagan’s embrace of deficit budgets put us on a road to previously unimaginable government spending.  The deficit in Reagan’s time was about $800 Billion, now we are nearing $20 Trillion.

The Democrats are failing in their attempts to provide medical care to all.  Medicare and Medicaid were initially pretty small programs.  They now dwarf the rest of the government’s budget and will only continue to mushroom.  The “Affordable Care Act”, also known as “Obamacare” has caused medical and insurance costs to continue to skyrocket, while destroying previously existing systems.  Current funding levels are so unsustainable, on the steep end of a parabolic curve, that a train wreck in our medical care system is imminent.

Republicans have their own share of blame in the medical arena.  Bush Jr. paid for the votes of the elderly by dramatically expanding Medicare through the recent prescription drug benefit.  Needless to say this dramatically increased Medicare spending.  Nowadays, Republicans are failing to come up with viable alternatives to “Obamacare” as they squabble amongst themselves.

The Republicans failed to keep us out of foreign wars.  Once upon a time, that was their specialty.  Recently, they led the charge in the debacles of Iraq and Afghanistan.  After years of struggle costing trillions of dollars and the LIVES of tens of thousands of our brave Servicemen and Servicewomen, we have basically handed Iraq over to Iran’s control, while Afghanistan is an unending mess.

Neither party is actually doing anything to deal with the two looming disasters facing us.  We are facing a financial mess that will make the Great Depression look like the good old days.  We are facing so many problems due to failures in Foreign Policy war is almost inevitable, and when it comes, it will make World War Two look like a picnic by comparison.

What to Do

At this point, I have no illusions that either party can fix itself.  People within both have tried to take the power away from the entrenched power brokers, and both have failed.  The “Tea Party” did little to change the Republicans, and those backing Bernie Sanders found that they were unable to move the Democrats away from Hillary Clinton.

This doesn’t mean we should “throw in the towel”.  What it means is that, more than ever, we need to educate ourselves about the issues and what the potential solutions are.  We need to learn about the pro’s and con’s of each of those potential solutions.  We need to look for people who will actually move into the political arena as a “public service” and sacrifice, NOT those who are looking just to serve and promote themselves.

And though it hasn’t worked well in the recent past, we have to look at creating new parties.  Parties that will deal with the actual problems.  The Republicans started as a new party in 1854.  Within six years they had Lincoln as a leader and got him into the White House.  He saved the country.  And since something like this has happened before, it can certainly happen again.

War

Losing the Air War

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F-35

In the late 1950’s, the US Air Force (and Naval Aviation) and the companies designing their planes decided that the new technology coming out at the time was the solution for the future.  The designed a common plane that was to be a platform for firing long range radar guided missiles that would destroy enemy aircraft well before coming into visual range.  This was the F-4 Phantom program.

Then it actually had to fight enemy aircraft over Vietnam.  The radar guided missiles didn’t work out the way they were supposed to.  Less than 10% of kills were with them.  Luckily the Air Force and Navy also had a short range infrared guided missile (that cost a fraction of the radar guided ones) that did most of the work.  Our pilots were also disadvantaged by the bulkiness of the F-4, which could not turn with enemy planes (a basic need in dogfighting).  This was exacerbated by the reduction in dogfight training, and by the fact that the F-4 was built without a gun, so it couldn’t shoot at the enemy at close range.

After the experiences of Vietnam, the Air Force demanded that its newly developed planes could dogfight.  The result was the excellent F-16, developed in the late 1970’s, which has been the backbone of the Air Force since the 1980s.  This plane has served long and well, but is now outclassed by newer Russian aircraft like the Su-27 and Mig-29 (and now the improved Su-35 and Mig-35).

Unfortunately, the Air Force (along with Naval and Marine Aviation) has reverted to the pre-Vietnam thinking.  The F-16 (and Naval F-18) replacement is the F-35.  It is very high tech.  It is supposed to shoot down enemy planes with its two missiles, while being next to invisible on radar.  The big problem is that it can’t dogfight at all, plus the pilot can’t see to the rear.  This will be deadly, to our own pilots, when they actually have to fight enemy aircraft, something the US hasn’t really had to do since Vietnam.

There are a host of other issues.  Enemy aircraft carry 8 missiles, not just two like the F-35.  The F-35 has a very short range, and therefore is incredibly dependent on air-air refueling.  It is a maintenance nightmare and can only fly once every couple of days, unlike F-16s that can fly a couple of combat missions each day.

The value of stealth technology is questionable, and that is the F-35s main feature.  Today, turning on a radar system is like turning on a flashlight in a dark arena.  You can see a few feet ahead of you with the flashlight, but EVERYONE can see you (and shoot at you).  Anti-radar missiles lock onto radar emissions, so turning on radar is VERY dangerous.  So you leave them off when facing competent foes.  So paying a fortune for stealth capability is rather pointless.

This “fortune” is the main point.  The F-35 program has cost more than a Trillion dollars.  To develop a plane that is worse than what it is supposed to replace.  And each F-35 will cost $90 Million.  The F-35 is so bad, that when we fight competent foes with it, our military will lose Air Superiority.  This means losing the war in the Air, and that will be an unmitigated DISASTER.  The last time we were in that situation was in the Pacific in early World War Two when the Japanese Zero ruled the skies.

What to Do

The money spent developing the F-35 is lost.  We can’t get it back.  But we need to NOT throw good money after bad.  Cancel the program.  Stop building these flying gold-plated turkeys.  Keep the F-16s flying until we have a viable replacement (something like the Swedish JAS-39; they cost about $30 Million apiece).  We need to start the development of something that can actually dogfight NOW.

If we want to help our military, we need to stop wasting money on failures like the F-35.  We need to develop weapons that will actually work on the battlefield or in the skies above it.  The defense industry is no help here.  They want to develop costly “state of the art technology” that won’t work in real combat conditions.  This is because they want us to pay them the most they can get out of us.  And this is why President Eisenhower railed against them (the military-industrial complex) in his final speech.

Culture

Family Change – Part 1

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I did some research years ago on the Social Security program.  It’s the largest government expense, at about a Trillion dollars a year.  As our general population ages (people living longer and having less kids), this program will only continue to increase in size and scale.

I figured that since the program is so large, there must have been some kind of debate about setting it up in the first place.  I dug around and found that the entire debate in congress is actually posted on Social Security’s own website.  It is pages and pages from the Congressional Record of 1935.  This is pretty dry, but I actually took the time to download it and read most of it.  It was extremely illuminating.

I remember that one of the main overall objections was that it would “end the family as we know it”.  I thought that was a pretty extreme and outlandish claim.  Families certainly continue to exist, and I didn’t think at the time that Social Security had much of an impact on families over the years since it was set up.  But then I read the argument again.  The key phrase is “as we know it”.  What he was talking about was the family as it was known in 1935.  For most, this was the extended family.  This was not just the mom and dad with their kids.  Back then the family also included the grandparents, and it was the working adults who took care of those too old to work anymore.

Social Security did end the family “as we know it” from 1935.  This is because, as Rep. O’Connor (D-NY) put it, “we would have the spectacle of sons and daughters giving up supporting their parents and wanting the Federal Government to support them” [Congressional Record – House, 1935, p5461].  This was pooh- poohed by others in the debate who assured everyone that wouldn’t happen.  Well, it did.  The extended family is a thing of the past.  And few of us today are in any way prepared for taking on this responsibility, as it HAS been handed over to the Federal Government.

The basic problem with Social Security is that it is not a savings or an insurance program.  The money that you or your parents put into the program is used to pay off other people.  Like any Ponzi scheme, the first people to get money from Social Security really made out well.  Literally the first person to receive a check was Ida May Fuller.  She had contributed a total of $24.75 into the program.  By the time she died, she had received a total of $22,889.  It wasn’t because she was a rock-star at investing and turned every dollar into a thousand.  She got this much because she was getting the money put into the program by other people.

We now regularly assume that the government will take care of our parents and will take care of us.  It is both scary and astonishing to read how few elderly have any retirement savings, and how many are still paying mortgages while attempting to live solely off of Social Security.  What do you think will happen when this program no longer provides enough to buy food, let alone anything else?

What to Do

The rational thing would be to change the Social Security program into an actual investment or annuity type program.  I am not talking about putting it into the stock market, but into things like treasury bonds.  But the main point of the changed program would be that you only got out YOUR OWN MONEY plus interest.  This would require a significant upfront cost of paying off the people whose money has already been given to others.  But it is the only conceivable way of saving this program.  As Rep Monaghan of MT put it in 1935, “There will be a day of reckoning for those suggesting the delusional plan suggested”.

By destroying the extended family, none of us are prepared to go back to it.  Children are unprepared to take in their parents and care for them.  On the other side, seniors are unwilling to give up independence and give a lot of household decision making responsibility to their children.  Both sides need to discuss what would happen, and the ground rules for such arrangements.  Because it is not a matter of if, it is a matter of when we have to go back to extended families, or most seniors will literally starve to death.