Wealth and freedom

They say you gotta have money to make money, but the next best thing to money is credit, borrowing someone else's money, paying a little interest until your investment can earn it back to pay off the debt.

I read somewhere that ARM mortgages started as options for wealthy and self-employed home buyers who wanted more flexibility for payment options. The lower rate at the start of the loan more than compensated for higher rates later since the property was either expected to be paid off early or sold sooner than later. But then the lower starter rate of ARMs became a selling point for lower income borrowers looking to have lower payments for a while, without careful regards of the later risk of higher repayments.

I think as well of examples, like "Free trade", of third world workers with manual labor trying to compete not only against mechanized farming, but subsidized farming as well. One of the arguments in support of keeping our subsidies is we have to protect OUR farmers from low prices, and third world farmers ought to mechanized as well if they want to compete.

On other case, I heard the failures of NAFTA to help Mexico stem from an unfortunate world market where cheaper exports from China can underprice the production from Mexico, again probably partly because of subsidies, and partly through better capitalization, automating what can be done best by machine, and cheap labor for the rest.

I think also of the flow of illegal labor from Mexico to perform cheap labor in the U.S. Obviously it would be better for more good jobs to exist in Mexico, but apparently there's not the capital investment available for development that can compete well in the global market.

It seems to me there's a HUGE waste to purely competitive systems. An investor might borrow millions of dollars to set up an enterprise in Mexico, and when it comes to final price, it finds itself undersold by comparable products from China or where ever, and no market to buy the products.

I certainly can understand why there ought to be some protection for local production, subsidies for local consumption, to protect investments and security. On the other side, subsidies for exports seems crazy, worthy of a call of "dumping", selling products below cost to undersell and drive competitors out of business. This is a tricky issue, can even be done accidentally by large producers. I mean if you expand production by a factor of 10, there's fixed costs to expand production, and those costs must be amoritized over some period to define profitability. A hopeful producer might claim they're not selling for a loss merely for selling just above production costs ignoring repaying start up costs (and interest). Larger businesses can afford to cover costs over a longer period of time and can outcompete in the short run.

Dumping is still a problem when there's a surplus. If the demand is less than supply prices will fall. Inventory has a cost to hold, so in the short run selling under production costs (and taking the loss) may be the best option.

If the U.S. consumer purchases hit a fall because of fears or whatever, and demand decreases the immediate response is surplus and cheaper prices. It's a hard place for producers to properly predict demand (and competition) to make a profit.

It is scary to think the U.S. consumption (and debt) is being fueled by foreign investment into our debt. If China stops investing in U.S. debt, our economy falls, and their exports fall. It's a strange relationship.

I sort of think of Robinson Crusoe, his servant "Friday", and his payments to Friday from a fixed set of coins, and eventually after enough years, his ever saving servant holds all the coins. I don't remember what happened, except things turned around, master and servant by the change of wealth.

I worry the U.S. is like Crusoe, and our day of reckoning must come if we keep spending what we haven't earned. Overall I still imagine China is in a weaker position, dependent upon our senseless consumption.

Internationalists want free trade in everything, empowering their wealth to flow freely where ever it can earn the greatest return. They imagine this freedom benefits all because the more resoures that can be extracted from the earth, the most there is for people to have, cheaper prices, more jobs, more everything. PLUS it sets their power ABOVE that of any government. Then governments themselves must compete for capitalists attention, and money will flow where there's the lowest taxes and most freedom (along with some security of stability).

Capitalists admit the concentration of wealth means the concentration of power and influence. They can offset any possible guilt at their wealth by philantropy, for at least a fraction of their wealth. Thus freed, their benevolent power helps us all.

As you will guess I don't easily support this concentration of power, even if I have no ultimate solution to it. Perhaps if we lived in a transparent age, where the origins and history of our things could be told and compared, but without knowledge it risks being a race to the bottom, moving capital to where ever the lowest costs can be found, lowering standards for workers and the environment.

Again capitalists will say third world workers are HAPPY to get more income in sweatshops and such, than there old human-scaled activities that supported their local economy. And I'm not saying they're competely wrong. It's good to give people choices, and higher income CAN help them get ahead, move to greater prosperity and freedom. Still I think the game is cooked against them - the more you earn, the more your tastes go up. First you make the capitalists rich by your cheap labor. Then you make them rich by buying the products marked up. The game can only be won if people are wise enough to save for real prosperity over just short term trinkets and babbles. Like "Friday", you gotta save, and those who don't will be WORSE off when the factory closes down, moved somewhere else where labor is again cheaper.

It is hard for me to reject capitalism, but hard for me to accept it blindly. It is NOT for the weak-willed, those easily lured by instant gratification, especially when debt is offered. There's too damn much exploitation, perhaps much of it voluntary - I mean there's freedom, but short sightedness, and a failure to measure costs and benefits in the long term.

Perhaps we are just animals afterall, and those who can't rise above the lure of the cheese in the mousetrap, will get caught by their own greed. Very hard to escape personal responsibility, but I do have pity, and I can't even feel superior, just fortunate to have a fair doorway into a job where I can earn more than I need.

There's surely lots of heroics on the bottom, people working together as families, traveling to opportunity, sending money home to support family.

As always, I believe wealth is about having more income than you need, and I'm glad I learned there's more power to influence "need" (above a level of sustenance) than influence income. I mean "moving up" exists, especially when you start on the bottom, but whatever level you're at, there's always room to question where the best gains are - to get by spending less, or fighting to earn more.

I'm sure I'd be a bad leader, having sympathy, but fully unsure what policies give more than they take. ESPECIALLY given an unknown future where collective wealth may fall, and we'll all have to readjust our expections and hopes for the future.