Busted Part Two

Starting a business is a radical act, to go against all that is taught and encouraged, all cautions and advisements, and still go on your own. You not only challenge the general view that one should strive for a good job with a good company, but that you intend to offer what is right now not available. You starting a business may necessarily mean someone doing less well must do better, or worse. You intend on shaking things up.

Certainly you are shaking things up for yourself as well. Earlier I condemned the welfare state, and you may agree. You may be a refugee from the welfare state, which is not a bad analogy. If you propose to be self-employed, like a immigrant, you have come to a new land, where everything is different. The language, culture, religion are all different. As different as say a fundamental difference in Christianity and Islam, that is orthodoxy versus orthopraxy.

Indeed, I speak with many Americans who live primarily in the welfare state-sponsored business and industry, or government, all successful people, who see the gathering storm, and ask me to which country should they flee. I answer, “Try USA.“ With the right attitude, the USA is a perfectly good country.

But you will discover a new country, a rather alien country if you pursue self-employment in USA. As self-employed you’ll feel at first a stranger in a strange land. You will be one with the immigrant, feel what your ancestors felt. And build this country the way your ancestors did.

Of course, even with our wildest success we will be insignificant to the world as we are at the small business level. But collectively, if enough people start businesses, the status quo is under constant tension. In aggregate, small business can, and does, transform the world. For those in the commanding heights, who are being challenged from below, this is unacceptable.

You are too insignificant for anyone to set out to destroy you, and there are too many examples of dragon-slayers, the small businesses that destroy large businesses, to believe there is any personal concerted effort to harm a small business.

There is of course the stated United States government policy of “get big or get out,” that is business must get big in cooperation with the government, or the business should fold.

The political/economic philosophy of a unified business/government has a strong pedigree, going back to the first emergence of ‘states” (as opposed to nations). As a technical matter it is called fascism, from “fasces” the roman symbol of a bundle of sticks surrounding an axe. As our country experiences the results of foolish policies, the calls for closer cooperation between business and government get ever more insistent.
When those in the commanding heights abrogate their responsibility, things get worse all over. People are forced to make changes. Unhappily, those changes usually mean a demand for more control on the part of those who caused the problems to begin with. We see this today with the calls for more controls over the economy by the Federal Reserve Bank.

Indeed, the Federal Reserve Bank and its system, less than 100 years old, failed miserably when first instituted, causing the great depression and the boom that preceded it. It is behind the present economic distress.

A recent quote from Chairman of the Fed Bernanke captures the wrong thinking: “...An excessive preference for liquid assets reduces society’s ability to fund longer-term investments that carry a high return but cannot be liquidated quickly.” The problem here, of course, is how would he know? How would he know if there is “excessive preference for liquid assets?” Or if that it “reduces society’s ability to fund longer-term investments?” And he is talking of political spending, not free market. And in any event, how can he see that any given investment would “carry a high return?” By definition, any investment that carries a high return has a high risk of failure, he can replace his view for the markets? Further, “but cannot be liquidated quickly.” High return and cannot be liquidated? Then the return needs to be higher, not a taxpayer bailout needs to be higher.

The heart of the Federal Reserve System is an artery that carries un-oxygenated income from the productive sector of society to the government and the vein that carries oxygenated income from the productive sector of society to the banks.

That UN-oxygenated income is the targeted inflation rate set by the Fed. Inflation is theft of savings, a tax no one really notices. The government monetises the inflation by printing currency that is traded for Treasury bills (bonds). Now this newly printed money hits the streets, benefitting the first to receive it, the banks, and through the magic of compounded interest, destroys savings and paychecks of the last in line.(Especially hard hit are the foreign workers who supply goods and services exported to USA).

This system allows the government to fund its earmarks to our detriment, with bad ideas crowding out the market preferences. You may look around and say, “This is the best system mankind has ever produced. Look at the advances in medicine, telecommunications, defense, access to information, free movement, the cornucopia ini every store, the wonderful housing, options in energy, clothing so specialized, insurance, astonishing leisure time. It is so wonderful people are breaking laws and risking their lives to get here. All true. When experts say the dollar has lost 95% of its value since 1913 (the year the Fed was instituted), who cares? We have so much more than our ancestors had in 1913, obviously our dollar buys more, because we have more.

But the love of money is the root of all evil, and what is missed is the evil of omission.

Inflation causes market distortions. As government picks and chooses winners and losers, in the measure the government is wrong we have malinvestment. One form of malinvestment is over investment. such as the San Jose, California airport, which was expanded to handle the traffic generated by during the dotcom boom, and is now overbuilt for the local economy (aside from a lovely airport becoming a mess).

That is the problem that is seen. The problem that is unseen is, with governments inflating away savings, and taxing away profits to build airports, the money to build cheap, efficient, clean magnetic levitation systems of transport, such as are operating in China and coming to Las Vegas/ Los Angeles, are crowded out and in this case, delayed by about 75 years.

There is no field that has not seen disastrous omissions in development. Think of the areas where crisis exist, and you’ll see the highest government intervention. Banking. Education. Medicine. Transportation. Housing. All fields are impacted, all fields would experience more better cheaper faster if left to the free market, or if even deregulated lightly, in that measure there would bering more better cheaper faster.

(I had developed that phrase while studying Austrian/free market economics. I was astonished to learn it was also Chairman Mao’s goal for China, with the expectation communism would deliver it. hence Mao’s various campaigns to achieve his goal. Under Deng Xiaoping leadership, the Chinese Communist Party has in fact delivered the greatest economic growth in the history of mankind, largely by adopting de facto free market economics. Go figure.)

Between government interference and the yield from empire, it is impossible to calculate the damage done to what we have, and what we do not have. if we refused to accept the governments programmed looting of our savings, would we have instead directed our savings into investments that may have funded a cure for cancer? Would we have transportation that was clean, efficient and comfortable? Would charities be properly funded? Would education put even the meanest intellect in touch with the good the true and the beautiful? Would our religions attend to higher things, instead of promoting blasphemous traps?

War, befouled environment, Jim Crow laws, brutal medicine and risible education are all pursuant to government interference. Without it, would all that we have be better, plus would we have more, at a lower price, and faster?

The answer of course is yes, but there is no knowing in advance what life would look like in a free market. No one envisioned the internet when litely deregulating telecommunications was permitted. No one anticipated the astonishing variety of beer, with its undeniable concomitant health benefits, that we now see due to the lite deregulation of that beverage. When I was a child eyeglasses were a major expense, and many people were unable to read for want of glasses; now you can serve yourself at any grocery store and pick up a pair for five bucks.
Of course, the eyeglass industry fought the change, demonizing the free marketers. And so it goes: you may find pollution abhorrent, and may have a workable free market solution, but if it is not the government approved solution, you will be painted as anti-environmental.

Education is a mess in USA, except in continuing education, which is a free market category. I meet serious scholars who bemoan the fact their chances of tenure are nil, for whatever reason, and thus they cannot earn a living by teaching. I share I earn a minimum of $100 an hour teaching where I want, when I want, have standing offers to teach at countless colleges, and I have a textbook that is required reading in over 25 schools in USA and Canada, and it has 29 out of 30 five star ratings on Amazon. Teachers would kill for that accomplishment, but they would not teach in continuing education. It has no tenure.

Cosmetic surgery is largely unregulated, since it is largely elective. Nonethless, there is more better cheaper faster in this one segment of medicine. When it comes to payment, cosmetic surgeons will dicker. At the same time, many of them spend vacations visiting countries where government intervention hampers freedom, to correct the cleft palates of unfortunate children, free of charge.

And I’ve met countless authors who await a publisher to accept their book. I am neither a scholar nor a author. I am merely a merchant, and probably third rate at that. I teach what others taught me, I wrote it down too. But I worked outside the system they find prohibitive.

Of course, as Commodore Hopper, the highest ranking woman in the US Navy once advised, “It is easier to apologize than get permission.” We are free, for the time being, to maker things better. Once we step out of the status quo, and enter the new land of free markets, the possibilities re endless, the opportunities abound, more so where the interventions have caused the worst distortions,

Indeed, this land is not really new. It is in the DNA of all Americans, in particular those recent immigrants who perceived it from afar and came home to USA. The Jeffersonian ethic is what makes America wonderful, but a counterrevolution by the Hamiltonians, with their centerpiece, the federal reserve bank, currently causes the problems we face.

You can challenge all of that and do good while doing well. Where?

Most people make the error of thinking as they did in the “old country” that hamiltonian wasteland from which they escaped. They consider what they know, that is what they learned in their “school to work” government program. “Well, I am an engineer, so I’ll...” The world has lost countless outstanding interior decorators because of this thinking. “My family has a garment factory, so I’ll sell clothes.” There goes a cure for cancer! We must forget who we know and what we have as we approach what we ought to do.

The question should be: “Where are you gifted? A problem with this question is people begin by thinking, “What have others said? “ I ask, How would they know?”

The question is addressed to you: “Where are YOU gifted?” Your gifts are normally closely allied with your passions... where are you passionate? Passion comes from the Greek “to suffer.” Compassion, is to suffer with. It is related to love in this sense, love for others. You are passionate about what you love. Where do you see things other do not?

When Sylvester Stewart, an Oakland radio DJ played music that pained him for its lack, he started his own band called Sly and the Family Stone. Pop music improved that summer.

At any given time, and any given place, given the status quo, there are problems we each encounter. There are fields we do not care about, we leave the problem to others. But there are problems in fields we love, and we can apply what we were given to the problem to arrive at a solution. Drucker says “products (and services, of course) are solutions to problems.”

And further, “There is no solution that cannot be improved upon.”

In self-employment, we fix a problem here and now, and the process is called “business.” We get there by trial and error, the customer being the most important part, but getting the product or service right being the hardest part. Love of the product, passion, is what drives us to thrive in the business. The very work is our lifestyle, making “money and acquisitions” less important than the means by which we ever improve our offering. Those means become our infrastructure, and how all of that looks, what it consists of, is up to us. Walk through any small business, visit the owner at home, what you see is an array that reflects the owner. It is all lifestyle, it is all the work.

If our offering becomes ever more popular, the paradox is competitors come in and offer alternatives, and then we begin to see our margins slip. We find we are no longer enjoying the profits which support our work and lifestyle. Happily, at the same time, our customers are feeding us new design ideas, which, once introduced, restore our necessary profits.

At the same time, years into this process, the conservator companies see our innovative item, vastly improved over many iterations, and study it for eligibility as a commodity item, to be offered at a low price through mass production and distribution. if it makes the grade, at no cost to you, the conservators lower the cost and widen the access to your innovative item, offering a version of your item to customers you could never have served, making the world an ever better place. The free market is a wonderful system. it is all so Zen: by eliminating controls, we gain far better results than any controls might offer.

Yes, but, where to start? A better place to start is, with passion.. pain... “I get ill with anxiety when i see the NGO’s taking the lead in genocide when they pass out USA foodstuffs after a disaster.” It can be anything.

So what is the solution? All those businesses you see thriving at the small business level solve a problem not otherwise addressed. But this I cover in depth in my book and classes. Let’s move ahead to the point of this article. What to do if we are busted?

So what if you try, and you fail?

The fact that you are busted is rather proof you are naive or inexperienced. Sorting it out is the corrective you need before you move onward and upward. So the rent is due, your kids need dental work, and your garage is full of junk no one will buy. You are busted. What to do? You are busted either because you are underperforming in your business, or you are a refugee from the welfare state? Well, take it from an expert, This is what you do.

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