Mud in the Sun

We fail because we lie

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“All evil begins with a lie. The biggest evil comes from the biggest lies, and the biggest lies are the ones we tell ourselves. And we lie to ourselves because we’re afraid to take ourselves on.” — Brother John

 

Many of us like to spread the belief that our destiny is in the hands of “The Economy”, blissfully forgetting that we create and control said Economy.

The silly political rambling about our national debt and the raising of our debt ceiling compounds the realization that our government leaders lack the innate entrepreneurial skills needed to get the most powerful nation in the world out of its slump. None of them have written a viable script of our much-needed economic innovation, a singular economic compass to which all our economic, financial and political systems should abide. We need to treat our country more like a company and to make reference to my entrepreneurial background; our country lacks a viable business plan.

I call it silly, not because our national debt shouldn’t be taken seriously but because the childish partisan bickering proves that neither political side has its eye on the economic ball.

The real issue we face is not whether we should raise the debt ceiling to pay the bills we incurred as a result of the “spaghetti governance” spanning many presidencies, but why the governmental process is unable to create and maintain sustainable high performance economic systems that leverages our renowned innovative capacity so that income far outweighs expense.

Clearly the rest of world that is prepared to loan us the money, has a more well versed belief in our capacity to improve income than our own elected officials. And so do I.

Our House of Cards

We have recently seen our economic and financial systems collapse, and now it dragged along with it a political system that let those systems grow out of control in the first place. All of our systems have failed, and therefore our implementation of capitalism has failed.

Capitalism hasn’t failed, mind you, just our implementation of it:

Failure of our economic system
Our economic freedom is a lie. An economic system that supports a financial system eleven times the size of production is the outcome of the deployment of a laissez-faire financial system in which gambling on production provides a better standard of living than actually producing something. We failed to implement the proper free-market principles to ensure financial markets themselves are truly free-markets (and therefore flat), and as such group think, selling to each other and self-preservation grew the financial sector to an excessive size. We should not be surprise that gambling is not a sustainable economic strategy.

Failure of our financial system
Our financial freedom is a lie. By economic principle, financial systems that are not free-market systems turn inevitably subprime. Therefor not only the sheer size of our financial system becomes a burden but the massive deployment of uniform risk deflates the value of its underlying asset. Thus the quality of the investable attribute diminishes over time to a point where the financial systems are unable to detect anything outside its uniform focal point. And thus by our own design financial systems are regressive to the underlying assets, and hurt rather than extrapolate its exposure and success.

Failure of our government system
Our government representation as the cumulative opinion of our people is a lie. Less than 30% of the U.S. population votes. That means our complicated political system, comprised of various local and state governments, The House, The Senate and The Presidency have not turned on or disenfranchised more than 70% of us. So how can a political system that is unable to garner the interest from the majority of people in the U.S. appoint an entrepreneurial outlier as President who has the guts to attack the fundamental flaws of our economic and financial systems that same political system helped produce, with the same people responsible for its current makeup. Could it be that the majority of our population in absentia has “voted” for that kind of President already?

The Upside

We the people – and no one else – are responsible for the systems (political, economic, financial or otherwise) we build to enhance our lives and create new opportunities for those who strive.

“A free people [claim] their rights as derived from the laws of nature, and not as the gift of their chief magistrate.” — Thomas Jefferson

We ourselves dictate how much or how little power a President has today to affect real change to our ailing systems. And the ineffectiveness of those systems has become the ball-and-chain in our performance as a nation and our individual contribution to, and merit in it.

Yet despite all of our flawed systems, much of our innovation still reigns the world. And that is why the world is ready to loan us the money we may need to fund change. But our clock is ticking.

Many emerging economies have the opportunity to not incur a cost of change and do it right from the start. To ignite a new more entrepreneurial economic system in which a healthy balance between finance and production is maintained. Their challenge (and our advantage) will be that an innovative society (that warrants meaningful financing) is not built overnight, and some believe starting now will take 30 years to build.

Real Change

Applying new regulations to a lying system does nothing but cause a delay in the timing of that system’s complete demise, and thus reduces the years of advantage we still have over emerging nations. A President and government who promote those kinds of regulations are just kicking the lies (within the can) further down the road, for others to combat.

“We fight not to enslave, but to set a country free, and to make room upon the earth for honest men to live in.” — Thomas Paine

We need a real leader in this country, not one who meddles in the people’s business but one who ensures that whatever economic transactions take place adhere to strict free-market principles.

For not free-markets have failed, but our laissez-faire implementation of it. Proficient economic systems are just like traffic, in which you have the freedom to define your destiny as long as you behave in, and conform to, a matter that protects every other participant’s safety and freedom.

Real change will come from a leader who helps our country look in the mirror and understands the lies of freedom we live today. And when – and only when – we tackle those lies will the innovative capacity of our country be able to pay handsomely for the expenses we incur to continue breeding it.

I believe in a new United States of America, for:

“We have it in our power to begin the world over again”. — Thomas Paine

 

 

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About Georges van Hoegaerden

Georges is a serial entrepreneur, venture catalyst, 4x CEO, board director turned innovation economist (by fate). His ideas have raised $14M in venture capital and produced over $100M in returns. More.

  • @AngelVentures

    Bravo!

  • Carl May

    Georges,

    Although my take on the weirdness of the times is not as sophisticated in the economic arena as yours, I come down similarly on a couple of points: (1) It is truly silly (and puerile), and (2) we voters must assume a big portion of responsibility for the increasingly frequent crises. Following is an e-mail exchange I had earlier today–a lot like many lately.

    Carl May

    Date:
    Wednesday, August 3, 2011, 1:36 PM
    Hi Carl, Don’t like this Debt “Deal” at all! Take a look at this article – it describes what the “Super-Committee” is supposed to do by Thanksgiving & if they don’t come up with a plan there will be automatic cuts on everything – this is stupid, stupid, stupid & shame on them for “GOING ALONG WITH” the Repug Bullies http://www.nytimes.com/2011/08/03/opinion/hiding-behind-the-budget-act.html?ref=opinion Did you hear Obama in his announcment about this Debt “Deal” say that it was a Manufactured Crisis?!? Well, if he realized that, as well he should from reflecting on Bush’s Manufactured Crisis where Senators & Congress voted to support his Blowing Up innocent men, women & children for NOTHING then, WHY did he “Go Along With” THIS Manufactured Crisis??? Who the heck is going to trust their “Super-Committee”??? This is totally ridiculous. What are your thoughts about all of this? /Barb 

    Barb,

    I keep up with current happenings superficially; but because it is all such
    ridiculous political game-playing, I try to avoid becoming disturbed by any of
    it. Because huge underlying factors such as the need to overcome growth
    addiction, overpopulation, and resources are not even in the discussion, there
    can be no “solutions.” Until Americans kick their current two-party stranglehold
    on government, we’ll have posturing, unqualified politicians elected for their
    stances on trivial wedge issues and incapable of doing anything but reel
    haphazardly from one momentary crisis to the next in their quest to serve monied
    interests. It’s great for those owning and exploiting government, but hard on
    people who depend on government for life support.

    A lot of this is on the voters who let themselves be manipulated by the
    corporate media, who don’t much care who is nominated for political office, who
    don’t look at qualifications for office as long as candidates say a few
    pandering things about gays or abortion or patriotism, who don’t object to big
    money controlling campaigns, and who won’t vote for fresh alternative candidates
    on the rare occasions they do make it onto the ballot. San Mateo County is
    exemplary of the larger mess: bureaucrats (running county departments) will
    always seek to feather their own beds, so we won’t get better county government
    until we elect better supervisors.

    If you find yourself going nuts over the impossibility of it all, there is
    some refuge to be found in seeking out groups, authors, alternative media, etc.,
    that lean the way you do. And though I don’t see eye-to-eye with him on some
    major issues, I like to check in on people like U.S. Senator Bernie Sanders of
    Vermont occasionally just to reassure myself not all politicians are sold
    out.
    Carl

    • http://venturecompany.com/ Georges van Hoegaerden

      Hi Carl,

      I think politicians have a hard time dealing with these subjects because they lack the innovative mind / or are to close to the burning fire to come up with a systemic economic fix. 

      All of us can debate with some kind of intelligence the granular legislation that is responsible for our (messy) government system. But to deploy an economic master plan, a business plan – if you will – so all systems work in cadence requires a different kind of thinker. That fix requires an entrepreneurial mind, not often found in those who chose politics as a profession. One that takes a fresh look from above. 

      I do have a fix to the problems I describe in this article, an overarching economic framework under which these system are supposed to operate. I just need to get it to the appropriate decision makers. My upcoming book will be step 1.

      If any of you have inroads that I don’t, I would welcome an intro.

      Best,

      Georges

  • Carl Wimmer

    George

    You have the blindness of all honest men.

    You feel that the current dangers arise from a failure of the system, political or otherwise.

    But such systems are merely symptoms of the men who wished to design them.

    Are the current systems irrational , illogical and do they doom the country to an eventual economic collapse? Of course.

    Then why do these systems prevail or even exist. Don’t people understand how illogical and phony they all are?

    Of course, they do. No one is fooled or mistaken about the nature of a system where 51% of the population gets a cheque from the other 49%.

    No one believes in the irrational. BUT … and this is where your blindness comes in … they DO believe in the unjust.

    They don’t care about the cost to you, they just want what they see as theirs.

    A financial system with a central bank is a system designed to steal, every day, steal from the productive and give to the un productive.

    A democracy without absolute respect for private property always degenerates to a kleptocracy where the mob takes for itself things it does not produce.

    The real question for honest, productive people is not how the system can be fixed but whether the system can be fixed.

    And if the conclusion is that it cannot be fixed, the Fight is over. Only considerations of Flight remain.

    Fight or Flight.

    Ya pays yur money and Ya takes yur chances.

    • http://venturecompany.com/ Georges van Hoegaerden

      Carl, 

      The systems fail because it is easier to proliferate systems that are not free (in economic principle), than to create economic systems that are (yet not a free-for-all). It is easier to listen to the merit of a few, and extrapolate to all concerned than to listen to all and apply a system that encompasses all.

      The system can be fixed (the subject of my upcoming book) and I will take a pragmatic approach as to how. But we will have to make some tough decisions. Such is the burden of (economic) innovation, it requires change – real change.

      Best,

      Georges

  • Gary Honig

    Georges,

    Wonderful insights except for one glaring omission, we don’t need better economic strategies – there are plenty of fine qualified individuals who know how to get the country out of this mess. We don’t need better leadership – because in order to lead you have to have good followers.

    Everything that is wrong with this country has at its root – lack of comprehensive campaign finance reform. So what we have is decision making by the highest bidder. Can you imagine running anything if each time you had to decide something you held an auction and the highest bidder decided which way to go?

    • http://venturecompany.com/ Georges van Hoegaerden

      Gary,

      The root cause is the lies we live, and clearly many benefit personally from those lies so much so that they have not implemented that change. But if you hear of the wisdom of change that can fix this, send it my way. So I can challenge it with mine.

      Best,

      Georges

  • Tliu

    I thought Obama’s speech after the debt ceiling decision spoke of common sense. It was very refreshing to hear from our President that flaws of our system. The world needs great leaders, but not leaders who took the select few of us to mountains of wealth but better well being of the mass population. So far, most leaders are without vision, sadly.

    • http://venturecompany.com/ Georges van Hoegaerden

      Yes, but we cannot fix our economy by modulation of the bottom of the economic food chain. We’ve done that for years and it is not working. The fundamentals of our economic principles are broken, and so far no President in recent history has paid any attention to that level of change. 

      Downstream innovation of our economic system will simply not get us out of this mess. So, I will describe an alternative in my book.

      Best,

      Georges

  • http://www.plusaf.com/woodshop/woodshop.htm plusafdotcom

    Georges, i think your analysis is spot on, but i’ve grown very pessimistic in my old age [i'll be 66 later this year...]… i don’t believe that the leader or leaders you described exist and i don’t think that the majority of voters are capable of reasoning at the level of “yes, we’re in this problem because of the things that we’ve demanded of our government that they’ve been stupid enough to deliver to us!”

    a friend of mine dropped out of a Stanford U grad course after the instructor told the class that “the way to get ahead in Silicon Valley is to step on and climb over as many people as necessary in order to reach your goals.” 

    too many people view capitalism and the free market as a zero-sum game because they’ve been taught that by economic morons and/or unthinking, unbending minds.

    if you can point out any possible such “leaders” in the US, i’d love to vote for them, but i’ll need help… i’ve been searching for ‘em for the past few decades, unsuccessfully.

    more of MY opinions at plusaf dot com…

    thanks for your post.  Excellent!

    • http://venturecompany.com/ Georges van Hoegaerden

      Alan,

      Thanks for your kind words.

      The gating problem we have is that we have never deployed free-market principles, because free-markets are an economic principle, not a free-for-all.

      On your skepticism perhaps Churchill said it best: The U.S. always gets it right in the end after it has exhausted all options to do the opposite.

      I think we need to endure a certain amount of “pain” until we come to our senses. And people like me are raising the awareness and bringing solutions to what the right thing to do is. I think it is a lot more obvious now that change needs to happen across our systems (that I’ve been writing about for more than 5 years), yet many are trying to optimize our systems downstream rather than upstream (because that is easier). But I think we have exhausted downstream change.

      The winds of change are in our advantage. Traditional economists have proven to add zero value to this process, they got us here. I think it is time for more pragmatic change. And I hope to add my contribution to that change with my book and a bunch of other activities I will be deploying. In the meantime, please spread my word, because I could use every bit of wind in my sail to propose the change I am about to introduce.

      Best,

      Georges

  • http://www.plusaf.com/woodshop/woodshop.htm plusafdotcom

    I’m reading Freakonomics… about 1/3 through it so far… they write some VERY interesting analyses and insignts into “lying.”   i recommend the book.

    • http://venturecompany.com/ Georges van Hoegaerden

      I believe you, however lying is not the only reason why we fail economically. And solving the issue of lying will not lead us to a better economy. Salt is an ingredient of many a good dish, yet not all dishes that contain salt are good dishes. If you catch my drift.

      Best,

      Georges

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