The Rabid Independent, Nonpartisan solutions, independent policy ideas

The Prisoners Dilemma explains the probabilities behind decisions we make when we must choose whether to compete or collude. The math is simple and the model tells us that under certain conditions you are always better off if you betray your friend or competitor.

A multinational corporation has a choice when it comes to paying its employees – it can go for profits now by paying them 3rd world wages or it can do the Henry Ford thing and pay them according to their productivity so as to make them wealthy enough to buy the goods they make. If they choose the latter then the risk is that the workers use the money to buy stuff made by other companies. Profits will be lower and irate shareholders will hold executives accountable at the next shareholders meeting. The price of their products will also be slightly higher (so as to pay these higher wages) so they could lose market share.  Local Apple employees may buy Samsung phones. So all multinationals do the logical thing – they betray the US worker. The model tells them they have no choice.

If we look at it as a whole however we get a different picture. Every American will be paid less and less and profits (and debt) will grow more and more until eventually the great American (consumer) dies a horrible economic death. When that happens all companies will see their profits crash. In the long run everyone is worse off. If you study game theory you’ll see that is frequently the case.

But so far everything is working out beautifully and the stacks of cash just grow to the sky. This is how it looks to the average CEO:

Yes consumer spending is at an all time high as a share of GDP while labor income hits new lows. In the midst of this Obama wants to add on another secret trade agreement with Asia (TPP). I understand why multinationals and Asian countries want in on our crazy consumers. They never stop buying foreign goods no matter how broke they are.

Does Obama still think that a multinational company has the same interests as America? Does he think that a Peruvian will buy more American goods after he signs this  deal? There must be a payoff for him that I can’t see and game theory doesn’t help me with that.

 

Students have taken over the Parliament of Taiwan for 15 days- completely shutting it down. 100,000 of them marched through the streets of Taipei. The rebellion is called the Sunflower Student Movement. What’s made them so angry?: a new service sector “free trade” deal with China. Yes they actually seem to understand that such a [...]

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After the referendum in Crimea we are hearing the same rhetoric from every American politician: “The results of the vote are falsified and illegal.” They should be ignored and the very fact that the referendum took place is an affront to the west. How dare they solicit the opinion of the local population? Such nerve!

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Western Impotence

On March 3, 2014 By

As President Putin exercises his troops in the Crimea we bluster and shake our fists. Since The Ukraine has no military it’s up to the west to save and protect them. How did that work out for Poland (and Czechoslovakia) in WW2? Our European allies have no armies and would never attack a primary energy [...]

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Common Sense Jingoism

On February 17, 2014 By

I have often declared (to be provocative) that I will only go on vacation to a first world destination. The point is that a vacation is not the right time to have to worry about whether I can drink the water. I don’t want to be concerned about whether my hotel or a restaurant I choose [...]

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The global stock markets have had a tough start this year due to flight from emerging economic stock markets and currencies. All the political dialogue in the US seems to be about income/wealth mal-distribution and how to fix it (or whether it matters). Both issues are derived from the same source – China

China Explains [...]

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Policy Distractions

On January 24, 2014 By

In 20004 George Bush’s campaign manager, Karl Rove, decided on an approach to win the swing state of Ohio: He aggressively floated the idea that George would push for a constitutional amendment banning gay marriage. This was merely an extension of the Republican hate radio strategy of winning over mainly old white men by marketing [...]

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Military Divergence

On January 17, 2014 By

Former Secretary of Defense Robert Gates is getting a lot of press since he just released a new tell-all book that criticizes Obama and VP Biden. The media is feasting on his negative remarks and treating him like a god. This is consistent with their reverence for the military in general where they laud their efforts to [...]

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Turn off the engines.

On January 3, 2014 By

Skill testing question: Name one accomplishment of Hillary Clinton during her tenure as Secretary of State.

What have you got – anything? Does the disaster at Benghazi count? – probably not.

John Kerry is furiously flying around the world hoping to achieve something – anything. He may be able to say he stopped the Syrian [...]

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Poll Justice

On December 19, 2013 By

President Obama’s poll rating hit a new low this week so he’s now in Richard Nixon territory – he’s even below George Bush Jr.! I’m sure his race and the health care web site fiasco (and the NSA spying) haven’t helped but in the end, political popularity is really about economic prosperity. As Bill Clinton [...]

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Irritations

Here’s my list of things that bug me. Some are big and some are petty. Feel free to offer new additions.

Irritations

Mottos, Creeds, Rules

As we search for legitimate solutions to America’s problems everyone must obey these rules or we’ll never get anything done.

Mottos, Creeds and Rules

Reading List