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Tuesday, August 23, 2011

The American Economy and Pyramid Schemes

Is the American Economy a pyramid scheme? The answer is, of course, "no". Nevertheless, there are some elements of a "pyramid" in it -- as in any economy -- and its viability depends on fighting them.

1). First of all there must be people interested in actually buying what Americans make. There are, of course -- but not enough, apparently, which is one of the reasons for the recession. The American economy cannot survive by everybody selling to everybody; something must be produced.

2). Second, one must not build one's "prosperity" on the sand of the "greater fool" theory, like the internet or housing bubble. Real estate prices, as well as internet companies' stock prices, were built on people buying something one knows is terribly overpriced with the expectation that someone else will buy from you.

3). One should, as far as possible, live within one's means (yeah, I know, I know -- none of us do, but you know what I mean...) Do not spend your money on shiny gadgets in order to impress people if it gets you into debt. It is hard enough to pay legitimate debt (like mortages or bills for food, medicine, education, etc.) without adding to it that extra payment for the hot car or big-screen TV you really want.

The list could be extended. But does this seem to have a familiar ring? Why, yes -- this is precisely the MLM business model. The weaknesses and problems of the American economy (or of any advanced economy): overspending, buying overpriced useless stuff so that others will buy it knowing it is overpriced useless stuff but hoping others will buy from them, a proportion of about 1:100 between the number of salesmen in the MLM in relation to the number of people who actually produce their product, etc., etc. -- is what MLMs are all about.

Even if there was no problem at all with MLMs legally or morally speaking, they would be economically worthless.



At February 8, 2012 at 1:43 PM , Blogger Bob Hurt said...

I have a hard time understanding why you would entertain the question of America as a big MLM.

We have a feeding ground for opportunists who prey on the stupid, of which America has from 80 million to 110 million people, depending on what you call stupid. I consider as stupid anyone without the cognitive ability to graduate from high school. They make stupid decisions, and America has around 80 to 85 million of them.

The finance industry advertises shiny gadgets to everyone. Both the stupid and the affluent buy them as showpieces. The stupid use credit they cannot repay, and when that fails them, they mug the affluent through welfare abuse or street crime to get the shiny gadgets anyway.

Does that sound like an MLM or a third world country?

In practical terms, I consider anyone with an IQ below 95 as undeserving of the right to vote. Without a decent education and the ability to discriminate between demagogues and honorable candidates, or to understand the issues, they will reliably vote stupidly. That and the suborning of the political process and courts that allows unqualified candidates to take office shows why America has a by and large corrupt array of governments and agencies.

Business love to market to the stupid because it's easy to hoodwink them. The Financial Crisis Inquiry Commission Report shows how governemnt and busines colluded in a scheme of predatory lending that collapsed home equity values to negative levels and caused massive job loss. The insistence of well meaning liberals on paying people a "living wage" made it impossible to hire them. Much of Black America now typically refuses to work in farms, yards, and other menial labor because they do better with welfare and street crime, so Mexicans take those jobs now.

Does that sound like an MLM?

The exorbitant wage demanded by liberal politicians and the stupid has driven labor-intensive jobs offshore.

Does that seem like an MLM?

No, it is a disastrous refusal of intelligent people to heed the law of the survival of the fittest, and to pass laws that tamper with it. All those laws that prevent capitalism from flexing its muscles and capitalists from growing indomitable, have frustrated capitalists who now have found new ways OUTSIDE the USA.

If you mess with a law of nature, you ought to find acceptable ways to retain that law's benefits. What benefits did the law of the survival of the fittest bring to civilization? it brought strong intellgent people to rule the stupid and less fit. What happens when you eliminate the system of labor by and protection of slaves, in other words slavery. You make the same physical slaves into economic slaves that require feeding, but you LOSE THE ABILITY TO MAKE THEM WORK, so you lose all value of productivity.

That is not MLM. That is abject insanity. So you cannot blame corporations for finding better ways to make money anyway. And that's what modern debt is all about.

At March 13, 2012 at 8:10 AM , Blogger Randy said...

This comment has been removed by the author.

At March 13, 2012 at 2:57 PM , Blogger Avital Pilpel said...

The problem with what you say is that while it would be nice if "stupid people" (however defined -- somehow it never includes oneself or anyone near and dear) wouldn't vote, to have a country where those who are "stupid" do not get to vote is simply having a dictatorship with another name, as nobody connected to the rulers is ever declared "stupid", only those who are not.

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