by Gary North: Ron
Paul: The Greatest Master of Political Rhetoric Since Reagan
It has happened
before. I did not plan on it happening again.
January 4, the server system that hosts my website, http://GaryNorth.com,
I did not
get fired by my paying subscribers. I got fired by digits that failed.
I was re-hired on Friday. The site came back online.
This is the
sort of risk that most people avoid most of the time. Because of
the free market economy, there is an extensive division of labor.
We have fallback positions. Usually these work, but not always.
This is a fact of life. Nothing stays the same. We like to think
things will get better when they change. Usually, they do. But things
tend not to get better in a straight line.
I like the
words of songwriter and guitarist Gamble Rogers, which were later
made famous by John Lennon: "Life is what happens to you when you're
busy making other plans."
There is a
phrase in software circles that salesmen love to use: "seamless
transition." Never believe it.
We like to
think that changes in our lives will be seamless. They usually are.
Then one fine day, one of them isn't.
we know will not be seamless. Getting married isn't. Deaths in a
family aren't. Getting fired isn't. But we also know that marriages
bring increased productivity to match increased risk. The family
is a great form of insurance the greatest in most cases.
The same is true of a job. The checks come every month. Work imposes
a routine. A person knows what to expect the next day. This is a
But then comes
a crisis. Maybe your business fails. People employed by Kodak seem
to be facing this. Here was a company that was on top in 1994, the
year that it spun off Eastman Chemical. Eastman Chemical continues
to prosper. Kodak faces bankruptcy.
a major firm for over a century. It supplied an important product.
The company kept improving its product line. It looked invulnerable.
In film, it was.
photography arrived. Guess who invented it? A Kodak employee. That
was in 1975. You
can see the original camera here. The top executives thought
there was no future to it. They did nothing with this technology.
The technology has now done something with Kodak: bankrupted it.
if you want a great pocket camcorder that has an external microphone
jack, you had better buy a Kodak PlayTouch soon. The external microphone
jack is its unique selling proposition. No other Flip-type camcorder
has it. So did Kodak's Zi8. When Kodak took it off the market a
year ago, you could buy one for $90. Today, it will cost you over
$300 on Amazon. Typical of Kodak is this: the Kodak page promoting
the PlayTouch does not mention the external mic jack. There are
good reasons why the company is close to bankruptcy.]
Xerox had no use
for the graphic user interface (GUI) and mouse system that its Palo
Alto Research Center developed. Steve Jobs did. We read on Wikipedia:
"The first successful commercial GUI product was the Apple Macintosh,
which was heavily inspired by PARC's work; Xerox was allowed to buy
pre-IPO stock from Apple, in exchange for engineer visits and an understanding
that Apple would create a GUI product." I hope the company bought
a lot of Apple stock . . . and did not sell it.
Xerox were busy making other plans.
REVISION AND LIBERTY
of the power of the free market is that it encourages producers
and consumers to revise their plans. Producers think they know what
customers want to buy, but customers can and do change their plans.
think they know what they want to buy. Then they see a new, improved
model sold by someone else. They change their plans.
is going on 24x7, all over the world. Tastes change. Expectations
change. Opportunities change. We revise our plans accordingly.
The free market
economist F. A. Hayek described the free market as a process of
discovery. He emphasized plan revision. Austrian
School economists Israel Kirzner and Roger Garrison focus on this
aspect of Hayek's work.
economies are better coordinated than can be accounted for by references
to deliberate planning, they are always less than fully coordinated,
hence the coordination problem. In one important sense, coordination
failures are an integral part of an ongoing market process that
iterates towards a greater degree of coordination. An oversupply
or undersupply of some particular good, for instance, is evidence
that the plans of producers and consumers of that good are not well
coordinated one with the other. But the discoordination itself provides
both an indication of the inconsistency in plans and the incentive
for producers and consumers to make the appropriate adjustments.
asks the seller, "What have you done for me lately?" He also asks:
"What's your best price?" These days, he need not ask. He searches
Google. This is changing marketing. Price competition was always
a major benefit of the free market. With search costs falling, price
competition is a way of life. Sellers that cannot respond to the
new conditions close their doors.
This is all
for the good of customers. It is not good for millions of sellers.
They must adjust their plans.
I have been
fired twice in my life. I have quit three times. In each case, my
life improved because my productivity improved. But my life did
not improve immediately. The transitions were not all seamless.
136 voters in Ron Paul's district voted for Bob Gammage instead
of Paul in November 1976, I lost my job. I had been his economic
analyst and newsletter writer, beginning in June. If 136 voters
had voted the other way out of 180,000+ I would have
remained in Washington. I have written about that transition here:
of a Washington Reject."
hired me a month or two later. That let me continue learning how
to write direct-mail advertising copy for my newsletter, Remnant
Review, which I had launched in 1974, the same year that Ruff
launched The Ruff Times. Two years later, I wrote an ad that
pulled in about $500,000 in new subscriptions well over a
million dollars today. Maybe I would have written it if I had still
been in Washington, but I doubt it.
On the whole,
I have found
this chorus to be accurate:
one door closes, then one will open.
When something's wrong, something's bound to be right.
There is a new beginning, 'cause something's ending.
And the promise of a sunrise deep in the darkest night.
This is a
variation of what the apostle Paul wrote. "And we know that all
things work together for good to them that love God, to them who
are the called according to his purpose" (Romans 8:28).
should have voted for Ron Paul in 1976. They didn't. He went back
to Texas, delivered babies, recorded his weekly Code-A-Phone answering
machine broadcasts on Washington, and got elected in 1978. I wrote
my newsletters and ads for my newsletters. Things worked out.
is one of life's more unpleasant transitions. Quitting before you
get fired is less disrupting. Quitting when staying on will keep
you from making a mark is wise, but risky. You may not make that
mark. But if you don't quit, you may spend the rest of your life
looking over your shoulder and wondering if you made the wrong choice.
I don't recommend second-guessing yourself, but people do it. The
guy who owned 10% of Apple computers and who sold his shares back
to Jobs and Wozniak for $2,300 made a bad move. We have phrases
to deal with such decisions. "It's water under the bridge." "There's
no use crying over spilt milk." "Easy come, easy go." "It seemed
like a good idea at the time." "Life goes on."
AS A LIFEBOAT
why money exists is this: people do not know the future. They don't
know what they will want to buy or when, who will want to buy what
they are selling at that time, and what will happen in between.
So, they accumulate money. Money was defined best by Ludwig von
Mises: the most marketable commodity.
a broad market. It is liquid. You do not have to persuade anyone
to accept it. You don't have to offer a discount. You don't need
to spend money on advertising. The question, "Would anyone like
to sell me this?" is usually met with a positive reaction.
When you are
forced to make a transition that comes upon you unexpectedly, money
helps make the transition more orderly. Money makes transitions
is a familiar figure in literature. He is seen as emotionally disturbed.
A miser does not pile up money to buy other things. He sells things
to pile up money. A miser does not fear the future that much. At
some point, he has enough money to buy his way out of everything
that offers an escape in exchange for money. How many unpleasant
transitions is he expecting? The big one is coming. "How much did
he leave behind?" "All of it!"
There is a
rule of thumb for saving. Have six months' living expenses in a
bank. It's a good rule of thumb. It depends on your profession.
If you are highly specialized and well paid, you may need a year
in reserve. You may not be able to find a comparable job at comparable
pay. Highly specialized people face more volatility in the employment
market than unspecialized workers. "When you're hot, you're hot.
And when you're not, you're not." Someone who is well paid in a
specialized field would be wise to have a year's expenses in the
bank. He had better also have a blog site, a LinkedIn account, and
a network of people in his profession who respect his work.
Money is good
as you get older. Your recovery time is less. Your ability to adjust
is less. Your age group is out of favor with employers.
as a lifeboat in a sea of unpredictable storms. It is also great
for buying used items from hard-pressed sellers who have run out
of money. They want money. They must offer discounts in order to
buy money with their used goods. Craigslist is filled with these
I have money
in reserve. I plan to buy some houses to rent in the near future.
I will rent them to people who cannot secure credit to buy something
comparable. At my age, I will pay cash and live on the rent. If
I were 30, I would buy with a mortgage and build equity.
I think this
is a good time to buy distressed homes, meaning good homes sold
by distressed people. The idea here is to buy a less liquid item
from someone seeking money. He wants money now. You want money later.
Deals are possible.
If I can offer
cash without delay, and someone needs cash without delay, I can
get a steep discount on a house.
I received notification of a foreclosed home being sold by a local
bank. The bank is asking $139,000 for a 1,900 square foot home in
a decent neighborhood. The house needs $2,000 in repairs. This means
$5,000. But the listing reveals that the market price of that home
is $96,000 to $112,000. The bank will sit on that house at $139,000.
In a few weeks, I may make an offer.
Panic is never
a wise response. If you get fired, start searching. Put in 10 hours
a day, six days a week, looking for work. Lower your expectations.
Contact a lot of people you know in the field.
might even consider starting out in a field you rejected long ago.
If you have money and no debt, you may be able to make the transition.
If you can
sell face to face, you'll eat. If you can write an effective ad,
This is a
big economy. There are lots of employers looking for competent,
dedicated workers. Such workers are in short supply at the going
wage. Make an offer.
I know what
it is to be unemployed. It's miserable. But it's the cost of moving
out and moving up. Sometimes, we need motivation.
North [send him mail]
is the author of Mises
on Money. Visit http://www.garynorth.com.
He is also the author of a free 20-volume series, An
Economic Commentary on the Bible.
2012 Gary North
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