The Rush of Twitter-Down Economics

14085074766_76b914f306_o-copy-300x180 The Rush of Twitter-Down EconomicsIt is difficult to get a handle on what exactly is happening in our troubled economy. Everyone feels the malaise but few know how to explain it. Some say the economy is getting slightly better; others say it is getting much worse. There is debt, unemployment and stagnation which some say is caused by too much government and others say comes from too little. A constant stream of messages, statements and generalizations leave the normal reader struggling to keep up. In the rush, we are often reduced to basing opinions on what can be gleaned from Internet headlines.

RTO-mini2 The Rush of Twitter-Down EconomicsFree Book: Return to Order: From a Frenzied Economy to an Organic Christian Society—Where We’ve Been, How We Got Here, and Where We Need to Go

These are dangerous times because economy is ruled today much more by the way it is perceived by the general public rather than the actual facts. It is becoming increasingly difficult to disregard the distorting hype of the media. Indeed, what passes for economics these days is not trickle-down but twitter-down economics.

In the nano-second rush of twitter-down economics, everyone grabs the part of the message they like so that it might be instantly posted. No one has time for explanations beyond those which can be texted. So much of what people believe is based on sound bytes designed to cause momentary sensations and emotional impressions. Anything vague or ambiguous can be, and is, tweeted into streams of confusing 140-character messages that cloud minds. The economic message becomes what you want it to be or even nothing at all.

All this is the result of what I call the “frenetic intemperance” of our times. We live in days of moral unrestraint and instant gratification. Everyone must have everything now, instantly and without effort or reflection. This gives rise to a whirlwind of activity that has long been tearing our economy and society apart. It even erodes our Faith. At the same time, it is breaking down economic thought since so much is based upon the instant and ephemeral. There is the general questioning of all that is reasoned or structured.

With the ever more frantic pace of today’s world, our economy is now at risk. Instead of relevant and serious economic discussion, we are seeing a fragmented postmodern mix of ideas where everything is possible and nothing is certain.

There is actually little new in the economic debate. What is new is the chaotic mixture of old rich v. poor narratives, recycled Keynesian nonsense, and impossible entitlement demands. There are distortions of free market ideas (such as the so-called trickle-down economics). There are socialist diatribes and leftover scraps from the Occupy Wall Street propaganda of the one percent. This tired and confusing mixture permeates everything and conveys the message that “capitalism” (whatever that means) has failed and we need to look elsewhere for solutions.

What is particularly dangerous about twitter-down economy is that policy becomes based on impressions that remain in the general public consciousness in the midst of this chaos. Reality risks being disregarded or contradicted. Our guiding principles are jettisoned. We head toward the coming economic storm rudderless, unaware of the real dangers that lurk ahead.

There are those who claim that the debate be carried out in this manner since a postmodern world should be addressed in postmodern terms. Such a policy only multiplies the confusion. There is really one way to deal with these matters in the rush of twitter-down economics. It involves denouncing the whirlwind of frenetic intemperance that fuels the superficial and ambiguous debates that swirl about.

At the same time, it is not enough to counter with a twitter-down defense of the free market or modern financial systems. We must return to the foundations of sound economy. This calls for reconnecting with the moral considerations and restraints that need to guide our economic actions and keep them balanced.

In short, we need a change in the dialectic that governs the debates now raging in face of the present economic crisis. Far from the tyranny of the 140-character tweet, we need to give postmodern man that for which he yearns: a categorical message presented with extreme clarity, logic and precision. There must be a return to order.

This is what I have endeavored to do in the book, Return to Order. I have sought to clearly Subscription112 The Rush of Twitter-Down Economicsarticulate what constitutes sound economy and its necessary connection to moral law. It is a daring proposal since it is grounded on an understanding of reality long abandoned. Indeed, ever since economic thought broke free from its moorings in moral philosophy and ethics, there have been those who have sought to keep such considerations out of this debate. The time has come for such reflections to return.

They must return not out of convenience but rather of urgent necessity. We are entering dangerous waters. Without a framework of clear principles to serve as beacon, we risk becoming wrecked upon the rocky shoals.


  • amy

    Rocky shouls? Do you understand what this means at then end? RISK….? Of losing our souls?

  • Carlos Mesa

    So true the comments of this article from Mr. Horvat. The main problem that I see in the micro-economic level is that many folks are purchasing too many gadgets, vehicles and not too long ago homes that where clearly out of reach from their income levels. Hence the result was an alarming amount of foreclosures and repossessions that the banks had to assume. Yet this sort of practice continues today at a frenetic pace with banks issuing more lines of credit to consumers and the treacherous cycles continues.
    If there is no restraint or self-control the resulting factor will be a disastrous one which the author stresses.

    • DavidMacko

      A major part of the creation of the housing bubble was fedgov “encouragement” to banks to loan money to people who were unable to repay them. Also, as a general procedure, the government promotes lack of individual responsibility so that people who do not think for themselves are more easily controlled.

    • Wallace Klinck

      If they wish to live, people have no alternative but to produce increasingly in order to distribute incomes available not to purchase the end product of the current production and costing cycle (i.e., the goods upon which they are presently working) but to purchase goods created during a preceding production cycle.

      Under the existing financial system if we cut back on the rate of production these previous goods cannot be purchased, their costs cannot be liquidated and the producer cannot repay his bank loan or restore his capital and will be forced into bankruptcy. This will create mass unemployment and financial ruin for both workers and investors. Those who have been forced to finance their physical assets by loans requiring to be repaid from future earnings will be foreclosed upon by the lending agencies (i.e., banks) and lose the benefits of their past efforts.

      The core of the problem is the false claim of the banking system to ownership of the credit which they create to monetize the nation’s real wealth and their appropriation thereby of the community’s credit and communal capital. This is theft by counterfeiting, indeed by grand larceny, and the fact that it is “legitimized” by government issued Charters does not make it either morally right or technically sound. I have elaborated on this subject in my extended comments below.

  • mg

    perhaps we can get the corporate interests out of our government, like the turning over of ‘Citizens United’ would bring the economy and politics down to the individual level, where we are all equal and one vote means one, not one weighted by corporate donations.

    • DavidMacko

      Proposals to overturn Citizens United would partially repeal the First Amendment and thus restrict the American people, not the government. This is always bad.

  • jrj90620

    We need a limited govt,where short term greedy,long term ignorant voters,don’t have so much power to screw things up.That’s what we had,before govt grew so large.

  • Randal Agostini

    Economics has become enormously complicated, because of the multiple levels at which economies now operate. The control of an economy such as ours is now beyond the reach of government, for it neither knows all the economic forces in play at any one time, nor is it capable of responding in time when such forces are out of synch. Governments are far more likely to mess up an economy than assist it. Subsidiarity is a Catholic social doctrine and one that makes great sense in our time, or any time, because it never loses sight of social satisfaction. Our American society has engineered ourselves into believing a false scenario, we are forced to believe a narrative that is both false and counter productive. If we practiced Subsidiarity we would use our political, governmental and economic resources more effectively, responsibly and efficiently. More importantly people would feel that they are contributing to the common good, part of the grand scheme, helping one another, which leads to self satisfaction and points us in a direction towards Salvation.

  • jaScott

    I admire your writing, Mr. Horvat. Return to Order is an uplifting read. Are you familiar with Dr. Thomas Woods? I’ve read 3 of his books and wonder if you are in agreement at all. His libertarian leaning is troubling to me, for a Catholic, as a Catholic. But he makes a lot of sense too. Please continue!

  • Chris Lilly

    Hyper capitalism, commercialism and consumerism is not economically sound because it does not take into account actual market conditions. It leads to manic buying and selling that creates gross economic maladjustment and debt. A woman from the local Catholic Parrish told me that her son’s College tuition for one year is sixty thousand dollars. That is a combination of child abuse and peonage. The two houses in front of our family home have been unsold for years. The only occupants have been a long string of renters. The no growth economy has ended the American dream of home ownership. Hyper capitalism, commercialism and consumerism is not economically sustainable.

  • Wallace Klinck

    There appear to be some very serious misconceptions about the nature of our financial and economic system. From a metaphysical or philosophical aspect the problem arises from an erroneous assumption that salvation is to be found in work–an assumption diametrically opposed to the Christian Doctrine of Salvation through Grace, which is not earned but a Gift. Our financial and economic system is firmly based upon the false Doctrine of Salvation through Works. It is technically and mathematically defective and as has been said, even an army of angels could not administer it successfully. In order to achieve a balanced society it is necessary to have a balanced price-system.

    (1) The purpose of a rational economy is not to create work, i.e, “jobs”, but rather to produce goods and services for society as, when and where required with maximum efficiency and an absolute minimum of inconvenience for all concerned. Perverting the economy to create work, rather than eliminate it, is irrational, entrenches inefficiency and derives from the false and domineering philosophy known as “Puritanism”, i.e., the desire for power over individual human activity. At worst it is the basis of tyranny; at best it is pure superstition.

    (2) It is sometimes wrongly implied that profit is the source of our problems and that a form of profit-sharing from the proceeds of industrial sales under existing conventions of price-making will ensure that labour derives its “fair” recompense for effort expended on the manufacture of goods or provision of services. This a major and fatal error insofar as it is based upon the false assumption that the price-system is essentially balanced, i.e., that the act of production distributes in each costing cycle sufficient consumer income to liquidate the financial costs of that cycle. This is a scientific, technical or analytic error. The financial price-system is not only not self-liquidating but increasingly not so as the economy is made more efficient by means of labour-saving and eliminating technology and improved “tools” or real capital. The rate of flow of industrial costs and prices increasingly exceeds the rate of flow of consumer incomes which are required to liquidate the costs of production. Re-distribution of an increasing insufficiency cannot make a sufficiency.

    (3) Labour does not create all wealth and works with tools originating in past discovery and development to create both more consumer wealth and real capital or “tools”. Indeed, in the modern economy labour or human energy plays an increasingly diminishing role in production, per se. The notion that all wealth derives from labour is grossly in error and is Marxist in nature. The production of consumer and capital goods derives from the interplay of energy provided by nature, materials provided by nature, capital tools provided from past production and decreasingly from the current input of human energy. This productivity is enormously enhanced by knowledge and technique which has accumulated from the dawn of history and has become what we call the “cultural heritage”, which cannot be claimed by any individuals or classes and belongs to society as a whole. Labour from the past becomes crystallized capital which itself takes on over the passage of time a productive force of its own and becomes a much greater factor in production relative to human labour.

    (4) The assumed fact that “labour” is insufficiently rewarded is true only insofar as it is true also of all citizens which are entitled in aggregate to access the full flow of consumer goods as these emerge from the production line. Labour deserves it own remuneration but all citizens including labour are entitled to an inalienable and equal share or inheritance in the wealth that has been made possible by the “cultural heritage”. The existing financial methods of industrial costing and national accountancy have no mechanisms by which to deliver this inheritance or what we might call the “wages of the machine” to the community at large.

    (5) Currently, distribution is partially effected by means of earned incomes which are grossly and increasingly insufficient to purchase the product of industry in any given costing cycle. Costs and prices continue to spiral in excess of wages, salaries and dividends. We endeavour to overcome this difficulty by creating new purchasing-power in the form of bank loans extended to consumers, by increasingly irrelevant, wasteful and even destructive production such as war materials and excess real capital–and for promoting exports in excess of imports. While loans allow goods to be claimed, being a debt they do not finally liquidate the costs of production but merely transfer these as an increasing and inflationary mortgage on future production, which is no liquidation at all. The fundamental economic flaw is that the financial price-system is not self-liquidating and every genuine advance in efficiency which increases the capital component of cost and prices relative to labour costs make it evermore non-self-liquidating.

    (6) The primary cause of the economic problem is that the banking system claims ownership of the credits which they create to monetize the wealth of the nation, which wealth they do not create but will foreclose upon in the case of non-performance of a loan. The technical name for this is counterfeiting and governments legalize the process by issuing charters to the banks to create and issue the nation’s money in this manner as debt only.

    (7) Banks do what banks do. This results in accumulating private and public debts which increasingly burden society. What is required is that the Government must issue sufficient money without debt to bridge the widening chasm between consumer prices and incomes. The banks are doing this all the time, although in an irregular manner which causes cumulating debt and pendulum swings in the economy wherein they make large foreclosures when they contract credit and bankrupt both producers and consumers in an alleged attempt to slow or eliminate the inflation which they have caused in the first place by their wrongful claim to ownership of the community’s credit. What has happened is that the banks have appropriated the communal capital which actually belongs to society at large. The consumer is being quite properly charged with capital depreciation but wrongfully not credited with capital appreciation, which greatly exceeds capital depreciation. The solution to the economic conundrum lies in recovery of the communal capital and its restoration to each citizen an inalienable inheritance.

    (8) The new consumer credits must be issued without debt, merely being debited from a properly and actuarially determined National Credit Account, being an estimation of the real credit of the nation, i.e, the available natural, capital and human resources which constitute its ability to produce goods and services and which if used might result in prices. These consumer credits must be issued as: 1. National (Consumer) Dividends equally and unconditionally as an inalienable inheritance to all citizens, and
    2. to finance Compensated (lowered) Retail Prices at point of sale. Compensated Prices would be determined by application of a universal factor applied to all consumer sales, derived from the ratio of national consumption to national production in any given accounting cycle.

    (9) In this manner consumers at large would always have access to all final production as it flows from the production line, all retailers would be able to recover their costs and repay their outstanding production loans with the banks. Falling prices would reflect actual lowering of real costs through increasing efficiency. Having balanced price-systems would eliminate the need for increasing personal and public debt. Nations would no longer seek to compensate an increasing deficiency of domestic purchasing-power by producing an evermore superfluous and unnecessary volume of capital and consumer goods merely to distribute incomes available to purchase goods made in previous production cycles–nor would they be forced to compensate their internal lack of purchasing-power by engaging in futile efforts in increasingly competitive foreign markets to export more than they import–a practice which is the major cause of international friction and war.

    If we want “balanced” societies and a peaceful world, we must establish balanced price-systems. “Good intentions”, in and of themselves, will not suffice. Indeed, as the saying goes, they often pave the road to hell.