Fool.com: Monoliths and the Worker Bee [Fribble] May 8, 2000

Fribble Monoliths and the Worker Bee

By Blacknblue
May 8, 2000

A few years ago, when communism as an economic system died in Europe, Americans reveled in the perceived superiority of capitalism. It is interesting to consider the factors that brought communism down, and to ask the question: Are these same factors also capable of finishing off capitalism?

In my judgment, the major thing that killed communism was its inefficiency. It was inefficient because the government institutionalized the existence of too many parasites who found a home in the bureaucracy. Parasites consume a sizable portion of an organism's resources, and when the demands of the parasites for the lifeblood of the organism become too great, the organism dies. And of course, the parasites die with it!

Our own form of government, and our form of economy are also infected with an excessive number of bureaucratic parasites. Nearly all governments at all levels appear to have the idea that one of their most important functions is the redistribution of wealth. This redistribution requires an enormous and expensive infrastructure. The process of separating the worker bees from their money is called taxation. This is carried out by one bureaucracy, the IRS, while legions of other agencies in Washington endeavor to dole this cash out in what is considered to be a politically correct manner.

In the "private sector" (if there is such a thing in this country), capitalism operates mostly through Wall Street and the stock markets. The stock market infrastructure in the U.S. can also be thought of as being just another enormous self-serving bureaucracy. It contributes absolutely nothing in terms of real productivity to American business, but it's analogous to the money-changers in the temple that Christ threw out.

Mutual funds are still another bureaucratic establishment. They delude us into thinking that they know more than we do, and they manage to suck some of our life's blood out in the process.

When online brokerages began eating away at the revenues of full-service brokerage houses, stock market volatility increased by an order of magnitude. The enhanced volatility, of course, resulted in many more sales commissions, as investors sold on the way down, and then bought again on the way up. So the Wall Street establishment found a way to make up for the lost sales revenues from their full service brokerage services.

This plunder of small investor portfolios now goes on to such an extent that, in my opinion, the small investor has completely lost confidence in the future of his investments. He is just plain giving up, and leaving the markets in droves. The small investor organism is dying, and one can only hope that at least some of the parasites will die with him.