Thursday, June 21, 2012

Life Is Not Fair!
Lately I have noticed a trend in our society especially our government and that is that they all want things to be fair.  They want to make it so that money is distributed fairly i.e. take from the rich and give to the poor.  The problem with this attitude is that life is not fair and our constitution does not guarantee fairness to all people, if you read the Declaration of Independence  it states that
        "We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness."
America provides an opportunity for all citizens to pursue happiness but it is not guaranteed or assured.  And if you do achieve success what right do I have to lay claim to any of it.  The amazing thing about America's capitalism is that anyone can attain that elusive 1% and make tons of money such as Bill Gates, Glenn Beck, and Mitt Romney.   These people had an idea and turned it into money and they should be allowed to keep that money.  I certainly love what I do but know that I will never become wealthy teaching high school History to kids in custody, unless I have an idea that rivals the Pet Rock,  and that is my choice.  However, society seems to feel that life should be fair and that I should pay for the man who went out and fathered 30 children or provide for those who chose to sleep through school or to not to attend school at all and now have no skills to with which to obtain a job. 
President Obama told Joe the Plumber, “I think when you spread the wealth around it’s good for everybody.” He is once again forgetting history and that taking from the rich to give to the poor might make a good Disney movie (Robin Hood) but it does not work in real life for the following reasons from Capitalist in Chief
  • Much of the money that goes to the government ends up being wasted, resulting in ineffective government programs, and less wealth for EVERYBODY.
  • Many are tempted to assume that money collected by the government goes to help the poor and downtrodden. However, much of that money ends up in the hands of the rich and politically connected, those who have the most resources and ability to lobby for it.
  • Socialism concentrates money and power in the hands of the government. When government grows, the greedy and corrupt don’t go away. Conversely, they now have a more powerful tool in their hands, the government itself
  • The richer you are, the easier it is for you to avoid increasing taxation and leave the bill to the middle class.
  • A soak-the-rich, high tax strategy inhibits the economy. And who is hurt the most by a slow economy? Not the rich!
  • The transfer of earned wealth that socialist policies mandate are a detriment to entrepreneurship and innovation. Entrepreneurship and innovation are driven by the potential for material rewards. If we take away or reduce the material rewards, we’ll have less innovation. Less innovation means less of all the cool, useful, and life-saving stuff we all love
  • High taxes and government regulations make it more difficult to start and grow a business, thereby leaving much greater opportunities for those who are already rich and have the resources to overcome those difficulties.
  • Social programs create more demand and need for those very programs in a self perpetuating cycle because given government handouts, people come to expect and rely on them. And therefore, you can never spend enough, because the more you do, the greater the need to do so becomes.
  • Social programs are a disincentive to work and act responsibly. After all, if some or all of your needs are taken care of, and if someone else picks up the tab whenever something goes wrong, why would you worry about such minor details as work ethic, productivity, financial responsibility and family obligations? Consequently, when productivity takes a downturn, leading to a shrinking economy, guess who suffers… everybody! Oh and as always, the rich suffer the least.
  • A combination of the above points causes a vicious cycle of decreasing revenues and increasing demand for social spending that results in a socialist government running out of money and having ‘no choice’ but to perpetuated tax increases to every level of society, rich and poor.
  • Socialism causes poverty because it slows economic growth and progress through government waste, taxation on productive economic activity, discouraging innovation and the creation of hurdles for business. In addition, socialism causes poverty because it creates a disincentive to work and act responsibly.
  • Socialism causes inequality because much of the money that goes to the government ends up in the hands of the rich and politically connected, it’s easier for wealthy individuals to avoid taxes, and it creates hurdles for business that the wealthy find easier to overcome. Socialism is a way for the rich to shut the door behind them, preventing those who are on their way up from reaching their destination.
  • Liberalism tends to liken inequality to injustice, therefore, just by using the standards set by liberal thinking, socialism causes injustice because of the inequality it promotes. But more directly, socialist policies (wealth redistribution, social programs, and regulation) necessitate a larger, more powerful, more meddling, government that becomes a powerful tool for the wealthy, politically connected, and bureaucrats on “power trips” to take advantage of the rest of society.
On the opposite end of the spectrum is capitalism which makes life better for everyone.  As Joseph Schumpeter put it in Capitalism, Socialism and Democracy, capitalism "progressively raises the standard of life of the masses....One problem after another of the supply of commodities to the masses has been successfully solved by being brought within the reach of the methods of capitalist production." Think Steve Jobs and computers in every home.  He had an idea working from his garage he was able to build a company that changed the world as we know it.  Cell phones, cars, medical advances came about because of capitalism. 
I usually equate this issue to grades as that is how my students can relate.  If student A works hard, gives up on some social time to make sure that they have a straight A average and student B chooses to party all the time and to not study and gets C's and D's should we average out the grades to make things fair?  I am pretty sure that at least student A would not feel that it would be fair to do all the work so that student B can get good grades as well.  This analogy might not work for President Obama because he won't release his transcripts so we don't know what his grades are he might like this system as well. 
Here is another one that might help do you all remember the story of the "Little Red Hen"  she found some seeds and asked "who will help me plant these seeds" and everyone says "not I" so she plants the seeds this goes on with reaping the seeds, grinding the seeds, making the bread until we get to who will help me eat the bread and of course everyone wanted in on that one.  No one wanted to do any of the work but they certainly wanted to reap the rewards.  
President Obama I have news for you LIFE IS NOT FAIR! If it was you would not have gone to Harvard, married a beautiful woman, had two wonderful daughters, been given the orating skills that you have, and certainly would not have been able to  play 100 rounds of golf over the last 4 years at the taxpayers' expense.  Wake up and quit trying to destroy America.

Wednesday, June 20, 2012

“quantitative easing,” and Operation Twist June 20, 2012

     The twist here is how the Feds are trying to twist our economy into  a terrible mess.  As George Santayana said "Those who cannot learn from history are doomed to repeat it." And our government cannot or will not remember history.  If you do not know today our Federal Reserve decided to stimulate the economy by printing "as much money as needed to revive the crippled banking system" (Edmond L. Andrews)
      As of today the "government has assumed at least $7 trillion in direct and indirect financial obligations in the form of Wall Street bailouts, emergency lending and government guarantees on bank deposits, inter-bank loans and home mortgages." (Andrews ) and they  the "Fed and the Treasury have stepped into finance consumer debt, from car loans and student loans to small business loans. The $200 billion program comes close to being a government bank" ( Andrews)  because they believe that they the government needs to step in to save us. 
The long-term risks are enormous and difficult to estimate. They begin with the danger of a new surge of inflation, at least after the economy comes out of its downturn. But they also include the hazards to taxpayers of taking responsibility for trillions of dollars in assets that may end up plunging in value. And they also raise unanswered questions about how the government will untangle itself from its new obligations, if it can indeed do so. (Andrews)
If the government would look to history to see that printing "as much money as they deem necessary to revive the banking system is seriously flawed and has only resulted in hyperinflation.  Hyperinflation occurs when a country experiences very high and usually accelerating inflation.  Hyperinflation results from a rapid and continuing increase in the supply of money, which occurs when a government prints money or creates credits in bank accounts this creates a vicious cycle.  Right now the Feds feel that they must print more money because banks are not loaning money and they feel that this money will stimulate the economy, however, history will prove that this is definitely not the case.  It will only result in a devaluing of the dollar and create more problems than it solves. 
     Both the Theories of Monetarism and Classical Economics maintain that Hyperinflation is born out of the irresponsibility of the financial authorities to borrow excess money and make payments of all its expenditures. Does this sound like our government today.  Their philosophy is that they can just borrow the money that they need to pay for all the money that they are printing.  At some point we the American people are going to have to pay the piper. 
     Hyperinflation effectively wipes out the purchasing power of private and public savings, distorts the economy in favor of the hoarding of real assets, causes the monetary base, whether specie or hard currency, to flee the country, and makes the afflicted area anathema to investment. This also sounds like America today. 
We can look to the past to see how printing excessive amounts of money has had a deleterious effect on economies such as the; Weimar Republic, Brazil, China and Argentina, even America in the past has succumb to the lure of printing exorbitant amounts of money as a means of easing financial woes with disastrous results. 
     America needs to wake up and learn from the past.  We cannot continue to spend ourselves into oblivion and then print money as if money grows on trees.  We need to become fiscally sound and our current administration does not seem to understand this concept.