BLOG: Whose Success?

Posted on by June 28, 2014

I was once again shocked and disappointed Monday on reading about President Obama’s recent comments about the success of the nation’s entrepreneurs.

It is clear that Mr. Obama is no fan of successful businesses. The only businesses he seems to support are the ones that are not in the business of making money, but those who worship at the shrines of environmental activism, “social responsibility”, and political correctness.

To Mr. Obama, profit is not a goal. It is a fault to be corrected. To Obama, profit is proof that something shady is going on, not something earned by the sweat and skill of the dilligent and resourceful. Earning a profit is something to be ashamed of, while losing money, or even going bankrupt is an inevitable result of doing “the right thing”.

Obama’s supporters are quick to point out the “support” he has provided to businesses (like Solyndra), but his policy seems to echo the old Reagan quote—”If it moves, tax it. If it keeps moving, regulate it. If it stops moving, subsidize it.” In the world of Mr. Obama, profitable companies get only criticism, higher taxes, and more regulation, while failures like Solyndra get subsidies and praise.

So Monday morning his comments about business did not come as a surprise, but they do demand a response.

First of all, Mr. Obama is a leader. Our leaders are a focus of attention, and have impact on the national character. If our leaders lionize effort, faith, self-reliance, and independence, we are likely to attain a more active, faithful, self-reliant and independent population.

If our leaders lionize government as the source of all success, and gives no credit to those actually running businesses for the businesses they create and run, we will not have many people inspired to be entrepreneurs.

Pile on top of this an attitude toward profit and wealth that seems to punish those who are successful, and threatens to take the wealth that a successful business might earn, and I don’t see why anyone would want to run a business.

… and we wonder why there are “not enough jobs” being created.

It is bad enough that we are advertising how easy it is to get food stamps, and telling those who get public assistance that it is their “right” and the not-so-subtle message that their choices and actions are not relevant to their success or failure.

Now Mr. Obama is saying that those who have made the sacrifices of time and treasure to start and run a business do not deserve any credit for their success.

The United States has always been the home of “Yankee Ingenuity” and the “Can-do” attitude. If someone wanted to design a plan to destroy that spirit, it is hard to imagine one more thorough and effective than the everyday rhetoric and policies of our current administration.

Emergency Alert System and Broadcast Freedom

Posted on by July 12, 2012

The FCC has recently run a test that demonstrates the capabilities of the EAS. (Emergency Alert System)

This may sound like a good idea, but the free citizens of the USA should pause to consider what it means.

The way this system works is to insert equipment directly into the broadcast stream at every broadcaster.  The device is under the control of the FCC (now the DHS as of a new executive order) and can be enabled by “officials”.  The broadcaster is not permitted to disable or interfere with this device.  One can see this as the government temporarily interrupting the broadcast for important messages.  One can also see this as the government setting up machinery that can decide when broadcasters can and cannot broadcast. (see also here)

As with most other measures that surrender autonomy and independence for some broader purpose, this has an upside.  Voluntary measures take time, and if an emergency should arise that requires timely notification to the public, lives could be at stake.

Unfortunately, the downside is also obvious.  Government power seldom exists for loong without being abused.  The power to decide whether a broadcaster broadcasts his own content or that from the government will be a great temptation to officials who could use it to advance their agendas.  This could happen obviously by seizing the broadcast, but could also be done more subtly, by threatening disruption, or even by broadcaster harassment. (sorry, technical problems….)

The core and essence of a free society is voluntary association and cooperation.  Private property is essential, and means nothing if not respected.

It is a sad commentary and of great concern that this effective federal control of all broadcast information services has gotten such little coverage.

What is Money? (part 1)

Posted on by June 28, 2014

I am not an economist, and I don’t play one on TV, but you don’t have to be an economist to understand the basics of money.

We often forget that money has no fixed, real value.  You can’t eat it.  You can’t drive it, or live in it.  Money is only valuable as a tool to trade for goods and services.  You never really want the money.  You want what it buys.

We know this, though we seldom think about it.  There are lots of stories about people stranded on desert islands, or in science fiction, where the “rich guy” offers tries to buy food with his handy pile of cash.  The point of the story is that money is sometimes useless.

What we forget is that money is always useless.  It is a substitute — a proxy for what you buy with it.  If I am a farmer, and I raise wheat, I sell the wheat for dollars.  When I take those dollars and put them in the bank, in a sense I put the grain in the bank.  When I withdraw the dollars and buy a melon, I am trading the grain that the dollars represent for the melon.

If I sell a lot of wheat, and put all the money in the bank, I have exchanged my wheat for dollars that I trust will be valuable in the future to buy things.  My savings of dollars represents the surplus of grain that I have produced, and not consumed.  I have traded my grain for dollars, which I trust that I can trade for something I want in the future.

In the same way our IRA or 401K represents our excess production over our lifetimes.  We have sold our labor, our skills and our products to get dollars.  Our savings of dollars represent all that productivity, and the promise that we will be able to exchange those dollars for things that we want in retirement.

Money is the yardstick that allows us to divide up things of value.  I don’t have to trade my whole cow for something.  I can sell the cow for dollars, and buy several things with the dollars.  I can also store the value.  I don’t have to trade the cow today.  I can trade the cow for dollars, and save the dollars for the future, when I go to buy what I want.

With dollars, we can immediately and accurately measure the value of things and trade with precision.

People used to talk about money being “backed” by something – meaning that it could be “redeemed” at any time for something with intrinsic, reliable value, like gold or silver. Up until the 1930s, the US Dollar was on the “gold standard”, meaning that you could always go to the bank and get gold at a fixed exchange rate for your dollars. ($20.67 per ounce) Today’s money is what economists call “fiat” currency, backed only by the faith we have in its value.  We have worked with money for so long, and so effectively, that we forget this.  We measure our economy in dollars, and plan our retirements in dollars, and gauge our success in dollars.  Our faith is effortless and complete.

Such faith assumes that a dollar tomorrow will be worth roughly the same as it is today.

Unfortunately, the history of money is punctuated with periods of inflation and deflation, poor money management by central banks, and other disasters.  Germany in the 1920s, Zimbabwe in the last decade, and many other places have experienced the total collapse of the local currency.  Even in modern US history, we have seen annual inflation of almost 15%, less than 35 years ago.  The dollar is one of the most stable and reliable currencies in the world, but the track record of government money managers throughout history should give us pause.

Dollars are a yardstick and value storage tool.  They have no real value themselves except as a way of precisely measuring and storing the value of things we trade for them.

Our debts are also measured in dollars.  What happens when a huge debtor has the ability to tamper with the length of our yardstick?

The answer in part 2.

Life and Risk

Posted on by July 4, 2012

The constant thrust of the left is to pursue the chimera of the risk-free society.  From seatbelts, to helmets, to laws mandating concussion policies at youth sports to voluminous regulations on lifesaving drugs, the illusion of safety is an obsession of the nanny-state.

This is why the quote articulating why this is so misguided is worth sharing:

We should be able to understand that the world isn’t risk free, can never be made risk free and that regulations which trick people into thinking it is risk free serve only to make it more dangerous. – Dylan Grice of the French Bank Societe General

The article in Zeroedge has additional information.

Thanks to Janet Beihofer for pointing this out.

Total Nonsense

Posted on by June 28, 2012

I have not yet read the entire opinion of the SCOTUS, but so far, I am left aghast at the combination of illogic and overreach in the opinion.

My single consolation so far is the straightforward dissent offered by justice Scalia, which I hope will resonate with the people.

The problems begin in the summary in the beginning of the opinion.  The court explains that the mandate is not a tax for the purposes of the anti-injunction act, and therefore can be adjudicated.  The court then goes on to say that “the mandate” cannot stand as a penalty, even though it is explicitly defined in the legislation  under scrutiny as a penalty, not a tax.  The court explains all the reasons – and there are several – why the “penalty” cannot be held constitutional.

The court then decides that if the penalty were a tax, then it could stand.  The court gives the excuse that it has a duty to work hard to find a reason to uphold the law, and declares that since it COULD BE a tax, the court will pretend that it is a tax, and let it stand. (see above – anti-injunction act)

Let’s set aside core principles of jurisprudence, where the court decides only on real cases that have been presented, and not on hypothetical issues that it dreams up.  I think this is logical and judicial gymnastics that boil down to writing an opinion to match an agenda, not ruling on the basis of our constitution.

This is a pivotal day in our history.  The limited and enumerated powers of our constitution are gone.  This can, and should have a huge impact on the election this November.  Let’s hope we make wise choices.

BLOG: What is Debt?

Posted on by June 28, 2014

Among the most important issues of our time is the question of debt.  Every one of the “western” nations has fallen into the trap of massive debt.  Politicians speak of repayment of that debt as an option, not a duty.  Voters seem only vaguely aware of its size.

This video of Nial Farage is a sobering indictment of the mess that is Europe.

Unfortunately, Americans do not seem to understand what debt is.  Debt is a promise.  I buy a house and get a mortgage.  I promise to pay that mortgage, and some investor lends me the money.  I get the house, and pay the investor over 30 years for the use of his money.  We see the lender as some large impersonal bank, but it is much more accurate to see the lender as some elderly widow who has her savings in a 401K and is relying on those mortgage payments for income in her declining years.  We hear a lot about the poor borrower having to make payments, but almost nothing about the widow, who will lose both her savings and her income if the borrower defaults on his mortgage.

The foundation of our economy is integrity.  We make deals and make promises.  Nothing works if we cannot be counted on to keep our word.

The troubles in Europe are not some kerfuffle over big banks and meaningless large numbers.  Politicians spent money, and made promises to repay with the money of future taxpayers, and the bills are coming due.  No one – not the politicians, nor the voters, nor the bureaucrats who “guaranteed” the loans – is willing to own up to having made massive errors in judgement and take the fall.  It is a giant ponzi scheme that makes Bernie Madoff look like an amateur, and no one wants to admit the obvious.

Every ponzi scheme crashes.  This one will, too.  When it does, trillions of dollars of illusory wealth will evaporate.  No one will “destroy” it any more than you can “destroy” a mirage.  It never existed.

The Europeans would do well to admit that they are running a ponzi scheme.  To prolong the ponzi is to make it bigger, and then it will do even more damage when it collapses.  That delays the day of reckoning, but will save no one from the crash.  Unfortunately, no one has the courage to allow the music to stop.

Our situation in the US is similar, but our debt is much larger.  Americans are still capable of repaying our debt, if we choose to.  The question is whether we will have the courage to take some pain now, before the crash, or take the cowardly path chosen by the Europeans, and keep the music playing until all hope of keeping our word is gone.