The sense of entitlement in our nation is staggering.  The following are truths which need to be understood as soon as possible in order to prepare for the inevitable downturn in our economy. Failure to understand these truths will result in disillusionment, disappointment, confusion and anger.

Please be advised:

Your job is never safe. – Job safety is a myth. It is a fabrication of politicians who play off financial fears and pin blame on greed, capitalism, large corporations, foreigners, foreign governments… everything except common-sense market forces of individuals wanting to maximize their budget.  Job security is impossible since we are wired to maximize our comfort and, all things aside, get maximum value for our finite wealth.  As a result, we naturally seek to work as little as possible, spend as little as possible, and get as much value possible for our money. Jobs going overseas has little to do with “tax loopholes” and has far more to do with the simple economic fact that, if quality is comparable, people will choose to seek the cheaper good.  When labor is interchangeable, labor will flow in the direction of lowest cost.  As a result, your job is never safe from cheaper, foreign competition.  This is inevitable and no politician can stop it.

Pensions are unsustainable – The notion that you can work for a number of years and then get 80% of your salary paid for by taxpayers and stock market returns is a claim made by politicians who promised this to win votes from beneficiaries of said pensions(government employees:  teachers, PD and FD unions).  Taxpayers have lost their jobs, income, equity valuations and home valuations, which leads to the question… where will this money come from? If you were promised a pension, you need to realize there is only so much in tax revenues the government can suck out of a city and state without killing businesses.  The notion that a tenured public school teacher can retire after 30 years of service (age 55?) and collect $40,000+ annually and health benefits till death is simply not realistic or fair for the taxpayer.  Pensions will be altered; Plan on it.

Foreigners are just like you – Do you think homeless people in India care about your factory closing?  They are far worse off than you will ever be.  A factory moving to India hurts American workers, but helps Indian workers and helps American consumers by allowing them to buy cheaper goods and spend or save the money elsewhere.  All human beings love free markets, low prices and lots of variety as consumers and they love protected markets, controlled prices and barriers to entry as producers.  You can expect the governments of other countries to be as manipulative as possible to meet their countries needs, just like ours.  The IMF, World Bank, UN and other quasi-world governments aren’t going to save your job or magically reverse market trends.

You must learn economics – The government cannot create wealth by printing paper and rolling over its debt.  Wealth only comes from savings and production.  Fighting two wars, underwriting retirement for a whole generation, “free healthcare”, and new infrastructure all need to paid for with real money.  Borrowing money cannot be the only solution to all of our problems.  Living within our means as individuals and as a country is the only way we can survive as a country.

Watch what politicians do, not what they sayObama voted for 10 out of 11 war funding bills and voted FOR the bank bailoutNo one who voted for Obama can complain about the bailout since they supported someone who took direct action to bailout foolish bankers.  Just like with religion, it is not what you say that counts, it is what you do.  Politicians like to rail against other countries manipulating their currency, however, the US government does the exact same thing.  Bank bailouts, massive interest rate cuts, liquidity injections and excessive borrowing certainly do impact currency levels.  Ignore those who claim otherwise.

Compounding wealth comes from the private sector, not the public sector –  Compounding wealth, innovation and life-improving technologies are not borne out of love for one’s fellow man.  They are generated by hard work and intelligent risk taking with the promise of wealth and money if the good or service serves the consumer as planned.  Profits serve as a feedback loop of how a firm should direct its limited financial resources. Since governments do not have to generate profits to stay in business, there is little need to innovate, take risks, eliminate waste or strive for excellence.  Google, Microsoft, Yahoo, Apple all must come up with new ways to win over customers or they go out of business.  The SEC couldn’t catch Bernie Madoff even when Harry Markopolos did the work for them.  For this, they will get a larger budget and hire more employees.  Screw up in the private sector and you’re gone.  Screw up in the public sector and your budget grows.

Market forces are more powerful than government forces – Markets are an inescapable fact of life.  They are the logical outcome of our human desires to maximize our finite resources.  As such, governments cannot manipulate the economy to have artificial growth without consequences.  A GM, Ford or Chrysler bankruptcy is inevitable.  The government can play tricks like giving everyone money to buy a car, but not without disastrous consequences like devaluing the currency.  Reliance on government is fatal.  If you are currently relying on a government pension, you are rolling the dice.  There can only be so many bailouts before the dollar becomes worthless.

The world does not revolve around you or your industry – Just because your family all worked at the same factory/plant/industry does not entitle you to that job/wage for the rest of your life.  Do you care about Chinese factories shutting down and forcing Chinese workers back to the farms…?  Then don’t expect them to feel the same way about *your* job.

The American lifestyle has been luxurious – Only in America with abundant schools, libraries and food would obesity become a problem.  America is less than 5% of the world’s population and uses over 20% of the world’s energy.  Don’t you think that other countries will want to consume more as they rise out of poverty? Food, energy and resource prices will all encounter increasing demand and a decrease in the American standard of living/consumption should be expected since it is nearly inevitable.  America also has large numbers of thrift stores, widespread internet access, and decent schooling options.  For those who have an ounce of ambition, this is still the best country in the world.

Ignore these warnings at your own peril.

You must embrace reality, before reality embraces you.

For more on reality, read here

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