May
5
Growth is not Free
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As a child, I always used to take note of coupons and mailings which had the word “FREE” on them. I would mistakenly believe that these items represent value, rather than an attempt to move stale merchandise or lure in customers who would eventually spend more. While kids fall for this trick, adults know there is no such thing as a “free lunch”.
As we mature, we realize nothing worthwhile comes easy. Just as an alcoholic has to struggle through the shame and humiliation of addiction and the superstar athlete has to struggle through off-season practice, individuals can only grow and strengthen through facing pain.
Nature also teaches us that nothing is free. The Law of Conservation of Energy and The Law of Conservation of Mass state that all energy and mass are conserved. They may be redistributed, however, they are neither created nor diminished.
On a national level, we cannot escape our economic problems pain-free either.
Here are a handful of financial problems we are facing:
- Drastically unfunded pensions
- Trillion dollar deficits
- Toxic assets bought with taxpayer assistance to avoid bank balance sheet meltdowns
- Total reliance on government retirement and health benefits as population ages
- Total lack of comprehension that government cannot create new wealth, it can only redistribute or reallocate previous wealth.
The answers from our leaders have been to buy more time, borrow more money and avoid reality as long as possible. The sleight of hand of verbal obfuscation (Congressional grandstanding, Fedspeak) and cheerful optimism will not fix these underlying issues. Debts need to be repaid or defaulted on, they cannot be rolled over forever at favorable interest rates.
The flood of new money and credit is not prosperity, it is a sugar high that is not sustainable. Like a marathon runner who vomits with exhaustion and dehydration, we cannot expect a packet of sugary government goo to provide us with meaningful sustenance.
When will this painful “growth” of financial sanity occur? When will this reality be faced? When will the veneer of prosperity via interventionism be ripped off?
Takeaway: We only grow when we challenge our worldviews, struggle, and exit our comfort zone. Comfort and complacency is the enemy.
Feb
4
Who Built the Middle Class?
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We often hear the phrase “(constituency being courted) built the middle class!”
To me, the “middle class” to me is a fancy politician’s word used to build up support from voting blocs.
Who really built the “middle class”, or more importantly, who has built the source of increasing, compounding wealth in America? Entrepreneurs.
Those color-blind, money-hungry, “greedy”, consumer-pleasing entrepreneurs… They are the providers of jobs and the source of constant, incremental improvement in all areas of our lives from customer service to technology. The motivation of profits and freedom has motivated thousands across the world to flock to our country and engage in mutually beneficial transactions.
Blue collar workers who punch a clock in a factory did not build a middle class, anymore than the teenager at McDonald’s built the corporation it is today. It is the owner, with his ass/reputation/money/credit/pride on the line that deserves the credit.
The collectivist mindset of saving the “middle class” espoused by both Democrats/Republicans or anyone running for office is a lame attempt to curry favor with those groups of people giving them credit for accomplishments they are not directly responsible for.
As always, better to focus on providing value, in any capacity, for friends, family, employers and customers rather than relying on a politician to get elected and give your voting bloc the goodies it was promised.
Thank you for reading.
To clarify: Banks/oil companies/auto companies and any other big businesses that lobby for benefits or get bailouts do not qualify; I will make sure to clear up this distinction in a future post.
To read more about the US financial situation, click here.
Feb
4
Housing Crisis and the Memory Hole
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After years of following politics and being open-minded to all points of view, it seems the most popular positions are rarely the most accurate.
A politician can be right about consequences of policies and “predict the future” and it won’t make a difference. Even in the age of information overload, YouTube, internet accessible voting records, no one seems interested in accuracy. The proof I offer is this forgotten 2 minute speech by a politician who in September 2003 predicted:
1. Taxpayer bailout of Fannie Mae and Freddie Mac
2. Overinvestment in the housing market as a result of government artificially stimulating demand for housing
3. “Painful” crash in housing
This speech was literally five years ahead of its time.
There is short-term bias in the newsmedia. It is not the media’s fault; it is the natural, predictable consequence of individuals choosing to accept this medium of news rather than discovering truths on their own.
Take a look at Huffington Post; their front page is screams like a tabloid. Since our national attention span is microscopic, we miss the fact that there are some that warned of dire economic consequences years ago which have come true. They are hardly mentioned or interviewed since the media and the public has moved on to newer stories.
The lesson that I have learned from seeing this cycle play out over and over again is: Who do you choose to connect with and learn from? Whoever’s popular in the polls? Whoever your friends follow? The most popular/influential person? Or thoughtful, reasoned thinkers? Seek out these sources and take action to benefit from them. By reading intelligent and openly opinionated thinkers on all sides of an argument it is easy to distill what facts are relevant to certain arguments and which facts aren’t. This is essential to getting a clearer picture of reality.
Thanks for reading.
To read more about our economic issues, read here.
Jan
22
Nowhere is image more important than in the political arena. Succeeding in politics relies on mastering photo ops, coming up with memorable soundbites and appearing genuine, likable and charismatic. Obama is by far the best in those “skills” that I’ve ever seen. He is handsome, eloquent, well-spoken and appears likable.
Logical arguments and critical thinking doesn’t often come into play in politics since the attention span of the voter has forced media outlets to summarize a politician’s views in as little space/airtime as possible.
As a result of this framework, the successful politician needs to be conscious of these limitations and sell his ideas to generate the political capital (breathing room, if you will) to take on more ambitious tasks. In order to sell a major change, one has to have earned the “capital”, little bit by little bit.
Increasing value to constituents is a two step process
1) Perform a deed which increases real or implied value.
2) Communicate said value.
Today’s first day of a new presidency was a sharp contrast from the “salesmanship” we’ve seen in the past.
After Bush won a squeaker over Kerry in 2004, he held a press conference where he uttered the following:
You asked, do I feel free. Let me put it to you this way: I earned capital in the campaign, political capital, and now I intend to spend it. It is my style. – George W. Bush
The link is here. It is a cached version. It appears as thought the White House was trying to bury it.
As you can see, Bush failed miserably on both counts. He didn’t do anything remotely like #1 and even if he had, he failed spectacularly on #2.
By contrast, look at Obama’s first day. Three (potentially inconsequential) changes which speak volumes about winning back trust.
- Freezing pay for those over 100k in his administration.
- Ban on gifts by lobbyists to those serving in his administration
- Make it easier to for public to get documents and information from the government
He also threw in this juicy soundbite “We are here as public servants, and public service is a privilege, it’s not about advancing yourself or your corporate clients.”
These changes aren’t groundbreaking and they don’t fundamentally change any real problems, however, it is obvious that he is well-versed in salesmanship and winning trust from his constituents.
Rather than railing on Obama and Bush for hailing from faulty ideologies as I would have done in my younger days, I now try to learn what I can from both of them and move along. There is no sense getting upset about national politics since most people are already wed to their opinion and you have little, if anything to gain by engaging someone who isn’t openly interested in having a debate.
These lessons from Obama and Bush show us a contrast in exercising power. One flaunted it and impressed no one, while the other seems to be using it judiciously.
Regard your good name as the richest jewel you can possibly be possessed of — for credit is like fire; when once you have kindled it you may easily preserve it, but if you once extinguish it, you will find it an arduous task to rekindle it again. The way to gain a good reputation is to endeavor to be what you desire to appear. – Socrates
To read more about economics and politics, click here.
