Challenge Your Beliefs

Once upon a time, I was a confirmed Neo-Con.  Then I began to read history.  I studied  the founding fathers and principles.  I looked at the history of our government to the present day.  What I realized was that I had a lot of preconceived, and wrong, ideas.  I saw that the Republicans are almost as bad as the Democrats when it comes to big government, centralist policies and solutions.

I am much more of a libertarian or a classic conservative now.  I am not really happy with any party out there...the two major parties or the other, smaller parties.  Have you challenged your own long-held beliefs lately...or ever?  In the video below, Professor Jason Brennan challenges us all to question our beliefs and helps us to know How To Vote Well.

Obamanomics

Andrew Klaven provides another humorous and irreverent look at Obama's policies and understanding...or rather lack of understanding of how the economy works.

Klaven refers to James R, Otteson's article, An Audacious Promise: The Moral Case for Capitalism for The Manhattan Institute.   In this article, Otteson points out that while Obama said that "the market" or capitalism "doesn't work. It has never worked," this flies in the face of historical facts:

"Since 1800, the world’s population has increased sixfold; yet despite this enormous increase, real income per person has increased approximately 16-fold. That is a truly amazing achievement. In America, the increase is even more dramatic: in 1800, the total population in America was 5.3 million, life expectancy was 39, and the real gross domestic product per capita was $1,343 (in 2010 dollars); in 2011, our population was 308 million, our life expectancy was 78, and our GDP per capita was $48,800. Thus even while the population increased 58-fold, our life expectancy doubled, and our GDP per capita increased almost 36-fold. Such growth is unprecedented in the history of humankind. Considering that worldwide per-capita real income for the previous 99.9 percent of human existence averaged consistently around $1 per day, that is extraordinary. "

"What explains it? It would seem that it is due principally to the complex of institutions usually included under the term “capitalism,” since the main thing that changed between 200 years ago and the previous 100,000 years of human history was the introduction and embrace of so-called capitalist institutions—particularly, private property and markets."

The article goes on to show that, contrary to socialist propaganda, capitalism is actually the system that benefits the most people and is, in fact, the moral choice.  Some of his key points are:

• "(M)arkets allow us to 'serve' one another even when we do not love one another—even when we do not know of one another’s existence."
• "(V)oluntary exchanges that take place in the free-enterprise system are positive-sum, not zero-sum—meaning not that one person benefits only at another’s expense but rather that all parties to the transaction benefit."
• "Even if we do not all get rich at the same rate, we all still get richer."
• Rescuing hundreds of millions of people from grinding poverty is, however, nothing to sneeze at—and nothing to take for granted."

Otteson admitts that, "Capitalism is not perfect."  But, he points out that, "The benefits of the free-enterprise society are enormous and unprecedented; they have meant the difference between life and death for hundreds of millions of people and have afforded a dignity to populations that are otherwise forgotten. We should wish to extend these benefits rather than to curtail them."

"It would be all too easy for us, among the wealthiest people who have ever lived, in one of the richest places on earth, to disdain the institutions that have enabled us to escape the strictures of poverty and disrespect that have plagued humanity for the vast majority of its existence. Our crime today, however, would lie not in our inequalities but rather in our refusal to uphold the institutions that give humanity the only hope it has ever known of rising out of its natural state of destitution. The great and precious blessings of freedom and prosperity that we Americans have enjoyed, and that some, but not enough, others around the world have also experienced, deserve nothing less."

Do you really want a president who is so completely ignorant of how the economy really works?  I don't.

Enjoy the video, but don't miss it's point.

Electoral College Prediction

Okay...I'm going out on a limb and am going to predict a Romney win by 286 to 252 Electoral votes.  The map below, which I created from the Real Clear Politics Create Your Own Map tool, is how I'm calling it as of today.

Analysis from political science professors Kenneth Bickers of Colorado University (CU)-Boulder and Michael Berry of CU Denver actually gives Romney the win with 330.  Their analysis has been applied to all presidential elections back to 1980 and have accurately reflected the actual results of those contests.  Their model gives New Mexico, Colorado, Minnesota, and Pennsylvania to Romney, which I give to Obama...an additional 44 Electoral votes.

I believe that the anti-Obama vote has the most motivation...and the more people see of Romney, the more they like him.  In July, Gallup reported that Democratic voting enthusiasm is down sharply from the 2004 and 2008 election cycles.  In October, Forbes reported that one of Obama's biggest challenges was voter apathy.  The Forbes article points to analysis by NBC's Chuck Todd that showed "an ‘across the board’ advantage for Republicans in the enthusiasm race."

No one should take any of this for granted though.  It is highly dependent on voter turn out.  So, if you care about the future of your country:

GET OUT AND VOTE!

Top Priority? Really?

I always tell people in my business life that when everything is a priority...nothing is a priority.  Obama has done nothing positive for any of his many so-called "top-priorities."

Obama in his own words:

Retire the Debt Overnight?

For another way to look at the Federal debt, I thought it would be helpful to do a little thought experiment:

If the Federal debt of $16.2 Trillion were divided among all Americans, each of our more than 314 million citizens would owe in excess of  $51,000 to retire it.  Let's say that there was a way, through great effort and sacrifice by all of the patriotic people of the country, to collect this amount from every citizen and retire the debt ...maybe some would pay more than others...corporations would also contribute.  What if we could do this and erase the debt overnight?  Would you be in favor of this?

Think about it, all the problems that arise from such a large debt that I and others have chronicled...gone over night.  No more indebtedness to China...no more credit problems.  This would be great, right?  Well, the problem is that Federal spending exceeds revenue every year by about $1.1 Trillion at today's spending levels. This would mean that one year after the country went to extraordinary measures and sacrifice to retire the debt, each citizen would already owe an additional  $3,500 above their normal tax burden..that's every citizen, children, old, sick, handicapped, ...everyone. Additionally, with current programs and rates, there are future, unfunded liabilities for spending on things like Social Security and Medicare in excess of $61 Trillion...or more than $500,000 per household.   Of course this is not current debt, but gives a view of future debt.

What does this all mean?  Well, it's as I've said again and again, we don't have a revenue problem, we have a spending problem. Even if we got the revenue to retire the debt overnight, the government would be back in debt in no time.  With current spending, there's no way to get things in check.  Government is like an out-of-control teen with credit cards.  Even if they consolidate all of their cards,  they will just run them up again.  We have to take away the cards.  We must return to small, decentralized and limited central government as as was intended by our founders and is in fact law through the Constitution.  We must return our States to a place of prominence, where they can apply checks on the power if the Federal body.  We cannot sustain...cannot long endure...under the current, corrupted system.

This does not, regardless of what the desperate central planners would have you believe, mean that the poor would be left to live or die on  their own.  It does not mean old people would be forced to eat cat food to survive.  States could look after their own citizens as they see fit, without the burden of overhead caused by the huge Federal bureaucracy.  Each State, according to the wishes of their own electorate, can deal with these problems on their own terms.  If some states wish to pursue a "socialist-like" solution, they are able to...but with no bailouts from the Federal government if it fails.

With this arrangement, I believe States will quickly find viable solutions.  They will have to balance policies that keep and attract business for full employment with the needs of their less fortunate citizens.  They will have to compete for services and opportunity to keep people from moving to states that better meet their needs and expectations.  To do this with no bail-outs means they will have to do what works, and not engage in wild,  Utopian experiments.  They will only be able to provide safety nets to the "truly needy," as they define it in their own States.  In short, they will have to run their affairs like responsible adults and not spoiled kids.  This is the Utility of Federalism that I have posted about in the past.

Ask yourself, would you trust your money to an investment that created ever-increasing, crushing debt, no matter how much money you contributed?  An investment with huge overhead and red tape?  Of course not.  Why would you then trust our current government?  This may go against what you have always believed, but it is what the founders intended.  As for myself, I would rather stand with the learned, patriotic statesmen of the founding than the power-hungry, corrupt politicians of today.

Tax the Rich?

I know I have posted several Antony Davies videos, but he is very good at putting debt and deficit issues in very clear perspective.

One thing that Liberals, Keynesians, and Class Warriors of all stripes always ignore is that there are consequences to their policies.  Namely, that higher taxes are a disincentive to business and economic activity in general.  Davies points out that to balance the budget (not reduce the debt) you would have to raise the taxes of the top 5% of Americans to 88%.  This would reduce the average "rich household's" real income to about $36,000/year.  "Making the average rich household worse off than the average household."

Would you, or anyone, continue to work hard to make a lot of money if it were going to be taken from you, redistributed to the less productive, and make you worse off than someone with an average job?  History tells us no.  Whether the pilgrims of Plymouth Colony who became lazy and unproductive in their commune established by the Mayflower Compact, or the Soviet people who had a common saying that "as long as they pretend to pay us, we will pretend to work."  Socialism has never worked.  Taking from the rich simply makes the rich less productive...taxing corporations simply passes on the cost to the consumer, who buys less product.  Raising taxes on any activity reduces the activity...which reduces the tax revenue.  Many central planners have been surprised and dismayed, for example, that raising taxes on cigarettes has actually resulted in decreased revenue as some people stop smoking or cut back, and some find other, lower taxed sources.

Here is another great video where Professor Davies shows how ridiculous it is to continue to call for taxing the rich to deal with our deficit   The answer is to CUT SPENDING.  As he says in the last line of the video:

"The budget deficit is so large that there simply aren't enough rich people to tax to raise enough to balance the budget."

How Do We Balance The Budget?

Regardless of who wins the upcoming Presidential election, there are hard decisions to be made to avoid a financial disaster in our country.  Federal spending is out of control with no apparent end in site. At the time of this posting the Federal debt exceeds $16 Trillion.  That's:

$16,000,000,000,000

In past posts I have put this kind of debt in perspective (and that was in 2011 when the debt was only $14 Trillion)...I have shown that it is not a revenue problem, but a spending problem.  Raising taxes can't fix it, because you could tax corporations and everyone who is considered rich at 100% and still not have enough money to feed the government's spending habit.

Though everyone knows that we have an unsustainable debt problem...that our deficits continue to grow, government continues to expand programs...and therefore spending.  Not only that, but the government has been actively advertising and recruiting to get more people on the roles of programs like food stamps.  Today the Washington Times reported that "Overall, welfare spending as measured by obligations has grown from $563 billion in fiscal 2008 to $746 billion in fiscal 2011, or a jump of 32 percent."  While welfare programs were cut during the Clinton administration, the Obama administration has been redoubling their efforts to increase this spending.

We are headed in the wrong direction.   I agree with then candidate Obama when he said of the much smaller debt under Bush, "That's irresponsible.  It's unpatriotic." We must first stop the bleeding, and then begin to return to fiscal responsibility and prudence.  This can only happen through a return to the principles of limited and decentralized government.  Come on folks, let's get patriotic again.

Professor Antony Davies has another great video on the issue:

The Sin of Redistribution

Professor Walter E. Williams makes the case that redistribution of wealth by government is theft, and therefore a sin.

The Problem of The Poor

Milton Friedman is as relevant on this point today as he was in 1978...maybe more so.  In 1978, we did not have a $16 TRILLION Federal debt with an even larger unfunded future entitlement liability.

"Stimulus" Doesn't Stimulate

Facts are facts.