It Is Not Strictly Business - It Is Personal Now

Last summer and fall America was enthralled with the election and pretty much ignored what was happening all around us. Oh sure we were not happy with that bank bailout but it was strictly business, right? And who really understands that? Not your average citizen, especially when terms like derivatives and bundles and subprime are thrown around. Besides nobody paid much attention to what Bush was doing; he was leaving soon anyway. And yes the market dropped but hey it has done that before but it was costing less to fill up our SUVs, so life wasn’t too bad, right? So the summer flew by as summers do and the fall was exciting and historical as the country elected Obama as our president. Then came the winter…

Maybe at a Christmas party you first talked to a neighbor or friend or somebody’s spouse and you realized that people around you were losing their jobs. Perhaps you cut back some on your holiday shopping, and even if you didn’t, you discovered that favorite stores and restaurants were disappearing overnight. Suddenly the holidays seemed a bit more muted this year; more furtive looks, more dipping into the eggnog, scared people heading to church on the Sunday after Christmas.

In January, when it seemed as if everyone on TV was rejoicing Obama’s inauguration, no one you knew was celebrating. Life was actually turning more stressful. The harsh winds of winter were beginning to creep into your house.

Year-end results were announced at work making this recession, depression whatever it’s called start to hit home. If there hasn’t already been a reorganization or downsizing in your company, you know one was coming. Maybe you’ve worked hard and climbed the corporate ladder but you’ve never been given a million dollar bonus or flown on private jets to sun drenched “meetings”. No, in fact, you’ve worked harder than ever spending late nights and weekends, seeing less and less of your family while your employees resent you as they believe what they see on TV about management. And now all employees are told of wage freezes, no bonuses and no more matching 401K. But worst of all, you might have lost your job or, if you’re in management, you might have the gut wrenching task of having to let people go. Your job, if you still have it, has become even more stressful. But what can you do? There are no jobs out there so you stay put, if you can, but hating every minute of it, and you seriously begin to worry about strokes and heart attacks. But you will do whatever it takes because you need that job for the bills are beginning to accumulate like the snowdrifts against your house and car.

By February, you’ve already received the credit card statements and you’re scared. You know that after paying your mortgage and electricity and everything else that there isn’t much left over to help chip away at your MasterCard and Visa and Target and all the other credit card balances. Then you start to go through the paperwork to fill out your income taxes. You worry how you are going to be able to pay Uncle Sam, but unlike some states, you never once question if you will pay, of course you will find the money, sending in that check, somehow, someway.

No matter how difficult, you still manage to pay your bills, your taxes and yes, your mortgage. You may go deeper into debt, you may have to stop buying nice things for our spouse, you may stop putting money into your child’s college funds or your pension plan but you’ve always been told that you have to pay your bills, especially your mortgage. And it is depressing to know that you can no longer do more for your family, that the dream you’ve worked for all your life is gone through no fault of your own and you can’t fix it any more. In fact it hurts, really hurts, deep down inside you. And you realize that what is happening all around you isn’t strictly business or economics or even politics anymore. It has become personal, very very personal.

Then Obama tells us he will help us with his recovery plan. But what do we get? Out of the billions and billions of dollars, the hardworking taxpayer gets only a few lousy bucks more each month and nothing for the struggling small businessmen and women. Instead Obama promises handouts to people who bought homes we never could afford so that they can stay in their homes. Lowlifes who never worked or saved or earned the right to buy their homes. Yet we are told we have to give them our tax money so they can stay in their fancy houses; while we struggle to quietly pay our mortgages on our small homes every month. It just isn’t right and we are hurt and angry. So now, it is no longer strictly business. It has become personal.

Greed Is Still Good

I recently saw a number of articles which all had the same theme –America’s economic problems are partly caused by greed – that people are too materialistic, spend too much money, buy things they don’t need and are still trying to keep up with the Jones’s. My first reaction was “Damn right!”. You bet we want more. That is who we are and what made America so great and we should stop being ashamed of it.

People have been brainwashed into believing that wealth is bad and that the wealthier the person (or business) the more evil they are. Yes there are some corrupt rich people but there are an equal number, if not more, corrupt poor people, it’s just that you don’t hear about them in the evening news. People are also told that it is wrong to want more and that they should be satisfied with what they have. Of course you should be grateful for what you have but there is nothing wrong with wanting more money, more goods. I would even argue the opposite; that it is wrong not to aspire for a better life. In fact I believe that this need for more is hard wired into our genes, it is what separates men from beasts and without it we would be living in a very different world.

People laughed at President Bush for once asking everyone to support the war by shopping but he wasn’t that far off from the truth. Think about it. What if everybody decided they were satisfied with what they had and stopped buying? You think the economy is bad now just imagine what it would happen if starting January 1 the stores were empty of customers. Imagine the impact of closing just one clothes store; first the store’s employees would be out of work which would hurt their town’s economy as these unemployed people would stop buying things and perhaps even default on their mortgages, the truckers used to haul the clothes would be the next to hit unemployment, then add in the thousands of people needed to make the clothes plus the companies who produce the material, sewing machines etc etc who all would now be out of work. This hasn’t even taken into account the stock market which is easily affected by a company’s downward trend and all the stockholders, pension funds, 401k’s etc. which would be impacted and lose their life savings. And all because you decided not to buy that new jacket.

Greed not only keeps our economy going but it also has been the main motive for man improving himself and his world. It is our desire for better, faster and more improved products that has fueled mankind’s innovations, experiments, and progress and took us from caves to the moon. People don’t realize just how much they benefit from somebody else’s greed. Think about it. Everything you touch is the result of somebody coming up with a better way of making that object or because somebody figured out a way to make more money producing it. In either case greed is the dominant factor: I want a better product or I want to make more money producing this product, or both.

If you think that you are not greedy then you are either a hypocrite or a saint. And disguised in this contempt for greed is the liberal’s need to “equalize” the world by making the poor wealthier and the wealthy poorer. But that is a discussion for another day. As for our current problems, if you really want to turn the economy around then we all need to stand up and loudly proclaim the famous line from Oliver Twist “Please sir, I want some more.”

American's Evolution - Part 2

Previously I argued that this country has been evolving from an agricultural society to a manufacturing society and is now moving to a service industry. I wondered if the demise of the car industry in America was simply an extension of this evolution and as such should be allowed to die and not be saved with an infusion of cash by Congress.

It was brought to my attention that allowing the car industry to fail will have a domino affect on all the other companies dependent on it. A multitude of smaller companies who provide materials to the car industry will then fail if our car industry goes under. Another argument is that the car industry had been producing what people wanted – big cars. Now the demand has suddenly changed to smaller more fuel efficient cars but the auto industry needs a few years to change their production lines. So the bailout is simply to help the industry while they redesign their factories to start providing smaller cars.

Both are valid arguments. As for the latter one, I remember the 1970s when we went through this the first time. Everyone worried that our car industry would die because Japan was making smaller cars and our industry made big gas guzzlers. Thirty years later and I don’t understand how the exact same thing can be happening. How could they have once again been so off guard as to let this happen again?

As to the satellite companies that could fail if the car industry goes under I have always wondered if Ford or Oldsmobile or any of the original car makers worried that they were putting the horse and buggies out of business. No one really cared about the blacksmiths or leather makers or any of the other businesses dependent on horses when the country evolved to cars as our means of transportation. Except, you know what? These men didn’t go on the dole when their businesses failed. Instead many of them evolved from servicing horses to cars. Leather makers began to make car seats instead of saddles and buggy seats while stable masters swept out their stables and converted them to garages. Given a chance, people will evolve and grow. But when you put them on welfare then you are denying them the incentive to change.

So maybe by allowing our car industry to live on we are actually hampering this country. Perhaps there are young inventors out there with great ideas for new types of cars that don’t need to be powered by fossil fuels. I have every belief that someone will somehow fill the void left by the car industry and that this new industry would help this country further evolve away from our dependency on gas. But by giving our existing car companies bailouts to continue as is then the government is stifling our chance to grow and evolve. And if you spend all of your energy treading in water in the same place then you will eventually die without ever moving forward.

I was unsure when I started this if I thought the government should bailout the car companies or not. I think I have now convinced myself that it would be detrimental to this country in the long run. In the short run, yes, for the demise of our car industry will be painful but I am now of the belief that out of this pain will come a new and better industry and country.

As for this country moving towards service industries and away from manufacturing, perhaps that isn’t that bad after all. What would be wrong with having a nation of thinkers, inventors and service companies to help make this a better world? Don’t forget that services also include hospitals and schools and not just banks and hotels. Plus for those who still want to work with their hands, there is still a need for plumbers and mechanics and builders among many other highly paid skilled service jobs.

There would always be some manufacturing, just as we still have some farming but it wouldn’t be our primary source of employment. Besides, show me one factory worker, one immigrant, one migrant worker, one welfare mother who doesn’t want more for their children and that more always includes a higher education. So let’s move forward and become that nation of thinkers and inventors. Let America supply the world not only with our food and products but also with our ideas and knowledge and inventions.

America’s Evolution – Part 1

America’s car industry is dying… again. Congress wants to bail them out (again) but I am not sure if that is the right thing to do. I can’t help but wonder if the car industry is like a dying person who would be artificially kept alive if given an injection of money. I don’t know if GM and Ford can continue on their own any more and if they can’t then why should we keep them going? Maybe these companies have run their course and it’s time for them to close their doors.

I think what we may be seeing is the final death throes of manufacturing in this country. For the past fifty years we have slowly been evolving from a manufacturing society to a service society. I don’t know if this is even something bad but merely a result of becoming a more advanced nation. This is not an original idea yet I don’t hear people talking about it very much and I think we need to have this national discussion. For my own edification I want to think through how we got where we are and then try to figure out if this is good or bad and what we should do next.

As this country advanced we have continuously evolved and yet each time it took violence to help us move up the chain of evolution. Like most new nations, America first started out as an agricultural nation. Once this country’s metals were discovered then ambitious and sometimes ruthless men began to find ways to manufacture these metals into needed products. Steel, ore, iron, coal and the like were the building blocks on which this nation stepped up a level on the evolutionary chain.

Yet moving from an agricultural society to a manufacturing society was a brutal and bloody transition. It started with the Civil War which was primarily a fight between the manufacturing North against the agricultural South. The final blow to our agricultural dominance was the Dust Bowl during the Great Depression which destroyed millions of acres of farmland.

War World II ushered in the peak manufacturing years. After years of disuse during the depression, our factories were producing at maximum levels to provide the materials and products needed to fight a war. After the war, these same factories continued on peak levels but now to produce all the new products that the young and growing middle class were clamoring for after years of deprivation. Not only was there a demand for goods but there was also a new demand for housing. This country lost for good untold millions of acres of what could have been productive farm land. Now this land was irrevocably gone as the suburbs were being born.

During the 1950’s and 1960’s America couldn’t manufacture items fast enough to satisfy this country. The birth of the suburbs issued in a whole new array of needs from all the things housewives were now demanding to have in their house to the products required to maintain the new lawns. Midwife to the birth of the suburban appetite for products was television which now told everybody what they needed to have.

By the early 70's the high demand for products tapered off yet as the need for big ticket items diminished, the 1970s started a whole new world of consumer goods – electronics and computers. Not only were these products in high demand but due to continuing technological advances products quickly became obsolete thus requiring new purchases. Since the 70's entire industries were born, thrived and then died within a handful of years. Think 8 track cassettes and VCR's for example.

Although our demand for products still remains high, at some point we stopped producing these goods. America is moving up one more step on the evolutionary chain from being a manufacturing country to being a service country. Yet when and how did this happen? Was it inevitable and simply the result of being an advanced nation? If that is true, then government’s plans to “rescue” these factories with obscene amounts of money may be pointless and a complete waste of our money.

I want to explore this some more but its time to take a break so I will finish this up in a day or two. Meanwhile, here is something to think about. If Congress is this upset over the possibility of losing our car industry would they be willing for their children or grandchildren to forego a higher education in order to work in a car factory? Would you?

Unintended Consequences

President elect Barack Obama. The country really did it but now we all wonder what will an Obama presidency mean? One thing everyone agrees on is that Obama and his fellow Democrats will be raising our taxes; the only question is what income level will it be based on. I don’t think it really matters as it will be the difference between high and higher taxes. For in addition to federal income taxes, there is also talk of increasing payroll taxes, capital gains taxes, taxes on small businesses and the list goes on and on. That’s just federal taxes; states are also proposing new tax increases. For example, in New York, Bloomberg has already announced higher taxes in the form of tolls on all bridges and has even proposed a tax on plastic bags at the grocery store.

There is, however, good news for some people. No, I don’t mean the low income or no income groups whose outstretched hands will finally be filled. I have a completely different group in mind. For if you find your taxes going higher and higher there is one thing most people could do that will immediately lower your tax burden. What is this talisman to protect you from more taxes? Move to a state without income taxes!

Seven states currently do not have state income taxes: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. I truly doubt if too many people would be interested in moving to Alaska, South Dakota or Wyoming, especially as I just heard that in this, the first week of November, South Dakota had over 30 inches of snow! That leaves Florida, Nevada, Texas and Washington as possible relocation sites for overtaxed folks from the other 43 states.

If you are an employer who wants to either get out from the burden of your taxes or open a new plant or office you will also consider one other important aspect – right to work. Florida, Nevada and Texas are all right to work states meaning that employees can’t be forced to join a union but instead can decide for themselves if they want to join one. With the potential passage of the new union open voting law, the option to join or not may become an increasingly important one to both business owners and employees.

Once the higher taxes start to impact people, I wouldn’t be surprised to see a small boomlet in Florida, Nevada and Texas as people move here to escape their high state taxes. All three states also have large retiree populations and with a lot of people retiring in the near future there is no reason to think that they wouldn’t continue to retire there. This could help the lagging new housing construction and the sales of existing houses in these states. The economy may not be ripe for new businesses, yet I would think that if it were to occur it would happen in greater proportions in Florida, Nevada and Texas. I could also envision that more companies will relocate to these states, too. They offer ideal situations; no state taxes, right to work, lower housing prices than in many areas and not to forget Florida and Nevada’s warm climates.

If you currently live in Florida, Nevada or Texas you are already benefiting from having lower taxes. But if there is a small migration of people and companies to your states then this could mean a faster recovery of the housing market along with increased state revenue from the larger populations. Plus more people mean more business for your local stores. The job market might also increase if companies do start to relocate to your state, too.

I think that it would be extremely ironic if Florida and Texas were to benefit from the increased taxes as proposed by the liberals. Ever since the Bush elections liberals have despised Floridians with an intensity I have never seen before. To a lesser extent they also dislike Texas which is the heart of Bush country and southern Republicans. (Nevada, unfortunately, is Harry Reid’s state and as such is beloved by Democrats.)

So maybe Texans and Floridians should feel a bit smug when they hear how Obama and the liberals plan to raise taxes for they know that they could actually benefit from it! Now all they need to do is make sure the folks who move into their states to avoid higher taxes eventually become good southern republicans who will vote against Obama in 2012!