Is the economy so complicated?

Is the economy so complicated that a gaggle of economists and politicians cannot figure it out? The Chairman of the Fed just told us he does not have a clue. I think he is right in that regard. Might I be so forward as to offer the perspective of a night school educated high school dropout with at least a half-dozen transcripts from different institutions of higher learning, none of which were Ivy League? Of course, there is also the perspective one gains when supporting himself from the age of 16 years young.

Here is the first point of understanding, for which one does not require Ivy League credentials to grasp. In my intellectual circle, we call this point a blinding flash of the obvious. A business, household or country that consistently spends more than it takes in fails. The money coming into a business must exceed the money that necessarily goes out (for those in Washington, this is called profit) before a business can expand. Businesses that commit future money into entities that provide no return on the investment and then borrow money against hope that they can meet those obligations rather than reality are re-named Government Motors. Additionally, businesses that must spend their profits for excessive taxation will see growth stifled and along with it any potential business expansion or job creation, which by the way is how wealth is truly spread. A household with an input of a tablespoon’s worth of income that consistently spends it by the shovel full will too collapse. We call this a housing crisis, which is the fault of the evil bankers who were forced by the government to give sub-prime mortgages to people who had no reasonable expectation of ever repaying them. After all, some people need a little boost if they are to realize the great American dream – even if it points us toward the great American nightmare. That is why nearly 50 percent of them have no skin in the game. They pay no taxes.

Hopefully, that was not too difficult for the Harvard educated to follow. Simple yes, but all things in life are driven by relatively simple and unchanging principles. The enduring principle here is that credit spending and borrowing and excessive taxation does not build wealth. That is especially so if the credit card holder lacks a conscience and there is no limit on the amount he can spend.

How does a country that is racing toward economic disaster right itself. First, the people who are systematically destroying our country must understand how a nation builds wealth and understand that it has nothing to do with anyone in a political office unless of course he is good at staying out of the way. If they are bent on our destruction, which it often appears is so, it is apparent they understand this quite well.

Let me give you the formula. It has worked for most of our nation’s history. It only falters when smarter people, self-infatuated smarter people, try to fundamentally transform it.

First, start with a free nation. A nation where men are considered to be created equal with certain unalienable rights endowed to them by their Creator among which are life, liberty and the pursuit of happiness. For you Ivy Leaguers who just gasped, I swear I did not make that up.

Second, understand that the individual pursuit of wealth is one of those unalienable rights.

Third, understand that if one individual who is seeking wealth actually finds some measure of it he or she will, by their success, create wealth for others. If one should invent a snazzy little computer for which there is great desire, it will require a production facility, a distribution system, and stores in which to sell it… Wealth sought by one generates downstream wealth for many others. Nowadays, however, because of burdensome taxation and regulation and unions, that production facility will likely be located in China.

For most of its existence the whining classes have endeavored to label wealth seeking (also known as the pursuit of life, liberty and happiness) as greed and evil. This ideology brings about another enduring principle. Vilifying and subsequently punishing the goose for its success will not encourage it to produce more golden eggs.

Fourth, money invested in areas that do not produce wealth cannot produce wealth. Further, wealth taken from those who create it and given to those who did not earn it is redistribution of wealth not creation of it. That is not freedom. That is government sanctioned enslavement. Government does not produce wealth so when government grows well beyond what is necessary, supporting it drains the created wealth of the nation proportionately. For certain, there are functions of government that are necessary and that must be paid for by the citizenry through reasonable taxation – defense, police and fire, and infrastructure are among them. Using the wealth created by citizens of the republic to build monuments across the country named for politicians is not among those necessary functions of government. Neither are unnecessary government agencies.

Fifth, a nation should not transfer wealth to other nations for what it could, and for its own well-being should, necessarily produce at home. One word, energy.

Now that was not too complicated. Was it?

© 2011

2 thoughts on “Is the economy so complicated?”

  1. Common sense is not so common, is it? Seems as if SOME of We the People actually get it–while the majority (I fear) just keep thinking they can milk the cow endlessly without feeding it. I’m ready to start using my Monopoly money. After all, that’s what the government is printing!

  2. Hmm! “And so it is written” Pay heed my friends to Pendryomics 101 or suffer the consequences. May seem a bit like doom and gloom, but then such is reality. I’m stocking up on my Ball and Mason jars, which I hope are still U.S. made.

    Freeze-dried Top

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