Tag Archives: capitalism

Blame Capitalism?

You may have noticed a new theme within the mainstream media. Sometimes its subtle, somtiemes its blunt, but its there. “Blame the Rich”, blame the wealthy, blame capitalism, blame .. “God Damn America” as Rev. Wright would say.

It has emerged as the left’s rallying cry once again, just as it has throughout history. In my post on Cloward-Piven Strategy, I discussed how the creators of this strategy simply expected us to embrace Socialism because we would be told that Capitalism had failed and Socialism was needed to save us. They are laying that foundation now in order to get popular support against the rich, in the hopes that, when the economy fails, you will support Socialism in order to “Save America.”

Here are some examples:

From Newsbusters:

MSNBC: American Capitalism To Blame For Financial Crisis
By Mike Sargent

File this one under Liberal Guilt Syndrome.

In the second hour of MSNBC’s “Morning Joe”, correspondent Savannah Guthrie gave a live report on the upcoming G-20 summit from London. This was a fairly straightforward report, hitting on issues that the major parties were interested in hammering out – the French want more financial regulation, for example. And then, at the very end of the report, Mika Brzezinski threw a hanging curveball. Guthrie did not disappoint:

MIKA BRZEZINSKI,“Morning Joe” co-host: What are you hearing in terms of who the Europeans blame for this financial mess and is there any blame being put on the United States? SAVANNAH GUTHRIE, MSNBC correspondent: Absolutely. I don’t think there’s any question that here in Europe and in other places around the world, people place the blame squarely on the shoulders of the United States. And in ways, this G-20 summit which, in years past, was just kind of a meet and greet and a photo op has a lot of importance. In some ways, capitalism itself is on trial, people will really be looking at hard at some of the free market principles that have really governed the day up till now. I don’t think we’re going see some huge sea change but you know, people are taking a hard look at how we got here and a lot of people do blame this American-style capitalism, lax regulation and the pursuit of money above all things with moral responsibility sort of shoved to the side. And I think we’re going to hear a lot of those themes in the coming days.
BRZEZINSKI: All right. Savannah Guthrie, thank you very much. Great report.

For those of you keeping score at home, let’s break this down in slow motion. The economic collapse is the fault of capitalism as a system, and thus, not the fault of individuals who over-leveraged their capital – or, for that matter, individuals who overextended their financial capability by buying overpriced homes.

The normally-meaningless G-20 summit is now important because it has now become Nuremberg for capitalism itself. Scratch that. American-style capitalism – the European version is perfectly fine, because it pays attention to the moral responsibility of the successful to subsidize the unsuccessful individual’s lack of success.

Of course, although the real issue lies with the fault of the few who tarnished the success of many an honest businessman, We the Press will rouse a populist lynch mob to destroy the career of every American capitalist pig.

The Ronald Reagan quip rings all too true for the mainstream media: “We have so many people who can’t see a fat man standing beside a thin one without coming to the conclusion that the fat man got that way by taking advantage of the thin one.”

How about the New York Times claiming the Rich are keeping us in the recession with the following article :” Wealthy Reduce Buying in a Blow to the Recovery“.

The economic recovery has been helped in large part by the spending of the most affluent. Now, even the rich appear to be tightening their belts.

Late last year, the highest-income households started spending more confidently, while other consumers held back. But their confidence has since ebbed, according to retail sales reports and some economic analysis.

“One of the reasons that the recovery has lost momentum is that high-end consumers have become more jittery and more cautious,” said Mark Zandi, chief economist for Moody’s Analytics.

How dare those rich people not spend in order to get us out of this recession. It’s all their fault. According once again to the New York Times, these “ruthless”  rich people don’t even pay their mortgages.

Biggest Defaulters on Mortgages Are the Rich

Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.

More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.

By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent.

Though it is hard to prove, the CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment.

“The rich are different: they are more ruthless,” said Sam Khater, CoreLogic’s senior economist.

So now the evil wealthy don’t pay their mortages, are guilty of prolonging the recession, and caused the financial crisis. If that’s not enough for you lets blame them for Climate Change too.

From Tech Herald: “U.S. study pins blame for climate change on wealthy

In the context of the ever tricky debate of how to involve developing nations in the battle against global warming, a group of researchers at the U.S.’s Princeton University has said a fairer method of controlling carbon emissions would be to focus on the highest emitters in each country (ie the rich).

The new study, released at a time when the world looks to a new global compact for cutting carbon emissions at the Copenhagen climate talks in December, contends that a more practical way of combatting excessive emissions is to concentrate on those wealthier individuals in all countries who contribute most to increased greenhouse gases.

“Most of the world’s emissions come disproportionately from the wealthy citizens of the world, irrespective of their nationality,” explained physicist Shoibal Chakravarty, a lead author of the report and a research scholar at the Princeton Environmental Institute.

“We estimate that in 2008, half of the world’s emissions came from just 700 million people,” he said.

“We are not actually suggesting you go after the high using individuals. But we are using this approach to better capture the notions of equity and fairness in bettering national targets,” Chakravarty said in an interview with Scientific American. “So, if a country has a lot of high-emitting people, it must do more to reduce carbon emissions.”

The authors of the report say their system is a fairer way to apportion “blame” for global warming and may lead to a breakthrough in the impasse in climate negotiations.

Many developing nations, such as India and China, say because their contribution to greenhouse gases is far lower historically and per capita than those countries of the affluent West, they should be exempt from stringent emission cuts levels. However critics of this approach say that a global approach is required to combat the climate crisis.

I’m sure by now you are seeing the pattern, but I can’t resist throwing one more at you, the latest attack on the rich blames them for the ever shrinking middle class.

From Yahoo Finance: ” The Middle Class in America Is Radically Shrinking. Here Are the Stats to Prove it

The rich are getting richer and the poor are getting poorer at a staggering rate. Once upon a time, the United States had the largest and most prosperous middle class in the history of the world, but now that is changing at a blinding pace.

So why are we witnessing such fundamental changes? Well, the globalism and “free trade” that our politicians and business leaders insisted would be so good for us have had some rather nasty side effects. It turns out that they didn’t tell us that the “global economy” would mean that middle class American workers would eventually have to directly compete for jobs with people on the other side of the world where there is no minimum wage and very few regulations. The big global corporations have greatly benefited by exploiting third world labor pools over the last several decades, but middle class American workers have increasingly found things to be very tough.

The reality is that no matter how smart, how strong, how educated or how hard working American workers are, they just cannot compete with people who are desperate to put in 10 to 12 hour days at less than a dollar an hour on the other side of the world. After all, what corporation in their right mind is going to pay an American worker 10 times more (plus benefits) to do the same job? The world is fundamentally changing. Wealth and power are rapidly becoming concentrated at the top and the big global corporations are making massive amounts of money. Meanwhile, the American middle class is being systematically wiped out of existence as U.S. workers are slowly being merged into the new “global” labor pool.

What do most Americans have to offer in the marketplace other than their labor? Not much. The truth is that most Americans are absolutely dependent on someone else giving them a job. But today, U.S. workers are “less attractive” than ever. Compared to the rest of the world, American workers are extremely expensive, and the government keeps passing more rules and regulations seemingly on a monthly basis that makes it even more difficult to conduct business in the United States.

So corporations are moving operations out of the U.S. at breathtaking speed. Since the U.S. government does not penalize them for doing so, there really is no incentive for them to stay.

What has developed is a situation where the people at the top are doing quite well, while most Americans are finding it increasingly difficult to make it. There are now about six unemployed Americans for every new job opening in the United States, and the number of “chronically unemployed” is absolutely soaring. There simply are not nearly enough jobs for everyone.

While the author mentions “Globalism” and that “the government keeps passing more rules and regulations seemingly on a monthly basis that makes it even more difficult to conduct business in the United States” he has settled on blaming the rich who surely must be responsible.

The government is already limiting executive pay where it can, taxing it where it can’t (expiration of Bush tax cuts, estate tax reinstatement – all to take from the evil rich.  Where does it go?  The intent appears to be Obama’s “re-distributive change”.  Taking from the wealthy and using it to fund programs or outright hand the money to the poor.  How long before the case is directly made that the middle class needs to be rebuilt using money from the wealthy to lift-up the poor?

The media is pushing the message that, “The rich” are responsible for all our problems. They are hoping you will hold to blaming them after an economic collapse and allow a Socialist Economic Revolution to replace “Failed Capitalism.” They are trying to make you angry enough to turn a blind eye to the Nationalization of each and every company, and the forced redistribution of wealth because those evil rich are responsible for all our problems.

Obama: Keynesian Economics or Cloward-Piven Strategy

The Main Stream Media and Liberal defense of Obama’s Economic Policy has been that he is using “Keynesian Economics” to stabilize our economy and to give him time. Well it’s time to look at Keynesian Economics and see if it matches.

According to BusinessDictionary.com Keynesian Economics is:

..the assertion that the aggregate demand created by households, businesses and the government and not the dynamics of free markets is the most important driving force in an economy. This theory further asserts that free markets (despite the assertion of 18th century Scottish economist Adam Smith and other classical economists) has no self-balancing mechanisms that lead to full employment. Keynesian economists urge and justify a government’s intervention in the economy through public policies that aim to achieve full employment and price stability. Their ideas have greatly influenced governments the world-over in accepting their responsibility to provide full or near-full employment through measures (such as deficit spending) that stimulate aggregate demand.

According to Investopedia

What Does Keynesian Economics Mean?
An economic theory stating that active government intervention in the marketplace and monetary policy is the best method of ensuring economic growth and stability.

Investopedia explains Keynesian Economics
A supporter of Keynesian economics believes it is the government’s job to smooth out the bumps in business cycles. Intervention would come in the form of government spending and tax breaks in order to stimulate the economy, and government spending cuts and tax hikes in good times, in order to curb inflation.

My Analysis:

  1. If Obama were actually using Keynesian principles he would, in these troubled times, be giving tax breaks to the rich in order to stimulate and aid the economy, instead we are expecting massive tax increases on the rich which will kill the economy. Not renewing the Bush tax cuts equals a tax hike, exact opposite of the Keynesian explanation.
  2. The Health Care Law amounts to a tax increase on business forcing them to make cuts and layoffs as well as drop coverage to employees.
  3. The pending Cap & Trade Bill is a massive tax increase on every business and every individual. The Coal industry will be unable to continue and electricity/gas prices will skyrocket. The increased price of energy will trickle down to kill manufacturing in the USA and if anything is made here, it will be too expensive to purchase on top of raised domestic energy costs. The lack of suitable energy to replace coal will cause mass rolling blackouts. Not very economically stimulating, therefor anti-Keynesian.
  4. The Financial Reform Bill does little to Wall St. but affects banks that would loan to small businesses, in short, don’t expect any loan. No loan no business, no business no contribution to the economy, hence, anti-Keynesian.
  5. The Many Stimulus Bills, on the surface appear keynesian, borrowing money, even deficit spending, in order to stimulate the economy and create or save jobs. However once you look into to the actual projects and the prices for them, you realize the majority of these projects are complete wastes of money and are therefor frauds which have no positive affect on the US economy, lasting or temporary.

I have made the case he is not using Keynesian Economics, now I’ll explain what I believe he is doing.

The Cloward-Piven Strategy from DiscoverTheNetworks.org

“First proposed in 1966 and named after Columbia University sociologists Richard Andrew Cloward and Frances Fox Piven, the “Cloward-Piven Strategy” seeks to hasten the fall of capitalism by overloading the government bureaucracy with a flood of impossible demands, thus pushing society into crisis and economic collapse.”

“In their 1966 article, Cloward and Piven charged that the ruling classes used welfare to weaken the poor; that by providing a social safety net, the rich doused the fires of rebellion. Poor people can advance only when “the rest of society is afraid of them,” Cloward told The New York Times on September 27, 1970. Rather than placating the poor with government hand-outs, wrote Cloward and Piven, activists should work to sabotage and destroy the welfare system; the collapse of the welfare state would ignite a political and financial crisis that would rock the nation; poor people would rise in revolt; only then would “the rest of society” accept their demands.”

“The key to sparking this rebellion would be to expose the inadequacy of the welfare state. Cloward-Piven’s early promoters cited radical organizer Saul Alinsky as their inspiration. “Make the enemy live up to their (sic) own book of rules,” Alinsky wrote in his 1989 book Rules for Radicals. When pressed to honor every word of every law and statute, every Judaeo-Christian moral tenet, and every implicit promise of the liberal social contract, human agencies inevitably fall short. The system’s failure to “live up” to its rule book can then be used to discredit it altogether, and to replace the capitalist “rule book” with a socialist one.”

Another title to this strategy has been “The Strategy of Manufactured Crisis” to go with what we have heard from this administration we could call it “The Strategy of Never Waste a Crisis” but I digress…

The objective is quite simple, overwhelm the system with impossible demands and it will collapse, in the chaos that follows you implement a Socialist system to “Save” everyone because “Capitalism falied” them and they will simply accept it.

Are we seeing this in play? I believe we are – this has been Obama’s plan from the beginning.

  1. The National Debt is near the breaking point and we have been warned by Moody’s that if we don’t stop spending we will lose our AAA credit rating, yet Obama continues to spend frivilously.
  2. Even the EU, which is in dire straits with riots in Greece and Spain has decided to stop the spending, yet Obama chastises them for it and demands they continue spending like he is.
  3. Obama’s non-Keynesian economics do not bolster the economy, but create uncertainty. Uncertainty in business does not encourage hirings, which would stimulate the economy, but layoffs and cutbacks just in case.
  4. The way he has demonized the rich, in his own words, and other comments made by Obama demonstrate that he is no friend of business or free market but instead has Socialistic goals.
  5. The Health Care Bill did nothing to lower the costs of Healthcare itself and forces insurance companies to raise premiums in order to cover all the new people added to the rolls that have existing treatment needs but never payed into the pool. By denying them the power to raise their prices, Obama is forcing them into Bankruptcy. He will then Implement the Socialistic “Public Option” to replace the Insurance Companies. Nancy pelosi did promise us that we, “will be begging for the Public Option.”
  6. The rampant unemployment due to Obama’s economic policies is bankrupting the entire State/Federal unemployment benefit system and overwhelming it. Directly inline with Cloward-Piven goals. The majority of the 50 States are at or near bankruptcy and cannot afford to pay for their own infrastructure let alone all the unemployed in this “Recession”
  7. Those lovely stimulus bills did not spend responsibly in any way, shape, or form. You can do a simple google search and find idiotic projects next to mindboggling prices. The worst part to this waste is that quite a bit even went overseas to be wasted there. Telling Hookers to drink responsibly in China, Fossil research in Argentina, and more, which could have absolutely 0 positive affect on the US economy.
  8. The rapid expansion of Government agencies and infrastructure only hastens economic collapse, not slows it. Government by nature is a leech feeding off of private business. The Government does not generate any income only takes it from productive citizens in the form of taxes and therefor cannot pay for itself.
  9. And finally, the last straw on the US economy’s back will be the Cap & Trade bill if implemented. Any business not over-outfitted with alternative energy will cease to exist on its own. Big Business will cut production, institute mass layoff’s, and dramatically draw down operations. Small business will die. This is economic armageddon and the deathblow to free enterprise and Capitalism.

Once fully implemented the Cloward-Piven Strategy will collapse all free enterprise. Obama will then move to Nationalize everything in order to “Save the economy” This I believe is where Obama is bringing us. However, The strategy will not end peacefully regardless of what its inventors predicted. The American People will resist the implementation of Socialism and will always rally behind freedom, not control.

In my opinion this Manufactured “Economic Collapse” will bring about riots and chaos in the streets worse than we are seeing in Greece and Spain. When we have radical militant groups such as The New Black Panthers and Farrakhan’s Fruit of Islam preaching racial hatred and violence, and Unions such as the SEIU who feel storming the home of a banker is ok, you can infer that their will be great violence from the Left .  This is not part of Cloward-Piven but part of the Communist takeover. Obama prepared for the ability to use violence in January with his “Council of Governors” Executive Order wherein 10 Governors will be chosen to run the country with Obama in the event of Civil Disturbances and Martial Law amongst other factors.  Obama willl use the violence from the economic collapse, fueled by the racial divide the Left is bringing along with anti Capitalist sentiments,and the clearly biased media to implement Martial Law and suspend elections and freedom itself. They have tried to bait the Tea Party into being the violent group but that has proven ineffective so now he waits for the left to attack.
According to the Army Times we already have Soldiers with “Homeland Tours” as a “New Dwell Time Mission” beginning on October 1st. 2010 for deployment within the USA.  “They may be called upon to help with civil unrest and crowd control or to deal with potentially horrific scenarios such as massive poisoning and chaos in response to a chemical, biological, radiological, nuclear or high-yield explosive, or CBRNE, attack”.  The article goes on to detail all the extensive training they are recieving for this new mission and new equipment such as tazers.
Cloward-Piven strategy is being used as a means to an end, nothing more and according to the Left’s hero Saul Alinsky, “The ends justify the means” regardless of the suffering caused. All for their greater good unrealistic Communist Utopia.  The Cloward-Piven strategy won’t end the way its creators planned, but will have been effective none the less.

If interested in reading the original article written by Francis Fox Piven and Richard A. Cloward, “The Weight of the Poor: A Strategy to End Poverty” http://www.commondreams.org/headline/2010/03/24-4
You can find it here at “CommonDreams.org” a website that describes itself as follows:

“CommonDreams.org is a national nonprofit, progressive, nonpartisan citizens’ organization founded in 1997 by political activists Craig Brown and his late wife, Lina Newhouser.
We are a powerful online voice for change in America.
With millions of monthly readers, we have become one of the top progressive websites.”

Yet another link between crushing capitalism and implementing Socialism as a goal of any progressive policy.

UPDATE August 1, 2010

Heres an amazing video on Cloward-Piven Strategy

Hattip to @AlinskyDefeater

Follow StopObama2012 and Conservative Daily News on Twitter

America's New Rulers

As we approach another Independence Day, I reflect on what has made this nation great and fret over the actions being taken that threaten its greatness.  What cold irony it is that we celebrate our independence from one tyrannical ruler only to find ourselves struggling against an entire collection of them.

The threat is not from radical Islamic terrorists, small groups of  home-grown radicals or the hyperbole espoused by pundits from both ends of the political spectrum.  It is from those we chose to put in power – our elected officials.

Once power is gained, it is not easily relinquished.  The simple human desire for self-preservation makes it a most-difficult task to voluntarily weaken one’s own position.  It takes an extraordinary person to unselfishly accept loss of power – I would submit that few if not zero of those exist in power today.  What that creates is a new aristocracy.  Not one of inherited title, but of entitlement none-the-less. Tocqueville pondered the value of Democracy over Aristocracy, we are allowing the worse to replace the better.

How do they make their death-grip on power palatable to a large-enough portion of the American voting population?  They condemn that which dilutes their power – freedom.  They don’t directly attack individual freedoms, they use shame to get enough of the citizenry to give it away on their own.

Achievement is ego, success is greed, self-reliance is selfishness.  How many times have we heard it?  Selfish CEOs, greedy bankers, assaults on State and individual rights – all to diminish that which made this nation great.

Those of us that produce are selfish.  We work hard to keep what we have earned and to have the right to assist those that deserve the help – which is certainly different than those that might demonstrate need.  A person can be needy of a thing yet not be deserve it.

Why is it immoral to produce something of value and keep it for yourself, when it is moral for others who haven’t earned it to accept it? If it’s virtuous to give, isn’t it then selfish to take? – John Galt, Atlas Shrugged

This denouncing of those who produce, create wealth, and succeed serves only to take power from individuals and concentrate it in the government.  Alexis de Tocqueville wrote, “Once works of the intellect had become sources of force and wealth, each development of science, each new piece of knowledge, each new idea had to be considered as a seed of power put within reach of the people.”  He understood that a man’s success took power from central authority and gave it to the people.  Our leaders understand this relationship and are working to reverse the flow of power by making the desire for success and reward .. evil.

The self-doubt this creates among the producers in the economy is dangerous.  At what point will those that create wealth quit doing so because they do not wish to create wealth for someone that chooses to produce nothing?  From another perspective, if the government takes from the producers and gives to non-producers, how long before all benevolence is performed through government programs?  In Atlas Shrugged, John Galt weighs these questions (emphasis mine):

You know that you can’t give away everything and starve yourself. You’ve forced yourselves to live with undeserved, irrational guilt. Is it ever proper to help another man? No, if he demands it as his right or as a duty that you owe him. Yes, if it’s your own free choice based on your judgment of the value of that person and his struggle. This country wasn’t built by men who sought handouts.

This country was built by men who sought to earn, produce, trade.  They asked for and expected nothing that they did not work for.  This morality  is one that is being shamed, pushed into the shadows, broken.

Power must be re-distributed, wealth must not.  This Independence Day let us celebrate those still willing to be productive and take the power back from the new aristocracy in America.

Ford Held Hostage By Obama Administration

The government having a major stake in an American company was obviously in-conflict with the Constitution, but the United Auto Workers union (UAW) having a large stake in GM and Chrysler was an outright conflict-of-interest.  Obama followers said that it would not cause any problems and that Conservatives were just overreacting.  Bloomberg.com reported today, that the UAW is refusing to give Ford the exact same concessions it gave to the GM and Chrysler which will put Ford at a competitive disadvantage against its two propped-up competitors.

“Ford, the only major U.S. automaker to avoid bankruptcy this year, sought concessions similar to those secured by General Motors Co. and Chrysler Group LLC…Ford has said it needs the concessions to ensure that it doesn’t have a labor-cost disadvantage against GM and Chrysler, which unloaded debt, closed plants and eliminated dealership contracts in their court restructurings…About 75 percent of members voting nationwide rejected the deal, one of the people said. It called for a six-year ban on strikes over wages and benefits.”

Concerns over the UAW taking this approach at strengthening their financial stakes in GM and Chrysler by holding Ford to a non-competitive agreement have now been proven true.  The UAW stands to take a possibly-fatal financial blow if GM and Chrysler do not succeed.  By trading cash for stock in those companies, the UAW is now relying on the two bankrupt car companies to return to profitability.

GM is coming back to the government for another bail-out as it’s restructuring plans are not making the company successful.  How much of a hand does the Obama administration have in formulating this strategy to ruin the only non-government owned, non-union backed American automotive company?  The President would lose a large portion of his support if the UAW was destroyed by the fall of GM and Chrysler.  The administration now has a personal interest in seeing Ford at a disadvantage to its two new assets.

This is precisely why the government should not get involved in private industry.  It cannot be impartial, it will destroy the free-market system one industry at-a-time.  This is the disassembly of capitalism, “brick-by-brick” as Robert McChesney, an Obama Czar, claimed they would do.  How long until America wakes up?

I, for one, hope Ford shuts-down every factory in Michigan between now and the end of its current UAW contract (2011).  FMC should then open even more plants in right-to-work states such as Texas and see where the competitive advantages are then.

‘Going Galt’ Without Realizing

Going Galt Atlas Shrugged In March of this year, there was a firestorm of libertarians and ultra-conservatives taking up the call of John Galt from Ayn Rand’s Atlas Shrugged.  Galt is a bright inventor/engineer that decides to quit furnishing his skills to the economy when his company goes Marxist.

Several on the right are considering a Galt-like removal from the economy to starve the money-hungry habits of an increasingly-socialist government.  Others are becoming Galtist without even knowing it.

Many conservatives are shedding debt and increasing assets at an historic pace.  By not needing to service debt, they would need anywhere between 5% and 20% less capital than someone living off of lines of credit from banks and credit card companies.  The popularity of get-out-of-debt personalities such as Dave Ramsey and Clark Howard is massive and escalating.  These personal finance empowerment experts are motivating Americans to shed debt and unnecessary purchases.  According to a Wall Street Journal Article, “Total consumer credit outstanding, which includes everything from credit-card debt to loans for recreational vehicles, fell $12 billion in August, or at a 5.8% seasonally adjusted annual rate, the Federal Reserve reported Wednesday. It was the seventh straight month of declines”. Conservatives are eating-it-up, the whole thing, all the way.

If the major bread winners in the economy stopped buying a new BMW or SUV every two or three years that means that they need far less cash flow to service their lives.  The real drivers of the economy won’t need to grow their business and some are deciding that enough-is-enough by getting what they get and not going after much more.  These people represent almost half of the job creation in the entire U.S. market.  What is pushing them to consume less, need less, and therefor produce less?

As income increases, disproportionately so do the taxes, bureaucracy, risk, disparagement by the socialist-minded left and responsibility.  An Entrepreneur’s appetite for risk decreases as each of the negatives increase in an increasingly-socialistic atmosphere.  Without a tolerance for risk, these captains of the economy will cease to take out loans to finance their future business growth, cease to hire additional workers, cease to find additional ways to increase revenues that will only get increasingly sent to the government.  Have we passed the risk/reward threshold?  Have the capitalist-hating liberals finally crushed the spirit of the entrepreneur?  I don’t think so, but we are approaching these limits rapidly.

Constantly spouting wealth-hating rhetoric, putting in increasingly anti-capitalistic policies, and taxing out high-earners is focusing the mindset of an already fiscally-conservative crowd.  This drives them into sharing the ideals of Ramsey and Howard, shedding liabilities and only adding fully-owned assets or even worse for our Keynesian approach to money – saving. The savings rate in America increased by almost 5 times to 6% in the second quarter of this year. We’re saving at a higher rate than any time in the last 20 years and many economic experts think that rate could exceed 8%.

If you believe the news, the increased savings and reduction in credit balances are due to a “credit crunch”. Hooey! Consumers aren’t borrowing. On Bloomberg.com, they state that, “only 8% of adults plan to increase household spending…” while 3% will spend less and a little more than half will spend at their current levels.

This not only takes the interest on credit lines out of the picture, but also takes serious private liquidity out of our financial system.  The U.S. uses a fractional reserve system.  Basically, a bank must hold $1,000 to be allowed to loan $10,000 (not the real ratio, but good for demonstration purposes).  This creates liquidity as $9,000 goes into the economy that did not previously exist.

If the major wealth in the country no-longer believes that some margin of debt is o.k., where will this liquidity come from?  The government.  Now the cycle of artificial public liquidity (loaning by the Federal Reserve, a.k.a. “printing money”) requires increasing taxes, more-and-more people either unsubscribe to the idea that debt is fine or increasing numbers of them go bankrupt and won’t be able to borrow.  A liquidity crisis spiral is created until the big-government spending-based economy collapses under its own weight.  That was the goal of John Galt in Rand’s novel and it would appear that it may be occurring not because people are intentionally “going Galt”, but because they are being driven to it by ever-increasing government spending and derision of capitalistic entrepreneurship.

Reagan had it right, you pump up this economy by empowering the hard-working, wealth-creating capitalists. I’m not sure the current administration understands that.. at all.

Liberals Hate Entrepreneurs – They Just Aren’t Sure Why

Capitalism posterCapitalism is the new “ism”. It is the thing we are all being told to hate, abhor, avoid, and destroy. It’s the “c-word”.  The centrist, elitist mobs are trying to show that capitalism has failed by singling-out CEOs?  What about the hundreds of thousands of small-to-medium sized business owners that are true entrepreneurs.  The liberals just don’t get it, but they will.

If people want to fight corruption, they should. If they want to fight injustice, please do.  Fighting against capitalism does neither and promotes both.  The problem with capitalism isn’t greed, it’s the government.

Two entirely-flawed arguments against a free-market system are in-play.  The failure of the free-market system to keep health care costs down, and the recession in which we currently find ourselves.

First, our health care sector does not function as a free-market system.  When was the last time that you as a consumer tried to figure out whether one doctor’s office charges were less than another (not the co-pay, the actual charge).  When a doctor recommends a certain procedure, we will most-likely just have the work done, or at-best ask for a second opinion.  No one is going to go shopping for the best “value” for that procedure.  The actual costs in health care are hidden from the average consumer so we don’t evaluate them [link]That is why costs are spiraling.  Not greed, not some intrinsic free-market cruelty, it’s simply that if we don’t know what it costs, no one has to care.  Oddly-enough this insulation mechanism also puts many people into debt with credit cards… it’s not real money so it doesn’t really hurt to spend it.

Secondly, the financial collapse last year was not due to the greed of CEOs as the left-wing media would have us believe.  It was actually the power-gobbling, money sucking, worthless crowd in Congress.  By pushing the banks and institutions to loan money to people that did not have the ability to repay it, the government put banks in jeopardy.  To try and deal with the risk that they were forced at gunpoint to take (Community Re-investment Act anyone?), they tried re-packaging the loans into mortgage-backed securities.  Unfortunately, when the loans started going into default, now unwitting investors were in as deep as the banks.  Thanks Barney Frank, brilliant job.  What’s worse is that Frank perpetrated the biggest scam of them all, he pushed off his greed and ineptitude onto “greedy CEOs”.  That’s the only smart thing he did and it benefited no one but Barney.

Liberals are now taking up the call of Pelosi, Dodd, and Frank.  Down with capitalism, down with CEOs, down with entrepreneurs!  I say, it’s time to fight back.  Small-to-medium-sized businesses account for more than 42% of all jobs in the U.S. – almost half.  Maybe that 42% doesn’t need to be open to anti-capitalists.  Heck, maybe they can get a union job somewhere, because of course there’s no top-end greed in the union shop.  Where do those idiots think the rest of us real people are going to find jobs if there is no free-market system?  In the government?  Wait, the government doesn’t make anything, it’s only method of bringing in money is taxes, but without the market… who will they tax?

When they’re bashing capitalism, they are bashing small business owners.  They are bashing success.  They are bashing well-rewarded hard work.  They are bashing everything this country was founded upon.  I submit to you that they do these things, because they don’t understand business, work, or rewards.  they think that everyone deserves a piece of the pie, no matter how little they contribute to the making of it.

In Europe, the tide is turning.  One-after-another, the socialist candidates are being thrown out of office and replaced by free-market leaders.  Even England’s Brown is seeing his poll numbers drop into the chasm.  The era of big government is ending and being replaced by the era of big entrepreneurship.

Vote out liberalism in 2010: Take Back America!

A good, short read on the truths about capitalism

There has been much capitalism-bashing going on in the media.  Clearly the anti-caps have no idea what they are against and even less of an idea of what they are for.  I don’t have a lot to add to this well-thought, well-written paper by Dr. Ronald Nash.  I just know  I’ll be looking for even more of his writings.  I hope after reading, you will add your comments to start what should be a lively discussion on the pros and cons of capitalism, socialism, and what the left is really hoping to accomplish.

In Defense of Capitalism
by Dr. Ronald Nash

Anti G-20 Mobs Set Sights on Pittsburgh

Anarchists, environmental groups, and other left-wing radical groups led the way for anti-capitalism protests in Pittsburgh on Thursday.

Reasons for the march were varied.  Several groups were there to enforce messages of lowering CO2 emissions.  Others were protesting the situation in Burma, the fact that 20 people control the global economy, social justice, pushes for anarchy, ending hunger, stopping war, you name it.

While  nowhere near as numerous as the conservative march on Washington D.C. earlier this month, it did turn violent at times.  Police and protesters traded rocks, tear gas and bean bag shot as the marchers attempted to ignore police orders to discontinue the illegal march.

The news media went out of its way to ignore the more violent sections of the march and the New York Times went so far as to claim that the entire protest was peaceful with no mention of the rock-throwing, dumpster tossing thugs.  UPI at least bothered to mention that some tear gas and rocks were traded.

Fox news interviewed a few protesters that said the protests were largely peaceful.  When asked if they would condemn the destruction of property and attacks on police, they agreed that it was happening, but they would not call the actions wrong.  The question was evaded in typical elite-speak and by turning the question around on the interviewer.   They can’t condemn the illegal actions of their fellow protesters, because they agree with it and hope it continues.

When the 9-12 marchers went to D.C. predictions of violence, perhaps near militant in-nature, were going to break out.  Nothing even close occurred.  Exactly zero people were arrested after having done zero dollars of damage to public or private property.  The conservative marchers were there out of love for their country, its constitution, and everything it represents.  When the left marches, it’s to demonstrate hatred and anger for the country that gives them the right to voice that opinion.  Who do we really need to fear?

Health Care Reform Does Not Increase Competition

For months we have been fed several mis-truths, myths, and outright lies about health care.   It is certainly worthwhile to evaluate all the individual frauds, but we may be missing the forest for the trees.

The major reform that the President and Congress are proposing is to reduce costs by increasing competition.  Unfortunately, nothing they are planning will increase competition at the point of delivery at all.  In-fact it will diminish it as costs will be even further hidden from actual consumers.

Liberals are stating that the free market has failed to keep costs low.  Our health care industry is nothing close to free market.  In a free market system, the consumer (patients) would evaluate how effective a producer (doctors, hospitals, care facilities) is and measure them against competitors.  As most people under standard insurance plans pay their set co-pay regardless of what the provider actually charges, they have no incentive to shop around based on value and hence, the providers have no market-based incentive to control costs.

Imagine a health care system where we had to decide how to spend our own health care dollars.  Doctors would have to compete on service and price.  They would be forced to find efficiencies within their own offices and hospitals to be able to be competitive in the marketplace.  That is not how it works today – at all.

High-deductible health plans paired with Health Savings Accounts (HSAs) put many health care consumers in the driver’s seat.  Because they are spending real money out of an account that they manage, these consumers tend to shop for their health care services, abuse the system far less, and consider less-expensive drugs and treatments that are as effective.  This kind of health plan is certainly closer to showing how a free market health care system might work.  Unfortunately, not everyone is responsible enough to manage their own health care costs.

In our current system, insurance companies work as an insulator between the consumer and producers.  The providers might perform tests or treatments that are more-expensive because the insurance will pay for them.  If they had to sell the cost to the consumer, the patient might actually push back and ask for alternatives and evaluate them all based on effectiveness and cost.

The reform packages attempt to do this value-based evaluation by setting up 10’s of bureaucracies to evaluate the cost and effectiveness of treatments.  Unfortunately it will work just like insurance.  They will have fee schedules that say that they will pay for those treatments and what they will pay.  The only one making a decision at the point-of-care will be the doctor and if the expensive treatment will get paid for, the doctor could use it.  The patient will pay their co-pay regardless if the most or least expensive treatment is proposed.

If the person making the health care choices (patients) is not making those choices based on cost, there will be no downward pressure on health care costs.  If hospitals and providers knew that patients might choose less-expensive, but effective, institutions, they would be forced to use the most cost-effective solutions, not the solutions they could charge the insurance company the most for.

The health care reforms proposed will hide the costs of care even more.  Smaller co-pays, no maximums, etc.  That money has to come from somewhere.  It will come from the premiums of everyone that is not too poor to pay.  If a government-run plan is added, it will come from taxes as well just like Medicare and Medicaid.  Health care won’t get cheaper this way, it will just be less obvious to us that it’s more expensive.

Other Articles on Health Care Reform:

Health Care Reform Analyzed: The truth about HR3200

Baucus’ Bill Revealed

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