An alternative to Atlas Shrugged; Atlas Spent?

In Ayn Rand's novel Atlas Shrugged, our capitalist heroes ultimately defeat the collectivist power grab by going on strike. They drop out of society, taking their ingenuity, productivity and imaginations with them. Society soon crumbles and the bureaucrats beg for their return.

In real life, there are problems with this approach. Not the least of which is the nature of the capitalist. When a capitalist sees a problem, he or she sees opportunity. They want to fix it. They want to fix it profitably, but they want to fix it. When they see an insurmountable problem (or so perceived by general consensus) they see an opportunity for an enormous return. The other problem is that, unlike in the book, societies don't generally blow up quickly. They die a slow and agonizing death. Rome didn't fall in a day. It took centuries. Personally, I don't want to wait that long.

If you believe in capitalism, you believe it works because it takes advantage of human nature rather than fighting against it. There has been much made of the fact that nearly half the people who file taxes in the U.S. pay no income taxes. Thus, they have little concern about rising taxes and increased regulation. But what if they did pay taxes? What if they had a taste of capitalist success? What if they saw things from the same perspective you do? It is not human nature to do yourself harm.

So how do you create more tax paying capitalists? Invest in your business, locally. Look for small businesses at the local level that can provide things for your business. It may cost you more, but there is value to be had in this approach. For one thing if you're paying 50+% in taxes on your income anyway, why not get the most luxurious office equipment and furniture available (in town)? Make your workplace comfortable, cozy, attractive. This will bring down your bottom line some, but after taxes, it's not that big a difference, and as a bonus, you create tremendous goodwill at the local level. Look for local service providers and suppliers as well.

When you place a $3000 order with a multi-billion dollar company half way across the country, do you think they're bubbling over with gratitude. Now spend that $3,000 or $4,000 at a local shop that averages $2,500 in revenue a week and see if it doesn't get their attention. You can still shop quality and price, at the local small business level. It's going to be more costly than using a super-efficient giant producer, but even if you just spend a portion of your operating capital locally, the return in goodwill can be well worth it. Also, rather than letting the government pick winners and losers with your money, wouldn't it be smarter to eliminate the middle man and pick some winners yourself? Who do you think is a better judge of the worthiness of an up and coming entrepreneur? You, or a panel of bureaucrats at the Department of Commerce?

Further, if this were a trend that caught on, successful small business people would become much more aware of the burdens, speed bumps, roadblocks and useless paperwork, regulation and make-work that government imposes on the business community. They would have to hire help, who, now having jobs, wouldn't have the time or inclination to "Occupy Main Street" or worry about where their next condom is coming from.

In short, if you want to keep the country from going down the drain, don't look to the global financial markets. Look to the local market and see who you can lift up. Create allies and compadres at the grass roots level. Someone who is defending an income of $50,000 a year and rising is likely to be much more passionate in that defense than someone who's already sitting on $250 million hedge fund account. They may not have the same resources, but they have the same number of votes come election day, and if you want to see change in government across the board, you need representation at the City Council in places like Falcon, Colorado and Springfield, Missouri, not just in New York and Los Angeles.

Waiting for society to collapse and come to its senses is a long wait for a train that aint coming (to steal a line from Firefly). Investing in a new generation of capitalists seems much more win/win and intuitively more capitalist to me than hoping the populace will eventually become miserable enough to see things your way. It's also faster, more likely to succeed and more gratifying.

The best government stimulus plan; stand down

from Examiner.com

Ronald Reagan was right when he said the scariest words a person can hear are "I'm from the government, and I'm here to help."

If you hold government action on the economy in check, market cycles are fairly predictable. Low interest rates, falling real estate prices, companies going out of business, leads healthy companies and entrepreneurs to snap up assets on the cheap. Some people take huge losses, while others take advantage of huge opportunities and the new growth cycle begins. That's not happening today. The reason is that government has come to the rescue. In doing so it has caused so much uncertainty in the marketplace that making major investments in new projects and ideas at this point would be irresponsible and dangerous.

Nobody wants to commit sizable amounts of time resources and money into a company or project, only to find out six months later that the government has decided to subsidize a competing company or project. Who wants to hire 1,000 new workers only to find out later that their unemployment insurance has doubled and new benefits have been mandated. You don't want to borrow a lot of money right now and then have to refinance it in an environment of sky-rocketing interest rates due to runaway government debt.

Winners and losers, or at least survivors and non-survivors, are increasingly being selected by a handful of government policy makers rather than by 300 million individual consumers. Believe it or not, the mob is much easier to predict and more efficient at directing resources than any Washington committee, no matter how many degrees they have hanging on the wall.

If the government truly wants to help, they need to stand down. Have some faith in the American people. We can work this out. The road to the next Great Depression is paved with good intentions. Pull over and let us drive for a while.

The Economy - Prescription for Recovery

To understand how to correct the current downturn in the economy one has to have a good sense of what got us here. For the past couple of decades, corporate earnings growth has been strong. Individual disposable income, not so much. Consumers have been living on credit and their earning power has not kept pace with spending. Banks are now having to face the reality that a lot of the money they loaned out isn't coming back.

I'm in the marketing products business. I don't regard my job as selling ads and printed products. I regard my job as helping my customers increase their revenue and earnings. If my customers don't do well, I don't do well. Government needs to come around to this same realization. Individuals need to be empowered to have higher earning potential. They don't need handouts and make-work programs that are the jist of the the "stimulus" packages now being proposed. We are not going to rebuild a thriving private sector by growing government.Government needs to get out of the way. The capital gains tax needs to be eliminated. People need to have incentive to earn, save and invest. It's hard to get excited about the prospect of netting 30% on your investment and then giving a big chunk of it to the government. We need less regulation and paperwork. The income tax needs to be eliminated. How many hours a year are wasted filling out tax forms and complying with employment regulations and filings? When you pay an independent contractor, they do the work, you write them a check. Transaction complete. When you make them an employee you get a helpful guide to federal payroll regulations that proudly proclaims on the cover how simple it is. The instruction guide is 70+ pages long and much of it just refers you to other forms and manuals. As for taxes, a sales tax form takes about ten minutes for a merchant to complete and most taxing authorities offer a small rebate in return for your work. The monstrosity that is the income tax code requires a team of professionals, none of whom really understand the whole thing.

Regulation, taxation and government intervention in general is mostly well intentioned, but it has the the opposite of the desired effect. In the interest of providing security and stability we are stifling the dynamics that have made this country so successful. The Soviet Union provided security and certainty. Everyone had Jack Squat, but it was predictable. Is that where we want to go?

Risk taking is not something that needs to be eliminated. It needs to be encouraged. It has to come with potential reward and we have to accept the consequences of failure. There's no way to win if there's no way to lose. The incremental steps taken by government to reduce or eliminate risk are ruining the game. Get out of the way and let us play.

The Great American Garage Sale - Playing the Crash

The Fed cut rates, in intermeeting move today by 75 basis points for the first time since 1984. Congress and the administration are actually in agreement on the need for a stimulus package. This has lead traders to wonder, "what do they know that we don't?" This has actually caused more panic and selling in the market. How should one repond to these circumstances? Time to go shopping.

This is the most opportune point of the market cycle. When almost everyone agrees that the economy is heading for a train wreck. Goods, services, commodities get cheap and nobody's buying. I would not recommend putting all your money to work in one fell swoop, but if you've got some saved up for a rainy day....it's raining.

In the stock market, start dollar cost averaging into it. That is, purchase the same amount of a broad basket of stocks (exchange traded index funds) each month or every couple of months. In real estate, start looking for bargains and pick one up when you have the opportunity. Spend the next year or so refurbishing and getting ready for the turn in the market. In business, rent a store room and start picking up equipment on the cheap. For consumers, spend your money productively on home repairs, landscaping improvements, etc. Start visiting pawn shops, thrift stores and flea markets on occasion. Good stuff is about to show up there. Use downtime to gain education in something you're interested in. There's free education all over the internet. Go get some.

The train is in the station. Don't wait for it to start to pull out and join the clamor to get on. Find yourself a good seat now and enjoy a good book while anticipating the next leg of the journey.