Monday, February 25, 2008

Fight the Power, by Exploiting the System

It seems every generation of American youth dreams of changing the world. They often become disillusioned because they start with the false premise that to make positive change they must tear down the capitalist system; "fight the power".

They fail to realize that they have the ability to use the system to "be the power". Today's generation of youth is in a unique position to spark tremendous change in the world by fully exploiting and promoting capitalism. The single biggest thing they can accomplish is to bring about the fall of the oil market and all of the monopolies, dictators and terrorists who depend on it, through their purchasing decisions.

Don't demand alternative fuels. Buy them. Use them. Figure out how to profit from them. There are cars coming to market now like the Aptera, that get over 100mpg and cost 30K or less. Order one, email them, let them know you're interested. There are companies like Innovalight working on Solar Ink that can revolutionize the solar industry. Let them know that if and when they develop a commercial product, you're ready to buy. At you'll find urban wind turbines. Give them your input, your ideas, ask questions, demonstrate demand.

There are a host of companies that offer biodegradable utensils, reducing the need to haul away and dispose of trash. Use them.

Eliminating our dependence on foreign oil is not going to happen anytime soon if "alternative" fuel remains the domain of the hippie and the tree hugger. Alternatives wont work in the long term if they need government subsidies to survive in the market. Look for good ideas and support them with your dollars. Better still, learn to employ them to make more dollars. Money talks. You can bring about real change or you can bring about another bumper sticker.

--"What the world needs now is another folk I need a hole in my head"

--"If you want to change the world just shut your mouth and start to spin it"


Sunday, February 3, 2008

Price Caps and Interest Rate Freezes - A Layman's Guide

Some on the left of the political spectrum have proposed "solutions" to credit problems and health care costs that involve price caps as well as freezes on interest rates. A knee jerk reaction might be that this is a good idea. After all, if higher prices and interest rates are hurting people, why not just make them illegal? The politicians that support these things have been involved long enough in national policy and its effect on the market to know better. Many voters have not. This is why they keep proposing them. Here's a brief explanation of why these policies have never and will never do anything but harm the economy.

The real issue is whether the allocation of capital and resources should be determined by a few individuals or by the cumulative effect of billions of decisions made by free individuals daily. The first is fascism (although proponents will never call it that). The second is the free market. The free market allows rapid adjustment and exposes both good and bad ideas rather quickly. A free individual can make a judgment call on the fly, whereas a committee must schedule meetings and develop consensus which can be largely influenced by political considerations that have nothing to do with good economics.

Price caps for example, have been tried and have always failed. Yet, they continue to be proposed because it can garner quick votes from people who aren't fully aware of the consequences. You have to remember that industries and corporations are not buildings and logos. They're people. If someone told you that your revenue will never be allowed to increase or your income will be determined by a government agency, how long would you stay at that particular job? Everyone wants to do better and improve the quality of their lives. If a new law made that impossible in your current field, you would likely start looking for another field. The result will be to drive the best and brightest out of the industry in question, as well as investment dollars. In health care for example, the industry would not go away, but the quality and the pace of innovations would nose-dive.

The mortgage industry extended too much credit to bad risks; people who couldn't afford to keep the commitments they were enticed to make. Cosequently mortgage companies have had to take huge write-downs on loans that will not be repaid and have had to tighten credit availability. These are market forces in action. The market has forced the industry to adjust because it was heading down the wrong path. Capping interest rates would only make credit tighter. If one can't charge higher rates for higher risk, one will not take the risk. Making risky loans is....risky. But eliminating risk means eliminating innovation. The more one ensures that failure can't take place, the more one ensures that success can't take place. For innovation to take place, we must allow failure. If you lose a home you couldn't pay for, you haven't really lost anything. It was never yours. Financial calamity can be traumatic. It's not the end of the world. People deal with it and recover from it every day.

Prices and interest rates are symptoms, barrometers, governors that tell us how our decisions are impacting the decisions of others. Removing these governors would essentially make us a market dictatorship. Your purchase and investment decisions are your votes. You determine whether or not more of something is produced and at what price every time you buy something. You determine what interest rates ought to be every time you sign a financing agreement. Capping prices and freezing interest rates would eliminate your right to vote in the marketplace. Learn how the market really works. Don't join the chorus of those who would destroy it.

Friday, February 1, 2008

Capitalists Wake Up!

Pundits of all political persuasions are predicting a high probability of a Democrat victory in November. The Democrats are promising a big shift toward socialism in the guise of health care. Entitlements are already 60% of the federal budget and expected to go to 70% soon, even without government health care. They are also promising higher taxes while bemoaning the fact that companies are moving their operations overseas. The American pubic is eating it up because there is no counter offensive. We are being drawn to socialism like moths to a flame.

Meanwhile the Republicans are debating gay marriage, Roe vs Wade, and prayer in school. It's the 7th inning. We're down by 5 runs and the alleged proponents of free markets and free people are out in right field picking strawberries. Wake Up!

The American way of life is about to be substantially changed for the worse. Get your head in the game. If we're going to beat this thing back we need ALL freedom loving individuals on board, the gay ones, the straight ones, the corporate ones, the black ones, the white ones, the hispanic ones, the Asian ones, the Christians, the Jews, the Atheists, the Muslims and the long-haired, dope smokers.

Picture your grandchildren standing in line for their weekly allotment of toilet paper. Do you think they'll be proud that you upheld their right to have "In God We Trust" remain on their ration cards while you watched capitalism die?

One might point out that things looked much bleaker when Carter was president and Reagan was able to turn things around on a dime as a point of optimism, however, Reagan had been unapologetically promoting capitalism and free markets for decades before he finally won his party's endorsement. There is no Reagan in the bullpen right now. There's no messiah going to rush in and save the day. If capitalism is to survive as our national way of life we'll need a grass-roots rejection of socialism in all its forms.

There is no guarantee that quality of life will continue to get better or that technology will continue to advance. History is full of periods of misery and backwardness that lasted for centuries. The human race is not on auto-pilot.

If you have any interest in preserving freedom for your children and grandchildren, stop supporting parties and suits and great smiles. Start vocalizing and supporting ideals and ideas. You will NOT come out ahead in a system that takes from those according to their means and gives to those according to their needs. You will only become more NEEDY.

The California Democratic Debate - Our Demise Defined

There were very few differences between the positions of Hillary Clinton and Barak Obama.

Both are promising:
Nationalized Health Care
Higher Taxes
Surrender in Iraq

Their health care plans both come with subsidies, mandates and price caps. Neither has a clue how devastating this would be to the economy. The plans come in at a cost of over 100 billion at their own estimates, which means the actual cost would be closer to half a trillion. Mandating health care means that those of us who pay as we go because we've done the math and IT'S CHEAPER will no longer be able to do so. There is no way you can mandate that everyone pay into a system that they use at their discretion and have anything but skyrocketing costs. Third party payer is the problem, not the solution. I don't know where we all got the idea that it is a legitimate function of government to take over the health care industry. Which amendment was that? As for price caps, this is based on a false premise that individuals in the health care industry will continue to work, regardless of the pay. The health care industry, like any other, is not static. People come and go. Nobody is born obligated or genetically compelled to take care of you, except maybe your parents. If you cut wages, income, profits, return on investment, people will leave the industry. Like so many other countries, we'll still have health care, it just wont be very good.

They're going to finance this monstrosity with higher taxes. Maybe the idea is to take the rest of the economy down to the point that even a low return on investment in health care will seem attractive by comparison to the rest of the economy.

Both are sticking to their surrender strategies in Iraq despite the fact that we're finally achieving great progress there. This has been their plan for 5 years. I guess they feel they've got to play it out.

It would be amusing if there were a champion of free markets, capitalism and a strong national defense to counter all this, but there isn't. There hasn't been in quite some time. The Republicans are running on a "We're not quite as socialist as those guys" platform and are far more concerned about gay marriage than trivial things like property rights, and personal freedom.

If America votes for this, I suppose America deserves the consequences. Hopefully we will recognize and correct.