Saturday, July 14, 2012

10 "Feel Good" Lies - And Their Consequences

Americans tend to be optimistic. Unfortunately, that often leads to a readiness, even a willingness to believe in things that make us feel good - even if they are blatant lies. We tend to pay attention only to the visible effects, and ignore the unintended consequences.

Here are 10 of the greatest "feel good" lies that have duped too many of us.

FEEL GOOD LIE #10 - Subsidies like Cash for Clunkers (or any other subsidy) stimulates the economy.

UNINTENDED CONSEQUENCE: You cannot stimulate the economy by destroying goods just so more have to be made to replace them. When someone buys a new car, he is only using money that he would have spent anyway - on computers, vacations, an ATV or even a new car. By paying him to buy a car instead of other things, you have not increased consumer spending, but you have successfully siphoned billions out of taxpayer's pockets, leaving them even less to spend. You are robbing Peter to pay Paul. Nothing more. And no true benefit comes from it. In fact, the majority of new cars purchased under Cash For Clunkers were foreign cars - the profits went to Japanese companies. The overall economic effect was minimal, but the cost was huge.

FEEL GOOD LIE #9 - The new "green" flourescent lightbulbs are good for the environment.

UNINTENDED CONSEQUENCES: They are far worse for the environment. FAR worse. First, these new bulbs require between 4 and 9 times more glass. Glass production requires extreme heat, produced by fossil fuels. In addition, these bulbs use mercury, one of the most toxic substances on Earth. If you break one, the government says you all but need a HazMat team to clean it up. And expired bulbs must be disposed of at a hazardous waste facilty - most people live at least a gallon of gas away from such a facility - one way! These bulbs are as "green" as a raging forest fire.

FEEL GOOD LIE #8 - Electric cars are better for the environment and the economy.

UNINTENDED CONSEQUENCE: The truth be known, they are worse for the environment and the economy. For one thing, most electricity in this country is produced by burning coal. And simple basic physics teaches us that whenever you convert energy from one form to another, there is loss. In essence, we burn MORE coal if we use more electric cars. Furthermore, like Cash for Clunkers, the government uses taxpayer money to pay incentives for buying electric cars, which increases their ultimate overall cost and siphons money out of the economy via taxes to pay for this foolishness.

FEEL GOOD LIE #7 - Title 9 - the law that requires as many women as men involved in sports in any educational institution. While it sounds great, and fair, to have as many women as men in sports, there are serious flaws.

UNINTENDED CONSEQUENCES - It is rare to find as many women as men who desire to be involved in sports. The reason is as much genetic as anything else. Most sports require people getting banged up, and women prefer not to have that happen. Since the vast majority of sports are at least semi-violent, the vast majority of players will be male. In schools and universities across America, almost half of all sport programs in schools and universities had to be terminated in order to comply with Title 9 law. Instead of increasing the number of women in sports, Title 9 simply eliminated many sports because the law requires that an equal proportion of women be enrolled in sports or the sports had to stop. In fact, a championship Rugby team had to be disbanded due to Title 9, and we all lost something of value with that. Under Title 9, if there is not a single female willing to enter into sports, then all sports programs in that school must be terminated. It's the law.

FEEL GOOD LIE #6 - Every American should be able to own a home. So laws were passed that required banks to issue risky mortgages to people who could not otherwise buy a home.

UNINTENDED CONSEQUENCES - We all saw - and are still feeling - the results of this folly. Forcing banks to make risky loans also forced them to devise methods of doing it in a way that would "spread the risk". This gave birth to "derivatives" which became investment vehicles for companies like AIG. Fannie Mae and Freddie Mac, at the heart of all these risky mortgages ended up buying many of them. And as was easy to predict, the people who bought the homes they could not afford defaulted. Foreclosures abound, markets crashed and the entire nation was nearly devastated economically. And to add more injury to this bad scene, the government blew another 800 billion on a "stimulus" bill they said would help dig us out of the hole they created. The hole just got bigger. The fact is, if a person cannot afford to pay for something, they should not be allowed to buy it on credit. Everyone gets hurt when they default. The government messed with the free market and caused it to fail. Had the government stayed out of it, not as many people would own homes, but this economic disaster would have been avoided. Thanks to government intervening in free markets, we all suffer because you cannot force people into the middle class. The middle class can only be created by individual effort, not freebies.

FEEL GOOD LIE #5 - Government can create jobs to stimulate growth.

UNINTENDED CONSEQUENCES - Every Democratic administration since Woodrow Wilson - and even a couple misguided Republican administrations - has pushed this phony idea. The only jobs government can produce are government jobs, which do nothing to stimulate growth because they are paid for from money taken out of the economy via taxes. Again, robbing Peter to pay Paul. If government pays businesses via incentives to hire in the private sector, again, those funds come from taxpayers - taking the money from one pocket and putting it in another. But there is an even more insidious consequence of government jobs - every person who becomes dependent upon the government, whether for their job, food stamps or anything else, those people become part of the problem because they are now obligated to "do what their boss tells them". Like freeloaders who pay no taxes and have nothing to lose and everything to gain by voting for people who will take from the rich and give to the poor, government employees are in the same position. When 51% of the people are in that situation, the government has more power than the people, and that is when serfdom begins. Currently we are at 47%. Too close for comfort.

FEEL GOOD LIE #4 - We need to pay unemployment benefits for as long as it takes for people to find work. And it stimulates the economy.

UNINTENDED CONSEQUENCES - Sure sounds nice, doesn't it? But here's what is wrong with that line of thinking. For starters, most (about 80%) of people on unemployment do not even bother looking for work, for several reasons. One, it's more fun to go fishing and escape a daily grind. Two, If they can collect $400 a week from unemployment instead of $500 a week from working 40 hours a week and then having to subtract for gas, daycare etc., it's pretty much a no-brainer to just collect. Another problem is that the longer a person is unemployed - and encouraged to remain so - the less likely he or she will ever enter the workforce again. Employers shy away from any resume that shows no employment for more than 6 months, and working skills can get out-dated. And it does nothing to stimulate the economy - NOTHING. Some believe it helps the economy because it provides money that is then spent. But think about that - where did that money come from? It came from you and me, in taxes. If we had been able to keep that money, we would have spent it ourselves, supporting our own families. The money would have been spent either way. The only difference lies in WHO is doing the spending of WHO'S money. Call me old-fashioned, but I believe the person who earns the money should get the pleasure and benefit of spending it.

FEEL GOOD LIE #3 - Every American worker is entitled to a fair minimum wage.

UNINTENDED CONSEQUENCE - Can hardly argue with that - or can we? While it certainly sounds laudable on the surface, there are dramatic and dangerous consequences. The reason is rather simple - money does not grow on trees. Every business has a certain amount allocated for salaries and benefits. If forced to increase salaries, they are also forced to lay people off because they cannot simply manufacture greenbacks out of thin air. Raising the minimum wage always - always - results in job losses. But it gets worse. The lower paying jobs are designed for entry level people, like teens, who have no experience. They work for less in exchange for an education in learning the business. And their wages go up as they gain experience and become more productive. By increasing minimum wage the government effectively eliminates entry level jobs. Employers simply hire only the more experienced people. This explains why the unemployment rate among the 18-22 age is 26%. If free markets were allowed to do their thing, everyone would get an appropriate wage, if only because of competition.

There is another unintended consequence to minimum wage laws - the cost of everything goes up. Employers, forced to pay more must now increase the cost of their products and services. So the net gain is essentially zero. If you get a $50 a week raise, but the cost of living increases by $50 a week because every business is giving raises and raising prices, then you gain nothing. Minimum wage laws are one of the biggest causes of price increases.

FEEL GOOD LIE #2 - Ethanol is good for the environment and the economy.

UNINTENDED CONSEQUENCES - this is one of the greatest lies ever told, and the second biggest boondoggle ever perpetrated on an unsuspecting public - courtesy of Al Gore, who pushed ethanol in his quest to be president. He admitted in November that ethanol is bogus and he only pushed it through in order to win the votes of farmers. Now as to WHY it is a boondoggle...

First, ethanol costs $1.78 a gallon more to produce than gasoline. The government - you, as taxpayers - are subsidizing the ethanol industry to the tune of $1.78 per gallon. So, when you buy a dollar's worth of ethanol at the pump, you have actually paid $2.78 for it. In other words, if fuel is $3.00 per gallon and is 10% ethanol, you are actually paying close to $3.30 per gallon when you add in what you are paying to subsidize ethanol production.

Second, as farmers trample one another to grow corn and collect all those government sibsidies, less land is available for production of food. Food prices have risen substantially due to ethanol. And meat especially goes up, as most meat animals rely upon corn as feed. But the government is burning the corn in fuel tanks across the land. Only fools would burn their food supply.

Third, it isn't even good for the environment. Every study has shown that it takes almost 40% more fossil fuel to create ethanol than it takes to produce an equal amount of petroleum. One must factor in the fuel required to plant, fertilize and harvest. The fuel to transport to the ethanol plants. And the fuel to convert the corn into ethanol. Petroleum, folks, is more green than ethanol.

As for being good for the economy, nothing that is paid for with tax dollars siphoned out of the economy can possibly be good for the economy on a net gain basis.

FEEL GOOD LIE #1 - This is the "biggie" - the "Affordable Care Act", better known among sane, thinking people as Obamacare.

UNINTENDED CONSEQUENCES - Let's start with reducing costs. It does not. All studies and reports show that insurance rates are increasing - and must, in order to pay the increasing benefits required. And the cost of health care, itself increases due to a greater demand as 30 million more people seek care, but there is no increase in the number of caregivers or hospital rooms and equipment.

As for the promise that you could keep your current insurance, that has already been proved false as many providers have simply dropped customers rather than be on the hook for more costs. One major insurer dropped out the the business altogether. And many companies, unable to comply with the new requirements are dropping health insurance, forcing people into the government plan - at taxpayer expense.

Then there was the promise of better care. The truth is that more and more providers - doctors, clinics, pharmacies - have dropped medicare patients - they cannot afford them, and there will be way too many. While you may have a great little Medicare card, it is not apt to get you the care you need.

Then there are the so-called "death panels" that many say do not exist. Yet, in the months since this bill was passed, the FDA has banned two safe and somewhat effective cancer drugs simply because they are too expensive and the government does not want to pay for them. So, by bureaucratic decree to save money, people will be left to die. And in Arizona a young father scheduled for a life-saving liver transplant was refused by Medicare. He will die. If not a "death panel", then I am at a loss for a better name.

Over the last 100 years the American public has been duped over and over by an increasingly government of "progressives" in both parties. And it is destroying the very fabric that made America great - free markets and personal responsibility. If we want to save America, we as a People must learn to look to the unintended consequences, and then fire any lawmakers that refuse to listen to the will of a more informed populace.


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