Crash Course in Economics

I find it amazing how few people actually understand the basic tenets of economics. We live in an economic, capitalistic society, yet fully 70+ percent of all Americans know nothing about it. But they THINK they do, and that is what keeps them at the bottom of the heap. We tend to build our lives on "foundations" known as "beliefs". If our beliefs are faulty, our lives will not be sound or stable, just as a house with a faulty foundation is threatened by collapse.

And most people have faulty beliefs when it comes to money and finance.

This becomes apparent when you hear liberals saying we should raise taxes on the rich. Either they do not understand economics, or they do understand, but hope that we do not. Either way, it is dangerous, and built upon faulty beliefs.

Let me be clear, if I may. You may not believe the following (at least not right away), but for your own sake, I hope you will at least keep an open mind, and chaw on it a bit.

1. 
   EVERY dollar paid in taxes is paid by the poor. No exceptions. I'll explain in a moment.
2. Only 4% of all Americans can achieve full financial freedom.
3. No matter how many people graduate college, there are just so many positions available at the top.
4. There is no such thing as "middle class", and there never was.

Don't believe me?

MIDDLE CLASS: There are only three types of financial condition - wealthy, poor, or in a holding area on your way to one or the other. You may call this holding area "middle class", but that would assume that it is not in a state of flux. The rich are rich. The poor are poor. No flux. But the so-called "middle class" is not stagnant. The people there are in the process of working toward one, or falling into the other. It is always in a state of flux. So it is not a "class". Like Purgatory - it ain't Heaven, and it ain't Hell. It's a proving ground for one or the other.

COLLEGE: No matter what the country; no matter what period in history; no matter how much we might want to change it; the majority of people must be at the bottom. As you move toward the top, fewer and fewer people will be found. It is like a pyramid - the few at the top, the many at the bottom, and those in flux in the middle. Can you visualize that pyramid? So, if there are 10 positions at or near the top for every 200 people graduating from college, 190 of those grads are going to be sorely disappointed. Don't think so?

In the 40's, very few people went to college. All they needed was a two year associates degree to vie for the top jobs. So, every parent wanted THEIR kid to go to college so they could get the good jobs. The number of good jobs did not increase, but the number of college grads did. So, employers started choosing only those who got a 4 year Bachelor's degree. So, everyone stated going for the Bachelor's degree. So now employers again had to weed them out by requiring a Master's Degree for top jobs. Then PhD's. Because there are just so many positions at the top.

4%: Throughout history, only 4% of all people ever get to the top, to the point of complete financial security. This is the amount of room that is at the top. It does not change. And believe it or not, our schools and universities are geared to that, because nothing else works. If you have more than 4% at the top, there will not be enough folks below that to hold them up. Ever see cheerleaders in a standing pyramid? It takes two to hold up the top one. It takes three to hold up the two, and it takes four to hold up the three. Altogether it takes 9 to hold up the top one. What would happen if one of the girls in the middle or the bottom joined the girl at the top? The whole thing would collapse.

4% is all that can make it to the top without jeopardizing the entire economy.

I am hoping you are still following me. It's a tough concept, but once you begin to grasp it, everything gets incredibly clear. And then you increase you chances of inching closer to the top - and farther from the bottom!

All things trickle down. The rich guy pays the employee. The employee pays his gardener. The gardener pays for his groceries. Now, liberals want us to believe that everything flows UP. Give the poor more welfare, more money, and it will get spent and flow up to the rich guy. Sounds good, I know. But it is phony. Want proof?

When was the last time you asked a poor person for a job? Or, the money that liberals give to the poor - where do you think it came from? Certainly not the poor! The reality is that everything flows up AND down, but it starts by flowing down. If it does not go down, there is nothing for the folks to spend, so it cannot get back up to the rich. Again, when did you ever get a paycheck from a poor person?

But if money flows down, why aren't the poor getting richer? That's simple - look back to that pyramid. If the rich guys puts $100 into the pipeline, by the time it filters down to the masses at the bottom, each will only have a dime. You are splitting up $100 among 1000 people - it's the pyramid again. The $100 in the hands of one person represents certain wealth, but distributed among 1000 people, it represents poverty. And that is why the poor stay poor. As Jesus said, the poor will always be with us. They have to be. They are the base that holds up the pyramid.

OK, so we are almost there. Let's see how and why the poor pay EVERY dollar of tax, and the rest of us pay none. Really!

Let's assume Poor Guy eats Ramen soup, because it's all he can afford. Liberals get elected by promising the poor that they will tax the rich, and use the money to help the poor. Since there are more poor people than rich people, they get voted in. So now they tax the Rich Guy an extra 10%. Sounds good, huh?

But look closely. Every expense a person has is a COB (cost of business), or COL (cost of living). And whenever we create and sell a product or service, those costs are factored into the price. They have to be, because Uncle Sam does not allow us to print our own money - only the government can do that.

So, you increase Rich Guy's tax by 10%. He deals with this as with any expense - he adds it to the cost of his products and services. The folks who buy those products and services are, therefore, paying his taxes for him. And so the Rich Guy who makes Ramen increases the cost of the Ramen that the poor guy has to eat. And the poor guy is now paying the taxes of the rich guy by way of higher prices on the Ramen.

Did I just hear some wiseguy say, "I pay taxes, but I am just a guy working for someone else. I can't pass my taxes off on the poor. I gotta pay my own." Nope! You don't. Your taxes are one of your costs of living. As your costs of living go up, you demand a cost of living raise, which covers those costs (including taxes - where else will you get the money to pay them - you ain't got no money tree, Bubba). So, in truth your taxes are paid by your employer, who must now increase the costs of his products/services in order to cover your raise, because he ain't got no money tree, either. And the folks who buy those things end up paying your taxes.

No matter who you are or what you do, if you "pay" taxes, ultimately those costs gets filtered down and passed to the poor. They are the only ones who are not in any position to pass them on, because there is no one below them.

The short of it: when a whale craps in the ocean, it falls to the bottom of the sea. So, any and every tax is paid by the poor. Increasing the tax on the rich - or anyone else - results in the poor getting poorer.

Taxing the rich, then, is not the solution - it's part of the problem. So what, then, can we do to make things better?

That's easy - you reduce the burden on the poor by reducing taxes. And you reduce taxes by requiring our legislators to spend our tax money more wisely. You require they give up ALL "pork barrel" spending. You require, with your votes, that they monitor costs - no more paying $1500 for a toilet seat. You require that the government, like yourself, should live within its means.

There are two ways to accomplish this - one is temporary, the other is permanent.

The temporary method is to "fire" every single legislator in office, regardless of party by voting for the opposing candidate. This sends a clear message to all other politicians and aspirants - do the job, and do it right, or dust off your resume and go back to working for a living! Start with the coming election - vote against every incumbent, to stir things up and send a very clear message. Say, "Work for me and not yourself, or look for another job". The current legislators have not been doing the job, and every one of us knows it.

Voting out EVERY incumbent is the only way to take back control of the government.

The permanent solution can and should be accomplished by first using the previous temporary method, then tell every new legislator that if they want to serve a second term, they had better vote in the "Fair Tax" (look it up, and learn more about it at www.fairtax.org). This places a lower burden on everyone, provides adequate revenue for the government, and places the power and authority to raise or lower it to the people. The legislators would no longer have that power.

And it reduces the burden on the poor - they will still be poor, but not as poor as they are now. And why is that important (other than being the moral high ground)? Because everything flows up AND down. The more money the poor have, the more they can spend, and funnel back up into the economy. And you, my friend, cannot get your hands on money that is not moving. The Fair Tax moves more money through the system, faster and easier.

If you seriously want to move upward in the pyramid, and if you want America to become stronger and financially stable, think about these things. Then get the changes made at the voting booth. Because that is where "real change" occurs. Is starts with YOU, not the politicians who seek only to empower themselves.

Win Or Lose

This morning over coffee at the local donut shoppe I got into a discussion with an atheist. After listening to his rhetoric about religion being a heathen rite, and that no sane, intelligent person would believe in God, I just had to speak up.

I first told him that, as a rule, believing in a greater power was a sign of intellect, and I proceeded to explain why. But the real blow to him came when I made one final statement:

"If there is no God, neither of us loses anything because of our beliefs. But if there is a God, I win, and you lose. There is no possible way an atheist can win - the best he can hope for is to not lose. And there is no possible way a believer can lose - the worst that could happen is that he does not win. Given a choice between a 50% chance of winning or a 100% chance of not winning, most intelligent, sane people would opt for the chance of winning."

Poor fellow choked on his donut and left without saying another word.

It is such a great feeling to know you simply cannot lose. And I feel pity for that fellow who simply cannot win, because he lives in a world that has no hope.

I turned to the man next to me, and showed him my thumb - how complex it was, and what it helps us to accomplish. I said, "Billions of independent cells act together to make me what I am, and work together flawlessly. Toss in instincts, emotions, intelligence and everything that makes us who we are and I cannot fathom that such a thing could happen by accident."

It rained in the afternoon, and one of the brightest rainbows I have ever seen hung in the sky. And I felt comfortable in my beliefs.

Simple Solution to Major Concern

For several years there has been a growing controversy over "gay marriage." I do not understand why, because there is such a simple solution.

The controversy arises when the needs of some people are diametrically opposed to the moral values of others. Gays need the same protections and rights as heterosexuals, but heterosexuals often do not want to accept the gay lifestyle because of religious, moral reasons.

The problem was created because the government broke the law - violated the First Amendment. Marriage always has been a religious rite. The state and federal governments, in violation of the First Amendment, co-opted and took over control of marriage, making it something that had to be sanctioned by the state, rather than God. "Separation of church and state" was ignored. This resulted in a religious rite, meant for followers of the church, to become a state institution.

The solution, then, is to separate the two in a just and fair manner - to allow gays to fulfill their needs without infringing on the personal moral values of others.

Currently, marriage is not just a state-sanctioned ceremony - it is also a religious rite. One that is often abused, even by heterosexuals.

PROPOSAL: All couples, regardless of gender, would have the right to enter into a civil union, sanctioned and regognized by state and federal government, with all the same rights currently attributable to marriage. These would be CIVIL UNIONS, regardless of gender, and would be the state-sponsored "norm" for all couples - even heterosexual couples.

Marriage, on the other hand, would be a separate RELIGIOUS rite, as it was designed to be, to be entered into as an option by religious people, to be performed only in a church, and only by an ordained person of the cloth. At least one member of the couple must actually belong to the church in which they are to be married, to maintain the sanctity of the marriage rite. Marriage would not create any new rights or priviledges not already given in Civil Unions.

Therefore, any couple who can pass muster with their church may be married in that church, regardless of sex. Church tenets that do not allow gay marriage would not perform any. Those religions that do not have a problem with gay marriage would perform gay ceremonies.

The end result: gay couples will have the same rights, responsibilities and protections as heterosexuals, granted equally to all by the state and federal governments. Those whose religion objects to the gay lifestyle would not be sanctioning or supporting gay unions - their church makes that call.

In this way, marriage would retain its religious sanctity and those with moral objections need not be concerned. And gays would have the same status as heterosexuals, from a legal standpoint.

If we remove the state from marriage (which should never have co-opted it in the first place, as that is a breach of separation of church and state), the problem is no longer real.

All couples wishing to unite would enter a civil union, for legal standing as a couple. Those whose religion and moral structure requires union in the eyes of God would ALSO marry, in a church, by an ordained person of the cloth (both rites can be performed simultaneously).

If gays believe themselves to be otherwise moral and have a need to unite in the eyes of God, they need only find a religion that agrees with them that the gay lifestyle is not an abomination in the eyes of God.

And, if no such church can be found, perhaps it is time for them to create one.

For here is a little understood fact: religious tenets are not meant to be molded to people. It is people who are supposed to be molded by religious tenets. Therefore, if a church uses a Bible that includes the belief that homosexuality is a sin, then that church should never be allowed to support the gay lifestyle. God's word is not for us to change.

So if gays need a church of their own, they need to found one that is based on a Bible that states something to the effect that while God may see the lifestyle as an abomination, he also sees gays as His children, and does not love them any less, and can bless their unions in spite of their faults.

After all, NONE of us are without sin, are we? So when you come right down to it, and using the "logic" that gays cannot marry because they are sinners, none of us should be allowed to marry, for we all come up short in the eyes of God.

While separating marriage from the state is the best solution considering the nature of Mankind, in a perfect world the simplest and best solution would be to let all adult couples marry, and let God decide who He will condemn, if anyone.

If you are not a moral person, you should not care who marries whom. And if you are a moral person, you would do well to remember "Judge not, lest ye be judged".

'Nuff said!

More "Stuck On Stupid"

The longer I live, the more it amazes me that some people can be so incredibly naive.

You know about the increasing foreclosure rate - people losing their homes in greater numbers. And there are people who believe that the government should step in and, using tax money, help bail those "poor people" out of the mess they are in.

On the surface, that almost sounds commendable. Until you realize the truth.

1) Most of the increase in foreclosures is due to greedy people wanting more home than they could afford, so they jumped into the sub-prime mess with both feet. Greedy lenders took advantage of greedy buyers. Remember this - you can't con and honest person. The lenders conned those buyers, but were only able to do so because the buyers, themselves, were greedy.

2) It is unconstitutional for the government to do bail-outs of this sort. The Constitution specifically states that the feds can tax ONLY for the GENERAL welfare and the national defense. Bailing out stupid, greedy people is not general welfare - it is individual welfare.

3) The taxes that would be used would come from people who lived more modestly, and own modest homes they can afford.

Now, to bail out those people would open the door to massive abuses. Greedy people could then buy Rolls Royces and Mercedes and, when they cannot meet the payments, ask Chevy and Ford owners to pay off their auto loans for them. Or send their spoiled kids to private schools, and when they fall behind on tuition, they make you pay the tuition for them, while YOUR kids are stuck in public schools.

Why should a person who drives a Chevy have to pay the payments for some greedy jerk's Mercedes, tuition or home?

Why should someone renting an apartment or living in a mobile home have to pay the mortgage payments of people who bought million dollar homes they could not afford?

One woman on AOL complained that she bought a $400,000 home 24 years ago, and is now losing it to foreclosure. I say, "Too bad!" First, no one forced her to buy a $400k home at a time when the average home only cost $150k. Second, if she has had it 24 years, it's almost paid for, and she can easily sell and walk away with enough $$$ to pay cash for a modest home. And if she kept borrowing against her home so she has no equity, that was her choice - she already spent the money of the high life. Third, she lived in a $400k home for 24 years, while 95% of all other Americans will never even get to see the inside of such a home. So, I cannot feel sorry for her.

Why should the little guys pay to keep her in her home? She overbought, on purpose. She tapped the equity and probably spent the money on fancy cars and European vacations. She lived the high life for a quarter century, and never planned for tougher times. She drove a Mercedes while you drove a Ford. She ate steak while you ate hot dogs. She lived in luxury while you struggled. And now she wants you to bail her out.

I say, NO WAY! As I pointed out in an earlier post, every action we take has consequences, and we need to be responsible for the actions we take, and accept the consequences.

People who think they deserve to have their cake and eat it, too, should get a good, swift kick in the butt! And people who believe it is "compassionate" to bail them out are naive, foolish and should stand in line for that kick in the butt.

Stuck on Stupid

Ever notice that for some politicians, their first and only "solution" to any problem is to increase taxes? And after 100 years of that, they still have not learned that higher taxes is never a good, permanent solution to anything. Government can never use our money as wisely as we can, and when they take it from us, we have less to invest in the future, in business, and in our families.

Take the bill in the Senate that would have put a Windfall Profits Tax on oil company profits. Sure, to the short-sighted, that sounds great - the oil companies can afford it, and they deserve it. But the thinking man first remembers that every Windfall Profits Tax of the past has failed miserably. We did it in the '70's, under Carter, and it resulted in shorter supplies and higher prices. Is that really a solution? Is that what we really want?

The reason WF Taxes don't work is simple economics. If you place more taxes on business, the business will simply increase the price to the consumer, to cover the tax. And they will not invest as much into research, or refining. The tobacco companies did that sort of thing when they got sued and had to pay out many millions. They simply passed the cost onto you and me (well, not me - I don't smoke). More taxes are not the solution.

It never ceases to amaze me that many good folks simply cannot grasp this simple concept: if you increase the cost of doing business, the cost of products and services must increase. Even a kid running a lemonade stand understands that if the cost of lemons increase, he must increase the cost of his lemonade. And if the local bully extorts 20 percent from him in a "protection racket", the kid must charge 20% more to cover those losses. And since we are all consumers, we are the ones who ultimately pay for higher taxes on businesses.

The solution is four-fold: first, the governments - state and federal - must be made to stop taxing fuel by the dollar, and tax it by the gallon, instead. As it is, every time the cost goes up, the amount we pay in tax also goes up. But if the tax was per gallon, it would not increase just because the price goes up. The ones who are earning a "profit windfall" are the governments.

Second, oil must be removed from the commodities market, and regulated as any other necessary utility. If day traders cannot keep bidding up the futures prices, the cost per barrel will drop like a rock.

Third, the government should pass legislation that would permit us to tap our own natural resources, as a temporary measure, until a new energy source can be found or created. Many people simply do not realize that in the last few years, China and India - both with populations that far exceed our own - have begun using oil in the same quantities (or greater) than America does. This has tripled demand - while supply has remained stagnant. The simple law of "supply and demand" dictates the price increases accordingly. If we cannot decrease demand, then we absolutely must increase supply.

Finally, the government should offer a $100 million dollar reward to any person or company that develops a viable, sustainable source of energy that can replace oil, and is either carbon neutral, or at least greener than fossil fuels. That reward is small compared to what it will cost us if such a source is not developed. The reward would spur ingenuity, and get companies investing in a renewable source. As an example, when a $10 million dollar prize was offered to the first person to put a man into space and land him safely, it spurred many into finding ways to do it, and it was accomplished within 2 years.

But the politicians who see taxation as the only solution are bad for us, bad for our economy, and do not offer any viable answers. It's time to replace them with people who can see beyond their noses. The republicans who shot down that dangerous "band-aid" solution did a fine and courageous thing. Courageous because many people will not see them as visionaries, but as obstructionists. But it's like the Bible says - the righteous will always be persecuted.

Not that those republican Senators are righteous. But in this case, they did manage to do the right thing, for the right reasons. And, since the bill would have forced all businesses to pay a total of an extra trillion a year to buy "carbon credits", they also prevented having businesses pull up stakes and move to China and India, where there are no such restrictions. If you owned a big business and were told to pay a huge amount for credits, and you realized you could save billions by moving to China, you'd be gone in a flash - and take all those American jobs with you. Not good! So, though it looks like obstructionism, in this case the Republicans did a very good and sane thing.

Now if only Congress will do the four things listed above, we could all rest a lot easier.

I really do not care if Republicans or Democrats hold Congress. I only care that whoever we elect, that they actually have some intelligence, common sense, and remember that they work for us, and not vice versa. They need to accomplish the tasks the people want them to deal with - immigration, health, jobs, national security etc. But in the 2 years the Democrats have held BOTH HOUSES of Congress, they have not accomplished anything at all. And the Republicans before them were not that much better (though they did get SOME things done).

It is time we sent politicians a message - do the job, or get replaced. If you are interested in discovering actual solutions, so you can elect people who will pursue them, check out www.americansolutions.com and look over their platform, formulated by asking average Americans what they want our leaders to do. If you agree with more than half of the platform, consider "signing" their petition to have it presented at both national conventions this year.

It's a start.

How to NOT Succeed

This really takes the cake! If you want to know one of the greatest secrets to success, it lies in making choices that result in good consequences.

Most learned folks understand that liberals, by their nature, do not like having to accept responsibility for their poor choices or bad behavior. As proof, I offer the simple fact that it is liberals that push so hard for the "right" to choose to end a baby's life before it even starts. The person makes a poor choice (sleeps with a guy without protection), then when she gets pregnant she insists on "undoing" that choice, and calls that the "right to choose". In fact, it is nothing more than a right to escape the consequences of earlier poor choices. Imagine if a bank robber, upon being caught, could just give back the money and walk away without going to jail. Same thing. Do bad things. If you don't get caught, you're golden. If you do get caught, scream for "do-overs".

That said, this one is precious, and it would be funny if it were not so pathetic.

Congresswoman Laura Richardson, a Democrat from California (wouldn't you know) lost her home in Sacramento to foreclosure. That, in itself, is not newsworthy, even though her salary as a congresswoman surpasses the salaries on most Americans. What IS worthy of note is that she refuses to accept the foreclosure, and does not believe she should lose her home.

And why is this so stunning? She states that the reason she stopped paying her mortgage, and stopped paying her property taxes was because she decided to use her mortage and tax money to fund her political campaign! And she thinks that makes it OK to default on her obligations!

How incredibly arrogant. And dumb. That is no different from the guy who loses his home because he spends his mortgage money at the racetrack (or on booze, or drugs).

This congresswoman CHOSE to pay for a political campaign with her mortgage and tax money. That was a choice she made. And for every choice, there are consequences. But now, like a true liberal, she thinks she can simply ignore the consequences - that they do not apply to her. She thinks she does not have to accept the consequences of her choices. It's just unfair!

Even more incredible: the people in her district actually VOTED that irresponsible clown into office. Now this person, incapable of accepting responsibility for her own personal obligations, is in a position to make laws that affect us all.

NOTE TO THOSE WHO SEEK SUCCESS: Every choice results in consequences. To achieve success, make choices that are most apt to have favorable consequences.

In other words, do NOT do what congresswoman Richardson did. And do NOT elect people like that into office. And if they DO get into office, get them out - fast!