Thursday, January 2, 2014

Economics 101 For Dummies

It is pretty obvious that most Americans and all Socialists do not understand basic Economics, and certainly not Economics 101.  This is the reason we should stop teaching basket weaving in the fifth grade and start teaching basic Economics every year thereafter.  There are some universal Economic Principles that drive human behaviors that all need to know to stop all the emotional discussions related to starving children and throwing granny over a cliff, every time anyone talks about cutting government spending and getting our fiscal house in order.

1.  Let's start with taxes.   If taxes are raised, we will see less productive economic activity and job creation.   So higher taxes to benefit bigger government and people on the dole will retard economic growth and job creation in the private sector, since companies will have less money to invest and hire people.    So in general, higher taxes are a job killer that will cause more poverty in America. 

2.  Additional regulations that make it harder for companies to do business results in less business in the United States because companies will push more jobs overseas to avoid those regulations.  Well dah!.  This is the reason many manufacturing jobs are now in China instead of the United States.  The EPA in particular has been destroying whole industries in the US for more than 30 years so those jobs are gone forever.  Also, ObamaCare will insure that more jobs are lost in the United States as even more knowledge work will be shipped overseas to countries like India to avoid the need to pay higher cost of labor and  health insurance benefits. 

3.  Supply and demand determine price unless government acts to restrain trade in anyway.  ObamaCare is a prime example.   Young people will be paying more for medical insurance than necessary to subsidize older people with pre-existing conditions because government is acting to control the health care marketplace and artificially manipulate the cost of medical insurance premiums.

4.  Raising wages, either by union contract or raising the minimum wage, beyond the worth of work performed insures that that work will either be moved overseas, or automated, requiring fewer workers.  So union contracts that artificially set wage rates and or raising the minimum wage actually hurts the very people Socialists are trying to help generally young kids working part time, or older people with little or no education or job skills.

5.  Providing Welfare, particularly when based on having babies out of wedlock, to assist the able bodied poor for unlimited amounts of time just insures more poverty.   We are seeing this right now in ObamaLand, as we have the highest poverty rate and the lowest labor participation rate in three decades because Obama has made it easier to get this Entitlement.  If the goal is fewer people on the dole, which it should be, then Welfare should be turned into Workfare so that able bodied people getting Welfare are required to either learn a trade, or clean up their own neighborhoods as a condition for receiving benefits for no more than two years.  No able bodied person should get Welfare for more than two years.   They can work at McDonald's if nothing else and earn the monies they are getting now for doing nothing.  Seeing parents work even at menial jobs is a better role model for children living in poverty.   

6.  Free Market Capitalism, even with all its boom and bust cycles, with reasonable regulations related to the rules of the road, is the best way to stimulate economic growth, create jobs and deal with poverty.  Competition is the best way to create innovation and bring new products and services to the market that benefit all people.   Government does not create jobs and in fact government usually destroys jobs in the private sector by over taxation and regulation.   Government is usually the problem and rarely the solution. 

7.  Monopolies in both the private and PUBLIC sector are bad.  The US Post Office, even though bankrupt because of union contracts and less regular mail volume, is better positioned today because of competition from FEDEX and UPS.   Public Schools would be better if poor parents in our inner cities had the option of School Vouchers to put their kids in private schools.  In all cases, unfettered competition brings down prices in the private sector and in both the private and public sectors leads to higher quality goods and services.

8.  The poor are not poor because the rich are rich.  The poor are poor because they lack education, marketable job skills, motivation to succeed and often an ability to deal with delayed gratification; that is sacrificing, studying, or working hard now for future benefit. 

9.  Income inequality in the US is the result of bad government policy and global competition.  It is not just that the rich in America have gotten richer; but that the poor and middle class have gotten poorer, widening the gap.  This has occurred because Socialist Schemes in the last 60 years actually retard economic growth and perpetuate poverty.  And, Americans are competing with people in China, India and other countries that are better educated and willing to work harder for less money.  Sadly, it really is that simple. 

These basic economic principles are truisms that should be applied to all policy decisions in local, state and federal governments.  Of course, the Socialists that live to grow government as their basis of power, rather than improve the quality of life for all will never accept the principles of basic economics.  Most important, Socialists win elections, allowing them to continue feeding at the trough, by having as many people as possible dependent on government, even if it hurts the very people they profess to help.   We have certainly seen this during the Obama Presidency.     

As such, we need to teach the American people Economics for Dummies to prevent them from being duped by Socialists running for office.   The nine principles described in this Blog Posting are the key to prosperity in America and less poverty.  Failure to accept these principles as fact will just result in more people in the US living in poverty and misery.     


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