When I was a kid, my parents weren't smart with money. They never taught me anything about managing money. In fact, the only advice I ever received was from a relative, who told me with lots of swagger: Spend it like you got it. Evidently, that impresses people... being a big spender.It might be the generation, but we see that philosophy embraced by a lot of people. Washington spends a ton of money on pet projects and silly issues. Homeowners use their accumulated equity in their home to spend more money. I read Calculated Risk, a smart blog about matters economic, and they highlight a speech given by former Fed chairman, Paul Volcker, who says: "I come now to the heart of the problem, as a Nation we are consuming and investing, that is spending, about 6% more than we are producing." Our expenses outrun our income.This could be a been-there-done-that post about the dangers of over-spending, but that's not the problem in my opinion. I have no problem with spending. In fact, I think that's a good thing. What I do think is the problem is this: we're no longer producing enough. Evidently being industrious went the way of the Industrial Age. This is the age of Magic Money, where the government can fix problems by just speaking the solution into existence - never mind that any solution proposed comes from tax dollars absconded from you, the taxpayer. Oh but that's okay - the politicians want to take most of that money from the rich, where rich is defined not in terms of wealth but in terms of income. It is, after all, an income tax, not a wealth tax. So the goal is to therefore tax those capable of producing the most money. Which penalizes production. But it's okay to bail out adults who signed up for a house they can't afford. And "bail out" means giving money to people who didn't earn it, drawn from tax dollars absconded from you, the taxpayer. Oh but that's okay - the politicians want to take most of that money from the rich... and so it goes, around in a cycle of ignorance. Make some other guy pay. Don't penalize production; reward production. Reward entrepreneurialism and investment and lots of extra effort. Reward those who create jobs. To produce (pro·duce): - to bring into existence; give rise to; cause
- to bring into existence by intellectual or creative ability
- to make or manufacture
- to bring forth; give birth to; bear
- to provide, furnish, or supply; yield
The law of supply and demand is a pretty simple, but oh so essential, economic lesson. If you want lower prices, you have to make it easier for those who produce the thing you desire. That will increase the supply and lower prices. But instead, too many people make it harder. Too many people penalize production. Too many people hate the successful and the productive. Then, when the thing desired rises in price, like gas at the pump, these same people get angry about it. Oil companies are told they can't drill, can't build new refineries, and then they have to sit in front of congressional committees and get lectured by people who don't produce a single thing in benefit of society.Production, unfortunately, is in limited supply these days, as Paul Volcker noted. But it doesn't have to be that way. So change the world and celebrate the productive and successful. Once production is back in the groove, then you can spend it because you actually do "got it." |
