Many years ago the girl I was dating told me her friend had just got her MBA. So I asked this new MBA who was going to be a clothing buyer what she would do in her first meeting with a supplier wanting to sell to her. She proceeded into a technical explanation of how she evaluated and I told her no. She shifted to another technical explanation and again I said no. After the third rejection she asked me exasperated what I would do. I said simply I would look the person in the eye, size them up and decide if I could trust them. It’s pretty simple. If you are involved in complex dealings with someone you cannot trust you’re going to get screwed. Not having an MBA I learned this in the school of hard knocks.
Yesterday on Fox Business Network John Stossel did a show on entitlements and generational theft. At several points he was sitting with young children playing with toys and taking them from them saying he needed them. It was an entertaining illustration of generational theft, especially with the looks on the children’s faces. In classic Stossel form he started out showing Bernie Madeoff and talking about social security being a Ponzi scheme. He even had a guest attorney on who helped people with net worth exceeding half a million dollars get medicaid. I have a few points about how bad things are, but my primary point is that we establish trust based on prior history. As such I would say Bernie Madeoff has a better chance of reform than congress.
Of course the first point of all this is that the programs of social security, medicare, medicaid, unemployment and such are social welfare. No one can argue against the compassionate reasons for these programs, though it could be argued that like income tax they really should have been done with constitutional amendments as there doesn’t seem to be anything in congress’ enumerated powers to support them. Am I arguing against them? I think it best to remain silent and instead hear from Benjamin Franklin, one of our most respected founders and the man who gave us the post office, the library and the fire department.
I am for doing good to the poor, but I differ in opinion of the means. I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. In my youth I traveled much, and I observed in different countries, that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer.
I think that says it nicely. Currently many people are saying that the individual mandate in the health care take over is unconstitutional. I agree, but we have this odd judicial habit of ignoring the constitution if we can show precedence for having violated it previously. As a self employed person I have to pay unemployment insurance on myself. People who do road construction get laid off and collect unemployment during the winter and think nothing of getting their money back. Should I be mandated to insure my employment and should the government be the insurer? Ironically there is also precedent for getting out of government programs. The Amish are exempted from social security. They don’t participate because they are conscientious objectors. You only need to show your personal beliefs are in conflict to get exempted, but you probably need to convince a judge in court. You see if everyone who wanted to exempted themselves from these social welfare programs… well it seems moot because we can’t. However I say there is another problem.
This year social security will need to borrow money from China to pay. That’s nine years ahead of when the president’s OMB (office of management and budget) predicted. Oops! Orzag scores again. He also made a trillion dollar error on the 10 year budget. Hey, that’s only a million million. Here’s the point. When you review government spending you will see 3 of the last 40 years that we spent less than we took in but we also have been taking in surpluses in social security for decades. Where is that surplus money? It is in the form of IOUs from congress in a filing cabinet in the capital that we thought was a lock box. I don’t know the exact number if it is into the trillions but does it matter? Currently there is only one way for congress to cope with the $1.5T deficits and $60T liability in in unfunded mandates… monetize the debt. Know what that means? Simple. Let’s say we owe $100 trillion. We crank up the printing presses and print that $100 trillion to pay it off. Brilliant, right? I mean we could pay it off without even taxing anyone. The problem is that afterward our currency is devalued. Gas could go to $100 a gallon not from scarcity, but from inflation of currency. Monetizing the debt is an attractive solution for congress. They don’t have to raise taxes and they can blame Wall Street bankers. It’s a win win for them as they vote their pay up to several million dollars a year. The big problem is that if congress raises taxes to keep up with spending they end up with tax rates from 25% on the low end to 85% on the high end.
Let’s get back to what congress has done with the money we sent them for social security. Initially when FDR introduced it there was no other way to pay other than direct transfer of wealth from the working young to the old. However not only did this not change into something more like a legitimate legal private sector retirement plan, virtually all excess has been spent. If any private sector business did this their executives in charge would be bunking with Bernie Madeoff. With 435 representatives and 100 senators plus a few presidents signing off on this for over 70 years several things are clear. First we note that as law makers somehow they appear to be exempt from any law sending their asses to jail for what is clearly unethical theft, illegal for anyone else to do. Another thing that is clear is that trusting congress with our money is like asking a heroin addict to watch your house while you go on vacation. Good luck keeping any wealth.
However the really significant aspect of all this goes back to what Ben Franklin said. If people have to take care of themselves they do better. Remember the question if you would take a penny doubled every day for 30 days or a million dollars. Do the math. Only a fool would take the million dollars. Likewise if you were 20 years old and invested $1,000 if you could double it every four years you would have a million dollars from only a thousand when you were 60. Imagine if you put $1,000 a year into investments or even savings before we got to this wacky ultra low interest trying to avert financial disaster. There are two spheres our money can go to, public and private sectors. in the private sector it finances business growth and creates jobs. It creates wealth and raises our standard of living. In the public sector they have no ability to create wealth so all their money is siphoned off the private sector. Therein lies the problem. The more money taken from the productive economy the less it creates and produces.
Let me put this in contrast. If we were taking Ben Franklin’s view then our government would not be risking bankruptcy, our taxes would be lower, more money would be flowing into the private sector, a booming economy would make investments pay handsomely and anyone who had invested a fraction of their entitlement taxes wisely would retire wealthy. Instead we keep giving money to a government who will make our money worthless and impoverish us in order to give us cradle to grave social benefits. Have we really become such a nation of suckers?
Am I against all social welfare programs? Pretty much, but I can’t bring myself to take the tough stand that as a nation we cannot provide some assistance. However statistically unemployment goes up whenever it is extended. It seems counter intuitive people would stay on longer just because they can, but some do. My point is any assistance from the government would need to be means tested, limited and have an expiration. In the end I think charity does that best and even in these difficult economic times we are seeing $300 billion a year going to charity. Imagine if our economy were to explode and out taxes go down.
Now of course we have a new entitlement that is scheduled to have over 100 new agencies, dictatorial control from Washington by the HHS secretary on what we must buy and 16,500 new IRS agents to make sure we are in compliance. When we set up medicare we projected the cost in 1990 and it turned out to only cost nine times as much. In fact the total fraud in the system is close to the projected cost at a whopping 10% or so. Just another reason to distrust a congress who is fiscally answerable to no one and as law makers will never indict themselves for their criminal activities. Congress truly fits the bill as crooks and nannies. Today congressmen and presidents look to get their name on landmark legislation with far more concern to their egotistical vision of their place in history than whether we will have a future or how horrible their legislation is. The best thing we could do as a nation is to observe and reflect Franklin’s thoughts and roll back our welfare state.
Assail the Ivory Towers
July 11th, 2010 by EricDo you know what stupid is? Stupid is anyone not educated enough to believe absurd and irrational ideas fed to people who think they are smart by people who think they are smarter. Unfortunately for smart and smarter everything they know fails any test of practical application because… let’s face it, practical application sounds like the kind of work and proof sounds like the kind of record keeping that is frankly below smart people.
When I was young I given IQ tests. The first was in the third grade. Growing up in remote Alaska I was home schooled in first and most of second grades. When I was placed into a social circumstance I was utterly unprepared, something other children quickly picked up on and had their fun with. My saving grace was that I was the biggest kid in my class and so while I was completely unaware of social intimidation I was physically intimidating nonetheless. Actually my social ineptitude was a bonus because when kids tried to pick fights with me and I tossed them around like rag dolls. I thought they were playing and they thought I was insane. As for my IQ, there was a lot of excited muttering among adults and I was told that I should not be flunking.
As it turned out my biggest problem through most of school was being horribly bored and uninterested in most things. By the time I was a teen my mom was studying psychology and gave me an IQ test. I was well into genius. Later I was sent to counseling and some fat guy in a 1950s suit and haircut looked like he was going to freak out giving me an IQ test. I had two weeks to drill for that one and acted as stupid as I could to entertain myself. Years later I found people not as smart as me able to sail past me with ease. I believed my intelligence would compensate for as much slacking off as I wanted. I learned that it is all about doing the work.
One of the things I did professionally was work on medical equipment in field service. I learned that doctors thought MD stood for medical diety. Later I found many doctors practicing decades ago had only a few hours of nutrition training, yet I have since learned that in many ways food is the first medicine as our bodies replace most cells every 28 days. Most highly educated doctors have more in common with soldiers than scientists. They are highly regimented and conditioned to a diagnostic pattern that has far more to do with rote conditioning than rational thought.
Bear with me here. I have a point. Education can expand your thinking by challenging you to defend or evaluate a position. However that is a difficult proposition and requires a selfless and unbiased instructor. It is far easier and more common that education conditions with the premise that you accept without question the wisdom being served from on high. Again I think of this like the military. When you go in to boot camp the instructor has to assert his dominance. So there is that moment when he has you stand at attention and walks down the line asking if anyone thinks they can take him. Sure you may be younger and stronger but there is one important thing on his side. He makes this challenge when you are all naked. Who wants to fight with everything hanging out with bullseyes on it? Battles don’t go to the strong or the smart all the time. Most of the time they go do the confident and prepared… even in the case where that means a poor argument wins.
Today we have a president with an administration that has only something like 8% of them who have ever worked in the public sector. Most are from the ivory towers of education. Ironically today we are even finding that while I may score better on an IQ test than others that much of that has to do with my familiarity with information in our society and lower scores may not be accurate for some. However I remember hearing that A students teach and B students end up working for C students. Seems like the king of the prom was a football star and always ends up working in a car parts store. I’m not making fun of athletes. I’m saying that climbing to the top of any heap in your youth may be no indication of your future success.
Getting back to the ruling class though, polls show that these people are diametrically opposed to the views of most Americans. Does that mean most Americans are stupid. That depends on where you come down on things like more deficit spending. If you think spending a lot more is what we need to do you are with the ivory tower eggheads. If you think government is out of control and continuing to spend twice what you take in every year, while placing as high or higher burden as we ever have on people to pay it, is insane then you clearly are an uneducated dunderhead… By which I mean someone in touch with the reality of things.
I could go on but I will leave it at this. Dig in to what the ivory tower types believe. In a nut shell they believe they know better than us, we have too much freedom, we get too much information they don’t have control over… Pretty much what you’d expect from a bunch of fascists, socialists, utopians and busybodies. The thing is if you read history that is not what America is about. Our founders were educated men, but due to limitations of the day much of what they learned was self taught. Ironically I am self taught in a lot of things… business, software programming, history, economics.
There is a nobility in education that is driven by the passion and hunger of the student with the end to seek truth and once found to test, verify and confirm in fact it is truth and not some idiotic ideology some arrogant ass is trying to ram down our throats while we pretend to be smart in indoctrination rooms. I’m not against formal education. I am against anyone who believes what I know to be untrue. Any education untested with application and results isn’t worth the gunpowder to blow it to hell and I give a damn if you think you are smart because of a piece of paper. Benefits derive to men through the creation of wealth in a capitalist society. Those people who don’t like it are free to complain, but disproving it to one who confidently understands it is going to be a bloody failure.
Don’t believe people when they say they are smarter than you. Remember the childhood story of the emperor’s new suit which was in fact going naked. Look ‘em in the eye and snarl “The emperor has no clothes”. Their ivory tower eggheads are empty suits. The world has no shortage of ideas and theories… Finding the ones that prove themselves to work and understand why they do or don’t is far more valuable than regurgitating absurdities and treating people like they are too stupid to understand. Kneecap their arguments with a smile and ask them why they believe anything as stupid as the things they clearly do.
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