Saturday, September 11, 2010

Liberal Disconnects

I posted earlier about how liberals don't understand how profit works, why it is important and why it is not evil. Mostly they believe this because they've been exposed to so much propaganda by their leaders, professors and politicians alike. It's like a mantra with them to play class warfare games and try to demonize the rich. They believe things like that rich people are rich by stomping on the poor and climbing over their backs to get there.

They can always find examples of this argument. They have to use individual people. They use somebody like Bernie Madoff to malign all of the hard working people on Wall Street. They use the CEO of Enron or Worldcom to try to demonize all CEO's.

This ideological demagoging causes liberals, even a few with business experience, to be disconnected from how business really works and what it takes to keep it growing and strong.

Since the media has picked up the drumbeat, partially because it's more dramatic then covering how things really work, the misunderstanding about how business, profit, salaries, etc work have grown in the average persons mind as well.

Here is how it works:
  • 80% or more of new jobs created in the U.S. are created by small business.
  • However, most Americans work for a corporation, sometimes a small business, but more likely a large corporation. Corporations provide the jobs.
  • All business, but especially the more vulnerable small businesses, need a stable business environment. Discussions about climate bills that will create massive increases in energy costs do not create that climate. Health care bills with tax provisions that start in 2011, as well as new mandates that increase the cost of providing insurance, create instability. Massive government deficits (currently 3 times higher annually than ANY of Bush's deficits) create an investment market that is uncertain.
  • The motivation for starting a business and growing any business is profit. Profit is what small business owners hope to make to pay their bills at home. Profit is what corporations want so they can grow again and hire the best people to work for them, from the top executive to the cheery receptionist. Overtaxing or discouraging profit discourages new businesses and business growth.
  • The proper market regulator on profit is competition. The more businesses providing the same service, the lower the price and the better each business has to be. Artificial pressures on profit from the government only force people out of the market, and only the biggest survive, not always the best. Less people in the market means those that remain can monopolize.
These are all basic and fundamental principles of business. People in the business world understand all of this. So why is the administration doing all of these things that hurt growth and jobs? The President, and EVERYBODY around him have littile to no business experience.

I watched Timothy Geithner for a few minutes on CNN in front of Congress. One of the representatives said to Tim, "I'm a lawyer, you're a banker . . . " and Tim interrupted him at this point. He said, "I've never been a banker, never worked in the private sector, my whole career has been with the New York Treasury." In other words, he's been on the regulation side his whole life, and still didn't know how to pay his taxes.

Christina Romer, now headed back to Berkeley, is a liberal professor that is a perfect example of my blog name. Her PhD is useless if she actually believes what she taught and practiced in the administration will really work in the real world.

Larry Summers, Chief Economic Advisor, or Economics Czar, has been in college his whole life.

Obama himself has only run Bill Ayers foundation, a non profit operating off donations. He's never run his own business, and no, a campaign doesn't count.

When you surround yourself with academics who have spent their whole lives believing Keynesian economic theory (that you can spend yourself out of a recession, which works as well as spending yourself out of debt), and theories that you can tax the rich endlessly to support the poor with no harm to the country, you get the disaster that is the Obama/Democrat economic plan.

They can't all not know this. Take Nancy Pelosi as an example. Her husband is a multi millionaire owner of a major food company. They both understand what goes into profit, that's why she had American Samoa excluded from the last minimum wage increase - her husband has many canneries there.

So you have incompetence and . . . power involved. The democrats know that the more people are dependent on the government, the more power they will have and the further left the GOP will have to move to win voters. Since the socialization of so much of Europe, conservative voices have been shut out of politics, because too many voters love living off the government teat and won't let go. Now Portugal, Ireland, Italy, Greece and Spain (the PIIGS) all face the collapse of their governments and economies because you always eventually run out of other people's money.

Let me reiterate - Corporations don't pay taxes. Their employees pay them in lower salaries/benefits. The public at large pays them in the form of higher prices. Or they don't pay them by getting their representative to create a loophole for them, increasing the burden on the individuals.

But create incentives to growth - lower business taxes across the board, stable policies, only basic consumer protecting regulation, allow everybody to fail or succeed without government interventions - and our economy will rev back up. 75% of our economic growth is based on spending. 27% of spending is done by the top 1% wealthiest Americans. Let them keep their money, instead of hoarding it to pay higher taxes or hiding it to avoid paying them, and they will invest, hire, and spend.

And stop demonizing business and wealth. They both keep people employed and off the public dole, but Democrats want more people on the dole . . . so, vote for the conservative, TEA Party or GOP.

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