CONTENTS
Is Obama doing the right thing?
Helping the poor of the US and the poor of the world - What can be done
A President/politician should tell the whole story - Ethics
Everything has tradeoffs - And how it is necessary to properly weigh them, producing more with less
A dollar invested produces a bigger result than a dollar spent
How tax takes away growth
Where are the highest payoffs?
The reason why capitalism causes prosperity
It's a dog eat dog world, and a stressful one, full of greed - Heartless or dependency averse?
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IS OBAMA DOING THE RIGHT THING?
There appears to be a number of people who believe they need to vote for Obama because the "others' will not.
But, is that really true?
It is appealing to have somebody give you what you want.
It is appealing to have somebody say that he is the warrior for the middle class and that he will redistribute from the rich to be "fair."
Of course, someone promising alot of things and alot of change in your favor is very appealing.
Of course, we want to help those who can't do it for themselves.
But what is the limit? Where does he cross the line? Where would someone like Romney do as well for the benefit of the people?
The key questions are: What is the trade-off between providing free things and spending freely and facing the consequences of the debt and future taxes that would lower one's standard of living.
The promise of giving you all you want and the government will do it for you is on the scale between what is helpful and what may be harmful. And you might want to learn in order to be better able to assess the trade-off. I would, respectfully, suggest you read the page on Socialism and the page on Capitalism , in an objective manner. Then you'll have more of the necessary understanding. Some people will resist that suggestion, but I would ask of you to purposely be open-minded, learn what you can, and then make whatever decision you want, based on being better informed.
HELPING THE POOR OF THE US AND THE POOR OF THE WORLD
I would like to help everybody, as I can "feel the pain", in my imagination, of what it is like to be scared about survival and/or misery. But I don't have the wealth to do all of that, nor is there presently sufficient wealth in the world to do that. And if we diverted all the wealth to that one purpose, the growth of the golden goose that lays the golden egg would stop - and then we'd be less able to help those people.
It's almost like we have to "bootstrap" our way up, helping the poor as much as we can and then working to make enough money to be able to help more, and then repeating the process over and over and over - recognizing that we can't leap toward doing it all.
Does this mean that we are cruel and of limited thinking? Some would say that, but I wonder if that is from unrealistic, unworkable thinking. The good fairy is not likely to show up. And if a person wants to demand that others give up all their money to help the poor, then that very person should devote his life to making as much money (or gathering as much money) as possible in order to contribute directly to helping the poor, perhaps giving a vow of poverty (at the margin) and ultimate altruism. That could be a valid, and very admirable, choice. But it still wouldn't create the giant leap - and it would be helpful.
We also can't expect human beings to give up all their wants and filling of their needs. If you will choose to never do a Starbucks or eat a sweet or indulge yourself in any way, then you will have reached that level you are demanding of others - and then you could teach others to do that, but you'd also have to teach them to be more effective and to gather alot more money for the poor.
Anyway, given our limitations in the US, it does seem that it is a "MUST", not an optional, that we will not let anyone in the US live without food and decent (maybe not optimal) medical care and shelter.
From what I can see, both parties are committed to that, though one gets a bit self-righteous about it, accusing the other of not caring. This is the interpretation because the other side seems so penurious (cheap) about it and they are so intent on making sure people are self-reliant and not cheating the system or plunged into passive dependency. But I think those same concerns are on both sides of the aisle.
Anyway, the ultimate objective is to make sure we meet some minimum standard and then spend our other money on what comes up as the next priority and so on. And one of the priorities is to assure that those people who are earning the money are adequately able to keep what they earn for their benefit, meaning we don't tax them too much.
So, I think, neither party is "bad". The party of giving and the party of budgeting are not flakes nor mean
a--holes, just caring human beings, with no one superior to the other, just coming at things from different viewpoints. The obvious "best" strategy involves balance: helping who needs to be helped while not harming those who pay taxes and could use the money for themselves.
A PRESIDENT/POLITICIAN SHOULD TELL THE WHOLE STORY
It appears to me that Obama does not tell the whole truth, understandably because of politics. He's not "bad" because of it, just not quite ethical - ethics is doing the greatest total good for those involved. Not telling the whole truth does not allow people to make good decisions.
For instance, being "generous" by forgiving student loans years earlier than otherwise is a very popular and generous thing to do, earning lots of point and probably votes. But when do we stop adding to what will increase our debt problems? Obviously, if someone's personal debt is forgiven, there will be less revenue to the government as the repayments will stop coming in, which in turn means that other people will have to pay more taxes to make up for the lost revenue.
But, you say, this is a small thing.
Yes, but all the small things add up to alot.
We are currently selling ourselves down the river, failing to see the consequences of the lack of appropriate limitations. In other words, our national debt will incur at least interest, rising every year, and that interest will take away from what individuals can spend or invest, as their taxes would have to be higher in order to pay the interest. Does that make sense? In the long term, more costs/spending will cause more taxes - and the good fairy or time won't rescue us.
Limiting = a--holism?
Meanwhile, the a--holes are proposing limitations on spending and being so mean as to not tax even the rich more. Of course, most people fail to realize that higher debt actually lowers our growth and thus our prosperity, causing more unemployment, plus taking money away from investments to be spent by the government also reduces our growth and costs us all - as the pie does not grow and wages are impacted downward from the lack of demand.
But are the a--holes really a--holes and the flaky spenders really flakes? Or are they simply doing what they think is right, which is, on both sides, a "right intention." The job of the two is to balance these off to maximize the benefit to the American public. Although I am a social liberal (wanting everyone to not suffer and to live the best lives possible), I think the Repubs have the right idea about being fiscally responsible and forcing the issue, as we can't afford to spend ourselves into oblivion (we now have over a $100 trillion of obligations and only a $15 or so trillion GDP - see Actual US Debt), which will cause more harm to Americans than the extra spending benefits them. We've got to meet somewhere in the middle, but draw the line at what causes long term harm.
In my opinion, this President is not being fiscally responsible and proactive about this problem - he doesn't seem to be aware that there is a limit. I don't think he understands the tradeoffs financially on the economy and on all Americans. He has noble ideals and wants to give alot of things to the American people and intervene on their behalf, but he appears relatively strongly to be enabling dependency and the entitlement mentality instead of self-reliance. And without an ethic of self-reliance, we have citizens being less productive and contributing less (or taking away) to the total pie, and its growth - essentially killing the golden goose to get all the eggs, and then redistributing them. Of course, we haven't yet killed the goose, but we are now hobbling it and making Americans, on average, worse off.
EVERYTHING HAS TRADE-OFFS
(Well, not everything, but most things.) All decisions must be made by carefully weighing the trade-offs, meaning the costs against the benefits. People who haven't studied economics and business fail to use the 80-20 principle, which basically says the initial, first effort of what we do normally has a higher benefit/result than each effort thereafter - that is called "diminishing marginal returns" (or "utility"), where each added piece on the margin adds less and less benefit.
The classic example is eating a piece of pie. The first bite has a huge payoff and then the next is pretty darned good and so on down the line. The fact is that I could probably eat only 20% of the pie and get 80% of the satisfaction but not have the cost of getting fat and unhealthy. I could also buy a little sailboat on a trailer and get 80% of the pleasure of having a yacht (long term, if your pride isn't too great). It would be a bad decision to buy the yacht if it impaired your life or caused too much debt.
Well, we have the same tradeoff in government spending, always. A good steward, a good manager, will use this tradeoff to produce more benefits overall and with less money.
Wait a minute, you say, that's impossible.
No. It is easily doable.
Projects, costs, and "good" units
Let's spend 10,000 make believe dollars on 10 make believe projects. Each project will produce benefits that follow the rule of more benefit for the first dollars than the later dollars and we'll assume the standard trade-off. (obviously this doesn't apply to stopping building a bridge at 20%, but to completed projects.) Each project/activity if done to completion would cost $5,000 each, but there is a higher return on the first 20%, say 50% of the benefit of the whole project (50% x 5,000 = 2,000 of benefit). Each project produces 5,000 units of "good".
Now, how do I create the most good for my money?
Spend on completing 2 projects = 2 x 5,000 good units = 10,000 good units
Spend only up to 20% on each project = 10 x 50% x 5,000 good units = 25,000 good units
Let's say we have to cut the budget as we've determined we can't tax the people anymore, so our budget is now only $8,000. If we do what is normal,
Spend $8,000 to complete 80% of two projects = 2 x 95% x 5,000 units = 9,500 good units of benefit
Spend only up to 20% on 8 projects = 8 x 50% x 5,000 good units = 20,000 good units
In the latter case, I spent $8,000 dollars and I got 20,000 good units.
But if I were not aware of this principle in the first case I would have spent $10,000 to get 10,000 good units.
I doubled my benefit with 20% less money by being a wise businessperson.
In other words, spend, spend, spend does not produce as good a result as budget and then spend wisely.
A DOLLAR INVESTED PRODUCES A BIGGER RESULT THAN A DOLLAR SPENT
By now you've probably heard of the "stimulus" package, where dollars were funneled to people to spend, which would then create somebody having to work to produce the item the money was spent on, and then that person who got the money would, in turn, spend the dollar (after taxes) on something else. So that extra dollar spent actually had a "multiplier effect" of some disputed number, but, let's say it was 1.6. $1 produced $1.60 to live off of (less taxes of course).
Of course, we borrowed the dollar from somewhere, say, China. And we have to pay interest until we repay them.
A dollar invested, on the other hand, produces a "return" in terms of "profits" (plus, over time, it employs a number of people because we are ultimately investing in loans or stock or directly in companies). That dollar returns, say, 10% per year. After 10 years, based on compound interest I now have $2.60, which can continue to be invested. So I am able to grow our productive wealth and create an ever growing economy. I didn't stop at $1.60, as in the stimulus example, and I can keep this growing forever. And I helped produce jobs, from which employees spent money, helping the economy, and on and on.
I'll produce more $ for the good of all the people by doing the second action: investing and compounding.
HOW TAX TAKES AWAY GROWTH
If I take away $1 from a person who will not spend it but would invest it, then I have removed the ever increasing always growing ongoing wealth and income for people (and jobs) forever. After all, even the wealthiest people can't spend all their money - and whatever is left over goes into some account somewhere either to be lent or directly invested.
If the government spends the tax money well, it will produce $1.60, but then there is no addition.
So the Repubs are saying if we don't take away investment dollars from anyone, then we'll have more money producing to create growth and prosperity onward and onward into the future. Of course, we'll probably spend a portion of it, perhaps helping the poor, but we'll still have lots left, so we can even help the poor more than we could if we just blew our dough.
So, it is about of a lie, or an unintentional mistruth, to say "the Repubs are fighting for the rich and taking away from the poor". (Many congresspersons and politicians don't understand economics, so they are telling an untruth unintentionally. Still, the untruth does the same amount of damage.)
So, we have to constantly weigh the cost of taking away an investment dollar, via tax, against the benefit of spending a dollar for a good unit (benefit). It is not simply: "we'll tax the rich and get more for the poor", as what will actually happen is that overall we'll be less well off as a country and less able to do things that are of high benefit. Not taxing people helps create long term prosperity and growth and abundance.
Of course, we're forced to spend something because we want to be protected and get other services from the government. But we need to stop at some point, using the 80/20 principle to get more benefit from our dollars, while we grow and benefit people much more.
SO WHERE ARE THE HIGHEST PAYOFFS
So on this 80/20 rule, we would identify those projects that produce the most benefit (the top 20%) and dump some of those that produce the least. And there are some things that are "utter necessities", so they aren't optional and they come first. So, at the top of the list:
Necessities (high payoff!)
Protecting us from attack
Covering the poor up to "sustenance" level only (optionally giving more, as separate project, if appropriate)
Medical prevention of calamities
Basic transportation infrastructure
Basic communication infrastructure
Good Multipliers
Then there are the items that have good multipliers that may be the same or higher than investments.
Education - The higher the education, the more value produced and the more money made, contributing to everyone's prosperity more. The mulitiplier effect of this could be, I think, double that of an investment dollar.
Of course, spending the education dollars more wisely is a key here, to increase the multiplier.
Here we run across a dilemma. The person who is more educated benefits by a large amount of money. If we provide all the benefits for free to that person, we are spending some of our money for his benefit. And we will receive some side benefits, as more productive citizens help the economy, and thus the rest of us. But we'll not receive enough to pay ourselves back, or at least nowhere close to what the person receives. So, based on that, the person should pay for what he receives, with a portion of his increased earnings, on some basis. See The Master Loan Account concept.
This necessitates having education loan money available, even if there is some risk of nonrepayment. On average it will have a reasonable return, even after defaults due to inability to make payments. There would be no forgiveness point, but there would be no collection if the person for whatever reason did not have the capacity to complete repayment.
The Master Loan Account has a good return for the student and the nation, and it reduces taxes so investments and growth will increase.
THE REASON WHY CAPITALISM CAUSES PROSPERITY
In Socialism, we spend money and discourage production. In capitalism, we provide "capital" (via investing and loaning), so that we can have compound growth, accumulating prosperity rather than blowing it all - so we ultimately get to spend more. The proof: look at our highest standard of living.
BUT, IT'S A DOG EAT DOG WORLD, AND A STRESSFUL ONE, FULL OF GREED
Yes, we are foolish in how we manage our lives, but that is not the fault of capitalism or "greed" (wanting more for ourselves). (Of course, there is illegal greed, where one steals from another, but that is handled by the law.) Capitalism is not what causes us to keep on trying to spend too much, going far beyond what we need to be happy with. The problem is lack of learning life management (and some of the principles above), so we create extra stress, eat poorly, borrow to spend, spend, spend (sound familiar, a bit like the government). All not the fault of the availability of ways to make good money for less effort.
And any entity can grow too powerful and misexercise that power, which is why we have laws, to limit abuse of power. Unions can abuse power and hurt prosperity and business, business can abuse employees but few do. Governmen can abuse power, so we can vote out the abusers. Only those not educated in life adequately believe that they are powerless and that "others" are able to abuse them and take advantage of them. There is, except in rare cases, a balance of power, where employees don't go to work when wages are too low and employers don't hire when an employee cannot produce enough value. It is a false concept to think that people should be paid just for existing even if they cannot produce sufficient value (obviously, those who are disabled or "unabled" in some way would be covered by the rest of us with our tax payments).
When Obama referred to the Republican plan (actually a proposal, since none was offered by the Democrats for reconciliation) as Social Darwinism, he was revealing his thinking that the government should protect people and that the Republicans were leaving people to fend for themselves in a survival of the fittest (where people are responsible for themselves, but, in fact, the Republicans would care for those who are responsible but unable). He also did not know for a fact that all programs would be cut the same, and therefore assumed the poor would be not covered adequately - something I think is below a President, or if he didn't know better, then he needs to be more knowledgeable. Therefore, a portion of what he said was pure politics, which, I think, governs him too much, to the detriment of the public. His stopping consideration of the ideas in the plan is harmful to the good of the public.
Heartless or dependency adverse?.
The Repubs have declared that they will be sure to take care of the poor, but I think they haven't done it clearly enough and emphatically enough. From what I gather, there is no Repub that I've ever seen who would let the poor go to pot, though they would certainly be demanding of all able-bodied people to get off the dole and to eliminate all of the so-called Obama Bucks that was mentioned in Nancy Pelosi's daughter's video interviews of welfare recipients.
In the cases where parents allow their children to become dependent for life, there are great costs in self-esteem but also in not developing the capability to handle life well. The children have to left to learn for themselves and to learn from their mistakes (obviously the parents protect against extremes that they couldn't handle and/or were too harmful) and to suffer the consequences. You can call that "tough love" but if done correctly it is "supportive love", that is not disabling.
The danger is that people will expect to be protected (beyond the normal law and order) from life's crappola that they can easily survive and overcome. The danger is that they will become entitled, to be rescued, to be saved from their own errors and from life's vicissitudes, to become dependent and disabled in terms of self-reliance, and, one of the worst psychological harms, to become passive in life.
Yes, perhaps as a teenager I might have fought this idea and criticized my parents for being heartless, mean, cruel, harming me psychologically for life, etc. But as an adult I see that I must not be encouraged to not be responsible for myself. If I get into trouble, with the exception of starving, I need to cope with that myself - and know that I'll come out ok, as all Americans can, given our safety nets.
All the young people need to be told that there is a line being drawn, where we will help if absolutely necessary, but where they are expected to overcome their overcomable adversities on their own!!!!
And that American values are self-responsibility and self-reliance - and that they'll prosper in America if they are consistent with those values. That is not cruel, but realistic and empowering. (Still some will insist on being in the victim role, unfortunately. But the President should drop being a role model of blame and excuses - and he should tell them to gird up their loins and go out and make things happen, that they are now adults and responsible for themselves and their debts and all they do in life - that would be the ethical thing to do, but ethics are often overruled by political considerations.
