It's (always) the economy, stupid!

thedo — Thu, 25 Sep 2008 15:29:00 GMT

The timing is odd. John McCain has suspended his campaign indefinitely to hammer (and sickle) out the current "economic crisis." Though I believe McCain should suspend his campaign definitely, a-la Mitt Romney, I offer little other disagreement about this "political move"—a vacuous pejorative people are using to describe their contempt for McCain's choice when, as a politician, every move is "political." After all, McCain is an elected senator—by the people no less! thank you 17th Amendment. He has a duty to represent his constituents in Washington D.C. and make sure their voices are hard. For all of the pandering people are putting behind that old hitching post to "call your representatives in Congress and tell them you oppose the bailout!" there sure seems to be quite the criticism of McCain for somewhat assuming this role. He wasn't elected to run for president by his constituents after all. Even Ron Paul, after all, temporarily suspended his presidential bid to shore up his congressional re-election.

Yet, the timing is odd, and people are associating McCain with ducking the presidential debate this Friday—a curious notion because the debate concerns foreign policy, arguably McCain's stronger point over Barack Obama. With few weeks left before the election, both candidates have some alleged duty to better inform citizens of their views to help them choose whom to vote for. Here's all the help you need: They both support warfare across the world. You can say tomato and I can say potato, and that's about how much these two candidates differ when you replace tomato with Iraq and potato with Afghanistan.

Regarding the debate, others lament that, unfortunately, the debate is not about the economy when the US economy is in such "dire straits." But here is the misdirection, again. The debate, whether it's Friday or another time, about foreign policy is inextricably linked to and cannot be removed from the economy. That "other" debate concerns domestic policy. You know, education and the like. Both debates—here's the kicker—concern the economy. For how can the US government pledge billions, nay, trillions of dollars into war venturing across the planet without affecting the US economy as a whole?

This was the beauty of Paul's cohesive arguments in the Republican presidential debates. He tied everything back to monetary policy, the economy, because nothing can be separated from the economy—that is, economics: human action. How the government acts oversea, how it spends its war venturing, directly impacts the economy. Where does the government get so much money to fight overseas? They sure don't tax US citizens, at least in the commonly perceived sense. The government either borrows or prints money, and both means increase the government's total debt, which, in the end, must be financed by US taxpayers. When the government is so financially invested overseas, in 160 countries, it directly impacts the home front, leaving less to spend at home. At least it should, but it doesn't, because if any domestic financing is needed the government, again, borrows and prints.

All of this leads to a reckless financial policy. When people demand more for bailouts, or health care, or whatever they want more money for, education, drug wars, etc., and the government is strapped, all they need to do is look at the overall financial policy: foreign and domestic. The debate Friday will concern foreign policy, and it should also concern financial policy. It won't, though, because both candidates are incapable of linking foreign policy with financial policy.

Economics in a job interview

thedo — Wed, 10 Sep 2008 20:58:00 GMT

My month-plus-long search for job stability turned onto the final 100m today. For over the past month I have been seeking a full-time position. Finding nothing, I turned to temporary work at a local staffing agency and easily found temp. work. The work wasn't hard and I made enough to pay for the necessary bills. I learned just how capable the market is in employing people and putting food on peoples' tables—so long as they are willing to "swallow their pride" and do work that isn't ideal. Humorously enough, I've been part of the poorest demographic, students, and accumulated thousands of dollars of debt chasing after that noble ideal of higher education, yet I never considered myself poor until I graduated and had to "manage by." As a result, and at the same time I read a financially awakening book by Dave Ramsey called "The Total Money Makeover," I learned the value of a budget and not spending beyond my means. It is just like if you want to get fit: You don't eat more calories (spend more money) than you expend (make).

But as I said, I'm running down the final 100m now after interviewing with Almon, Inc., the technical documentation contractor of John Deere, and receiving a full-time job offer. My interview today was the most interesting and pleasing interviews I've ever had. The reason was due to simply talking with the people I'd be working under and with and listening to their job anecdotes and how they showed economic truths.

Anecdote 1: John Deere is having to shut down an operation in Canada and relocate to Mexico. The reason? The oft-maligned "cheaper wages." But the full story I was told, that Canadian labor laws forced Deere to pay its employees the same as the automotive industry, upheld the basic fact that labor unions exclude possible employment, raise wages, and that minimum wage laws, in general, increase unemployment. Deere would've like to have kept its plant and employed many Canadians, and many Canadians would've surely enjoyed employment at Deere. However, because Deere could not afford to pay its employees such a high price at that location they had to relocate, increasing the number of unemployed Canadians who must now begin the arduous task of job searching again as I did.

Anecdote 2: Almon, Inc. has not grown considerably in size over the past decade but is achieving much higher productivity than simply 10 years ago. This story illustrates the true economic path to progress: capital reinvestment. Almon, Inc. did not become more productive because it highered more people and raised wages. It did so by reinvesting its capital, which later allowed the company to higher more people and raise wages because it could afford to do so. This is an economic point few understand, especially those who would say that companies becoming so rich should first raise wages, higher more people, or be taxed more. This is fundamentally unsound. A business cannot redirect its capital investment to wage raises or increased employment without first reinvesting capital to cover its costs. The same goes for taxes: the more a business is taxed, the less it has to reinvest for capital, which means, in turn, it'll have even less for raising wages and hiring new employees.

After reading authors of the "Austrian" school of economics such as Henry Hazlitt and Ludwig von Mises, it has been refreshing to see their economic theories proven by real-life examples. It was refreshing to know, no, the government doesn't need to "create jobs" for people to be employed, nor does the government need minimum wage laws to provide people with a "just wage," nor does it need to tax and implore businesses to "share the wealth."

So I know, even more, that I cannot believe a word Barack Obama or John McCain say about leading the American economy back on course because they both believe in job creation, which only removes more business from the private sector and increases taxes (because more people on the government payroll means more people will have to pay their wages). They both believe in minimum wage laws and labor unions. And they both believe in taxes, for sure, but also taxing businesses and the rich. These men, and their parties, are not different.

The real world demonstrates that the three aforementioned areas do not need government intervention. The real world demonstrates the two aforementioned presidential candidates are not needed.

Apropos Austrian Aphorisms : barack obama

It's (always) the economy, stupid!

Economics in a job interview