Two Roads

2008-11-11T14:31:00Z

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There are two ways in which to better your lot in life. One is to build yourself up. The other is to bring others down. We have all experienced people that have chosen one approach or the other. We all know someone who is always blaming someone else or pointing out everyone’s faults, and that someone appears to feel better about themselves by bringing down the competition. You probably also know someone who always sees good in others and just seems to focus on how they can work on themselves through acts of self improvement. I point this out to ask you which kind of person you would like to be or to be seen as? The personality that brings others down as a means to their own success is obviously not very appealing, but one has to admit that it is essentially a self defense mechanism for those that feel unable to feel good about themselves in any other way.

But let’s move beyond basic human interaction and on to how this may correlate to political theory. The government, in theory, exists for the purpose of, among other things, the betterment of its citizens. How it performs this duty is the basic divide between conservative and liberal thinking. Now, of course, there are many issues that differentiate between the left and the right but the fundamental principals reflect a choice between individual liberties versus an equal distribution among all. So far, both ideas sound pretty good on their own. I will not try to claim that liberals do not value individual freedoms, nor will I listen to the idea that somehow conservatives don’t care about the little guy. American’s are mostly up the middle and would like to see a balance of both choices. But how do we achieve this? This brings us back to the two paths to success.

Do we achieve a greater success by punishing those that at the front of the line and redistribute the wealth to all. Sure it sounds great if you’re at the back of the line because you just took the fast track to the front on someone else’s shoulders! But what does that do to the motivation of anyone in the middle of the line? I heard an example once where a teacher decides to “redistribute” some points on her scoring system for her student’s papers. She would simply take some points off from the A students and raise the scores of the D students, accordingly. She figured that this would improve the self esteem of the students who were at the bottom of the class. You can understand her good intentions in helping the less fortunate in her class, but as is the case with the classic liberal view in politics, it just doesn’t add up. By trying to take from one to give from another, you hurt all those involved. You take away the incentive to work hard for those who do. You also very subtly take away the motivation for the less fortunate by addicting them to their subsidy.

Listen, I can appreciate the concern that our society not allow a great divide between the rich and the poor. Equal opportunity must be assured for all. I simply have heard enough of the anti-corporate mentality that is running wild in the aftermath of the Wall Street meltdown. Tax the Rich! Give to the poor! Well, what happens when it is no longer profitable to run a business in the US anymore? It is those very corporations that employ the lower classes that we are supposed to be helping. Won’t we feel smart when big business shuts down or moves overseas?

There’s an old expression that you can give a man a fish and he will eat today. Teach a man to fish and he will eat for a lifetime. What do you want your government to do?

Bad Apple Economics

2008-11-06T14:19:00Z

Does a bad apple spoil the whole bunch? Unless the adult influences in my childhood misled me then the answer is no. Somehow, this came to me as my free-market, anti-regulatory brain tried to cope with the harsh reality that something has gone terribly wrong with all that I believed to be true about the stock market. Alan Greenspan may have been ready to testify before Congress that he was wrong, but I wasn’t quite there yet. Now that Ben and Henry have entered the building, signing checks until their pens run dry, you can hear the growling of the government watchdogs at the door waiting to chase down the supposed perpetrators of our financial crisis. And me, all I can do is sit and stare at the old black-and-white of Ludwig von Mises and wonder how I could have been fooled so completely. After all I have always prided myself on being open minded politically and socially, but I had never wavered on my faith in free-market capitalism.

Maybe greed is not good as a certain movie character once told me. Maybe traders, analysts and CEO’s can’t be trusted to be as ethical and cautious as they are aggressive and creative. Maybe broad regulatory measures are, in fact, a necessity and a call to Big Brother is in order. I was wrong! Bring on the dogs and hand over the deeds. Only the government can save us now! Certainly leaving Wall Street on its own to make the right choices is like leaving a room full of adolescents alone with a bag full of candy and a book of matches.

But, then I let out an exasperated breath and shook my head in disappointment as I bit into my morning apple and suddenly the child-hood analogy came to me. Bad Apples! What an appropriate term for the greedy, short-sighted stewards of Wall Street. Bad apples in the bunch, I thought. Then, of course, my thoughts turned to the rest of the apples. No, the bad ones do not spoil the bunch! I wouldn’t stop eating apples altogether just because I bit into a bad one. Neither would I begin a consumer campaign to change the apple industry, how we grow them, how they are packaged or anything of the sort. At the most, if I determined that some blame could be assigned to the market I bought them from, then I may stop doing business there.

Overall, apples are good. Our economy and the financial markets are essentially good. We have probably learned things over time that have allowed farmers to grow better apples and the same could be said in the financial industry. In the light of the current crisis, some things will need to change, but we must be careful not to go too far in reaction to our fears.

-----------The Angry Elephant

Two Roads

Bad Apple Economics