RESPONSIBLE CAPITALISM 2014

 

 

I caught part of the new New York mayor’s inaugural address and heard a call for income equalization and a scheme to tax the rich to pay for pre-K child care and after school care for all the people who live hand to mouth, struggling to pay for the rising cost of child care due to increased government regulation, taxation and licensing fees.  Chain child care institutions can afford all the fees, so local businesses are struggling to stay in business and prices rise and rise.  The reasoning here is that the rich deserve to pay the costs through taxation for the children of the lower income people and the government is the intervening agent. 

Who should pay for someone else’s child?  Did they create the situation of higher and higher costs for these people?  Are they profiting off government subsidies for their businesses and do they fund suggestible politicians who will work for their goals?  Are their goals of the short term profit variety and be damned the consequences?  Or are their goals to perpetuate the free enterprise system and take profits that allow for the continuation of the economy?  People can’t pay higher and higher prices on a static income in perpetuity.  A social consequence of this apparent policy is the mentality that would use the government to take from the wealthy, process the funds to enrich themselves, then distribute the remainder to the poor in the form of subsidies and services.    

So Socialism and Communism rise when the megarich get richer and everybody else gets poorer.  Is that what is happening in the USA right now?  Who should redistribute their high income to the poor because they went to school and worked hard to increase income?  Yet if the rich are rapacious and insensitive and are cramming things down the throats of people, like crooked politicians and mandates, then they can historically expect social problems.  A voluntary investment policy that increases jobs created Microsoft and Apple.  Innovation creates demands and jobs to satisfy those consumer demands like cell phones, Ipads, kindles and other related gadgets that people really want.  People don’t want spending mandates.      

It’s interesting that Justice Sotomayor issued a stay against a portion of Obamacare that dealt with a mandate for hiring institutions to provide contraception insurance coverage, based on religious objections.  The objection was a violation of religious beliefs, not against the insurance purchase mandate itself.  My objection is against the purchase mandate of anything, insurance or otherwise.  My personal rights are being violated when I am forced to buy.  Buying should be my monetary decision, not the governments.  Are religious beliefs more important than personal freedom among the judgmental elite?  The real issue is the mandate, not the specific belief violated. 

How can free enterprise work at all if people are forced to buy?  And the insurance companies have pricing discretion but the purchaser does not?  The middle class money flow into the coffers of the insurance companies and the government is a tsunami of political change. 

So I’m not sure what consortium is behind the change in the money patterns of the economy but I can see the results: 

·         Low interest rates due to the institution of sliding interest percentage payments based on prime rate so small holders can’t get any returns on their cash deposits. 

·         Huge payments to certain banks from the Federal Reserve which has been labeled money creation.

·         A ‘target’ inflation rate of 2% imposed on the economic system which harms fixed income people.

·         The huge banks can be in debt far more than they have on deposit and will get a government bailout if they lose their gambling debts. 

·         Fake ‘products’ like derivatives tie up real money and produce nothing but gambling profits for a few.

·         Opportunities for opening a small businesses are dwindling due to zoning requirements, fees, taxes, payoffs and cutthroat competition from chain businesses who can take a loss for a few months until the smallholder goes broke. 

·         Obamacare insurance mandates will cost jobs and investment in the small business sector.

·         Zoning laws prevent people from operating small businesses on their home properties, forcing the use of expensive investors’ properties.     

·         Students are in debt for degrees that are either in saturated markets, closed markets, or are simply archaic and need more education to be economically viable.  Student debt is an economic nightmare but somebody made big bucks off it.  Instead of working to keep educational costs down, they freely made debt available and profited off it instead.  I blame the educators, lenders and the politicians for that one.  I don’t see social justice here.  If they don’t bring the educational costs down, student numbers will decline. 

 

I know the demise of the Glass-Steagall Act dates to the Clinton administration and the rich have definitely become richer at the expense of the rest of the citizenry since then.  I know it’s nice for a poor boy to make good but what about the long term consequences of the tip in the economic balance between the rich and the poor in this country?  What are the long term effects of the lower economic persons not being paid enough to afford the current high prices in child care, material goods and real estate?   Now tack on sky high insurance costs and deductibles, and more people will be marginal economically. 

Perhaps devaluation in prices is in order.  Pay the people the same but get less profit per widget by lowering the prices people pay for services, goods and real estate.  The recent JC Penny problem is a case notable by initial high prices, a lowering of prices by a large percentage and a much lower profit margin per item.  Not no profit margin or a loss, but a lower profit.  People actually shopped there because the clothing was of a reasonable price for fair quality, instead of super high price for fair quality.

The late real estate boom resulted in devaluation in the value of properties, but no devaluation on the debt owed on the real estate.  Inexpensive housing became palaces for sale on paper and if you wanted a home, you had to pay those inflated prices.  I know people who were left in debt for a home that was now valued at 40% of the debt on it.  People are now paying high rents due to high debt levels on the properties they rent.  Everybody buying was cheated, and the sellers made off with the money, leaving behind them tears, despair and a lack of value.

Recent trends point to a lack of morality somewhere.  Responsible capitalism is not a game of decimating your rival and making off with all the cash:  Responsible Capitalism is employing people, taking a reasonable profit AND perpetuating the system.  

History teaches that excessive profit taking and gambling on the part of the wealthy results in popular uprisings.

UNDER CONSTRUCTION