Wednesday, March 30, 2011

Economic confrontation

This is one of the crucial issues. Do you believe that the government can allocate the resources of our country better than the individual? If yes, then you are like my wife. A life long Democrat who does not understand that her way of life and standard of living are directly dependent upon implementation of this concept.

Conservatives believe that our country's history has proven that the resources of our country are allocated much more effectively and wisely when the individual owns 'skin in the game'. After all, humans will take much more care of a house if they own it, rather than someone else. This concept applies to just about ALL property.

I work retail. I see this every day. People open items and just toss the items back into the box. If they owned that item, they certainly would not treat it in anything like that manner. After all, when they purchase that very same item, it needs to be perfect and unopened. Only if they themselves opened it, would they purchase that item. When you lend something out, is it handled as well as you handle it? I doubt it. I make great efforts not to lend anything out for just this reason. I am VERY selective whom I lend things to for this reason.

The conflict of government allocation of resources is coming to a head. The financial problems our country faces (On ALL levels of government: Federal; state; city and local) have reached a breaking point. The Democrats and unions do not understand this. They barely understand the most basic financial and economic principals. This is demonstrated time and again when they refuse to accept any retreat in benefits that they have acquired. (This is a natural tendency) An example:

In 1992, the basements of numerous buildings in Chicago were flooded. My company moved us into another building. Once power was restored, we were moved back and water bottles were stationed throughout the building because the water was not known to be safe for drinking. After 6 months, this had been corrected and the bottles removed. A huge uproar was the result and numerous meetings were held. The representative of the building (It was being rented) stated that it cost more than $150,000 a year to maintain the bottles. The company ate the cost for 6 months, but it would have to lay off some people if they were maintained. We voted on it. Out of more than 40 people in my meeting, I was the only person who voted to remove the bottles. I asked several people why they voted the way they did. The answer that I received was "I do not believe them." (Please note: Most of these people were college graduates.) This is what we face when we attempt to remove entitlements and benefits. This is a complete misunderstanding of economics and cost of production. Unions are particularly poor at these subjects.

Once potential bankruptcy is obvious, unions have been known to make exceptions. Many times, not even then. The members just do not believe that the financial situation is as bad as is being presented. Immense damage had already been done before they reach this point, and still many times refuse to believe what they are being told. What is even more troubling is that our country is facing this type of situation and many people just do not recognize how bad it is or how important it is to deal with it. It will take some type of economic shock to potentially wake them up. That will be way too late.

This is why we are seeing so much unrest concerning state governments and the cutbacks. Hell, even the NFL is being impacted and they are supposedly awash in money. What is generally not recognized is that it does not take much of an economic shock to make a company bankrupt. They operate more efficiently than just about any other economic organization and as a result are susceptible to all kinds of disruption. All we need today is some type of major disruption in the economy of the U.S. and we will be in trouble the like which has never been seen by us before. This is why the conflict at the state level is becoming so heated. Some people see this. This makes it worth risking more in fighting. Hence a greater level of pressure is being applied, which adds to the stress in this conflict.

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