I like having options and enjoy being able to make my own choices about various things in life—what food I eat, who I associate with, how I spend my money, what jobs I want to work at. There are some people who don’t have the ability to make their own choices. They may live under a repressive government, be poor, disabled, or have some other restrictions placed on them. That doesn’t mean they don’t have any choices, it just means that they are more limited than what the rest of us have.
We are reminded, but not often enough, that failure to make a choice is actually making a choice. If you are faced with paying the house payment or paying for a new car and you elect to do neither because you can’t decide, you have made a choice.
“Freedom” is defined as the ability to make your own choices. If you aren’t allowed to make a choice, you don’t have freedom in that area of your life. In reality most of us have the freedom to make a “bad” choice that ends with a result that is too bad to even consider. In cases like that a person really does not have a choice. For example, you may have the choice of cursing out your boss, but the consequences are that you will lose your job.
Sometimes we abdicate our responsibility of choosing to someone else—like the Government. When we want the Government to take care of our medical care/insurance, for example, we give up a large part of our ability to choose. We instead ask the Government to choose for us. When we do that, many of us find that we do not agree with the choices that the Government makes for us. By abdicating our ability to make these choices, we have given away some of our freedom.
In many cases the Government will limit our ability to make choices (limiting our freedom) in the name of “fairness.” From a perspective of emotions, “fairness” sounds so simple and good to people. This is where we have lost focus in this country.
Fairness, to me, means the mutual agreement among all parties involved. This country was established on the idea that all people would have a fair, or equal opportunity, not a fair, or equal, outcome. Yet, some people, especially some in the Government, only see “fairness” resulting in equal outcomes. Even in cases when two parties agree on a contract (maybe a price for a good), the Government may restrict that choice in the spirit of “fairness,” saying that it is unfair to another supplier that the supplier you agreed to buy from was selling his goods or services for too little.
What may seem “unfair” in a single snapshot of time may actually be “fair” when looked at from a different perspective. For example, it may seem fair to take money from the rich in the form of taxes and give it to the poor in the form of many various credits, government programs and allowances. But, when viewed over the course of half a lifetime or more it may be easier to see how arbitrarily people may define what is fair.
Let’s take a look at an example case where we have two individuals (let’s call them Steve and Jim to keep track of them). Both of them graduate from high school together. They had the same grades, and they score very close to each other on the intelligent tests.
After high school, Steve decided to go to work at McDonalds to earn some money, which he spends on cars, beer, clothes and going out. Jim worked also, but he spent his money on tuition for college. While Steve was out on the lake in the boat that he bought on credit, Jim was taking night classes and working toward his degree. Both men had the same opportunities, but they made different choices. Steve chose to obtain immediate gratification by not only spending all that he was making, but also going into debt using credit cards. Jim took a longer view on things and decided to delay gratification and invest in himself.
A few years later Steve was still living the good life, but was several thousand dollars in debt. Jim now had a good job, but instead of buying new cars and a big house like Steve, he lived frugally and invested much of the money he was making into savings, IRAs, college funds for his kids and 401k’s. Again both men made the choices that suited them.
A few years later we see that the kids from both families are ready to go to college. Steve has no money to pay for them to go, whereas Jim is able to afford to send his kids to school. Steve scrambles to find ways to have other people pay for the education of his kids. In fact, some of the tax money that Jim is paying (Steve doesn’t make enough to pay taxes) goes to pay for college for Steve’s kids. Now the difference in incomes is starting to irk Steve. Why should Jim make so much money and he (Steve) is left with all of those bills?
Finally the kids are grown up. Jim’s kids have good jobs now, and are supporting themselves and families. But, a couple of Steve’s kids are back living with him since they can’t afford a place of their own. Steve’s family is in debt, so they can barely afford to pay the bills let alone continue to provide food and shelter for their grown kids (and grandkids?). Meanwhile, Jim is debt free and his college education is paying off. He is now making triple what Steve is. Not only has Jim’s standard of living increased dramatically over Steve’s, but he is maxing out his contributions to his retirement plans. Steve is bitter that things turned out the way they did. At this point Steve complains that it just isn’t fair that Jim is making all that money. (I wonder if Steve thought it was fair when he was boating and driving new cars and Jim was going to school and saving his money?) He complains that it’s wrong for Jim to make as much as he does. Sadly, Steve is in a majority of Americans who made bad long-range choices and are suffering financially, while Jim and a few others are living comfortably.
At this point, Steve’s definition of “fairness” has become has become skewed. They both had the same opportunity, yet through the choices that they both freely made, things ended up very differently for Steve and Jim. When people in various levels of government start agreeing with Steve, things get completely out of whack.
Most politicians give lip service to what is “good for the country (or state, county, or city). Instead, most of the time, their goal is to get elected. They look to satisfy the masses (voters) who, like Steve, are in debt, have smaller incomes, and are bitter about the way “life” has treated them. In the spirit of “fairness” they propose to simply take money from people like Jim and give it (after they take their cut) to people like Steve. How can anyone say that it is unfair to take money from someone who has so much and use some of it to help those who have so little? Given that instantaneous snapshot in time, that policy may seem very reasonable to many people. But the Government has now taken freedom from Jim, which is his ability to choose how to use money that he has earned.
Throughout their lives, both men had the same opportunities. They were free to make their own choices. In the beginning, Steve made choices that allowed him to live better than Jim for a few years. During those years no one, not even Jim, complained about the differences in lifestyles. No Government asked Steve to share his boat with Jim. But the choices they made turned out much differently in the long run. Steve’s life became difficult financially, but Jim’s became much easier. So how could it be unfair that Jim is successful and Steve is not? The answer is that it isn’t unfair. That is just the way it turned out based on each man’s decisions. Fairness lies not in the result, but with the opportunity.
Is this the concept of “fairness” that we want our Government to enforce? If so, what motivation do people have to think in the long term? Why not spend all you have (and more) now and then let the Government take from the rich and give it to you when you’ve reached the end of your rope? By not letting people fail in their choices, we cannot be “fair.” Life isn’t fair and Governments will not only go broke trying to make it so, but in the process they will create more inequity.
Monday, July 7, 2008
Friday, March 28, 2008
Explanation About My Inspirations
In my last post, I listed a link to a modern version of the Ant and the Grasshopper. I listed it because I liked the libertarian version, not Al Date's commentary. In fact, Al leaves out some very important facts in his argument. When I have time I'll write a blog deconstructing his arguments.
I've got another post that I thought was finished about Freedom, but my last few paragraphs didn't save for some reason. I'll have to rewrite them and get that posted soon.
I've got another post that I thought was finished about Freedom, but my last few paragraphs didn't save for some reason. I'll have to rewrite them and get that posted soon.
Tuesday, March 25, 2008
Inspirations
Here are a couple links to articles that have been an inspiration to me.
10 Men Go Out to Dinner
The Ant and the Grasshopper (A Modern Version)
While the author of the 10 Men Go Out to Dinner is not known, I want to thank Denver talk show host Mike Rosen for posting it on his 850KOA website. Mike is an excellent voice of conservative thinking here in Colorado.
10 Men Go Out to Dinner is a simple to understand example of how the tax system works.
10 Men Go Out to Dinner
The Ant and the Grasshopper (A Modern Version)
While the author of the 10 Men Go Out to Dinner is not known, I want to thank Denver talk show host Mike Rosen for posting it on his 850KOA website. Mike is an excellent voice of conservative thinking here in Colorado.
10 Men Go Out to Dinner is a simple to understand example of how the tax system works.
The Rich Get Richer
A lot of times I hear people say, “The rich just keep getting richer.” They say it in a way that means, “I can’t get any (financial) breaks, because I’m not rich.” It’s like they feel that the world is set up so as to always benefit an incorrectly perceived, privileged rich and suppress the unfortunate poor.
But, there is a fallacy in that thinking. It’s not that the “rich” keep getting richer—it’s the smart rich people who get richer. We hear stories all the time about people who have won the lottery and then are completely broke in just a few years time. They were rich. Some with millions of dollars. If it is true that the rich just keep getting richer, how come they didn’t get richer? Because they were not smart! Most “rich” people get rich in the first place because they worked hard, took advantage of their intelligence and wisdom, and saved their money. Once they got rich, instead of spending their money, they found ways to make their money work for them and they got richer.
And why should it matter to people if someone else is rich? It obviously does. You can’t listen to the news for a week without hearing several stories about how unfair it is for someone to have so much plenty and someone else to have so little. We also hear stories to the effect that this person or that person has “more money than they need.” That’s an interesting statement! Again, so what! How can anyone know how much money someone else needs? Maybe they need that money to build a soup kitchen for the homeless.
Another saying you hear from people is, “You need to have money to make money.” This seems to imply that if you don’t already have money, you might as well give up because you won’t be able to make it. That’s not true either. I’m not rich, but I aspire to it. I plan for it, think about it, work towards it; and I defer spending a lot of my hard-earned money now so I can find ways to put it to work to help me reach my goals later. That is how most people get rich.
Many people assume that most rich people inherit money to become rich. That is not the case. But, if it was—who cares?! One of my goals is to have enough money to be able to provide for and leave enough money to my children and grandchildren, so that they are not left wanting in life. When I get rich (I fully intend to get there) is it wrong for me to leave my money to them? Why should anyone else care? I made the money, so shouldn’t I get to pick who I give it to, instead of the Government? Besides, I have reduced the number of people you have to help support in life through your taxes and/or charity. Does it hurt you if I have money and leave it to my family? No. And, it’s not their fault that I left it to them, so don’t get all up in their face about it.
I’m going to get rich by working hard. I’ve worked hard to increase my skills so that I get paid enough to satisfy the needs of myself and my family, take care of some of our “wants,” and then still have enough left over to save and begin building my wealth. I do this honestly, without taking anything from anybody. I don’t force the company I work for to pay me this premium—they do so gladly because, in their estimation, I provide that much value to them.
I’m not where I want to be yet, but I didn’t get where I am by taking advantage of anyone but myself to get here. If I had asked other people to give up the things and sacrifice what I did, I’m afraid I would have been locked up. But I did it (and continue doing it) to (and for) myself to get where I want to be.
Years ago I gave up my free time by going to school while working—getting my Bachelors degree and then my Masters degree. While others were out partying and having fun, I was driving from work to attend night classes, studying on the weekends, and taking summer classes. When times were tough, I cut off my cable TV and sold off vehicles so I could keep saving into my IRA. I made mistakes in life all along the way, but I didn’t let that discourage me. I fixed my mistakes and kept working at it. Now, about 30 years later, I’m starting to benefit from all that work by earning a good salary and building wealth.
That extra money is not just going into a shoebox under the bed either. I’m putting it to work for me, so that it helps me earn money more quickly. Some of it I’m investing in different companies—not all of which have done well for me. That’s part of the risk I take. But, enough of them have improved so that my money is earning more money for me.
At first, when I was relatively poor, the few thousand dollars that I had saved only made a few dollars a year for me. When I earned 7% on my $5,000 nest egg, I only got $350. At the same time more wealthy people got 7% on their $5 million, they received $350,000! Whew! I really could have said, “Poor me. I just can’t get ahead. The rich just keep getting richer and I get (relatively) nothing.” But I didn’t. I kept my head down, worked, and saved my money so that eventually I could be rich.
I didn’t pay taxes when Reagan was President because I didn’t make enough. When there was a tax break, it didn’t occur to me to get upset, because I didn’t pay taxes in the first place! I didn’t feel I deserved to get a tax break. Now that I am paying a lot of taxes (I think), I’m frustrated that so many ”tax breaks” end up going to people who don’t even pay them. I’m not jealous that others are getting a break that I didn’t—it’s a fairness issue. Isn’t it sort of like going to Sears and saying that you want the 20% savings given to you for that big-screen TV that’s on sale, even though you can’t afford to buy one? “Mister salesman, just cut me a check for the $500 that I would have saved if I could afford to buy this expensive TV.” (I probably just gave a bunch of people an idea. I expect to see a rash of law suits over the next few months by people saying that only the rich can afford to buy big-screen TVs. Their argument might go something like, “Why should the rich get all the breaks? The poor need the break more than the rich. People who can afford it should pay extra for the TV and the savings should be awarded to the poor people who need the break.” It scares me just to think about it.)
There are some people who would say that I have “enough” money now. But, I don’t think so. I could probably pay my bills and put food on the table for myself and my family for the rest of my life, but there is more that I want to do. I plan on working (and, to some extent, sacrificing) for another 7 years to get where I want to be. I’ll give my employer a good day’s work for the money they pay me. I’ll put my hard-earned savings at risk in hopes that it will earn me more money. Then, when I think I have enough, I’ll quit working at my job and I’ll let the money that I have saved begin working for me.
I’ll have to work managing my money. In some instances I’ll put it at risk in return for a potential reward. Sometimes the risk will come to pass and I’ll lose some of my money, but, hopefully, in most cases I’ll be smart enough to overcome the risks and I’ll use what I have to earn more money. Again, this is money that I saved years ago when others were spending theirs on beer, cigarettes and a new car. No one has the right to be bitter that I have money and they don’t. Most people had the same chances that I had years ago and they elected not to defer their gratification. When they are working in their 60s and 70s (80s?) at a job to make ends meet, I’ll be working managing the money that I earned and saved. That is the result of the choices that we both made.
One of the ways that I may manage my money is by buying and then renting homes to people. At this time in our history, in early 2008, we are finding that many people who recently tried to buy homes are discovering that they are unable, for a variety of reasons, to be home owners. Perhaps they overextended themselves. Maybe they overestimated their value in the job market. They may have taken a risk that just turned out badly for them. Maybe they just decided they weren’t willing to make the sacrifices, like giving up cable, driving older cars, and not eating out, to make enough of a difference. That’s fine, but these people still need to live someplace. Shelter costs money.
I’ll be glad to risk my money to provide shelter to those people who can’t (or elect not to) provide it for themselves. If you don’t think this is a risk, try this. Save up your money for several years until you have enough to make a down payment on a second house. Spend some more money to fix up the damage the previous family imparted on the property before leaving. Then, allow people to live in the house that you bought, knowing that most of the people feel that since it is not their house they don’t need to take care of it. In fact, in some markets you may have a hard time finding someone to live in the house. Months may go by with you paying an extra mortgage payment without receiving anything in return. These are just some of the risks I’ll take. Why would I elect to take these risks if there wasn’t the potential for some reward? I wouldn’t. And few others would either. The hopeful result is that I get rewarded with a return on my investment, and, in the process, some family gets a nice place to live. Win / win.
I will not force anyone to live in my property and pay me a rent that they feel is unfair. They are free to find a different place if they think I charge too much, or they don’t like the property. They can move once their lease (contract) is complete. (That’s an additional risk for me.) When I rent to them I am honest in that I tell them what they get and what it will cost. When they agree, we enter into a contract that needs to be honored by both sides. When it is, we both get what we want and we both win. Who cares how I got the money to make a down payment for this property? I worked hard for it, but I may have been given it by a rich uncle. In this transaction I am being paid by the renter for knowing how to do something they don’t know, or elect not to do. That is how to keep a house maintained, pay the bills, and to save enough to afford it. By the way, it may take several years before I start earning enough on this house to pay for the effort that I put into making and maintaining this investment, but I do it because I perceive there to be a financial reward in the future. Now were I to do this over and over again, I may become richer. What harm is that? Other families benefit from the hard work that I’ve put in to finding, buying, repairing and renting them a nice place to live.
The point of this whole rant is to show that money doesn’t just come easily to most people. People like me (I hope) start working early in life. We work hard and most of the time we don’t get paid for that hard work until years later. But finally, if we persevere and overcome obstacles, we break out ahead of others who were not as diligent. Why is it, then, that at that point, when I begin to get a sniff of success, some people feel justified in challenging how much money I have? No one, including the Government, has the right to say that I have more money than I need and then use that as a pretense to simply take it away from me to give to someone who has not been as diligent and careful throughout their life.
But, there is a fallacy in that thinking. It’s not that the “rich” keep getting richer—it’s the smart rich people who get richer. We hear stories all the time about people who have won the lottery and then are completely broke in just a few years time. They were rich. Some with millions of dollars. If it is true that the rich just keep getting richer, how come they didn’t get richer? Because they were not smart! Most “rich” people get rich in the first place because they worked hard, took advantage of their intelligence and wisdom, and saved their money. Once they got rich, instead of spending their money, they found ways to make their money work for them and they got richer.
And why should it matter to people if someone else is rich? It obviously does. You can’t listen to the news for a week without hearing several stories about how unfair it is for someone to have so much plenty and someone else to have so little. We also hear stories to the effect that this person or that person has “more money than they need.” That’s an interesting statement! Again, so what! How can anyone know how much money someone else needs? Maybe they need that money to build a soup kitchen for the homeless.
Another saying you hear from people is, “You need to have money to make money.” This seems to imply that if you don’t already have money, you might as well give up because you won’t be able to make it. That’s not true either. I’m not rich, but I aspire to it. I plan for it, think about it, work towards it; and I defer spending a lot of my hard-earned money now so I can find ways to put it to work to help me reach my goals later. That is how most people get rich.
Many people assume that most rich people inherit money to become rich. That is not the case. But, if it was—who cares?! One of my goals is to have enough money to be able to provide for and leave enough money to my children and grandchildren, so that they are not left wanting in life. When I get rich (I fully intend to get there) is it wrong for me to leave my money to them? Why should anyone else care? I made the money, so shouldn’t I get to pick who I give it to, instead of the Government? Besides, I have reduced the number of people you have to help support in life through your taxes and/or charity. Does it hurt you if I have money and leave it to my family? No. And, it’s not their fault that I left it to them, so don’t get all up in their face about it.
I’m going to get rich by working hard. I’ve worked hard to increase my skills so that I get paid enough to satisfy the needs of myself and my family, take care of some of our “wants,” and then still have enough left over to save and begin building my wealth. I do this honestly, without taking anything from anybody. I don’t force the company I work for to pay me this premium—they do so gladly because, in their estimation, I provide that much value to them.
I’m not where I want to be yet, but I didn’t get where I am by taking advantage of anyone but myself to get here. If I had asked other people to give up the things and sacrifice what I did, I’m afraid I would have been locked up. But I did it (and continue doing it) to (and for) myself to get where I want to be.
Years ago I gave up my free time by going to school while working—getting my Bachelors degree and then my Masters degree. While others were out partying and having fun, I was driving from work to attend night classes, studying on the weekends, and taking summer classes. When times were tough, I cut off my cable TV and sold off vehicles so I could keep saving into my IRA. I made mistakes in life all along the way, but I didn’t let that discourage me. I fixed my mistakes and kept working at it. Now, about 30 years later, I’m starting to benefit from all that work by earning a good salary and building wealth.
That extra money is not just going into a shoebox under the bed either. I’m putting it to work for me, so that it helps me earn money more quickly. Some of it I’m investing in different companies—not all of which have done well for me. That’s part of the risk I take. But, enough of them have improved so that my money is earning more money for me.
At first, when I was relatively poor, the few thousand dollars that I had saved only made a few dollars a year for me. When I earned 7% on my $5,000 nest egg, I only got $350. At the same time more wealthy people got 7% on their $5 million, they received $350,000! Whew! I really could have said, “Poor me. I just can’t get ahead. The rich just keep getting richer and I get (relatively) nothing.” But I didn’t. I kept my head down, worked, and saved my money so that eventually I could be rich.
I didn’t pay taxes when Reagan was President because I didn’t make enough. When there was a tax break, it didn’t occur to me to get upset, because I didn’t pay taxes in the first place! I didn’t feel I deserved to get a tax break. Now that I am paying a lot of taxes (I think), I’m frustrated that so many ”tax breaks” end up going to people who don’t even pay them. I’m not jealous that others are getting a break that I didn’t—it’s a fairness issue. Isn’t it sort of like going to Sears and saying that you want the 20% savings given to you for that big-screen TV that’s on sale, even though you can’t afford to buy one? “Mister salesman, just cut me a check for the $500 that I would have saved if I could afford to buy this expensive TV.” (I probably just gave a bunch of people an idea. I expect to see a rash of law suits over the next few months by people saying that only the rich can afford to buy big-screen TVs. Their argument might go something like, “Why should the rich get all the breaks? The poor need the break more than the rich. People who can afford it should pay extra for the TV and the savings should be awarded to the poor people who need the break.” It scares me just to think about it.)
There are some people who would say that I have “enough” money now. But, I don’t think so. I could probably pay my bills and put food on the table for myself and my family for the rest of my life, but there is more that I want to do. I plan on working (and, to some extent, sacrificing) for another 7 years to get where I want to be. I’ll give my employer a good day’s work for the money they pay me. I’ll put my hard-earned savings at risk in hopes that it will earn me more money. Then, when I think I have enough, I’ll quit working at my job and I’ll let the money that I have saved begin working for me.
I’ll have to work managing my money. In some instances I’ll put it at risk in return for a potential reward. Sometimes the risk will come to pass and I’ll lose some of my money, but, hopefully, in most cases I’ll be smart enough to overcome the risks and I’ll use what I have to earn more money. Again, this is money that I saved years ago when others were spending theirs on beer, cigarettes and a new car. No one has the right to be bitter that I have money and they don’t. Most people had the same chances that I had years ago and they elected not to defer their gratification. When they are working in their 60s and 70s (80s?) at a job to make ends meet, I’ll be working managing the money that I earned and saved. That is the result of the choices that we both made.
One of the ways that I may manage my money is by buying and then renting homes to people. At this time in our history, in early 2008, we are finding that many people who recently tried to buy homes are discovering that they are unable, for a variety of reasons, to be home owners. Perhaps they overextended themselves. Maybe they overestimated their value in the job market. They may have taken a risk that just turned out badly for them. Maybe they just decided they weren’t willing to make the sacrifices, like giving up cable, driving older cars, and not eating out, to make enough of a difference. That’s fine, but these people still need to live someplace. Shelter costs money.
I’ll be glad to risk my money to provide shelter to those people who can’t (or elect not to) provide it for themselves. If you don’t think this is a risk, try this. Save up your money for several years until you have enough to make a down payment on a second house. Spend some more money to fix up the damage the previous family imparted on the property before leaving. Then, allow people to live in the house that you bought, knowing that most of the people feel that since it is not their house they don’t need to take care of it. In fact, in some markets you may have a hard time finding someone to live in the house. Months may go by with you paying an extra mortgage payment without receiving anything in return. These are just some of the risks I’ll take. Why would I elect to take these risks if there wasn’t the potential for some reward? I wouldn’t. And few others would either. The hopeful result is that I get rewarded with a return on my investment, and, in the process, some family gets a nice place to live. Win / win.
I will not force anyone to live in my property and pay me a rent that they feel is unfair. They are free to find a different place if they think I charge too much, or they don’t like the property. They can move once their lease (contract) is complete. (That’s an additional risk for me.) When I rent to them I am honest in that I tell them what they get and what it will cost. When they agree, we enter into a contract that needs to be honored by both sides. When it is, we both get what we want and we both win. Who cares how I got the money to make a down payment for this property? I worked hard for it, but I may have been given it by a rich uncle. In this transaction I am being paid by the renter for knowing how to do something they don’t know, or elect not to do. That is how to keep a house maintained, pay the bills, and to save enough to afford it. By the way, it may take several years before I start earning enough on this house to pay for the effort that I put into making and maintaining this investment, but I do it because I perceive there to be a financial reward in the future. Now were I to do this over and over again, I may become richer. What harm is that? Other families benefit from the hard work that I’ve put in to finding, buying, repairing and renting them a nice place to live.
The point of this whole rant is to show that money doesn’t just come easily to most people. People like me (I hope) start working early in life. We work hard and most of the time we don’t get paid for that hard work until years later. But finally, if we persevere and overcome obstacles, we break out ahead of others who were not as diligent. Why is it, then, that at that point, when I begin to get a sniff of success, some people feel justified in challenging how much money I have? No one, including the Government, has the right to say that I have more money than I need and then use that as a pretense to simply take it away from me to give to someone who has not been as diligent and careful throughout their life.
Tuesday, February 12, 2008
Unintended Consequences of Compassion
A few days ago tornados and storms ripped through the southern states of our country. The latest that I’ve seen is that over 55 people lost their lives and many more were injured and lost property. While I normally support President Bush, I do not support everything he does. This is one of those cases.
In a press release, President Bush stated that the federal government would provide financial aid to these people. At first blush many people might say that is the right thing to do. However, let’s think it through and look at some unintended consequences.
Does the federal government do this for every family that loses lives and property? I don’t have anything to support this, but I feel certain they don’t. If not, why now? Just because of the size of the tragedy? Is this tragedy any worse for a family that lost loved ones or property in this storm than for a family that may have lost the same in a smaller storm that only affected that one family? How big does a tragedy need to be for the federal government to take responsibility for helping with restitution? 15 people? 20? 30? 50? Let’s say that any tragedy that takes 20 or more lives and/or $5 million of damage then the federal government will step in to help. Whatever number you set is arbitrary and unfair to those who suffer as much, but don’t have enough other people suffering with them. The number of people affected shouldn’t be the deciding factor.
The federal government doesn’t and shouldn’t come to the aid of every single person who has a catastrophe or bad luck. Our government would quickly go broke. But, I wonder if they should aid anyone?
How does insurance come into play? Let’s say that 10 families suffered equal losses, and that 5 of those families had insurance which covered (at least from a financial perspective) their losses. What happens when the government steps in to help those 5 families that did not have insurance? You then send exactly the wrong message to people.
First of all, you encourage those who didn’t have insurance to not get it in the future. After all, why pay good money for insurance if the government will cover you if you don’t have it? What kind of predicament will those folks be in if the next tragedy isn’t large enough in terms of total losses for them to qualify for federal aid?
What message does that send to their neighbors who sacrificed getting a new car or something because they paid their insurance premiums? Wouldn’t you be ticked off if for 15 years you paid the premiums on your insurance and then when a tornado blew up your house along with your neighbor’s you ended up having your insurance company pay for yours (after deductibles), and raise your rates, while your neighbor got a check from the Government? Wouldn’t some people be encouraged to drop their insurance and let the Government cover it next time?
Am I totally uncompassionate? Absolutely not! I feel bad for those families, and agree there should be some help for them. I just don’t believe the US Government should attempt to be the safety net for everybody. And I totally disagree with the arbitrariness of who they decide to help and who they don’t.
What this boils down to is responsibility. People need to step up and take responsibility for their own lives. Sadly, many people are simply the tail on the dog. They go through life allowing others to make important decisions that adversely affect their lives and then they complain about it. Or they don’t plan for emergencies and contingencies (financial and otherwise) in their families, and they expect the government or others to sweep in when there is a problem to fix it for them. Many have the mentality that they “deserve” help from someone.
So, in thinking this through myself, I wondered about the people who do all they can for their families—making sacrifices all along the way—and it isn’t enough. I’m still not convinced that the government should step in to help instead of churches and other charitable organizations, but let’s say that we accept the fact that they will. First of all, there must be some families that could have budgeted their money better and prepared for a tragedy, and some that did all they could, but it was not enough. How do you tell the differences when you decide to help those in need? The needs are immediate, so it would be too time consuming and expensive to screen those who you were going to help. Understanding that you were probably going to be giving money to some people who gamed the system, it may still be cheaper to pay out money to everyone than to go through the time and expense of identifying who really deserves it.
It seems to me that churches (that incorrectly assumes that everyone belongs to a church) or local governments would be closer to the people and could more easily identify who needed help. However, that also introduces the same level of arbitrariness that I mentioned before. Additionally, the local governments could easily play favorites and give more money to people who didn’t need it as long as they were friends or relatives.
Do you just say that all the waste and fraud is just a cost of doing business to help people in need? Or, is the ultimate solution to not have government, at any level, provide aid to people in trouble? I still tend to lean toward self-reliance and voluntary charity. (“Voluntary Charity” is actually redundant, but “Forced Charity” through taxes requires me to make this distinction.) In my mind, helping individuals (no matter how many are grouped together) should not be a role of the federal government.
In a press release, President Bush stated that the federal government would provide financial aid to these people. At first blush many people might say that is the right thing to do. However, let’s think it through and look at some unintended consequences.
Does the federal government do this for every family that loses lives and property? I don’t have anything to support this, but I feel certain they don’t. If not, why now? Just because of the size of the tragedy? Is this tragedy any worse for a family that lost loved ones or property in this storm than for a family that may have lost the same in a smaller storm that only affected that one family? How big does a tragedy need to be for the federal government to take responsibility for helping with restitution? 15 people? 20? 30? 50? Let’s say that any tragedy that takes 20 or more lives and/or $5 million of damage then the federal government will step in to help. Whatever number you set is arbitrary and unfair to those who suffer as much, but don’t have enough other people suffering with them. The number of people affected shouldn’t be the deciding factor.
The federal government doesn’t and shouldn’t come to the aid of every single person who has a catastrophe or bad luck. Our government would quickly go broke. But, I wonder if they should aid anyone?
How does insurance come into play? Let’s say that 10 families suffered equal losses, and that 5 of those families had insurance which covered (at least from a financial perspective) their losses. What happens when the government steps in to help those 5 families that did not have insurance? You then send exactly the wrong message to people.
First of all, you encourage those who didn’t have insurance to not get it in the future. After all, why pay good money for insurance if the government will cover you if you don’t have it? What kind of predicament will those folks be in if the next tragedy isn’t large enough in terms of total losses for them to qualify for federal aid?
What message does that send to their neighbors who sacrificed getting a new car or something because they paid their insurance premiums? Wouldn’t you be ticked off if for 15 years you paid the premiums on your insurance and then when a tornado blew up your house along with your neighbor’s you ended up having your insurance company pay for yours (after deductibles), and raise your rates, while your neighbor got a check from the Government? Wouldn’t some people be encouraged to drop their insurance and let the Government cover it next time?
Am I totally uncompassionate? Absolutely not! I feel bad for those families, and agree there should be some help for them. I just don’t believe the US Government should attempt to be the safety net for everybody. And I totally disagree with the arbitrariness of who they decide to help and who they don’t.
What this boils down to is responsibility. People need to step up and take responsibility for their own lives. Sadly, many people are simply the tail on the dog. They go through life allowing others to make important decisions that adversely affect their lives and then they complain about it. Or they don’t plan for emergencies and contingencies (financial and otherwise) in their families, and they expect the government or others to sweep in when there is a problem to fix it for them. Many have the mentality that they “deserve” help from someone.
So, in thinking this through myself, I wondered about the people who do all they can for their families—making sacrifices all along the way—and it isn’t enough. I’m still not convinced that the government should step in to help instead of churches and other charitable organizations, but let’s say that we accept the fact that they will. First of all, there must be some families that could have budgeted their money better and prepared for a tragedy, and some that did all they could, but it was not enough. How do you tell the differences when you decide to help those in need? The needs are immediate, so it would be too time consuming and expensive to screen those who you were going to help. Understanding that you were probably going to be giving money to some people who gamed the system, it may still be cheaper to pay out money to everyone than to go through the time and expense of identifying who really deserves it.
It seems to me that churches (that incorrectly assumes that everyone belongs to a church) or local governments would be closer to the people and could more easily identify who needed help. However, that also introduces the same level of arbitrariness that I mentioned before. Additionally, the local governments could easily play favorites and give more money to people who didn’t need it as long as they were friends or relatives.
Do you just say that all the waste and fraud is just a cost of doing business to help people in need? Or, is the ultimate solution to not have government, at any level, provide aid to people in trouble? I still tend to lean toward self-reliance and voluntary charity. (“Voluntary Charity” is actually redundant, but “Forced Charity” through taxes requires me to make this distinction.) In my mind, helping individuals (no matter how many are grouped together) should not be a role of the federal government.
Saturday, February 2, 2008
Allow People to Make Mistakes and Suffer the Consequences
Throughout life, people make mistakes. Some are small ones that have small consequences like putting salt in your coffee instead of sugar. Others are much greater, like getting an adjustable-rate mortgage to buy a house that you can barely afford. If people (and companies) are not allowed to suffer the consequences of the mistakes they make, they have no fear of making unwise decisions in the future.
Lately we hear the emotional arguments that too many people have been duped by greedy banks into getting loans for what now turns out to be more house than they can afford. Some people bet on the come--that housing prices would continue to rise and by the time their adjustable rate ended, their property would be worth so much more that they could sell it for a very nice profit. It worked for some people and for some it turned out badly.
I feel bad that so many people got into so much trouble. But, they took a risk and this time it didn't turn out. The people who got the loan, and the lending institutions are equally at fault (except in cases of lying--on either side), and now both sides are suffering the consequences of their bad decisions. But it is very wrong for the Government to try and bail people and companies out of this problem.
In most things in life, we come across the concept of risk versus reward. Most of the time, they correlate so that a little risk brings a little reward (on average) and a bigger risk has the potential for a bigger reward. The risk portion of the equation is extremely important! Without the consequences of risk, a person or company will continue to make bad decisions. There are some people who would like to spread those consequences out diluting them among a much greater number of people--the general population (through taxation).
This is wrong on several fronts. People who made mistakes end up not having to pay for the mistakes they made, so they are encouraged to make them over and over. Other people who weren't drawn into making the mistake this time see that there are no (or in some cases, reduced) consequences, so they are encouraged to give it a try. There are those who tried this before and failed, suffered the consequeces and now ask, "Where is my help?" Then there are those who didn't take a risk, but ended up paying for the mistakes of others though their taxes.
Did the people who made the poor loans make a smart decision? How about the people who took the loans? In the cases where the deal ended up in foreclosure or short-sell, you would have to say they didn't. What value do we have as a society by helping these people and companies avoid consequenses so they can go do it again? Are we not better off, in some respects, to let them fail and pay the price of failure? Either they learn how to do it better next time, or they don't get to play the game. By that I mean that a mortgage company should be allowed to go out of business if they are not smart in their business dealings, and a person who had their mortgage foreclosed on should not be able to get a mortgage leaving them to rent/lease.
It boils down to making people take responsibility for their actions. When we don't, at best people are not encouraged to learn how to make smarter decisions, but at worst we (society) encourage them to continue making bad decisions.
Lately we hear the emotional arguments that too many people have been duped by greedy banks into getting loans for what now turns out to be more house than they can afford. Some people bet on the come--that housing prices would continue to rise and by the time their adjustable rate ended, their property would be worth so much more that they could sell it for a very nice profit. It worked for some people and for some it turned out badly.
I feel bad that so many people got into so much trouble. But, they took a risk and this time it didn't turn out. The people who got the loan, and the lending institutions are equally at fault (except in cases of lying--on either side), and now both sides are suffering the consequences of their bad decisions. But it is very wrong for the Government to try and bail people and companies out of this problem.
In most things in life, we come across the concept of risk versus reward. Most of the time, they correlate so that a little risk brings a little reward (on average) and a bigger risk has the potential for a bigger reward. The risk portion of the equation is extremely important! Without the consequences of risk, a person or company will continue to make bad decisions. There are some people who would like to spread those consequences out diluting them among a much greater number of people--the general population (through taxation).
This is wrong on several fronts. People who made mistakes end up not having to pay for the mistakes they made, so they are encouraged to make them over and over. Other people who weren't drawn into making the mistake this time see that there are no (or in some cases, reduced) consequences, so they are encouraged to give it a try. There are those who tried this before and failed, suffered the consequeces and now ask, "Where is my help?" Then there are those who didn't take a risk, but ended up paying for the mistakes of others though their taxes.
Did the people who made the poor loans make a smart decision? How about the people who took the loans? In the cases where the deal ended up in foreclosure or short-sell, you would have to say they didn't. What value do we have as a society by helping these people and companies avoid consequenses so they can go do it again? Are we not better off, in some respects, to let them fail and pay the price of failure? Either they learn how to do it better next time, or they don't get to play the game. By that I mean that a mortgage company should be allowed to go out of business if they are not smart in their business dealings, and a person who had their mortgage foreclosed on should not be able to get a mortgage leaving them to rent/lease.
It boils down to making people take responsibility for their actions. When we don't, at best people are not encouraged to learn how to make smarter decisions, but at worst we (society) encourage them to continue making bad decisions.
Making Right Sense
I have a wide variety of interests that I like to read, think and write about: the economy, conservatism, capitalism, global warming, fitness, energy, positive thinking and other things. I'm not sure if my views are unpopular, or if "the other side" is just more vocal. I suspect that (to borrow a phrase) there is a "silent majority" of people that agree with many of my ideas. The purpose of this blog is to throw some things out there and see what comes back.
Knowing that I'm gullible causes me to be sceptical. I tend to understand and appeal to the logical argument more than the emotional, but I realize the power of an emotional argument, and understand that a strong emotional/weak logical argument will most of the time win out over the weak emotional/strong logical argument.
Most of my views are from a strong conservative viewpoint, leading me to select the name of this blog. I don't have any fantasy of being able to "convert" others to my way of thinking, but I've found that by reading and listening to other viewpoints and then expressing my own, I clarify my own ideas and values to myself. Many times after going through the arguments completely, I'll surprise myself and find myself agreeing with the opposing view. Changing one's values after critical thinking is not being wishy-washy as long as you admit to yourself and others that you have changed your opinion and can describe the reasons for it.
A local radio talk-show host likes to ask callers where they sit before they talk about where they stand. So here goes.
You already know that I'm a conservative. Much more so fiscally speaking, but socially as well.
I am a strong capitalist. I believe that, in most cases, Government should stay out of the way of business. I think that the creation of wealth is not evil, but is necessary for a healthy society.
I think that people who believe humans are the main cause of global warming are wrong. Most of that belief comes from the type of arguments (emotional) that are used by those who think "carbon footprint".
I'm in my mid 50's and I've gone from a very active lifestyle, to sedintary, and then back to active again. I've recently lost over 40 pounds through walking and a slight modification to my diet. I feel younger today than I did 5 years ago, and I'm wearing pant with waist sizes that I haven't worn in 30 years!
I am facinated by alternative energy--from an economical and self-sustaining perspective instead of one of "save-the-planet". I am most interested in energy usage, hydrogen, solar, and energy storage (batteries and ultra-capacitors).
Finally, I am a big advocate of positive thinking. I think too many of us "allow" things to happen to us, or allow ourselves to react to things in a certain way. I think we can change our future by visualizing how we would like it to be.
I don't think that I will be making daily entries into this blog. I have a fairly busy schedule and I like to stay active doing things. But occasionally, I'll read or hear something that really peaks my interest and I'll want to write about it to get a better understanding of it myself. You are welcome to comment on my thoughts, ideas and values.
Knowing that I'm gullible causes me to be sceptical. I tend to understand and appeal to the logical argument more than the emotional, but I realize the power of an emotional argument, and understand that a strong emotional/weak logical argument will most of the time win out over the weak emotional/strong logical argument.
Most of my views are from a strong conservative viewpoint, leading me to select the name of this blog. I don't have any fantasy of being able to "convert" others to my way of thinking, but I've found that by reading and listening to other viewpoints and then expressing my own, I clarify my own ideas and values to myself. Many times after going through the arguments completely, I'll surprise myself and find myself agreeing with the opposing view. Changing one's values after critical thinking is not being wishy-washy as long as you admit to yourself and others that you have changed your opinion and can describe the reasons for it.
A local radio talk-show host likes to ask callers where they sit before they talk about where they stand. So here goes.
You already know that I'm a conservative. Much more so fiscally speaking, but socially as well.
I am a strong capitalist. I believe that, in most cases, Government should stay out of the way of business. I think that the creation of wealth is not evil, but is necessary for a healthy society.
I think that people who believe humans are the main cause of global warming are wrong. Most of that belief comes from the type of arguments (emotional) that are used by those who think "carbon footprint".
I'm in my mid 50's and I've gone from a very active lifestyle, to sedintary, and then back to active again. I've recently lost over 40 pounds through walking and a slight modification to my diet. I feel younger today than I did 5 years ago, and I'm wearing pant with waist sizes that I haven't worn in 30 years!
I am facinated by alternative energy--from an economical and self-sustaining perspective instead of one of "save-the-planet". I am most interested in energy usage, hydrogen, solar, and energy storage (batteries and ultra-capacitors).
Finally, I am a big advocate of positive thinking. I think too many of us "allow" things to happen to us, or allow ourselves to react to things in a certain way. I think we can change our future by visualizing how we would like it to be.
I don't think that I will be making daily entries into this blog. I have a fairly busy schedule and I like to stay active doing things. But occasionally, I'll read or hear something that really peaks my interest and I'll want to write about it to get a better understanding of it myself. You are welcome to comment on my thoughts, ideas and values.
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