Tuesday, June 24, 2008

An open letter to both presidential candidates

The problems we face are not that complex nor are the solutions. Perhaps the implementation will be complex, but the concepts are quite simple.

It has been said that nothing happens until a sale is made, no raw materials are bought, no workers employed and no products produced until a sale is made.

And while thats true, it is incomplete. Nothing happens until someone buys something. Stated that way it makes your job much simpler - you, and all the other politicians must create and sustain an environment where I can buy things. I can only buy things if I have money and that means jobs. If jobs are running out of the country, you have to crate laws to make it cost effective for business to keep those jobs here. Incentives or disincentives is your job to decide but without jobs, people can’t by things and that’s bad for business.

Inflation is no big secret either, it’s simply when prices go up faster than salaries because of none-value-added costs. If that doesn’t match what you learned in school, remember that the labels you learned in school are some “great” thinker’s theory of how they believe things work, while my definition is based on the results of following those theories. No matter what your initial goals were or what your theory is, the results are what count!

The idea of buying a product today that will be produced tomorrow has value but when speculators take advantage of the process to make huge unearned profits, it unbalances the system. When speculators drive prices up much faster than salaries (think today's oil prices), I can’t buy and if I can’t buy, business can’t sell and that kills the whole economy.

Yes, the economy will self correct, but the time an unmanaged economy takes to self correct causes a huge dislocation in day-to-day living. So we expect the government to help. Just as building a physical dam keeps the river from flooding, economic dams (regulations) keep the economy from flooding.

If your doubt my theory, remember this part of Adam Smith's economic theory: "Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer."

Henry Ford is quoted as saying that the customer pays the wages, the factory owner only handles the money. In the same way the companies that pay the lobbyists only handle the money - it's true source is the people who by things. And one last time, no job no buying things.

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