Capitalism Works Every Time…

If you replace the word capitalism with “individual choice” you start to understand the reason we are so prosperous as a nation and people. This election cycle we are seeing a very dangerous tactic by the president and his supporters by demonizing “capitalism.” In the view of too many Americans, Capitalism has become a negative word. As a nation there is no quicker path to the bottom than to bite the system that feeds the prosperity we enjoy.

“Individual choice” to engage in trade with others works best because the individuals involved in the transaction know what is the best outcome of that transaction. The two parties assess the others offer and decide if it is worth the exchange of value to each party. An example would be a person needs food and a farmer needs a barn. The farmer and the carpenter decide what the value is in the transaction. The carpenter may ask for 6 months’ worth of corn in exchange for building a barn. If that trade is acceptable the two parties transact business. If not they either renegotiate or find another person that will find the transaction terms acceptable. The final transaction will be the result of “market” principles in action. Individuals decide for themselves the value of goods in the market.

The introduction of a third party like government into the market to decide what the “price” for goods and services is and the way they are distributed is socialism. A third party decides how much time people need to spend working and what wage they will receive for that time “spent” on the job. This third party is not part of the transaction except for the part of deciding how the transactions will take place and how the terms will be distributed. No matter what the individuals in the transaction think about the terms, the terms remain the same (“equal”). If those terms are not acceptable to the parties the parties remove themselves from the “market’ and the market stalls, and dwindles away. Nothing gets done and things stagnate or more likely a “black market” is created to get around the third party arbiter.

The economy and the world revolves around billions of “individual choice” transactions that all together make up a vibrant economy. The reason the “individual choice” model is so efficient is because people will only do the transactions that make sense to their individual circumstances. They make the best choice for themselves and their families. They control the choices they make and every transaction adjusts based on the needs of “individual choice.”

There are times when “individual choice” is “cruel” to the other party by rejecting what they have to offer. But unlike a system like socialism that attempts to force the transaction to move forward, in the “individual choice” model that rejected party must rethink, retool, reduce the price, (or many other possibilities), make a change that is acceptable to the other party.  It forces changes that can result in failure but can also result in a more efficient offer or product. It forces people to be creative, diligent, hardworking and in a word it is competitive. The strong survive and the weak either change or fail.

So even though socialism touts “fairness” it is not fair at all. It distorts the “individual choice” and replaces it with forced transactions. It never works for a greater length than individuals figure a way to work around it or stop working at all. So the next time you hear someone criticize capitalism ask them if they believe in “individual choice”? Most likely they will and then explain that capitalism is a system of individual choices which produces the best outcomes for all willing to work hard in our society…

Oblivious to Job Creation…

President Obama at a town hall meeting yesterday said it is time for American companies that are making money to start hiring workers. He is obviously ignorant to why employers hire workers. This is not a government job where you randomly hire people because you received a few extra bucks in your budget line item. Jobs are only created when the value of hiring an employee exceeds the cost of the employee hired.


In the real world, private companies only hire as a last resort or when they are confident that the growth of the company is dependent on a particular skill set not currently within the organization. And even then it may make better sense to source the work necessary until full realization of the revenue is delivered.

Obama and many politicians are basically academians and lawyers by “trade”. The lawyers are often not the ones that have created a successful law firm but rather lawyers that have spent their time sucking value from the economy (that’s unfair but felt good. There are many of them in the public sector). So their view on jobs is unrealistic. They demonize companies for making profits by saying now that you’re making money you need to hire workers. A totally ignorant statement.

We are in the economic mess today because we have too many people in government and congress that have this same “understanding” of business economics. It is not a difficult subject to learn but it makes a greater impact on your learning if you have had to run a business. That is why we should require of our politicians at least 5 years of experience in the private sector excluding law experience.

We are in deep trouble with an administration that has little to no understanding of what makes the economy and private business tick. Until we get rid of this president and all of these politicians in 2012 we are going to hear a lot more of this garbage from the president about how the private companies are not doing their part to help the American people. It is not the role of private business to hire people for political reasons. There has to be a solid business case. And that’s something this president knows nothing about…

The War on Wealth…

The left in this country, including this president have waged a final battle against the creation of wealth in this country. Since our founding, the American spirit has been driven by opportunity to better one’s circumstance through industrious labors. The people that came to this great land were lured by only one thing; opportunity to improve their lives through hard work and limited government intrusion.

The world was a different place before America, and opportunity to create wealth for your own consumption was a “foreign” concept. Most citizens of the day worked to improve the standing of the ruling class. There was little opportunity for individuals to prosper in the pre-America world. The world’s economic output was often incentivized through fear, coercion, and force. Not until the new American Experiment did the world have the chance to see how much more effective economic growth could be when put into the hands of the individual and the rewards of that labor left in the hands that created it.

The creation of wealth in America became the fuel that lifted millions of people around the world out of the most despicable circumstances through the generosity and ability created by individual ingenuity and wealth. When individuals are incentivized through private property and keeping the fruits of labor it is no mystery as to why wealth explodes and raises the circumstances of all within a society. It is simply the harnessing of human nature. Our instinct to provide for ourselves actually fuels our instincts to help our neighbor. The problem we have seen in America is that for too long the wealthy have been fueling compassion, and the recipients have forgotten where this charity comes from.

The tax system has become a mechanism to take one man’s fruits and distribute them to another for no sensible reason. We have seen generations of low income Americans become locked in a system that breeds dependency and steals the incentive to make it on their own. This system has become an industry with the captains of that industry being politicians. These politicians have a self interest in perpetuating poverty and dependency. They fund their “industry” by demonizing the wealth creators, creating envy, punishing wealth, and redistributing the wealth through punitive taxation. This war on wealth has created a class of people that now believe they are entitled to the wealth that is created by these individuals.

We are becoming morally bankrupt as a nation when we believe a person’s success should be a source of scorn and disgust. The question is never “when is enough, enough for the individual wealth creators”. The reality is the more wealth they create the more goes back into society in the form of jobs, investment, and charity. It is not the government’s role in America to decide that question. The government has become over reaching and must be returned to its constitutional role once again. These wealth creators should be celebrated as they were at the founding of this great republic. Without the incentives of individuals to keep the fruits of their labor we harvest less fruit. As the fruit diminishes the dependent class gets restless and demands more from the captains of their industry. The captains demand more from the wealth creators and we find ourselves back in a system where wealth creation is driven by fear, coercion, and force. The engine sputters to a halt and collapses on itself.

We are not far from this point right now. Our tax system must be utilized to provide only the services necessary to conduct a law abiding society. Individuals again must be incentivized through the rewards of their labor. Right now the wealth creators are slowing down their activity because they are being punished and demonized. The wealth creators have not received their rewards through any special circumstance but the industrious spirit they pursue. The envy, jealousy, and demonization of the wealthy is going to destroy the American Spirit. Wealth distribution has already destroyed the people dependent on others. If we don’t stop demonizing wealth we will have nothing to demonize in the very near future…

It’s a Reflection of Our Education System…

This administration and their inability to understand simple math, basic human behaviors, and our history is the reason our nation is sinking into the current economic abyss. They are the product of a failed education policy that is run by government bureaucracy. The quality of public education and its focus on everything except what is important to the health of our nation has come home to roost.

Obama and his team may be educated but they are far from smart. We have been teaching community without a firm understanding of the importance of the individual. We have been teaching animal rights when we have not been teaching constitutional rights. We have been teaching economics without connecting it to the human behaviors that incentivize and stop economic transactions.

We have filled our schools with teachers that have only their educational experience to pass on and very little real life experience. The educational “diversity” is nil to none and it shows. The key to our future is education and controlling the curriculum. We have allowed people like the current administration too much control over our future and now we see how important that piece of the culture is.

It is time for some adult and analytical conversation in this country. Stop spending money we don’t have; cut the taxes on the engine of our freedom and economy (business and personal taxes), and return the power back to where it belongs in the states and the people. Finally we must take back education and control the curriculum to align with the American value system…

Teens: This is how he real world of economics works...

Read this and remember it forever; It is the greatest lesson you will learn about business in your entire HS education:

To All My Valued Employees:

There have been some rumblings around the office about the future of this company, and more specifically, your job. As you know, the economy has changed for the worse and presents many challenges. However, the good news is this: The economy doesn't pose a threat to your job. What does threaten your job however, is the changing political landscape in this country.However, let me tell you some little tidbits of fact which might help you decide what is in your best interests.

First, while it is easy to spew rhetoric that casts employers against employees, you have to understand that for every business owner there is a Back Story. This back story is often neglected and overshadowed by what you see and hear. Sure, you see me park my Mercedes outside. You've seen my big home at last years Christmas party. I'm sure; all these flashy icons of luxury conjure up some idealized thoughts about my life.

However, what you don't see is the BACK STORY:

I started this company 28 years ago. At that time, I lived in a 300 square foot studio apartment for 3 years. My entire living apartment was converted into an office so I could put forth 100% effort into building a company, which by the way, would eventually employ you.

My diet consisted of Ramen Pride noodles because every dollar I spent went back into this company. I drove a rusty Toyota Corolla with a defective transmission. I didn't have time to date. Often times, I stayed home on weekends, while my friends went out drinking and partying. In fact, I was married to my business -- hard work, discipline, and sacrifice.

Meanwhile, my friends got jobs. They worked 40 hours a week and made a modest $50K a year and spent every dime they earned. They drove flashy cars and lived in expensive homes and wore fancy designer clothes. Instead of hitting the Nordstrom's for the latest hot fashion item, I was trolling through the discount store extracting any clothing item that didn't look like it was birthed in the 70's. My friends refinanced their mortgages and lived a life of luxury. I, however, did not. I put my time, my money, and my life into a business with a vision that eventually, some day, I too, will be able to afford these luxuries my friends supposedly had.

So, while you physically arrive at the office at 9am, mentally check in at about noon, and then leave at 5pm, I don't. There is no "off" button for me. When you leave the office, you are done and you have a weekend all to yourself. I unfortunately do not have the freedom. I eat, and breathe this company every minute of the day. There is no rest. There is no weekend. There is no happy hour. Every day this business is attached to my hip like a 1 year old special-needs child. You, of course, only see the fruits of that garden -- the nice house, the Mercedes, the vacations... you never realize the Back Story and the sacrifices I've made.

Now, the economy is falling apart and I, the guy that made all the right decisions and saved his money, have to bail-out all the people who didn't. The people that overspent their paychecks suddenly feel entitled to the same luxuries that I earned and sacrificed a decade of my life for.
Yes, business ownership has is benefits but the price I've paid is steep and not without wounds.
Unfortunately, the cost of running this business, and employing you, is starting to eclipse the threshold of marginal benefit and let me tell you why:

I am being taxed to death and the government thinks I don't pay enough. I have state taxes. Federal taxes. Property taxes. Sales and use taxes. Payroll taxes. Workers compensation taxes. Unemployment taxes. Taxes on taxes. I have to hire a tax man to manage all these taxes and then guess what? I have to pay taxes for employing him. Government mandates and regulations and all the accounting that goes with it, now occupy most of my time. On Oct 15th, I wrote a check to the US Treasury for $288,000 for quarterly taxes. You know what my "stimulus" check was? Zero... Nada... Zilch.

The question I have is this: Who is stimulating the economy? Me, the guy who has provided 14 people good paying jobs and serves over 2,200,000 people per year with a flourishing business? Or, the single mother sitting at home pregnant with her fourth child waiting for her next welfare check? Obviously, government feels the latter is the economic stimulus of this country.

The fact is, if I deducted (Read: Stole) 50% of your paycheck you'd quit and you wouldn't work here. I mean, why should you? That's nuts. Who wants to get rewarded only 50% of their hard work? Well, I agree which is why your job is in jeopardy.

Here is what many of you don't understand... to stimulate the economy you need to stimulate what runs the economy. Had suddenly government mandated to me that I didn't need to pay taxes, guess what? Instead of depositing that $288,000 into the Washington black-hole, I would have spent it, hired more employees, and generated substantial economic growth. My employees would have enjoyed the wealth of that tax cut in the form of promotions and better salaries.

But you can forget it now.

When you have a comatose man on the verge of death, you don't defibrillate and shock his thumb thinking that will bring him back to life, do you? You defibrillate his heart! Business is at the heart of America and always has been. To restart it, you must stimulate it, not kill it. Suddenly, the power brokers in Washington believe the poor of America are the essential drivers of the American economic engine. Nothing could be further from the truth and this is the type of change you can keep.

So where am I going with all this?

It's quite simple.

If any new taxes are levied on me, or my company, my reaction will be swift and simple. I'll fire you. I'll fire your co-workers. You can then plead with the government to pay for your mortgage, your SUV, and your child's future. Frankly, it isn't my problem any more.

Then, I will close this company down, move to another country, and retire. You see, I'm done. I'm done with a country that penalizes the productive and gives to the unproductive. My motivation to work and to provide jobs will be destroyed, and with it, will be my citizenship.

So, if you lose your job, it won't be at the hands of the economy; it will be at the hands of a political hurricane that swept through this country, steamrolled the constitution, and will have changed its landscape forever. If that happens, you can find me sitting on a beach, retired, and with no employees to worry about...

Signed, THE BOSS