A few weeks ago, I posted about changing the conversation about higher education, vocational school, and the skills gap HERE
The post included a clip from "Real Time with Bill Maher" where "Dirty Jobs" Host Mike Rowe said:
“A trillion dollars in
student loan debt right now. A trillion dollars. We are lending money
that we don’t have to kids that will never be able to pay it back to
educate them for jobs that no longer exist.”
We don’t have a lack of jobs available in this country. We have a
workforce that lacks the technical skills it needs to fill the millions
of vacant jobs that are currently being offered.
The
Progressive Bill Maher seemed to agree. This last week, the
Conservative Glenn Beck also seemed to agree in an interview he did with
Mike Rowe. This is a bipartisan issue. It can easily have
bipartisan solutions if we only realize the problem at hand, and figure
out a way to change this conversation.
"If you
want to be successful, you need to go to college," we are told.
However, college graduates today are graduating with degrees expecting a
job to be there waiting. Meanwhile, he explains, there are over three
million jobs that are going unfilled because they require a vocational
degree rather than a four-year degree.
He explains that
the idea that "everyone needs to go to a four year
university" is the result of a 70's PR Campaign that has sunk well into
the minds of Americans today. Vocational school has become "alternative
education" or something you only do if you can't handle a four-year
college. This is an artificial image, and leads to a huge amount of
unfilled jobs in the industry that can best grow our economy -
production. These aren't bad jobs, these are good jobs that have been
made to look bad by the artificial image produced around them.
It looks like there's at least one leader out there who's found a solution to this problem: Wisconsin Governor Scott Walker.
What constitutes real economic growth? Many say that spending and consumption are good for the economy, and they are right. Consumption and spending are absolutely necessary for an economy to do well. However, in order to spend and consume money, there must be products to spend it on, those things you consume. This is why production is so important. An economy that relies on consumption for growth loses its ability to produce.
While consumption refers to the money you spend on goods that you will "use up." In other words, you don't buy these goods in the hopes of gaining money off of them. You buy them because they are something that gives value to you in and of itself. You don't buy food, for instance, with the hopes of making money off of it. You buy it to eat it. And then its gone. Or even a boat, which you use for recreation and unless resold at a higher price (unlikely), you consume that too.
The misleading thing about consumption is that while it is statistically a component of GDP growth (Gross Domestic Product = Consumption + Investment + Government Spending + Exports - Imports), it does not provide for future growth.
This is where production comes in. Production refers to the amount of goods and services being produced by an economy. Consumption relies on production because a good must be produced before it is consumed. Production relies on consumption because consumers give money to producers and thus incentive to produce goods.
In order to sustain growth, an economy must produce more than it consumes. When an economy does so, it provides for its participants and exports the rest for more wealth. When an economy consumes more than it produces, it must import the difference from other country, bringing wealth out of the economy and sending it to another.
This is where the United States is today. We continue to borrow money and spend it on consumption, so we don't realize a problem since we're getting everything we need. But borrowed money is only supposed to be used on investment because investment assumes that over time, the project being invested in will produce more wealth than the initial loan was worth (so it assumes a way to pay it back). The only way it makes sense to borrow money is if you hope to gain even more money by doing so. When we borrow money, then consume the money we borrow, we are simply increasing the need to borrow more, digging ourselves into deeper and deeper debt, accumulating into what is now $17 Trillion in National Debt ($17,000,000,000,000.00).
As Americans, we need to realize the problem is there without having to feel the effects of it being there because by the time we feel the problem, it will be too late. We will have spent all our money consuming goods instead of saving and investing it, we will have lost the ability to produce goods, and we will have no one else there to give us another loan.
There is a way to fix this mess we're heading towards. And its not the government's job to do (the government has already shown that it cannot fix it). We need to change our way of thinking from one of consuming every dollar we make to one of saving and investing the money we make. The reason is, when we invest our money in the bank, it is lent to entrepreneurs and small businesses to start a businesses and begin production. When we invest in the stock market, the money is used by large corporations to acquire capital and mass-produce. Once we can start being the nation of production that we once were, we can have a truly sustainable economy where the producers produce and the consumers consume our goods. And even you make money because your savings and investments are paid back in full plus interest.
While quick-fixes and instant gratification are characteristic of our culture today, we need to realize the path down which we are heading before we are left with nothing and have to start over.
The consumption bubble is coming, and it's going to be worse than 2008.
The Federal Reserve's failure to allow for the free market to determine interest rates by keeping them artificially low led to the economic collapse of 2008. People love to blame "banks" because they were the provider of those risky investments. What people fail to understand is that the banks only made those risky investments because the Federal Reserve kept interest rates artificially low, which made it easier to make risky investments than the free market would have allowed.
This very concept was argued by Peter Schiff, CEO of EuroPacific Capital in 2006-2007 before the Great Recession in 2008, when the Federal Reserve set artificially low interest rates which led to the risky investments in the housing market. Of course, nobody took these claims seriously, and we ended up in the mess we did in 2008.
Milton Friedman takes apart the "Free Lunch" Myth that somehow or other government can spend money at nobody's expense. People who believe in this myth see a simple solution to our economic problems: Tax the corporations! Fair enough - if the businesses and corporations are the ones bearing the cost, then we, the people, don't have to bear that cost, right?
False.
People tend to think of businesses as inanimate objects by which wealth is generated. But while a business may require inanimate objects (such as factories or machines) to operate, the business itself is made of people. The factories and machines of a business cannot pay taxes because (even if they could write checks) they do not have the ability to own anything from which taxes can be taken (like wealth).
Therefore, taxes on corporate profits are necessarily paid by people. "Fair enough," people say, "but at least taxing the corporate profit will only affect the greedy, wealthy business owners that exploit the workers, right?" False. Again.
Friedman explains that taxes on corporate profit come from one of 3 sources: the stockholder, the customer, or the employee. Let's look at how each group is affected by corporate taxes:
1. Stockholder: The owners of a corporation, or stockholders, are responsible for the company's growth. All they can do is add to a corporation's ability to grow by contributing their own money to the corporation's capital in return for a share in its ownership and shared liability. The stockholders already contributed their own money to the growth of the corporation, and therefore will not lose more than they already contributed to it. However, while they may be the people writing the check, they do not bear the cost of corporate taxes. In order to pay the cost of corporate taxes, the stockholders must decide to either increase the corporation's income or decrease the corporation's expenses. This can either be done by increasing the price of their product or decreasing the cost of labor (since capital such as machines and factories are not easily sold off as liquid resources). Let's look at both options.
2. Customers: This one may seem simple. A business owner might deal with the cost of a tax increase by increasing the price of their product in the hopes that customers will pay the higher price for it. The customers, therefore, bear part of the cost of the corporate tax by accepting the cost imposed on them through increased prices. If we are to assume that workers pay for the goods corporations produce (such as food, cars, basic amenities), then these workers are paying the corporate tax by paying the new price. However, stockholders aren't likely to increase the price of their product because it will likely lead to decreased consumption of their product, and thus a loss in income - the opposite of what it was meant to do.
3. Employees: Since the stockholders cannot simply make more money to pay the tax through high prices and hold their bottom line (if they could they probably would have already been doing it), the burden of the tax must be paid by cutting expenses. While a company can cut capital and land expenses by selling off their machines, factories and property (or agreeing not to buy more), they probably won't because all this can do is ruin their ability to produce (and make money). So, they are finally left withthe option of decreasing the cost of labor in order to hold their bottom line and pay the corporate tax. If a corporation is imposed with a tax, they have less money with which to pay their employees. So they are left with only a two options: pay the employees less, reduce the number of employees. Either way, the employees (or the unemployed people looking for work) end up being the ones who have to pay the corporate tax through salary reductions or loss completely.
So for all those who think corporate taxes are good for the worker, I urge you to think again.
The woman in this video uses the "there's only so much a person needs in life" argument against Economist Milton Friedman to explain why redistribution is the right path to take over free-market capitalism.
However, when pressed as to whether or not she thinks they hide their money under their pillows, she admits that they "invest it."
Friedman explains the very simple fact that investments enable companies to acquire capital. For those of you who are unfamiliar with the term, capital refers to the factories, machinery and equipment owned by a business and used in production.
Free-market capitalism provides a system in which those greedy millionaires (selfishly seeking their own interest through a return on investment) invest their savings in companies, who use that money to buy equipment and factories, which necessarily requires they hire more workers to operate the equipment and run the factories, which gives those "impoverished people who try to get up in the world" she refers to the wages and skills they need to do exactly that.
Those millionaires everyone tends to blame for the poverty in this world are the very people that are providing companies the ability (and need) to offer a way up in the world to those who need it the most.
It happens in 7 simple steps:
1. An individual thinks of a way in which they can provide a good or service at a better quality and for a more affordable price than what is currently available, and begins to produce it.
2. People see this more affordable, higher quality product and begin buying it from that individual instead of from their inefficient former providers. The individual is happy because he can make money off his product and the consumers are happy because this individual provided them a way to get a product at a higher quality and a lower price than what they were getting before.
3. The individual understands that in order to provide his superior product to everyone in society that can benefit from it, he needs to increase his "capital", or means of production, such as machines, raw material and factories so he can produce more of his product to sell to the increasing amount of people who want to buy it
4. In order to pay for this capital, the individual sells part-ownership (or shares) of his company to people who can afford the expensive capital necessary to increase production in return for their personal contributions to acquiring such capital for the company. They share the risk in doing so and form a "corporation," which has enough money between all the part-owners (or "shareholders") to buy the capital necessary to produce the amount of the good that society demands, and they do so.
6. Realizing that the relatively small number of investors have neither the skill nor the time to operate the capital they just produced, they decide to hire people that do. So the investors offer jobs to people who will do so for money those people wouldn't otherwise have had in return for the labor these potential workers are able to provide to the corporation.
7. The corporation is now able to provide the low-cost, high-quality
product to the entire society while providing wages to the people who
agreed to trade their labor for them and providing profits to the people
who took the risk of investing their money and time in an uncertain
enterprise. (Not to mention the taxes they provide to society and the
costs of governmental regulation imposed on their product and
organization)
As this corporation sells more and more of their product to those who want it, the corporation is able to generate a profit, which makes the enterprise beneficial to everyone involved.
The consumers are better off because they are able to buy a product they need at a lower cost and a higher quality than they previously could have.
The hired workers are better off because the investors gave them the wages/salary they wouldn't otherwise have had otherwise in return for their work. They also learned skills they would not have otherwise learned with which they might be promoted within their current corporation, be hired by another, or decide to use both the money and the skills they earned from this corporation to begin their own.
The individual who began the entire enterprise is better off because as a part owner in this company, they made enough money that they are now able to invest it in other companies, providing for more machines, factories, jobs and workers' wages in the companies they invest in.
The shareholder is better off because the risky investment
they took provided the company with what it needed to become profitable (and
thus they were paid for taking the risk that others were unwilling to take)
As you can probably see, nobody is at a disadvantage in the free market.
The consumer benefits because they are offered a more affordable, yet higher quality product in return for the price they are willing to pay for it.
The impoverished and unemployed benefit because they are given a job, wages and potential skills (necessary for a "step up" in the world) in return for their labor.
The inspired and motivated entrepreneurs benefit because they are given a chance at achieving the American Dream through profit in return for taking a risk and working hard to provide for a societal need.
The risk-taking investors benefit because by investing in the entrepreneur's company, they give it the resources it needs to succeed and thus are able to share in the profits it generates.
This is free-market capitalism at work, my friends. And it's a wonderful thing.
There seems to be a popular sentiment that everyone deserves to go to college because it is a "right" and in order to protect that right, the government needs to intervene in order to make college more affordable. However, while government intervention in the student loan business has done nothing but allow colleges to increase the price that colleges charge for tuition, it also has lowered the value of the degree students earn.
“There’s an entitlement that is starting to emerge that I think is unhealthy for people and unhealthy for our country.”
"I think that so much of what we see in the world today is this sort of
propaganda machine around fame and around celebrity — and I actually
think that there are some kids in the world that grow up today that
think, ‘When I grow up I want to be famous’ instead of, ‘When I grow up I
want to do something, I want to build something, I want to create
something.”
The actor took particular aim at a number of societal phenomena,
including a push for fame just for the sake of fame and an influx of
people who are entitled and simply don’t want to work hard.
Noting that some of his own friends don’t want to work at Starbucks,
because they believe it is beneath them, Kutcher said, ”The only thing
that can be below you is to not have a job.”
Is increasing the power of the state the best way to reduce exploitation
of those under-represented or vulnerable in society? After all, the
only entity that has the force of law behind their ability to extract
money from the citizens is the government. Private companies and
corporations only have the ability to present an offer that is mutually
beneficial to both the worker and the company as a whole. If both
conditions are not met, no deal will take place and neither party will
reap the benefits they have to offer one another because both sides have
the freedom to choose what they do given the opportunity to make such a
deal. However, if a government institutes a law restricting either
party of that freedom, one is left to wonder who is actually exploiting
either side of the deal.
While I hate to post political ads of any sort, I do believe this
particular ad says a lot to the way the conversation in America has
shifted from the question of how one might achieve the success others
have to the question of how one might articulate the ways in which some
people achieve success at the expense of others.
People lose sight of the fact that in a perfect capitalist society,
trades and contracts are only made on the condition that both parties
benefit more from making the trade than they do from choosing any other
available option. The worker benefits because he believes his work is
worth more than the salary a company gives him, a company believes the
laborer’s work is worth at least the value of the laborer’s salary, and a
consumer decides that one particular company sells a better product at a
cheaper price than any other company does. This is a free society. We
only receive what we agree to pay for and we only pay for things at a
price we are willing to pay. Its a simple concept that is constantly
criticized by people that can’t understand how something as complex as
an economic system can be understood through such a simple concept as
two sides agreeing to something that makes them both better off.
“When I was 13, I had my first job with dad carrying shingles to the
roof, and then I got a job washing dishes at a restaurant, and then I
got a job in a grocery-store deli, and then I got a job in a factory
sweeping Cheerio dust off the ground,” he recalled.
“And I never had a job in my life that I was better than. I was
always just lucky to have a job,” preached Kutcher. “And every job I had
was a stepping stone to my next job, and I never quit my job until I
had my next job. And so opportunities look a lot like work.”
"1%er" Talks with "Occupy Wall Street" and they realize that
their anger is misdirected. The problem isn’t "the 1%" nor is it
necessarily Wall Street. It is the economic environment set up by our
government that prevents true capitalism from taking place.
For those of you who disagree with capitalism because they think the
current system is capitalism and the problems in our society prove that
it does not work, realize that our economic system is not true
capitalism. Massive amounts of government involvement and intervention
in the market have prevented capitalism from truly taking place, and can
be attributed to many of the problems we are seeing in our economy
today.
STEWART: Your politics have shifted from liberal
to conservative. Here is my issue with conservative politics as they
stand right now. It’s too easy. It doesn’t have any of the
responsibility of governance. If your mantra is government cannot help,
then any chaos or lethargy that you sow in the government helps to prove
your point. You have no incentive to be responsible in creating
solutions to many of the problems that face us.
KRAUTHAMMER: That
would be true but unfortunately, the assumption is a caricature. The
conservative idea is not that government has no role. You might have
argued that in the thirties when conservatives opposed the New Deal.
There’s no question of accepting the great achievements of liberalism —
the achievements of the New Deal, of Social Security, Medicaid,
Medicare. The idea that you rescue the elderly and don’t allow the
elderly to enter into destitution is a consensual idea that
conservatives, at least the mainstream of conservatives —
STEWART: I
would say that the rhetoric is the same. If you lock at the rhetoric
when conservatives opposed the New Deal, opposed Social Security,
opposed Medicare — it is identical. Ted Cruz quotes Ronald Reagan’s
Medicare speech in 1960 as he opposed Obamacare.
KRAUTHAMMER: Ted
Cruz is not the official spokesman for American conservatism. If you
want somebody who has been out there, who has offered an alternative —
the person who offered an alternative for example is … Paul Ryan. But,
let me start with his assumption. His assumption is not that government
doesn’t have a role. His assumption is that the welfare state as
established with great success by liberals has now reached a point where
it no longer fits. With the new demographics and with the higher
technology and medicine, we will simply become insolvent unless we
radically reform. I’ll give you one fact. When Social Security was
instituted, the age of longevity was 62. Today life expectancy is 80. So
what you have is a huge change in the demographics and when you look to
Europe, which is the social democratic state where we’re headed which
has all the entitlements of the government activities which a liberal
would want and — to with which American liberalism is headed — it became
insolvent because it never adapted to the change in demographics and
the change in technology. And it has had a rude awakening.
STEWART:
If it was ever presented in that fashion, the way you just presented
it, I think the conversation we would be having in this country would be
very different.
Dirty Jobs’ Mike Rowe: “A trillion dollars in
student loan debt right now. A trillion dollars. We are lending money
that we don’t have to kids that will never be able to pay it back to
educate them for jobs that no longer exist.”
We don’t have a lack of jobs available in this country. We have a
workforce that lacks the technical skills it needs to fill the millions
of vacant jobs that are currently being offered.
A fundamental difference between liberals and conservatives is their
feelings about the generation of wealth and the means by which people
become wealthy. Conservatives tend to believe that an individual’s
wealth is the value of the goods and services they provided to society,
given voluntarily to them by the people who benefited from it. Liberals
tend to believe it is the money that only greedy people get by
exploiting the worker through a corrupt system.
The interaction between this “Occupier” and
Charles Cooke (National Review) is a perfect example of the misinformed
voter in today’s society. This particular “Occupy Wall Street”
participant holds a sign that reads “Throw me a bone, pay my tuition.”
When asked why his tuition should be paid for by someone else, the
individual brings up an irrelevant statement that he thinks that
“billionaires are getting a lot of money, just out of greed.”
He then says they are “exploiting middle class and underclass people”
but quickly changes the subject when asked how the “greedy
billionaires” could exploit a single person in a free market system.
Realizing he has nothing to back up his claim, he begins to blame
government for implementing tax policies that unfairly benefit
corporations, but when reminded that the United States has the highest
corporate tax rate in the world, he begins stating “statistics” that he
read “online” but fails to say where they were from or who produced
them.
The reporter then cuts to the chase and brings the discussion back to
the original question: why should someone else pay this person’s
tuition? After his argument was debunked, he tries the “entitled to my
own opinion” argument.
After the reporter acknowledges that people can, in fact, say
whatever they want, the “occupier” reveals the only solid claim he has
to back up what he’s been displaying on his sign in protest: “Its just
what I want.”
When the reporter likens the protester’s participation in the
movement to writing stuff he wants on a sign (like a Christmas list) and
waving it in the air, the occupier agrees and the reporter moves on.
Many of you have seen the hit new video of Russel Brand’s call for a
socialist revolution in America. People have shared it through Facebook
and Twitter in agreement with his message. However, while most
Americans share in the grievances Brand has in the system, his proposal
of implementing socialism in America would be counterproductive to
providing a solution to these grievances because Brand fails to
understand some very fundamental principles of economic reality. Watch
as Businessman Peter Schiff explains why such a “revolution” would be
counterproductive as a solution to Brand’s own grievances.
