It's the Economy, Stupid!!

First off some housekeeping. I know I had originally set the goal for one post a day, but seeing as how it takes a long time for me to get these things from my mind onto my laptop.. well you get the idea. Next up to bat is an identification of my political party, ideology, leanings or preference if you will. I'd imagine that if you read my last entry you would conclude that I'm a Republican due to the fact that it was a pretty hard hitting post on Senator Obama and his connections to ACORN. Just in case you were even the slightest bit curious about this, if you assumed that I am a Republican you would be wrong. I consider myself a Conservative Independent. I say that because political parties have platforms that they run on and candidates that often deviate from them for better or worse; and I reserve the right to agree or disagree with a person or a piece of legislation not based on a "R" or "D" next to the name. If there is a politician, from the left or the right, has shady dealings and it affects the public welfare, then expect equal condemnation from me. Stupidity should have no shield irregardless of what party they affiliate themselves with. As far as the "conservative" part, well my Christian religion and strong support of Federalism and the Constitution inform my decisions and provide direction for my political compass as you will see if you continue to read this blog. Now onto the real business of this blog..

"It's the economy stupid!!" Yes, I'm lifting this from the 1992 presidential campaign of President Clinton, and yes, it is entirely relevant to whats going on in America today. It surprises me how little people know about economics and government and the relationship between the two. Today I think it would be good to get a little bit of a refresher course.. and away we go!

The Government and YOUR Money:
Lets get one thing clear about Government wealth, all the billions of dollars that the government spends on defense, domestic programs or even simply payroll is derived from exactly one source, the tax payer. This is a fundamental point that often gets lost because it's become almost second nature to gripe about how much money you lose out of your paycheck every two weeks; and hardly ever question with any meaningful resolve whether the government actually needs the money it takes from you or if it's being spent wisely. So irregardless of what a politician says government is going to do to bail out something in the private sector the simple truth of the matter is that it is the ordinary tax payer that is stuck with the bill through higher taxes, a devalued dollar, or lower benefits on civic services, whether they be entitlement programs or necessary functions of government.

The classic example of this is phenomenon is quite appropriately called the Great Depression. When the value of the stock market tumbled and things were being marked to market, almost the same situation we saw happen these past weeks, instead of letting the market find it's natural bottom it was propped up by the government and exacerbated. Instead of a painful but quick correction that would have lasted maybe a year, it became a depression that lasted until WWII. From 1929 - 1932 Presidents Hoover and Roosevelt would constantly be substituting private sector, market based solutions for legislative, government supported action that had a net drag on the economy. Notable among these actions were back breaking tariffs like the Smoot-Holly Act that brought protectionism to whole new levels, along with other domestic taxes that took more money out of the private sector to be spent by all the geniuses in Washington that caused the problem and afterward helped to propagate it in the effort to fix it; again there's an amazing parallel to the current situation in Washington. As if that wasn't bad enough FDR printed more and more money to fund his massive government programs culminating in the New Deal. Now most people who've come through the public school system will be wondering what exactly could be wrong about The New Deal? Wasn't that what helped to end the depression? Wrong. In order to pay for all the programs FDR had to print more money, devaluing the dollar even further in hard economic times. In all likelihood the US would have continued in it's depression if it had not been for WWII. Even if you look at the current US budget of about 3 trillion dollars, more than 50 percent of that is spent on entitlement programs that came out of the New Deal. Notable among these programs are Social Security, which is currently a ticking time bomb in our budget that is going to blow up sometime in the next decade, and Fanny May which already went bust! Surprise, surprise..

We live today in a society where we've become too comfortable. We expect certain things to be rights that we hold as Americans instead of looking at reality and seeing things for what they are, opportunities for success or failure. To break it down even more, it's gotten to the point where everyone is only too happy to privatize profit, but EXPECT the government to socialize the losses. In recent weeks people have been complaining about the "free market" and "unchecked capitalism," but I don't remember hearing anyone complain when their home values and IRA's were going up, up, up like a balloon. That's not even taking into account the fact that it's not the market that creates the mess, it's government involvement in the market that necessitates a correction. Fanny May and Freddy Mac were not a creation of the market, that was government. Sub-Prime loans were not a creation of the market, they were created by government mandate and supported by the government backing the loans, because under ordinary circumstances no good lender would take that risk. In any number of circumstances that you can name "big bad business" there is almost always the hand of government there at the genesis of the problem. Don't get me wrong, I'm not against government; and I certainly don't support anarchy, but lets be realistic, the people that continually create problems shouldn't be trusted to fix those same problems. Least of all without accountability for their prior involvement and perhaps worst of all everything is being done on the tax payers dollar, both the creation and supposed solution of the problem.

Ultimately we should take a few things out of this current financial debacle:

• The Market reigns supreme, and the Market will punish government intervention.
• The only way out of a correction is to allow it to go down to it's natural bottom and to work from there.
• Once lenders know the real assets that others hold they will then feel free to lend again.
• The 1 trillion dollar bailout was wrong, it will only perpetuate the pain and it is being paid for by the people it will hurt.
• The Government needs to have a policy of low taxes and reduced spending to create stability and confidence in the markets.

Some of these points I think I illustrated well, some of them not so much.. but I only have so much time and will power to devote to this blog, but I'll definitely get around to explaining anything else I missed. I did want to try to address something else in this blog as well and since I ran out of energy, I suppose cutting and pasting will do. I wrote awhile back on the concept of Federalism and it's importance in American political theory.. well you'll get it when you read it.

Federalism 101:
Federalism, as defined by Wikipedia, "is a political philosophy in which a group of members are bound together with a governing representative head. The term 'federalism' is also used to describe a system of the government in which sovereignty is constitutionally divided between a central governing authority and constituent political unites (like states or provinces). Federalism is the system in which the power to govern is shared between the national & state governments, creating what is often called a federation."

Now that we all have a basic understanding of the word itself, lets get into how this concept relates to the American form of government. As I'm sure you all are aware, before there was The United states of America, there were colonies of Britain that eventually declared their independence together but ruled separately as divided States. It was understood that these states might have matters that related to them all, and so the Continental Congress was set up to mediate and arbitrate these matters, but the framers of the nation wanted to go one step further, to unite these States under one banner, as one Nation. This is obviously an over simplification, but it'll do for the purposes of this blog. Each State already had an existing government, and existing laws, and the citizens and politicians did not want to give these up but grudgingly agreed that a United America was better than the existing status quo. The solution to merging the existing state infrastructure and what would be the new federal government was the idea of "Dual Sovereignty," and indeed this concept was essential to not only the Constitution itself, but the passage of the Bill of Rights as well. It can be found in the 10th Amendment, "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people." Essentially the Constitution outlined certain powers to be given to the federal government (ie. taxation, war etc.), and everything else was left to the states to decide. So the states remain sovereign within their borders to create laws and tax except when it interferes with the sovereignty of the nation as a whole. This was perhaps the most important aspect of "checks and balances," the concept which we are all so familiar with, when relating to the division of the federal government and even the state government into three parts. The most important "check" in my opinion is the concept of "voting with your feet." Essentially, when all else fails, and your local or state governments go in a direction you don't like for whatever reason, (be it taxes, over/under regulation etc.) you can move to any state in the union that better suits you while still having your essential liberty and freedoms intact guaranteed by federal government. This has the effect of creating 50 different states with different laws and circumstances all competing for people and business, which mirrors the market system we use for commerce, and ensures that the people have the freedom to choose their lifestyle not have it chosen for them by the federal government. From here you can see an important development, the PEOPLE created the States, and the States in turn created the Federal Government, not the other way around.

To understand the concept of federalism, one needs to understand the Constitution, the very document that created our country. The framers remembered the power of a monarchy and knew that power in the hands of too few men often led to an abuse of that same power. So they wisely divided it up creating what was actually the most inefficient efficient government in the world. Inefficient in that it took many steps to enact new laws so that the people would have a chance to stop it with a vote or by giving notice to their representative. Efficient in the sense that local and state governments were given the bulk of the power, so that the people they were directly governing could give their input and in turn be answered quickly instead of having to go through the bureaucracy to reach the federal government for mediation on local issues. Unfortunately today we have drifted and are continuing to go further away from the ideas this nation was founded on and that deeply disturbs me. The Congress is allowed to pass any law that is deemed "necessary an proper" for the execution of its powers enumerated in the Constitution, but today they only think about whether it will look good politically. Instead Congress should be asking the question, "Should government be doing this? And if so, at what level?" It could be construed that I have a deep hate or mistrust of the federal government. Let me clear that up here, that is certainly not the case. I think that the federal government has a large role to play in national security, foreign policy and guaranteeing free markets both domestically and internationally. A dedication to these things instead of domestic nuances that should be handled by state government would allow the federal government to concentrate on a handful of issues instead of the myriad issues it faces and is failing now. I believe that federalism works, I believe it is a current issue, not one that is dated and belongs in the 18th century, and there is only one man talking about it, explaining it and advocating it, that man has my vote for the Presidency of the United States of America.

Alright, that's it for this, somewhat elongated version of today's entry. I hope you enjoyed it, if you managed to make it here to the end. I have no idea what I'm going to write about tomorrow, or even if I will write one tomorrow.. these things take more out of me than I thought. In any event I thank you for putting up with my convoluted thoughts and writing style and perhaps you'll drop by again for some more fun and excitement with a marginally crazy 20 something.. in this greatest nation on God's green Earth.

Random Thoughts:
Stop right there,
That's exactly where I lost it..
See that line,

Well, I never should have crossed it..
Stop right there,
Well I never should've said that,
It's the very moment that I wish that I could take back..

I'm sorry for the person I became..
I'm sorry that it took so long for me to change..
I'm ready to be sure
I never become that way again..
Cause who I am hates who I've been,
Who I am hates who I've been..

Quote of the Entry: Have you learned the lessons only of those who admired you, and were tender with you, and stood aside for you? Have you not learned great lessons from those who braced themselves against you, and disputed passage with you?
- Walt Whitman (1819 - 1892) US poet