Saturday, February 20, 2010


Listening to liberals try to explain our current economic situation is alot like listening to a four year old trying to explain how airplanes fly. The irony to that is that flight is much more complicated and harder to explain than economics. But for the sake of the liberal readers that occasionally frequent my humble blog, I will explain the basics of free market economics.

The free market is actually less of a "system" and more of an expression of humanity and it's aversion to oppression. To put it simply, it's a matter of buying and selling the things we want/need, for reasons and priorities of our own choosing.
Like the fly in the ointment of all liberal concepts, it is the human condition that drives our economic system. If we were robots, we would require only the most basic of needs and no wants. If we required a car for transportation, the simplest of automobile would be all that we'd ever need. And being robots of coarse...we would never complain. Enter humanity.

As humans, our requirements are different, and so are our tastes. In fact, the idea that we even have tastes and/or opinions at all is what separates us from the robot world. A robot could care less what kind of car he drives to work, or what kind of power drill he uses when he gets there. But a human has a whole set of priorities unique to his individual needs. Maybe he is tall and needs a certain amount of leg room. Maybe he has three kids and needs a four door. Maybe he has small hands that require a drill with a particular style of grip. Maybe he likes to fish on the weekends and needs a truck to pull his bass boat.

It is this individuality that spawns our free market system. For all of our differences, there must be a way to cater to those needs and wants...hence, the entrepeneur. For every Tom, Dick, or Harry with a personal preference, there is someone out there with a way to provide for their needs. Tom likes hoagies? Enter, Subway and Quiznos. Dick likes Burgers? Enter, McDonald's and Burger King. Harry likes trucks, but his wife likes station wagons? Enter, the SUV.

In America, the common denominators between the buyer of goods and the seller of goods is both freedom and liberty. The buyer has the ability to make decisions based on the things important to him/her alone. Be it quality, convenience, or symbol of status, your reasons for purchasing something are as personal as any other part of your life.
The seller has the ability to make the decisions that result in the production of the things the buyer wants/needs. The seller makes decisions based on quality, cost, and competition.

Oh yeah, competition. Another part of the human condition. Again, since the robot could care less about quality, competition would really not be a factor in meeting it's needs. But humans need and want more than just a slab of meat between two buns. We need the Big Mac. We need the five dollar foot long. We need the stuffed crust pan pizza and the Chevy Tahoe with 33" tires for blasting through snow drifts.
It is competition that demands higher quality. After all, there would be no need to improve on the cheeseburger, if there were no other companies to compete with. The Mustang would not be nearly as cool of a car if there were no Camaro forcing Ford to innovate in order to stay ahead of the curve.
How does any of this relate to jobs? Well, unfortunately, cars and burgers do not grow on trees in some magical mystical forest. They are people. For those people to produce their good or service, they need to hire other people. This is what's known as "job creation". Now, if you were to create an environment that is hostile to this system, you might experience something known as "job destruction".
You might be wondering what could cause a hostile environment for employment. Glad you asked. Imagine you are the owner of a company that makes buggy bumpers. You've just heard your President tell the nation that he plans to raise your taxes in order to implement some pet project that nobody wants. He follows that by promising to create new regulations and standards that will increase the expense of running your business. Are you supposed to ignore him or assume he's bluffing? Or will you more likely take his word for it and take the appropriate measures to prepare for increased overhead? Knowing that the cost of your buggy bumpers will go up resulting in fewer sales, do you think it would be a good idea to throw caution to the wind and hire ten more people, or trim the cost of running your business by laying-off five people.
In addition to you, your customers heard the same message from the President and have decided to cut their spending in all areas in preparation for higher prices at the register. This results in fewer orders for all goods and services as well as their related transportation, warehousing, and retailing. You see, just because your President promised to not raise your tax rate which happens to be below his arbitrary $250,000 line, that doesn't mean he won't be raising the taxes of the people who produce the products you use. A nickle more for a tube of Chapstick here, or a dime more for a box of Pop Tarts there tends to add up after a while. Both costs passed onto you (the consumer) to make up for the cost of someone's brilliant tax increases or job creation stimulus bill.
And let's not forget your boss (if you're lucky enough to have one). Since he falls on the wrong side of the President's fiscal "line in the sand", what do you suppose he's going to do? He's looking at your up-coming Christmas bonus on one hand, and a promise of whopping new taxes on the other. You do the math.
He's looking at your request for a new company vehicle on one hand, and a rising cost of doing business due to up-coming "cap and trade" regulations on the other. do the math.

I'm not trying to say that Harvard didn't have an excellent business program when President Obama was studying there, but I am saying that business wasn't his major.