Soak the Rich and Kill the Society?

I listened to President Obama's speech on fiscal deficits and debts this afternoon. I was not surprised. He used his usual socialistic approach in recommending silly solutions to our budget and debt crisis.

What made me really angry was his repeated attempt to establish economic class warfare by appealing to the jealousy emotion that normally rests in every human being to some degree. In effect, he said those who have benefited the most, should pay more in taxes.

However, for those who may be swayed by this approach to the dark side of human nature, let me bring into perspective what this actually means. President Obama is implying that the "rich" have accomplished their financial status through government benefit, and that is unfair to the average person. The fact is that in the majority of cases, the "rich" have achieved their success through imagination, risk, and hard work. Should an average "non-rich" person, who has not put in the required risk and effort be rewarded to the same extent? If so, why would anyone want to engage in hard work and risks, when the same benefits can be obtained by lethargy? He would not. That is the fundamental deficiency of socialism. There is a lack of incentive for anybody to do better. In most cases, the rich have achieved a better financial status The other implication of President Obama's statement is that the "rich" person has achieved his status in spite of governmental hindrances.

If we take the accomplishments of the "rich" and spread those benefits among the general public, do you believe that those "rich" people will continue on the same track of producing goods, services, and profits, which can be taxed. No! They will cease to produce and will live off their assets, or take their businesses to other countries, which are more favorably inclined to business ventures. The net result is fewer businesses, with fewer jobs for the middle class and a forced lower standard of living. Even government will not profit by the operation, since the companies and owners, which previously supplied tax revenue will no longer be available.

Andrew Carnegie privately established the steel industry in the United States. The steel, which he and his organization produced, went into the manufacture of automobiles, bridges, rails, and skyscrapers. Andrew Carnegie became rich through his steel operations, but did the public suffer? No. We owe those automobiles we have, and the bridges and skyscrapers we use to Andrew Carnegie's ingenuity and efforts. Government in those years was not an impediment. Andrew Carnegie could not achieve the same success in the present governmental climate.
Similarly, John D. Rockefeller established an international railroad system, which led to the development of all parts of the United States. Without the rail system, we would still be a disorganized set of white tribes, possibly still fighting Indians.

Am I implying that private industry can do everything and that it is completely honest in all of its endeavors? No. But that does not mean it should be abolished or even unreasonably hindered. It only means that government should exercise some control to keep the playing field level for various competitors and the general public. It does not mean that we need a government of tremendous size that will compete with private industry or overtax them to the extent of driving them out of business.

Bottom line: Do not soak the rich. Be sure they are getting their fair share, as an incentive to continue doing and expanding their good work. Private industry makes jobs, and improves finances in the average working-class family.

Government is a leech on society. When small, we can tolerate it, and in some respects need it. In its greatness, it is an abomination.

The US Can Collapse from Financial Deficit

What caused the collapse of the Soviet Union? Very simple. Financial deficits.

President Reagan had a simple strategy. He said we will challenge the military might of the Soviet Union by building up our own. They will react by similar increases and we will continue to escalate. Eventually, they will go broke. They will have a tremendous military and nothing else. Conversely we in the US will also have a tremendous military, but we will still be financially alive. It came to pass.

With the collapse of the Soviet Union, it broke up into individual states, such as Russia, Ukraine, Belarus, etc.

Can the same thing happen here in the US? Without doubt. The US is in financial deficit for a different reason, but continuing to pursue this course will lead to the same bankruptcy as a military course did in the Soviet Union. We will break up into individual states, some of which will be able to continue their governmental existence because of innate assets, such as oil. Other states will be in complete deprivation, with subsequent riots, killing, etc. I suspect some of the Northeast states would be the first in that second group. They have little natural resources, little agriculture, little manufacturing capability, and large populations.

Can it all be avoided? Yes. If we take the present painful approach of getting deficits under control. The alternative will be dissolution of the US into its states, with complete devastation in some of those states.

Government Shutdown

Speaker Boehner,

I have just heard President Obama's speech on possible government shutdown. As usual, the community organizer gave a tremendously effective emotional talk devoid of practicality. However, he had one clear message. He is opposed to government shutdown.

As a rule of thumb, if President Obama is for anything, we should be against it.

However to put it in proper perspective, government shutdown is a tool to be used in order to obtain the $100 billion budget cut which was originally the Republican plan. Present discussions about budget cuts of $7 billion here and there are ridiculous.
President Obama's proposed budget for 2012 is $3.73 trillion. If we reasonably assume that this is inflated by 100%, the waste portion is $1.86 trillion. You have been looking for a $100 billion cut. In effect, you have been asking for only 5.4% reduction in the waste. That doesn't even sound reasonable to me, even if you were to get the Democrats to agree to that.

Let's remember that our objective is to reduce the size of federal government, and initially we are only starting with the waste factor. 5% is almost laughable, but it's at least a start. Reducing that further would be super ridiculous.

I am usually not a big donor to political or social causes based upon solicitations, but I have started to be a contributor to the Tea Party, which seems to be obviously on the correct track for this country. My individual vote will be miniscule, but perhaps my money
can convince others of the validity of the Tea Party's agenda.

Are Consumer Prices of Gatorade and Bottled Water Exorbitant Compared to Gasoline?

A friend sent me a widely circulating e-mail indicating that in spite of the rapid jump in gasoline prices, it is relatively cheap on a per gallon basis as compared to other liquids on the market, such as Pepto-Bismol, Gatorade, bottled water, and printer inks. The implication is that consumers are being ripped off by suppliers of these other liquids.

My response in explanation is as follows:

Partially true but an exaggeration.

All the comparisons have low-volume, special packaging, and in many cases higher-priced ingredients. Total administrative costs may be the same or higher, because of different sales outlets. Specialty products also require significant advertising.

In the calculation of profit, one starts with manufacturing cost, which includes raw materials, labor, packaging, plant amortization, utilities, and any other costs connected with the manufacturing operation. Add to that, the Sales and Administrative costs, which include salaries, benefits, advertising, and any other sales expenses. That's the gross product cost. Subtract it from the sales revenue to get gross profit. Subtract taxes to obtain net profit. Divide net profit by sales revenue to obtain percent profit. That's all on total production of that particular product. Using total number of units or pounds produced, one can calculate manufacturing cost per unit, S&A per unit, etc.

Most of the comparative sale prices per unit are not out of line from a profit point of view. An exception may be water, which is why so many different brands are available. Products are generally sold on a "what the market will bear" price. Apparently, those people who purchase bottled water do so for a variety of reasons, which may include status of the buyer, unsubstantiated fear of city water, better taste, or convenience of the bottle in daily activities.

With respect to printer ink, I tend to agree that printer manufacturers probably sell their printers at low prices, to be able to lock in future sales of high-priced printer cartridges. However, this also creates a profit opportunity for independent cartridge refillers, such as Office Max. Even with reduced prices, Office Max probably makes a substantial profit on that business. With a free market system, other potential refillers can also enter the market, which would bring down the price. I've seen several entrepreneurs try to do this and have gone out of business. This likely happened because of insufficient business volume. In other words, the "bearing market" seems satisfied with purchasing new printer cartridges from the original printer manufacturer rather than taking a quality risk from an unrecognized supplier.

Finally, gasoline is relatively cheap per gallon, because of the tremendous volume sold. This brings down manufacturing cost and S&A per gallon to rather low percentages. Profit potential is high so that government can tack on special taxes, in addition to corporate income tax and still make the product seem cheap on a per gallon basis.