Recently, an article with the same title as this one was featured on the front page of Associated Content. In the article, which can be viewed HERE, author Brad Sylvester pleads for the U.S. government to not only bail out the automobile industry, but also to start sending stimulus checks to U.S. Citizens now. There are crucial problems with these sentiments founded in a MASS misunderstanding of economics by the American people.
The United States is a CAPITALISITIC SOCIETY, and close to 100% of our economy should be driven by consumer spending, not the two-thirds that Mr. Sylvester states. Because of so much government meddling in our economic affairs, our economy is NEVER able to stabilize. You see, a simple rule of physics is that all systems seek a state of equilibrium, which can ALWAYS be reached if there is no outside interference. In this case, the system is our economy, and the outside interference is the government. It is through such action as bailouts, stimulus checks, welfare, food stamps, and minimum wage hikes that our economy suffers. It is at the hands of these actions that are pawned off on ignorant people as “helping hands,” that the population in general experiences economic decline.
The reality of the real world is that minimum wage increases hurt everyone. Prices across the board, as well as unemployment, soar as a result of minimum wage hikes. One of such magnitude as $10 will be devastating. Food stamps and welfare in general take money away from hard working TAXPAYERS, and gives it, in most situations, to individuals who are perfectly capable of making a decent living but choose not to. Bailouts reward irresponsibility, just like welfare and food stamps. Stimulus checks are not only wasting money, but they are just giving us money that should never have been taken from these tax payers in the first place. Now, just to return the money, thousands and thousands of man hours (which cost money), as well as postage (which equates to a LOT of money) fees are wasted.
Back to Mr. Sylvester’s article: He stated that approximately two-thirds of our economy is driven by consumer spending. I hope this means everyone reading that article understands that the majority of the other one-third of our economy is driven by GOVERNMENT SPENDING. This is not how a capitalistic society operates, nor should it. With our constant increases in minimum wage, not only are we hurting both small and big business alike, we are actually driving big business away from the United States. One of the biggest complaints in the past decade or so involves the number of companies outsourcing their labor, or even relocating their factories, to other countries. This is not because these companies are greedy, or even anti-American. Rather, the reality of the matter is that the United States turned their backs on the backbone of our economy: Business.
Minimum wage increases are not only unnecessary, but they give a perceived “reward” for all of our minimum wage workers who feel entitled to more money. These increases are given, often at the expense of another hard working employees raise.
Mr. Sylvester also discusses potential losses for larger companies due to this economic decline. Well, to that I say, simply, “tough.” When you decide to start a business, no matter what the size, you are playing with the big dogs. You must be responsible in the management of your company. If a company is poorly managed, then any decline in sales can equate to disastrous effects on said business. Here’s the thing: just as individuals are expected (well, perhaps they aren’t anymore, but they should be) to live within their means and SAVE money for an emergency fund. The same is true in business. If you are incapable of surviving a decline in sales, then it is time to close up shop.
What’s that you say? If Target closes, there will be so many lost jobs? True, however, don’t be so naïve to think that a million smaller businesses wouldn’t be happy to pick up all of the slack of these major retailers, if not more. Now THAT’s stimulating the economy.
Mr. Sylvester also discusses his proposed “Trickle Up Effect.” Well, while the fact of the matter is that people who have more money will spend more money, true, but a “Trickle Up Effect” is only temporary, where as “Trickle Down Effects” are much more permanent if allowed to thrive. When businesses, both small and large, do well, our economy will thrive.
Whilst discussing the “Trickle Up Effect,” Mr. Sylvester actually has the nerve to state that giving an economic stimulus check to our people would save the jobs of so many people employed by the manufacturers of goods sold here. There are two HUGE problems with this. First, a majority of products sold in this country are manufactured, at least at some point, in another country. Second, with a plan by President-elect Obama to raise minimum wage to $10 per hour, these jobs are still in jeopardy.
Another matter Mr. Sylvester discusses is bailing out the auto industry. Wait, so we are, yet again, going to reward businesses with bad management? All we need to do is look to Asian auto companies to see that not only are their executive’s salaries not bloated, but they are keeping the prices down on their cars while still making a profit from the United States.
The only point Mr. Sylvester makes that I agree with is NO MORE BAILOUTS. As a small business owner, if I hit hard times, I cannot simply defer my problems to the United States Government (which in reality means deferring my problems to the taxpayers.). I must be fiscally responsible to maintain my business. Take, for example, the housing crisis. It is ridiculous to think that just because Fannie Mae and Freddie Mac are experiencing problems that they couldn’t be solved by the public, which they would. Hundreds, perhaps thousands of small businesses would pop up from REAL entrepreneurs who could simply purchase these houses at reduced rates so that the banks can go back to being banks. In the meantime, these entrepreneurs could rent, or even rent to own these homes to their current occupants.
So yes, Mr. Sylvester, the bailouts do need to stop, so that our money is not wasted on moronic business decision, or decisions made due to government regulation or pressure. Instead, let us work our own problems out. Let this system reach equilibrium.
