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Archive for September 12th, 2009

by Dave Doc Rogers
link: http://www.docrogerswrites.com

“The problem with running any business is people. As soon as you get two people in the same room you have differences of opinion.” – me

I have, since my first real job, tried to understand the mathematics of money. One day it dawned on me that my dad was not always going to be my money resource. I had to learn to live on my own, budget my income against my outgo, and try to have some money at the end of my month. It took a while for that to settle in.

In my youth, my dad was my revenue source. If I lacked anything, I went to him or the corporate CFO, my mom, and complained of my lack. True, early on it mostly involved food for the ever hungry growing child and toys, without which life was incomplete. The older I got the less and less there was available for my fiscal wants. Then my father retired from military service and began working the private sector. There was even less at that point until my father partnered with a friend from the military and he began working for himself. Things got a little better until the summer came, because I was given the option to work for some spending money or not have spending money. The first reality check of fiscal responsibility. I quickly learned that if you spend all of your money you do not have any more.

Economics is defined as a study of production, distribution, and consumption of goods and services. This is a very simplistic view of economics. It is further simplified if you look at the Greek sources for the word: home and law/custom. A more modern analysis and usage of economics involves graphs, charts, spreadsheets, and mathematical tabulation. Economists use these elements and trend analysis to determine what is next. Economics has become a mystery science because it has gone beyond the basic premises of old.

INCOME – OUTGO = BALANCE IN +/-

It is a lesson I learned in my youth; although not arithmetically stated as above. When I was granted, or traded labor for, income I was at liberty to spend it how I thought best; however, I did receive wise counsel that I did not heed and learned the above formula painfully, because I did without until I gained additional income. I learned that some good or service [aka labor] had to be transacted for some agreed upon price; hopefully, the good or service [tools needed to perform the service] did not exceed the agreed upon price. Sometimes it did. Another valuable lesson learned: never contract for negative equity.

Extrapolation.

The macro-economic health of a country must be determined by the micro-economic health of its individuals and the entirety of communities. In determining this, one has to look at the individual contributor and his/her community to determine what are the goods and services of the local community. What are the goods and services that are making the interdependence of the community work? Is there parity in production or a surplus? If a surplus, where is that being traded? And for what? The macro-health is determined by the entirety of the micro-health. And, once large enough there is government.

At some point in the development of economic health individuals come together for mutual economic benefit and/or preservation. A little further along the community requires someone to either represent them in leadership or to uphold order; sometimes both. This person is provisioned by the community out of their surplus.

INCOME – OUTGO = [BALANCE IN +/-] – GOVERNMENT

The reality is now this: the individual contributor must meet a certain expectation in production surplus to take care of his/her own and that of the governing body or that governing body ceases to exist.

Historically, there have been governing bodies that required ‘X’ amount of provision; whether or not the individual contributor or community could provide it. The quality of expectation toward life decreased by the increase from the governmental demand. These types of government only remain in power through the enslavement of those governed. Sugarcoat it however you want, it results in the same. It is enslavement.

A few centuries back, Britain had expanded into the Americas and fought contentiously with France and Spain to retain that right. The expense of maintaining a quality of life in England, a continuing conflict with France and Spain, and the contempt of certain individuals within the empire led to the ever increasing taxation on goods and services within the Americas. The result was American INCOME could not meet the totality of OUTGO and maintain an acceptable quality of life. Some Bostonian zealots poorly disguised as native Americans overcame some cargo ships and up ended the cargo into the harbor. Apparently, people in Boston like their tea with saltwater. Thus began a strong discourse in governmental abuse and common law argument. The result was a declaration of independence. Britain treated Canada, Australia, and New Zealand far better after this incident.

INCOME – OUTGO = [BALANCE IN +/-] – GOVERNMENT = QUALITY OF LIFE

These separate communities within America joined in larger communities which all ratified a compact, a unifying document that became the basis for a stronger form of government where life, liberty, and the pursuit of happiness were valued. No document could guarantee these freedoms. It came by the permissive will of sovereign individuals justly represented by members of their community who swore, took oath, vowed they would honorably serve and represent their communities for the common good of their community, their greater community, and their singular voice to the world.

INCOME – OUTGO = QUALITY OF LIFE – [LOSS OF SOME SOVEREIGNTY]

Those first few representatives realized that they represented men and women who had limited resources. Farming 100 acres only produced so much harvest to sustain the farm, to provide for future sowing, to trade as surplus for goods and services not available on the farm. Government was kept minimal. Government remained the singular voice to a larger community. Individual [or micro] economic health was encouraged and not greatly taxed. 

Somewhere in the process the representatives of the community forgot their oaths and commitments to equitably, fairly, and in good conscience govern for their communities. On the floor of the US House of Representatives was presented a bill that would pension the widow of a military officer. US Representative from Tennessee, David Crockett, opposed the bill, offering instead to pay for the family’s personal support himself. A sense of entitlement was creeping into government.

Government transitioned from individual and community representation to a form nearing an entitled ruling class of wealthy and well to do. For those who had excess surplus from the labors of others, additional expenditures of government, offices, infrastructure, and girth mattered little. The individual contributor’s micro-economic impact was being considered less and less. Guilt and curried favor became practiced form.

INCOME – OUTGO = QUALITY OF LIFE – [LOSS OF MORE SOVEREIGNTY]

Through economic sanction and loss of hearing by governmental representatives, the individual micro-economic contributor gave away more individual sovereignty while the economic largess of bigger and bigger business created fiefal relationships and near liege-lord relationships that ensured funding for office or the office itself IF the individual would swear fealty to the economic powers.

The medio-economic powers then dictated concessions in the form of tax write offs and ‘economic inducements’ while continuing to rifle the pockets of the individual micro-economic contributor. To ensure a large influencer base and puppet constituency, the medio-economic powers influenced their representation to create a vassal state of paid influencers and sycophants. Under the guise of ‘social reforms’ additional revenue streams were placed upon individual micro-economic contributors to support an ever increasing government and dependent base of constituents who would vote into office whomever the medio-economic powers said and whomever would ensure the next hand out. Meanwhile, the individually contributing micro-economy was being pushed further and further into a heavily regulated serf state. The freedoms were enjoyed by the medio or macro-economic influencers and the sycophantic vassal constituency.

Today, government is less concerned about the individual micro-economic contributor than they are the medio/macro-economic influencer or the sycophantic vassal constituent. Large corporations and organizations continue to receive economic stimulus in the form of handouts and tax breaks. An ever growing governmental dependency adds to the macro-economic spending annually without macro/medio/micro-economic stimulus toward additional increase. Those individual micro-economic producers in the middle population are bearing the burden of government largess without voice, without recourse, without redress of government, with less and less freedom.

The correction to this spiral is a review of the government ‘books;’ how was the money spent. What is the anticipated INCOME? What is the ‘needed’ OUTGO? Cut the total spending to 1/2 of the INCOME. Budget what is needed for the government to run without handouts and largesse. Use the other 1/2 of the INCOME to pay the debt off. Go after the macro/medio-economic powers and ensure tax revenues are being collected. Work toward easing the governmental burden on the 80% population. Encourage individual micro-economic contributors to grow their impact. It has been the individual micro-economic contributor that creates the biggest surplus impact to the economy.

©2009 Dave Doc Rogers

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