Are We Still Here?

     Around the first of November I usually start looking
forward to the winter solstice.  That isn't because I enjoy the
shortest day of the year.  December is as dark and unpleasant as
it gets this side of a coal mine.

     The pleasant part of the first day of calendar winter is
that the next day the sun will be up for a few more seconds,
even if we can't see it through the clouds.  Dark, gloomy, short
days are more bearable when the days are getting longer rather
than shorter.

     The beginning of calendar winter is the last official
beginning of winter.  By the time calendar winter rolls in to
town the beginnings of solar winter and meteorological winter
are fading in the rear view mirror.  Solar winter is half over. 
The winter solstice is much more pleasant when viewed as the
middle of winter rather than the beginning.

     The joy of the most recent winter solstice was tainted by
the Mayan fans' claiming that the world would end.  I must
admit that I was a wee bit skeptical about that claim.  Many past
predictions of the end of the world have proved to have been a
bit overrated.  The doom sayer of 2011 postponed the big event
from May to October to complete the arrangements.  He still
failed to pull it off.

     When I awoke on December 21, immediately I suspected
something had gone wrong again.  Or, was it that something
hadn't gone wrong?  I guess the answer to that question depends
on your views about the end of the world.

     I heard that the big event was planned for sunrise. 
Maybe that was wrong.  I should at least wait for the day to end
before making fun of the failure of the prediction.  To be on the
safe side I would wait until the 21st ended everywhere.  I doubt
that the Mayans knew about the International Date Line.  Still,
why not play it safe?

     I was skeptical enough that while waiting I wrote this
column.  Why not be prepared just in case the world didn't end
on schedule?

     I am now quite certain that the world didn't end.  How
can I be sure?  I never experienced the end of the world.  How
can I be sure what it would be like?
     The Mayans might have been dyslexic.  Perhaps the
world is to end in 12/12/21 rather than on 12/21/12.  Does this
mean that we must now wait with baited breath for almost a
decade?

     What on earth is baited breath?  Is it painful?  Is baited
breath any thing like a baited fish hook?  Does baited breath
have a worm on it?  Perhaps it only smells like a can of worms
that spent too much time getting a sun tan.  If that is the case,
after waiting for almost a decade with baited breath we might
welcome the end of the world.

     There are other opinions about the meaning of baited
breath.  Some even claim that the expression is really "bated
breath."  They trace it back to Bill Shakespeare.  Does anyone
who has read any of Bill's writings really believe we should
consider him an authority on spelling?  If you are waiting with
baited (bated?) breath to learn more about baited breath, hit the
Internet.

     Disclaimer:  I assume no responsibility for any harm,
psychic or otherwise, you may experience in your search.  At
least buckle your seat belt.

     Maybe the world did end on schedule.  We simply
weren't observant enough to notice.  The doom sayers were
hedging their bets even before the big day dawned.  They were
saying that only the world as we knew it would end.

     Perhaps it did end.  Depending on what you know, the
world as you know it may end every day.  If the world ends
every day, that might take the fun out of predicting the end of
the world.

                                 * * * * *
                                  * * * *
                                   * * *
                                    * *
                                     *
Copyright 2012
Albert D. McCallum
18440 29-1/2 Mile Road
Springport, Michigan 49284

Free at Last

     Four decades ago I was a member of the Napoleon
School Board.  The board's negotiator worked out a union
contract requiring teachers who weren't union members to pay
the equivalent of union dues.  I was the only board member who
voted to reject the contract.

     My father worked for a railroad in Indiana when Indiana
was a right to work state.  I remember his comments about the
repeal of "right to work."  He said the unions ceased to care
about or serve their members.  The unions merely collected dues
from their captives.

     Michigan's sudden move to join the ranks of "right to
work" states where no one is forced to pay unions for the right
to have a job caught most people by surprise.  The unions, on
short notice, managed to rally the forces to reaffirm the basic
reason why I have despised unions for as long as I can remember.

     The union violence was a mere shadow of what I
remember.  Some individuals bashed a reporter and cut down a
tent.  Apparently some teachers lied and called in sick to join the
protests.  Bill Clinton was impeached for lying about sex. 
Apparently lying about being sick is okay.

     Some claims made in opposition to mandatory union dues
were jaw droppingly outrageous.  Heading the list was Barack
Obama's claim that unions built the middle class.  Increased
productivity built middle class prosperity.  Without that
increased productivity unions could have done nothing to
increase average income.  You can't consume what isn't made.

     If any one group built the middle class it was farmers. 
Increased production by farmers reduced the percentage of the
work force farming from about 90 percent to around 2 percent. 
That 88 percent of the work force makes the increased wealth
we have today.

     Farmers weren't the ones who brought on the agricultural
revolution.  The real movers and shakers were the inventors,
entrepreneurs and investors who provided farmers with new and
efficient means of production.

     Another outrageous claim was that eliminating mandatory
payments to unions would return us to the share cropping days
of the old South.  A few years ago my oldest son moved from
Michigan to a right to work state because he couldn't find a
decent paying job for an engineer in Michigan.

     There were 23 right to work states before Michigan
joined the club.  None of them seem to be overrun by share
croppers.

     Unions whine about free loaders.  Who are the free
loaders?  Suppose you tell your neighbor you don't want him to
mow your grass.  He mows it anyway -- and sends you a bill.  If
you refuse to pay the bill, Are you a free loader?

     Unions force representation onto non-members, then
demand that they pay.  If unions don't want to represent
non-members, the unions should quit doing it.  If laws are
preventing this, the unions should work for repeal of any laws
forcing them to represent non-members.  The freeloaders are the
unions that charge non-members for representation they don't
want.

     Right to work by itself isn't going to turn the Michigan
economy from dust to gold.  It may help a little.  Neither is
"right to work" the "right to work for less."  Unions are the ones
who reduce the average wage, and charge for doing it.

     Only increased productivity can raise the average wage
and standard of living.  Strikes, slow downs, union work rules,
etc. all decrease productivity.  Because the unions decrease
productivity, the wealth pie from which we all get our piece
prosperity is smaller than it would be without union interference.

     That smaller pie means the average piece is smaller too. 
Every gain one worker gets because of unions comes out of
other workers' pockets.  The battle isn't between labor and
management.  It is between unions and everyone else.

     Originally I hated unions for their violence.  I eventually
learned enough to despise unions because they are frauds claiming
credit for what others have done.

aldmccallum@gmail.com
                                 * * * * *
                                  * * * *
                                   * * *
                                    * *
                                     *
Copyright 2012
Albert D. McCallum
18440 29-1/2 Mile Road
Springport, Michigan 49284

Tax the Poor?

     Many things seem intuitively obvious.  Often the obvious
conclusions are wrong.  Many never figure that out.  Nowhere is
this more true than in matters of economics.  Some ignore sound
economics because they believe economics is boring.

     The disaster that voters court by voting based on wrong
economic conclusions won't be boring.  Is an exciting disaster
better than being bored?

     The controversy over whom to tax and how much oozes
with false knowledge about economics.  I don't know to what
extent the politicians are ignorant and to what extent they merely
take advantage of the voters' ignorance.

     "Tax the rich" is popular because to most people it is
code for "tax someone else."  The big myth is that taxes are
detrimental only to the person who pays them.  If the myth were
true, taxing the rich would make some sense.  The rich won't
feel much pain from paying a bit higher tax.

     Before laying on the taxes we should consider who,
besides the taxpayer, will be harmed.  Rich people save and
invest.  No mater how great the income of an individual he will
never be rich if all he does is spend.  If all he does is spend, he
will be poor the instant the income stream stops.

     The person who has millions isn't likely to greatly change
his life style or spending habits merely because his taxes go up
10 or 20 percent.  Instead he will invest less.  Net investment in
the USA is down about 20 percent since the beginning of the
recession.

     Another way of putting it is, we have eaten 20 percent of
our seed corn that produces future wealth.  Any tax that
decreases investment will only reduce production and wages. 
Everyone will suffer, not just those who pay the tax.

     When we spend instead of invest we can never undo the
damage.  Even if we go back to investing we never recover the
lost investment.  We are all poorer today because of the decade
plus of lost investment during the 1930s and 1940s.

     When we don't invest we don't build factories, mines,
harbors, trains, and all the other things that make workers more
productive.  The only way wages can increase is through
increased investment.

     Taxing the rich is but a minor annoyance to the rich.  It
can devastate marginal workers and the unemployed who need
new investment to provide them with more productive, better
paying, jobs.

     The tax that will have the least detrimental, long term
impact on everyone is a tax that does not reduce investment. 
The only way to implement such a tax is to tax those who don't
invest.  That would mean taxing only the poor and spendthrifts. 
Spendthrifts are only one paycheck away from poverty.

     Taxing the poor will reduce their spending on
consumption.  Government, or the recipients of government gifts,
will spend the money.   The government spending may be
wasteful.  Still, it will replace the spending taxed away from the
poor.

     Investment will still sustain increased productivity. 
Eventually this increased productivity will allow even the taxed
poor to regain their lost purchasing power.  Tax away the
investment capital and we will all spiral down into a bottomless
economic pit.

     Thus, taxing the poor, while stopping short of the point
of taxing them into starvation, will in the long run hurt the poor
less than will taxing the investment capital away from the rich
and anyone else.  I'm not advocating increased taxes for the
poor, or anyone else.  Instead, cut government spending.

     Like it or not, government spending will be cut -- 
drastically.   The most we can do by increasing tax rates is
postpone the inevitable cuts in spending and make them more
severe.  Continuing down the tax and spend super highway we
will soon consume the rest of our investment seed corn.

     We can't consume what we never produce.  We are now
headed back to the world that existed before the industrial
revolution.  Most politicians in D.C. are shouting "Full speed
ahead."

aldmccallum@gmail.com
                                 * * * * *
                                  * * * *
                                   * * *
                                    * *
                                     *
Copyright 2012
Albert D. McCallum
18440 29-1/2 Mile Road
Springport, Michigan 49284

Plans Gone Wrong

     Who will best plan your breakfast?  Will someone far
away who doesn't know what you like or how much time you
have available make the best plan for you?  That planner may
only know about averages.  He will set you up for the breakfast
for the average person.

     But, wait, there isn't any average person.  That average
person is a fictional composite based on a collection of data,
none of which may be about you.  It is unlikely that anyone else
is in a better position to plan breakfast than you are.

     Planning is vital to success.  Good plans must start with
the individuals affected by the plans.  All actions are taken by
individuals.  Individuals plan those actions so as to achieve their
goals.  He who doesn't understand the goals and abilities of the
individual can't plan effectively for the individual.

     Not only that.  He who makes the plan will always first
seek to achieve his own goals and satisfaction, not the goals and
satisfaction of the individual for whom he plans.

     Effective planning must be from the bottom up, not from
the top down.  Individuals plan.  Then they enlist the aid of
others to execute the plans.  Individuals may find employers,
employees, teachers, merchants, etc. to aid the individuals.

     The individual can't force those others to participate.  He
must make it worth their while.  Thus, the individual plans mesh
together for the benefit of all involved.  Those who aren't
satisfied with the results can bail out.  Thus, everyone must
endlessly reevaluate his plans so that they are beneficial to
others as well as to himself.  This is the price he pays for the
cooperation and aid of others.

     Vast and complex are woven by coordinating the plans of
many individuals.  Each individual greedily pursues his own
satisfaction.  Still, he must provide satisfaction to others to gain
his own satisfaction.

     The most a top down planner can do is recruit individuals
to join in his grand plan.  He may start with a grand dream and
a vast, complex plan.  When freedom reigns, the only way to
achieve that dream is to recruit many willing individuals to
cooperate.

     In the absence of freedom there is an alternative, threaten
and coerce individuals to cooperate.  The coerced individuals
have no interest in the success of the plan.  They cooperate only
to the extent they must to avoid punishment by the planner. 
When the plan doesn't further the goals of the individuals, they
have no motivation to make the plan work.

     Without the willing cooperation of the self interested
individuals executing the plan, the planner stumbles around in
the dark lacking the knowledge essential to success.  Forced
planing fails because it lacks the willing support of the
individuals who often are the only ones with the knowledge
essential to making their part of the plan work.

     Thus, top down, forced planning by government will
almost always fail to be efficient or achieve good results for
most people.  Occasional there may be limited success by
accident.  In a truly vast plan there are so many variables that
such accidental successes are all but impossible.

     The USA started out relying heavily on individual
planning and voluntary cooperation.  We now plunge ever
deeper in to central planing by politicians and bureaucrats. 
Individuals and their plans get lost in the shuffle.

     For so long as we rely on the forced plans of politicians
and bureaucrat, rather than plans built around voluntary
cooperation, inefficiency and waste will multiply.  Even if the
plans succeeded, they will still only achieve satisfaction for the
self centered, greedy politicians, bureaucrats and their cronies. 
Don't for a minute fall for the lie that politicians and bureaucrats
are a bit less self centered and greedy than business people or
anyone else.

     At the end of the central planning road lies a disaster, the
magnitude of which few, if any, can even imagine.  Government
planing isn't the solution.  It is the problem.

aldmccallum@gmail.com
                                 * * * * *
                                  * * * *
                                   * * *
                                    * *
                                     *
Copyright 2012
Albert D. McCallum
18440 29-1/2 Mile Road
Springport, Michigan 49284

What Should We Produce?

     Government is trying to restore the housing industry.  It
has used direct subsidies to buyers and artificially low interest
rates with limited success.  Politicians and others seem to believe
that restoring the housing industry and raising housing prices is
the key to economic recovery.

     Spending too much money on too much housing caused
the housing bubble that burst into recession.  How wise is it to
try to recreate the conditions that were a major cause of the
recession?

     Recessions happen because of major mismatches between
supply and demand.  When production of a certain thing, such as
housing or higher education, greatly exceeds what consumers
want to buy, production must decrease.

     Decreased production causes unemployment.  Excess
production facilities must be liquidated and directed to other 
uses.  During this process employment and production decrease. 
We call these inevitable decreases recessions.

     The cure for a recession is putting labor and other
resources to work producing the things consumers want the
most.  Those are the things that consumers will buy.

     Government should forget about restoring the housing
industry.  For one thing government has no way or knowing how
many houses people want and what prices they are willing and
able to pay.  All government can do by artificially manipulating
housing is reinflate the housing bubble and set us up for another
recession when that new bubble bursts.

     The purpose of all production is to provide consumer
goods.  A balanced, stable economy must produce the things
consumers want most.  Only consumers can decide what they
want most.  In markets not manipulated by government, market
prices tell businesses what is most in demand.

     Businesses wanting to sell products and earn profits
constantly seek out those price signals and attempt to produce
what consumers want most.  Businesses that misread the signals
lose money.  Those businesses either clean up their acts or slide
into bankruptcy.

     Businesses constantly make mistakes and fail.  The
economy as a whole doesn't collapse because of these business
failures.  Recessions happen when businesses are misled by
government actions, such as subsidies, mandates, prohibitions,
and artificially manipulated interest rates.

     Such manipulations lead many producers to make the
same mistakes, such as building too many expensive houses, or
directing too many resources into higher education.  When
consumers balk at buying the excess production, production
collapses and we have a recession.

     The root cause of the recession wasn't the drop in
consumer buying.  The root cause was the government
manipulation that caused the excess production in the first place.

     When a recession happens the only good thing to do is
let it happen.  The temporary drop in production is the inevitable
result of government artificially pushing production of things
consumers didn't want.  Left free to act, producers will put the
improperly used resources, including labor, to work making the
things consumers want most.  Soon the recession will be over.

     Before government started trying to fix recessions, they
didn't last long.  The last US recession government didn't try to
fix was in 1921.  That recession ran its course in one year.  The
first recession the US government tried to fix was 1929.  The
economy didn't recover until 1946.

     So long as government tries to stimulate production of
anything beyond the quantities consumers want and are willing
and able to pay for, a never ending succession of bubbles and
recessions is inevitable.

     To avoid recessions government must quit manipulating
supply and demand.  Consumers must be free to set the pace for
production.  Producers must be free to follow the consumers'
directions.  Manipulating supply and demand for housing,
ethanol, higher education, electric cars, windmills, etc. can only
lead to crashes and recessions.

                                 * * * * *
                                  * * * *
                                   * * *
                                    * *
                                     *
Copyright 2012
Albert D. McCallum
18440 29-1/2 Mile Road
Springport, Michigan 49284

Fuel for Thought

     During the government caused energy shortages of the
1970s someone in government had a bright idea.  Why not
prohibit auto racing to save fuel?  Certainly driving in circles
isn't a very important use of fuel.

     The idea died quickly when someone else figured out that
it takes more fuel to fly a football team across the country than
the racers use at an auto race.  This isn't even half the answer to
what impact prohibiting racing would have on fuel consumption. 
To answer that question we must consider all of the "unseen"
consequences of a ban on racing.

     For starters large crowds at races, football games, etc.
travel to the events.  Travel consumes fuel.  How much?  Let's
try some very rough estimates to calculate a ball park figure.

     In a 500-mile race with 40 drivers, the cars will travel
20,000 miles.  At one mile per gallon that would be 20,000
gallons.  Race cars get more than one mile per gallon.  If they
didn't, there would be many more pit stops.

     If 100,000 fans each use a gallon of fuel traveling for an
event, it would add up to 100,000 gallons.  They may use a
gallon of fuel while trying to find a parking space and crawling
through the traffic jams before and after the event.  For events
such as the Indy 500 and the Super bowl, spectators consume
vast amounts of fuel traveling from afar.

     It is certain that the spectators use far more fuel than do
the participants.  A major event may consume millions of
gallons.  Does this mean that canceling large crowd events;
races, ball games, concerts, etc., would be a great way to save
fuel?  Before leaping to this conclusion we should ferret out a
bit more of the unseen.

     People who don't go to events do something else.  That
something else could be laying in the backyard.  In most cases it
won't be.  How much fuel would be consumed doing something
else?  Something else could be a trip to the beach, the mall, a
movie, bowling alley, etc.

     Will those other uses of fuel equal or exceed the fuel
consumption of the event?  I don't know.  Neither does anyone
else.  Even if the event was canceled no one could ever figure
out how much fuel the would be spectators used for other
purposes.

     We still haven't reached the depths of the unknowable. 
Many major events are televised.  Millions watch.  Watching
television doesn't use much fuel.  If the viewers weren't
watching television, How much fuel might they consume doing
something else?  It is a safe bet that many of them would
consume fuel doing something.

     No central planner can even know the impact canceling
events would have on net fuel consumption.  Even after the fact
it would be impossible to figure out whether the cancellation
caused fuel consumption to go up or down.

     To figure out the consequences of any action that
interferes with human choices, planners must be able to trace all
of the choices and actions that would have occurred without the
interference.  Also, they must trace all of the choices and actions
that flow from the interference.

     To do this the planer must accurately predict the future
choices and actions of millions of people.  This includes the
entire chain of choices and actions that will run forever into the
future.  Even for something as seeming simple as canceling a
race, no planner is capable of even coming close to guessing
what will happen.

     No central planner of any kind can come close to
estimating the impact his plan will have on the choices and
actions of millions and billions of people.  Central planners
indulge in the pretense of knowledge.  Unavoidable ignorance
guarantees the plans will fail to archive the results they promise.

     Planners who can't even predict how canceling a race will
affect fuel consumption, don't have a chance to plan the entire
economy and get it right.  We should call "central planners" by
their real name, central guessers.

                                 * * * * *
                                  * * * *
                                   * * *
                                    * *
                                     *
Copyright 2012
Albert D. McCallum
18440 29-1/2 Mile Road
Springport, Michigan 49284

Much Ado About Nothing

     The campaign that seemed to last forever finally ended. 
Hundreds of millions were spent.  A few trillion annoying phone
calls were made.  What do we have to show for it?  Nothing,
absolutely nothing.

     We could have extended the terms of all the incumbents,
except for any who died, without any noticeable difference.  The
election to end all elections didn't end anything, except the
campaign.  How long before the talking heads start telling us
2014 will be the most crucial election the country ever faced?

     Considering the candidates on the ballot, it was long
apparent that the election wouldn't change the direction or even
the momentum of the country, even if all of the losers had won. 
The few candidates who stood up for reduced spending and
smaller government could have caucused in a phone booth, if
there still is a phone booth out there to be found.

     Mitt Romney didn't offer a real alternative.  He did his
best to avoid taking a position on anything.  He was for jobs,
reduced spending, and more freedom for businesses.  What was
he going to do to further any of those goals?  Other than
wanting to use coal for fuel, the specifics were few and far
between.

     I listened to Romney and Ryan's acceptance speeches at
the convention.  That coal thing was the only thing close to real
substance that either offered.  The general theme was "We are
good.  Elect us and we will do great things."  This was nothing
more than the Republican version of "hope and change."

     There were two defining events in the Romney ride to
failure.  A month or so before the election he volunteered that he
liked many of the parts of Obama Care and would keep them. 
Then he realized he had only shot himself in one foot.  So he
reloaded and fired off that he was proud to be the grandfather of
Obama Care.  It is hard to campaign after blowing off both feet.

     My reaction to this was that Romney might as well have
conceded the election and threw his support to Obama.  The
only thing Romney had going for him was that he wasn't
Obama.  Then he rips off his mask and announces "See, I really
am Barack Obama."

     The second failure involved Romney's now famous
remark that 47 percent of the voters were dependent on
government.  Perhaps he was a point or two off on the percent. 
Other than that he was spot on.

     He had finally gotten something right.  So what did he
do?  He ran from it as fast as a man could run after shooting off
both feet.  He got caught telling the truth and was embarrassed. 
Could anyone other than a politician be embarrassed by being
caught in a truth?

     We shouldn't pick presidents based on how exciting they
are.  The reality is that many, if not most, voters do.  On the
excitement index Romney ranks below cold oat meal.  I don't
see this as a fault.   The reality is that it is a major handicap for
a politician.

     Romney's major defect was that he was only obsessed
with being president.  If he had any concern at all about the fate
of the county, it was buried deep in second place behind his lust
for the presidency.

     There is no reason to mourn Romney's loss to one of the
most destructive president's in the history of the nation.  Romney
would have done little, if any better.  The results might have
turned out worse.

     There is a silver lining.  Voters still blame Bush for
Obama's failures.  If Obama had acted responsibly the economy
would have recovered by now, as it did during Reagan's first
term.

     The next four years were destined by Obama to be
economic stagnation punctuated by recession.  If Romney had
won he would get the blame for Obama's failures.  Perhaps after
another four years a few more voters will figure out that the
stagnant economy really is of Obama's doing.

                                 * * * * *
                                  * * * *
                                   * * *
                                    * *
                                     *
Copyright 2012
Albert D. McCallum
18440 29-1/2 Mile Road
Springport, Michigan 49284

Steak and Caviar for Everyone?

     The customer went to the supermarket to buy a loaf of
bread.  The clerk punched the cash register and said "That will
be $71.00."

     The customer replied, "How much did you say?"

     "$71.00."

     "For a loaf of bread?"

     "No," the clerk replied, "For the bread, sirloin steak, and
caviar."

     "I don't want sirloin steak and caviar, just a plain loaf of
bread."

     "We can't sell just a loaf of bread" explained the clerk. 
"We are required by law to  provide all customers with sirloin
steak and caviar."

     "I don't want sirloin steak and caviar.  Besides, I only
have $10.00."

     "That doesn't mater.  We must abide by the mandate and
provide the whole package."

     "I'm going to another store," responded the frustrated
customer.  "My kids are hungry."

     "That won't work.  All stores must include sirloin steak
and caviar."

     The frustrated customer went home to tell her children
they would have to eat their peanut butter without bread.

     Is this crazy or what?  Would sane people tolerate having
no options other than buying expensive food or no food?  Would
people be better off with no food than with the food they could
afford?   How many people who could only afford the bare
essentials of food would starve because they were denied the
opportunity to buy the food they could afford?

     Still, millions believe mandating that all medical
insurance policies include the equivalent of sirloin steak and
caviar is a great idea.  Of course, those government mandates
don't mention that the customer pays for the mandated bells and
whistles.

     The mandate requires insurance companies to pay for
drug rehab, psychiatry, child birth, contraceptives, etc. 
Nationwide there are 2,000 or so mandated coverages.  How
many ask "Who pays for all of this?"  Someone must pay the
insurance company.  Otherwise the insurance company will be
bankrupt.  Then it won't pay for any services.

     If the mandates were honestly stated they would say "To
buy medical insurance you must  pay for drug rehab, psychiatry,
child birth, contraceptives, etc."  It doesn't matter whether you
need or want the mandated coverage, you must pay for it, or
make do without medical insurance.  Still the politicians who
made medical insurance unaffordable complain that many people
can't afford medical insurance.

     Cost of medical insurance for college age individuals has
greatly increased this year   Why?  Obama care.  How many
more young people will have to go without insurance because of
the government mandated price increase?

     The price increase isn't from young people suddenly
incurring more medical expenses.  It is from government shifting
the medical costs of older people to younger people.  Young
people with low incomes, or no incomes, are forced to subsidize
medical costs for the wealthiest generation.

     This is only one small example of how government
intervention has kited the cost of medical services and medical
insurance.  The politicians are mainly responsible for creating
the mess.  Why would any sane, thinking person trust those
politicians to clean up their mess?

     Government has meddled with the providing of medical
services for more than a century.  The chickens are coming
home to roost.  How can any sane, thinking person seriously
expect more government meddling to solve the problem?

     We can continue down the road we tread and see medical
costs soar and denial of service become common place.  Or, we
can force government to back off and allow free people
voluntarily cooperating with each other to clean up government's
mess.  Mandating sirloin steak and caviar for everyone is the
problem, not the solution.

                                 * * * * *
                                  * * * *
                                   * * *
                                    * *
                                     *
Copyright 2012
Albert D. McCallum
18440 29-1/2 Mile Road
Springport, Michigan 49284

We Depend on Two "I"s

     Few people claim we don't have more today than our
ancestors had in 1900.  Some may argue that we are no better
off.  That is a value judgment that most people reject.  That we
have more, much more, is an observable fact beyond serious
dispute.

     We have more of all goods -- more cars, more carrots,
more housing, more entertainment, more everything.  We have
more per capita than most of our ancestors even dreamed
possible.

     Why do we have more?  The answer is so simple and
obvious that it is almost embarrassing to even ask the question. 
We have more because we produce more.  The first law of
consumption is, we can't consume that which wasn't produced.

     If we had the same jobs and produced in the same ways
people did in 1900, we would have the same things our
ancestors had in 1900.  The average person wouldn't be able to
consume more than did the average person in 1900.   Also, we
would have none of the new things invented and discovered
since 1900 -- no airplanes, no micro waves, no televisions, no
computers.

     The key to understanding our prosperity is to understand
why the average worker today produces more than the average
worker did in 1900.  We can immediately eliminate working
harder and longer.  Most work today is less strenuous than in
1900 and we work far fewer hours.

     We can also quickly and easily dismiss the claim that
somehow unions brought us prosperity.  Unions don't increase
productivity.  It should be obvious that strikes and union work
rules decrease productivity per worker.

     If the only change since 1900 was the rise of unions, the
average person today would have to settle for consuming less
than the average person did in 1900.  With lowered production,
lower consumption would be the only option.

     Unions might cause a redistribution of production.  One
worker's gain would be someone else's loss.   It is as impossible
for unions to increase average consumption as it is for a pie
cutter to cut the pie in a way that will give everyone a bigger
piece.

     Why then do we produce more today?  This answer is
also simple though under appreciated.  Two "I"s are the
foundation of our prosperity -- innovation and investment. 
Without new ways of producing and more and better machines
and tools, we would still produce and consume as our ancestors
did in 1900.  We would be no better off.

     Invention and innovation require imagination and the
opportunity to pursue a dream.  Stifling regulations that require
bureaucratic approval for every action kill creativity and
innovation.  We are well down the road to strangling the
innovators with red tape.

     If today's bureaucracy had been in place in 1900 we
would have a small fraction of what we have today.  Still, the
politicians and bureaucrats would demand thanks for what little
progress we made in spite of them.

     Without investment new ideas mean nothing.  It takes
investment to put ideas to work.  Inventing a great new way to
make tires means nothing without the resources to build facilities
to put the idea to work.

     Investment requires savings.  To build for future
production someone must work now without producing anything
for immediate consumption.  It doesn't matter who saves. 
Someone must save and invest in future production, if we are to
avoid returning to hand to mouth existence.

     A dollar saved and invested by a  poor person is just as
useful as a dollar saved and invested by a rich person.  On the
other hand, a dollar reduction in savings by a rich person is just
as detrimental as a dollar reduction in savings by a poor person.

     In either case the saver isn't the big loser.  Everyone
loses when net savings decrease.  Everyone wins when net
savings increase.  The pool of savings is what fuels our
prosperity.

                                 * * * * *
                                  * * * *
                                   * * *
                                    * *
                                     *
Copyright 2012
Albert D. McCallum
18440 29-1/2 Mile Road
Springport, Michigan 49284

Another World

    It seemed like a normal morning.  I didn't notice anything
unusual happening, like falling through a looking glass.  It
wasn't until I checked out the Internet that I realized something
was terribly wrong.

     First I found an article about a magic solution for the
problem of local governments that have unfunded pension
liabilities.  Translated into English "unfunded pension liabilities"
mean they have promised to pay pensions and don't have the
money to pay them with.

     The Michigan legislature is considering a new law to
solve that problem.  The law would allow local governments to
borrow money to pay off their obligations to the pension funds. 
Then the local governments won't owe anything to the pension
funds.  Why didn't I think of that?

     When the bonds are due perhaps the governments can
borrow from the pension funds to pay off the bonds.  Someone
needs to make a study, at the taxpayers' expense of course, to
see how many times this debt must chase it tail around the circle
before the debt, like the gingham dog and the calico cat, just
disappears.  Pay attention to this one.  If it works for
government it might work to eliminate your debt too.

     Or, maybe not.  Perhaps only those with the god like
power of politicians can make it work.  It was the next article I
found that drove home the reality that I had slipped into some
kind of parallel universe where up is down, black is white, and
debt is wealth.

     The master magician, the Obama guy, discovered a magic
solution to food shortages caused by the drought.  He wants the
government to buy food and give it away.  Perhaps this solution
came from his magic Teleprompter.  I can all but see Obama
staring into his Teleprompter chanting "Teleprompter on the
wall, tell me I'm the fairest president of them all."

     Perhaps Obama is extending the principles of Keynesian
economics.  In the gospel according to Keynes there is a
multiplier effect.  When government spends a dollar it magically
creates more than a dollar's worth of wealth.

     If this really works, we should give every dollar we have
to government.  Spending and respending those dollars would
soon produce so much wealth it would crush us.  That crushed
by wealth problem still needs a bit of work.

     In the world where I used to live the studies show that
the multiplier effect is real. Unfortunately the multiplier turns out
to be less than one.  When government spends a dollar wealth
shrinks to something less than a dollar, perhaps fifty cents.

     Perhaps the mistake has been applying the multiplier to
money instead of food.  Maybe every chicken government buys
will turn into two chickens.

     In fairness to Obama he wasn't promising more food.  He
wanted farm votes and sought them by proposing to have the
government buy more food. That might push up food prices and
temporarily benefit some farmers.

     Before promising to raise food prices Obama might be
well advised to count the number of voters who buy and eat
food and compare that number with the number of farmers.  Oh,
wait, I missed something.  Obama is most likely counting on the
votes of the people who get the free food.

     In a world where less than half the work force actually
produces something we can consume, the free food vote could
be enough.  Back on the other side of the looking glass where I
used to live, a couple of people would have asked, How much
food can government buy and give away before there is no food
left?

     Of course, politicians are far too busy with important
things to waste their time on such silly questions.  They don't
even have time to ponder, How many medical services can we
give away before there are no medical services to give away?

                                 * * * * *
                                  * * * *
                                   * * *
                                    * *
                                     *
Copyright 2012
Albert D. McCallum
18440 29-1/2 Mile Road
Springport, Michigan 49284

Medical Reality

     Providing medical services has been a hot political issue
for decades.  The issue isn't about to go away.  A big part of the
problem is that many, if not most, people are a long distance call
removed from reality.

     Government can't possibly do what politicians promise
and what most people want and expect.  This would be true even
if those in government were all knowing, well intentioned,
perfect, uncorrupted individuals.  We will get far less from the
self serving, semi competent (at best), cronyism that is inevitable
when individuals get to spend other people's money.

     First consider some realities that most people prefer not
to think about.  People are suffering and dying for the lack of
medical services.  No matter what we do, people will continue
suffering and dying for lack of medical services.  It is humanly
impossible to prevent all people from suffering and dying from
lack of medical services.  Those who claim we can have
unlimited medical services are either deluded or deliberate liars.

     If everyone on earth spent all of their time providing
medical services, some would still go without services that could
reduce suffering or prolong their lives.  Of course, if everyone
spent all of his time providing medical services, the lack of
medical services would soon cease to be a problem.  Everyone
would soon starve to death.

     The only options we have in the real world are to decide
how much medical service to provide and how to provide the
services.  How we provide the services will have a big impact
on how much service we can provide.

     Twenty-five percent or more of medical expense is
already devoted to paper work.  More government means more
paper work.  In turn this means less to spend on actual medical
services.  Less than one-third of welfare spending goes to poor
people.  The US Postal Service is going bankrupt.

     It is foolish to expect that government will be better and
more efficient providing medical services.  In the end
government provided medical services will mean less service
doled out by corrupt politicians and bureaucrats.

     We have limited capacity to  produce all of the things we
want.  Trade offs are inevitable.  More medical services mean
less of something else.  How many people are willing to increase
the availability of medical services by giving up everything
beyond the minimum of food, clothing and shelter essential for
survival?

     People risk their lives to enjoy driving, skiing, swimming,
biking and a zillion other things.  Giving up all, or even many,
of these things to live a little longer is a deal that just about
everyone has rejected.  What is the point in living long if you
have nothing to live for?

     The only answer is to work out a balance and produce
the things we want the most.  For each individual that balance
will be different.  "One size fits all" will be wrong for just about
everyone.

     Some people don't want organ transplants.  Should they
be forced to sacrifice what they want to pay for organ
transplants for others?

     If we leave people free to choose how much to spend on
medical services, everyone can 0pursue his most important goals,
be they providing medical services or something else.  This
freedom includes the right to choose how much to spend on
medical services for others.

     Even in the overtaxed, statist environment in which we
live, individuals contribute many millions of dollars to provide
medical services for others.  With lower taxes and the
recognition that government isn't going to do it, people would
contribute much more.

     The road to government control of medical services may
seem to work for a while.  In the end it will mean national
bankruptcy and few medical services for anyone.  Medical
services aren't priority one for starving people.

                                 * * * * *
                                  * * * *
                                   * * *
                                    * *
                                     *
Copyright 2012
Albert D. McCallum
18440 29-1/2 Mile Road
Springport, Michigan 49284

What Do Businesses Want?

      To understand what people do we must first understand
what they want.  Of course, at the most basic level everyone
wants the same thing.  That universal desire is for the thing we
call happiness or satisfaction.

     Our secondary wants are the things we believe will bring
us satisfaction.  These wants very greatly from individual to
individual.  The main reason for venturing into business is the
quest for wealth.  There are other motivators such as
independence and the thrill of power.  Wealth contributes to
both.

     People in business seek wealth.  Some aren't all that
fussy about how they get it.  People in business aren't
necessarily more ethical or more moral than those in
government.  The business environment rewards different
behavior than does the government environment.  Thus, people
in business behave differently than those in government.

     For most of us businesses serve one purpose.  They
provide a means for workers to increase their production of
consumer goods.  The reason for production is consumption. 
Businesses benefit us by increasing our supply of consumer
goods well beyond what we could produce if we all worked
alone.

     Businesses don't care about consumers' consumption,
unless the consumption benefits the business.  Indirectly
consumption is vital to businesses, whether they like it or not. 
Without customers buying to consume, business are out of
business, and broke.

     In free markets customers hold a business accountable by
either buying from it or refusing to buy from it.  Businesses
must have customers.  The businesses may not be terribly fussy
how they get customers or whom they hurt in the process.  As
long as the business must serve and please customers to keep
them, the customers are the kings.  In free markets businesses
can't exploit.  They must serve and please customers to prosper.

     Thus, big businesses are a natural enemy of free markets. 
Big businesses get in bed with government.  The two serve each
other.  The businesses provide support to politicians.  The
politicians grant favors to the favored businesses.  The biggest
favor government grants is to expand businesses' markets by
limiting the markets of the competition.

     Naturally this process favors the powerful.  The big
businesses grow while the weaker competitors shrivel and die, or
never get off the launching pad.  Consumers lose.

     There are many ways government provides captive
customers and otherwise expands the market for the products of
businesses.  Granting outright monopolies (such as utility
franchises), limiting the numbers of taxicab licenses, and
imposing tariffs, are some of the most obvious ways.

     Every law or regulation that limits production or restricts
competition expands the market for some businesses at the
expense of others.  Of course, the victim businesses are usually
the small, weak ones without political clout.

     New and small businesses are likely to see merit in
competition.  It is the main way the new or small business gets
its foot in the market door.  Once a business gains a large
market share, competition is more of a threat than a benefit. 
Restricting competition can allow an old, over sized, inefficient
business to continue to prosper and grow.  Those, allegedly "too
big to fail" businesses grew to their size and condition because
of government protection from competition.

     When big businesses and government get together they
strip the consumers of their kingship and reduce them to
exploited servants of government and businesses.  Only in free
markets is the consumer the king that holds the producers and
employers accountable.

     As the government-business complex grows we slide ever
deeper into serfdom.  Businesses are by no means blameless. 
"Do it my way or I will hurt you" government is the senior
partner that makes the exploitation possible.

                                 * * * * *
                                  * * * *
                                   * * *
                                    * *
                                     *
Copyright 2012
Albert D. McCallum
18440 29-1/2 Mile Road
Springport, Michigan 49284

Satisfaction Not Guaranteed

     We face endless choices.  Sausage or bacon for breakfast. 
White bread or rye.  Spend now or save for a vacation or
retirement.  Go to college, or go to work.  Go bowling, or go to
a movie.  Why do we choose one option instead another?

     Individuals always choose the options they believe will
be the most satisfying.  One may expect more satisfaction from
giving than from spending.  He will choose to give.  The
individual who expects more satisfaction from sleeping than
from going to work will skip work.  Perhaps when making the
choice he didn't consider that skipping work also meant no
paycheck.

     Often our choices don't turn out as we expected. 
Satisfaction isn't guaranteed.  When making choices all we can
do is give it our best shot.  The more we know about the likely
consequences of our choices, the more likely we will be able to
choose the most satisfying options.

     The more distant the satisfaction we seek, the greater the
risk that we will not achieve it.  Planning and saving for
retirement is a bigger gamble than planning and saving for a
vacation next summer.

     When choosing between immediate satisfaction and
distant satisfaction some people usually lean toward the
immediate satisfaction.  Others are likely to choose the more
distant satisfaction.  The ultimate pursuit of delayed satisfaction
is sacrificing immediate satisfaction for anticipated satisfaction in
the hereafter.

     Sometimes others make choices that baffle us.  They
appear to make choices that will certainly lead to less
satisfaction rather than more.  The explanations for these
puzzling choices are quite simple.  One possibility is that what
the chooser finds satisfying is very different from what we find
satisfying.  The other possibility is that the chooser has either
more or less understanding of the consequences than we do.

     The difficult question is, Why do some people appear to
choose distant satisfaction rather than immediate satisfaction? 
Why does one person choose the delayed satisfaction from going
to work while another opts from the immediate satisfaction from
skipping work?

     Instead of asking why individuals sacrifice immediate
satisfaction to pursue delayed satisfaction we should first ask,
Does the person who chooses to go to work sacrifice present
satisfaction?  Clearly, the worker sacrifices the increased
satisfaction he could have gained by sleeping late and spending
the rest of the day fishing.  Has he merely traded these
immediate satisfactions for the more distant satisfaction from the
things his paycheck will buy?

     The answer is "No."  The worker has also gained present
satisfaction from the anticipation of the things his paycheck will
buy.   The immediate satisfaction from anticipation and other
aspects of his choosing to work outweighs the immediate
satisfaction sacrificed by going to work.  Some of those other
immediate satisfactions from going to work might include
avoidance of guilt about skipping work and avoidance of worry
about how to pay future bills.

     Thus, when we choose distant satisfaction over immediate
satisfaction, we aren't really sacrificing immediate satisfaction. 
We are only substituting one immediate satisfaction for another.

     Individuals who seem always to be short sighted and
choose the immediate satisfaction simply don't gain as much
satisfaction from anticipating future satisfaction as does the
seeming more farsighted person.  To change this condition the
"short sighted" individuals need to increase their ability to gain
present satisfaction from the anticipation of future satisfaction.

     One example of this involves the common problem of
losing weight.  The anticipated immediate satisfaction from
eating now has a way of overpowering the present immediate
satisfaction from anticipating weighing less in the more distant
future.

     To overcome the urge to eat, the individual needs to
focus on gaining immediate satisfaction from anticipating the
future satisfaction from weighing less.  Dwell on visualizing a
thinner future and focus on the satisfactions it will bring.

                                 * * * * *
                                  * * * *
                                   * * *
                                    * *
                                     *
Copyright 2012
Albert D. McCallum
18440 29-1/2 Mile Road
Springport, Michigan 49284

What Can We Learn from Sports?

     Professional sports teams are businesses.  They live in a
different world than most businesses. Thus, they behave
differently.  Still, the sports world isn't as different as some
might imagine.

     Teams pay hundreds of millions of dollars to hire one
player.  Teams furiously compete to hire the best players.  Why
don't teams hire more cheaper players, rather than a few
expensive ones?  The answer is simple.  The teams are limited
by the rules as to the number of players they can hire and use at
anyone time.  Hiring two cheaper players usually isn't the
equivalent of hiring one of the best.

     A weak team may benefit more by hiring the two weaker
players.  This may make the team stronger, but it will still be
weaker than the best teams.   For good teams to improve they
must hire the best, no matter what it costs.  There is little
demand in the Major Leagues for less productive players.  They
must seek other ways to earn their living.

     In the world of business the market for CEOs is much
like the market for star athletes.  A company has only one CEO. 
It can't get the same result by hiring two or three CEOs with
lesser ability.    To be successful the company must hire the
best, even if it costs a bundle.

     Thus, the market for CEOs is much like the market for
star athletes.  And, not surprisingly, the compensation for
CEOs rivals the compensation paid star athletes.

     Fortunately, in most areas businesses aren't limited to
hiring one or a few employees.  The business can hire as many
employees as it needs to do the job.  The productivity of a
second or third employee is in addition to, not in place of, the
productivity of the first employee.

     When making hiring plans businesses compare total cost
of the employees to the total value of what the employees will
produce.  The costs of an employee include all of the costs for
equipment, material and supplies the employee will use to be
productive.  Hiring 10 employees may achieve the same
production as the hiring of seven more productive employees.

     Will the business hire the 10 or the seven?  That depends
on which will cost the most.  If the cost of the 10 is less than
the cost of the seven, the business will benefit by hiring the ten. 
In free markets less productive workers can compete with more
productive workers by accepting lower pay.  Everyone wants
higher pay.  Please note that lower pay is more than the no pay
alternative of unemployment.

     We will now consider a few of the ways we have tilted
the playing field against the less productive workers.  Prevailing
wage laws are one of the most obvious.  These laws include the
1930 Davis-Bacon Act that requires government contractors to
paying the so called prevailing wage to employees.  The
"prevailing wage" is usually interpreted to mean the union wage.

     Such laws push wages higher for the more productive
workers while keeping the less productive workers unemployed
or in lower paying jobs.  Employers hire the seven, not the 10. 
This wasn't an unintended consequence.  Supporters of the law
claimed it would protect high paid, "deserving" white workers
from competition from low skilled black workers.  The law
worked.  The mere fact a law works doesn't make it desirable or
good.

     All minimum wage laws, whether called minimum wage
laws, living wage laws or something else, have the same effect. 
Some early advocates of these laws openly stated the purpose of
the laws was to keep women and "undesirables" from competing
with "deserving" men for jobs.  Union wages also discriminate
against the 10 and favor the seven.

     This great morass of wage laws pushes up the wages paid
to the most productive while dooming the less productive to
unemployment.  Average wages may go up.  Average income
goes down.  The beneficiaries of the higher wages pay more
taxes to support the unemployed.  Who wins this game?

                                 * * * * *
                                  * * * *
                                   * * *
                                    * *
                                     *
Copyright 2012
Albert D. McCallum
18440 29-1/2 Mile Road
Springport, Michigan 49284

How to Prevent a Flood

     Flooding is a serious problem, at least for people living
in flood planes of major rivers.  Many people live in those flood
plains.  Some observations about rivers and water suggest a
solution.

     Too much water at the flooded location causes the flood. 
If the river flowed faster, the excess water would drain away. 
Alas, no flood.  The answer to flooding is to make the river flow
faster.

     We can also observe that more water makes the river
flow faster.  Obviously the cause of floods is lack of water.

     To implement this solution during the next flood, the dam
operators opened all the gates releasing the stored water.  To
their absolute amazement the flood waters rose to the highest
level ever seen.

     Skeptics always claimed that the "solution" was flawed
and wouldn't work.  These doubters were vilified by the
politicians and the press.  The true believers claimed the evil
doubters wanted people to die in floods.  The doubters now
claimed vindication.  Vindication for heretics isn't that easy.

     The true believers said, not so fast.  We must study the
problem  The most expensive and most reputable consultants
diligently studied the problem to find what went wrong and how
to get it right next time.  Three years and a couple of floods
later the consultants issued their report.

     The problem wasn't that the solution was flawed.  The
problem was that those implementing the solution failed.  They
were too conservative.  They only did half a job.  They didn't
release anywhere near enough water.  The answer lay in bolder
measures that would release more water.  The consultants also
reported that their calculations showed the solution did work. 
Without the additional water the worst flood ever would have
been even worse.

     The skeptics still voiced their complaint that the theory
could never work, no matter  how much water was dumped into
the river to stop the flood.  This irritated the true believers. 
They shouted down the skeptics.  The skeptics were branded as
anti science.  Some claimed the skeptics and their silly ideas
were a threat to the welfare of everyone.  True believers
demanded that the skeptics be imprisoned to prevent their
undermining of true science.

     Certainly this could never happen in the real world, or,
Could it?  The economy is in the tank.  Government tried to
borrow and spend the nation out of a recession in the 1930s. 
The result was an even deeper depression.  Borrowing and
spending failed to solve the problem.

     Bush and Obama have tried to borrow and spend our way
out of the current economic collapse.  It hasn't worked.  The
skeptics tell us the plan is flawed and will never work.  It will
only make the recession deeper.

     The true believers still claim the problem is that we
haven't borrowed and spent enough.  We have been too
conservative and cautious.  We need more courage and more
money to borrow and spend our way out of debt and into
prosperity.  The politicians and the main stream media shout
Amen!

     Is it possible that we should give the skeptics their day in
court?  Should we hear them out?  Should we demand that those
who advocate borrow and spend defend their theory with facts,
figures and real world examples?

     Or, should we yield to those who merely shout and tell
us how smart and learned they are?  If the true believers in
borrow and spend have a sound theory, Why shouldn't those
brilliant people be able to prove the soundness of their theory?

     Of course those "brilliant" people will respond that most
of us are simply too dumb to understand.  How brilliant is the
person who can't break the complex down into simple
components that a person with an IQ a bit under 170 can
understand?  Ranting and shouting are the "arguments" of those
who don't understand the ideas they advocate.

                                 * * * * *
                                  * * * *
                                   * * *
                                    * *
                                     *
Copyright 2012
Albert D. McCallum
18440 29-1/2 Mile Road
Springport, Michigan 49284

Four Kinds of People

     Everyone falls into one of four categories.  Some people
are beneficial to you.  Others are detrimental to you.  Some
don't affect you in any way.  The fourth category includes those
who are both beneficial and detrimental.

     Consider a neighbor who gives you vegetables from his
garden.  He is beneficial.  When he annoys you with the noise
from his garden tractor, he is detrimental.  Many people,
including most relatives, neighbors and other people we directly
interact with, are in this fourth category.  Who do you know
who hasn't irritated or annoyed you at least once?

     People who are only detrimental find little sympathy with
those they damage.  Most of us generally see detrimental people
as enemies.  They are competitors who provide no benefits to
offset the detriment.  It is easy for people to decide it is in their
best interest to destroy detrimental enemies.

     Ignorance further complicates the matter.  Individuals are
often ignorant about the impact others have.  An individual may
fail to recognize either the detriment or the benefit flowing from
the acts of others.  People always choose and act on what they
believe, not on the unknown reality.  I could give a host of 
examples.  That must await another day.

     Self sufficient, isolated people benefit very little from
those outside their isolated tribe or nation.  For most of  history
distant people were irrelevant, usually unknown.  The world of 
that day didn't extend beyond the neighboring tribes.

     Mainly those tribes were seen as detrimental competitors. 
They competed for scarce resources -- wild animals, grazing
land, wood and water.  Those neighboring tribes were only
detriments.  In times of severe shortages they could be a life
threatening detriment.

     The natural state of relationships among tribes was
hostility and war.  Destroying the competitor was good.  The
existence of the competitor was an endless threat.  About the
only thing that restrained neighboring tribes from battling to the
death was concern about the costs of war.

     Tribe members generally had a different attitude toward
members of the tribe.  These members cooperated with each
other and benefited each other.  The tribe members usually were
at least sometimes beneficial.  Even within the tribe some were
seen by others as detrimental.  Those detrimental members were
well advised to watch their backs.

     Competing tribes might cooperate to defend against
stronger tribes.  This expanded the boundaries of beneficial
relationships.  Wars and unstable peace based on a balance of
terror was the state of existence for most of history.   Major
change began with the Industrial Revolution.  Specialization and
trade expanded the group of people we find beneficial.  We now
benefit from people all over the world.  Ignorance of those
benefits still leads to hostilities.

     The major cause of wars is isolation that renders people
on the other side of the line useless.  World trade collapsed as a
result of the US enacting the Smoot-Hawley trade bill in 1930. 
Fearing the inability to import the resources they needed,
Germany and Japan embarked on ventures to create isolated self
sufficiency.  And, they became useless to the rest of the world. 
Germany and Japan set out to conquer the resources they
believed they needed.  Vast regions of the world became only
competitors and enemies.  They weren't beneficial to each other.

     During the Communist era the world divided into
competing blocks that were largely isolated from each other. 
The biggest threats to peace today are nations such as North
Korea and Iran that either choose isolation, or others chose to
isolate them.

     Isolation is the road to war.  Interaction and free trade is
the road to peace.  Those who oppose free trade are marching us
to war, whether they know it or not.  Perhaps this is why anti
free traders are usually among those demanding an ever stronger
military.

     "When goods do not cross borders, soldiers will." 
Frederic Bastiat, nineteenth century French economist.

aldmccallum@gmail.com

                                 * * * * *
                                  * * * *
                                   * * *
                                    * *
                                     *
Copyright 2012
Albert D. McCallum
18440 29-1/2 Mile Road
Springport, Michigan 49284

Mr. Worker and Mr. Nasty

     Mr. Worker is capable and ambitious.  He goes to work
every day.  Because Mr. Worker produces so much for his
employer, his employer pays him substantial wages.

     Mr. Nasty, Mr. Worker's neighbor, doesn't have a job. 
He produces nothing.  On payday Mr. Nasty follows Mr. Worker
to the bank.  Nasty demands 40 percent of Worker's pay.  Nasty
threatens to hurt Worker if he doesn't pay up.

     Mr. Nasty has another bad habit.  Every morning he
locks Worker in the basement for three hours.  Worker is always
late for work.  Worker would produce and earn more if he didn't
spend those hours locked in the basement.

     Why doesn't Nasty let Worker go to work?  Nasty could
take more pay from Worker if Nasty let Worker produce more. 
Is Nasty just plain dumb?

     Nasty is trying to increase his own satisfaction.  He does
it at the expense of Worker.  What does Nasty find satisfying? 
Nasty gains great satisfaction from dominating and controlling
Worker.  Mr. Nasty gains more satisfaction from dominating
Worker than he would from taking more money from him. 
Also, Nasty mistakenly believes that those hours spent locked in
the basement will make Worker more productive.

     Why does Worker put up with the abuse by Nasty? 
Worker actually believes Nasty's claim that the time locked in
the basement makes Worker more productive.  Worker doesn't
like being locked in the basement.  He puts up with it because
he believes the clever Mr. Nasty is doing it for Worker's good.

     Also, Worker never had the things he didn't produce
while locked in the basement.  A starving individual will greatly
miss a sandwich snatched from his mouth.  If the sandwich
never existed, he won't miss it as much.  He will still be just as
hungry.  He won't blame the person who denied him the
sandwich when he doesn't even realize that person was
responsible.

     It never occurred to Worker that there was anything
wrong about Nasty taking part of Worker's pay.  After all, Nasty
had always taken it.  Besides that, Nasty takes 40 percent from
everyone else in the neighborhood.  Mr. Worker grew up
watching Mr. Nasty's father take earnings from Worker's father. 
Thus, it always has been.  Thus, it must ever be.

     Mr. Worker never found the magic word --Why?  "Why"
is the beginning of all change.  For people who never ask
"Why?" nothing changes other than by accident.  Why must we
get by with light from candles?  Why must we travel by
horseback?  Why aren't there better ways?  Why must we do
seemingly pointless things that we have always done?

     Of course, Mr. Worker represents the hard working,
productive taxpayers of our nation.  Mr. Nasty is government. 
Some people may not recall being locked in their basement for
three hours a day.   Others do recall being locked up some place
for much longer.

     Government laws, and regulations interfere with
productivity just as much as would locking workers in the
basement for a few hours every day.  Those who don't see what
is happening don't mind.  They even buy the government claims
that they are better off because they are locked in the basement.

     Those hours in the basement grow longer with every
session of Congress and the state legislatures.  How much longer
will the Mr. Workers of our nation be able to sustain us with
their productivity during the shrinking hours they are allowed
out of the basement?

     Of course, those hours in the basement that reduce
production also reduce tax revenue.  Like Mr. Nasty, some in
government actually believe they are making people better off. 
Others in government, also like Mr. Nasty, simply enjoy
dominating and ruling others.

     When will more people start asking, "Why should
workers have to tolerate long hours locked in the government
basement?"

                                 * * * * *
                                  * * * *
                                   * * *
                                    * *
                                     *
Copyright 2012
Albert D. McCallum
18440 29-1/2 Mile Road
Springport, Michigan 49284

Dirt and Goo

     We humans endlessly seek to increase our satisfaction. 
In the beginning humans didn't seem to have much to work with. 
All that existed was natural resources and people.  Some of
those natural resources, such as berries and nuts, were nearly
ready for use to increase the satisfaction of humans.  Other than
air and water, most of the earth started out as little more than
dirt and goo.

     Plants and animals grew from that dirt and goo, with
some help from air and water.  They got a big boost from an
extraterrestrial natural resource -- sunlight.  Powered by sunlight,
plants turned dirt, goo, air and water into organic matter. 
Animals ate the plants.  The animals further transformed the dirt
and goo into meat and skins.

     Early humans lived mainly on the dirt and goo that plants
and animals transformed into things, such as food, which humans
found useful for increasing their satisfaction.  To use the
products of plants and animals required human action.  A berry
on a bush didn't satisfy hunger.  Neither did a rabbit running
wild.  Human effort made the products of nature useful for
producing human satisfaction.

     Ideas must precede action.  Except for reflex actions,
humans act only because they have ideas about acting and what
those actions might produce.  Of course, the ultimate goal is to
produce satisfaction.  Some of the first ideas were about using
plants and animals to increase satisfaction.  Pick berries.  Catch
rabbits.  Use sticks to help catch rabbits.

     Humans also had ideas about using those lumps of dirt
called stones.  Stones were useful for cracking nuts and throwing
at rabbits.

     Things that natural processes and human effort made
ready to use for increasing human satisfaction came to be called
consumer goods.  All consumer goods are the products of dirt,
goo, air, water and sunlight.  The only human contributions are
ideas and effort.  Ideas are the product of mental effort.

     Look about you.  Consider the consumer goods
surrounding you -- food, clothing, houses, microwaves,
televisions, vehicles, furniture, and endless other things.  All of
those things were made from dirt and goo.

     The dirt and goo are as old as the earth.  Human effort is
as old as the human race.  Why did it take so long to transform
the dirt and goo into all of the useful things we have today? 
The missing ingredient was ideas.  Humans had to discover how
to turn dirt and goo into a microwave.  First they had to discover
how to turn the dirt and goo into steel and plastic.  They also
had to discover how to use dirt and goo to make electric
generators.

     Increasing our standard of living depends on increasing
our ability to transform dirt and goo into consumer goods useful
for increasing our satisfaction.   We see no indication that the
human capacity to think and work is on the increase.  Our only
hope for advancement is increasing the fruits of the efforts of
which we are capable.

     To increase the fruits of our efforts we must have more
and better equipment, and use it more efficiently.  The industrial
revolution is about the efficient use of technology and equipment
to amplify the productivity of our efforts.  Among other things,
the increased productivity frees time to do other things. 
Increasing our productivity is the same as adding more hours to
our days.

     If we are to continue adding more hours to our days, we
must continue expanding our investment in technology and
equipment to amplify our ability to produce consumer goods.

     Unfortunately, tax and spend government is consuming
the wealth that we must invest in research and production if we
are to increase, or even sustain, our level of prosperity. 
Government is literally stealing hours from our days by limiting
our ability to turn dirt and goo into useful things.  If we continue
down this road we are on our way back to where we started, the
world of dirt and goo.

                                 * * * * *
                                  * * * *
                                   * * *
                                    * *
                                     *
Copyright 2012
Albert D. McCallum
18440 29-1/2 Mile Road
Springport, Michigan 49284

"You Didn't Build It"

     Politicians regularly spew outlandish ideas and absurd
lies.   Such are so commonplace that we grow immune to them. 
Still, occasionally a statement stands feet, ankles and waste deep
below others in the swamp of absurdity.  Obama's admonition to
businessmen that "You didn't build it" stands out as an absurdity
for the ages.

     If the entrepreneur didn't build the business, Who did? 
Would Ford Motor Company and automobiles have "just
happened" without Henry of Dearborn?  Who did build Ford
Motor and all of the other businesses that provide most of the
things we have and use?  Why aren't we all still independent
hunter-gathers picking berries and chasing rabbits for our next
meal?

     We don't need a pompous politician to tell us no one
does anything by himself.  If somebody hadn't provided you
with food and clothing, you wouldn't have survived to do
anything.

     I built a front porch on my house.  Of course, I didn't
build without assistance.  I bought materials and had some help
from family members.  Many of the ideas I  used I picked up
over the years from other people.  I don't even know the origin
of those ideas and many of the materials.  By myself I would
have trouble making a decent hammer.

     Without my making plans, collecting materials, and
directing the efforts I wouldn't have a porch.  My efforts were
indispensable for managing the building of my porch.  Quibble
about whether I built the porch, if you want to.  Without my
efforts as planner and director the porch wouldn't have
happened.

     Likewise Ford Motor Company, Target, Burger King,
John Deere, etc., etc. didn't just happen.  Someone had ideas and
resources which they put to work.  Such entrepreneurs are
behind the production of almost everything we consume in a
civilized trading society.  Even those who grow their own food
depend on others to provide tools, seed, fertilizer, etc.

     Without the entrepreneurs who make plans and bring
resources together to produce consumer goods, the world would
be populated (sparsely populated) by independent
hunter-gatherers.  We owe everything to those entrepreneurs to
whom Obama said "You didn't build it."

     The government of which Obama is so proud wouldn't
preside over anything more than a few rabbit chasers if it wasn't
for what entrepreneurs built.  Government lives as a parasite off
the production of the businesses that Obama demeans.  The
entrepreneurs could fairly say to Obama "You didn't build that
government."

     Government pays for some of the resources businesses
use.  Government pays with wealth taken from the private sector,
wealth created through the planning and direction of businesses. 
Government then uses that wealth to hire private businesses to
build highways, dams, etc.  Private businesses also build
highways, etc. on their own.  I drove on an expressway build by
Disney.

     Is Obama so ignorant and arrogant that he believes that
without government no one would build roads, etc.?  What does
Obama believe?  Does he do anything more that parrot whatever
someone sticks in his teleprompter?  As someone pointed out,
Obama didn't build that speech.

     The idea that businesses don't make indispensable
contributions to production is straight out of  Karl Marx's
Communism.  If Obama doesn't want to be called a Communist,
he shouldn't talk like one.

     One can learn far more about the importance of
entrepreneurs from Ayn Rand than from Obama.  I don't agree
with Rand on some points.  She was spot on in the defense of
entrepreneurship.

     In Rand's "Atlas Shrugged" the entrepreneurs quit.  As a
result the economy collapsed into strife and starvation.  The
parasitic government that Obama praises so much collapsed
under its own weight.  Mr. Obama, you have got it totally
backward on who is carrying whom.

aldmccallum@gmail.com
                                 * * * * *
                                  * * * *
                                   * * *
                                    * *
                                     *
Copyright 2012
Albert D. McCallum
18440 29-1/2 Mile Road
Springport, Michigan 49284

What Will the Federal Reserve Do With Its Magic Money Bag?

     Previously we considered what would happen to our
money if someone with a magic money bag endlessly shook
money out of the bag and spent it.  The ending wasn't a happy
one.  The owner of the bag used his magic money to steal
wealth from those who produced it.  In the end all the money
was worthless.

     Next we saw that magic money bags aren't confined to
fairy tales.  Magic money bags exist in the real world.  The US
Federal Reserve (Fed) has one of those bags.  It can create and
spend unlimited amounts of money.  If it does, it will steal
wealth from everyone who has money.  In the end all dollars
will be worthless.

     So far the Fed has shown some restraint in reaching into
its magic bag.  Still, in less than one hundred years it has pulled
enough new money out of the magic bag to reduce the value of
our dollar to around 5 percent of its 1914 value.

     What does the future hold?  Will the Fed continue to
limit its use of magic money, or will it turn the bag upside down
and shake it?  If the Fed maxes out the magic bag, all US
dollars will be as worthless as the German mark was in 1923. 
How secure do you feel having the future value of your money
depend on political appointees in Washington, D.C. exercising
restraint in making and spending money?

     We can safely assume two things that are in our favor. 
The individuals who control the Fed and have custody of the
magic bag know that shaking too much money out of the bag
will destroy the dollar.  They have no desire to destroy the
dollar.

     They deliberately and endlessly weaken the dollar
decreasing its value.  They try to weaken the dollar without
killing it.  One great danger is that they will miscalculate and
inadvertently kill the dollar.  This isn't the greatest danger.

     Often events control people.  Sometimes our only option
it to choose among really bad alternatives.  The Fed might
decide that under such circumstances risking destruction of the
dollar is the best option among the bad alternatives.

     How might this happen?  Government doesn't have
unlimited ability to tax and borrow.  A government's credit
rating may become so bad that it can't borrow money.  Or,
perhaps it can borrow money only at interest rates it can't pay
through more borrowing and taxation.  Also, at some point
increased tax rates shrink the economy resulting in less tax
revenue.

     When this happens the government has two choices.  It
can cut spending or turn the magic bag upside down and shake
it.  Telling people that the gravy train has crashed and there will
be no more manna from Washington would have disastrous
political consequences.  It is the kind of event that sweeps away
politicians and governments.

     In the eyes of the political class the dangers of hyper
inflation and destroying the dollar in the future seem small
compared to the danger of losing power right now.  So, they
shake every dollar they can out of the magic bag.  As the money
loses its value, they try to compensate by shaking the magic bag
even harder.  They won't quit shaking the bag until the money is
worthless.

     Zimbabwe shook out so much new money that the value
of its money diminished to where Zimbabwe couldn't use its
money to buy paper and ink to print more money.

     The government of the USA is fast approaching the point
where it will be unable to borrow or raise more revenue through
taxation.  Unless government at all levels in the US drastically
cut spending, and take the harsh political consequences, soon the
only option left will be to shake the magic money bag.

     No one knows when we will reach that point.  I can't
imagine that it will take anywhere near another hundred years. 
Sooner or later the US dollar will be worthless.  Have a nice
day.

aldmccallum@gmail.com
                                 * * * * *
                                  * * * *
                                   * * *
                                    * *
                                     *
Copyright 2012
Albert D. McCallum
18440 29-1/2 Mile Road
Springport, Michigan 49284

Is There a Real Magic Money bag?

     Last time we saw what would happen if someone with a
magic money bag pushed its use to the limit.  For a time he
could live very well as a parasite on productive people.  In the
end his magic money and everyone else's money would become
worthless.

     Is the story of the magic money bag merely a fairy tale? 
Santa Clause and the tooth fairy are myths.  Magic money bags
are real.  Even as you read this, special individuals all over the
world are pulling money from their magic bags and spending it.

     Zimbabwe had a magic money bag.  It pushed the bag to
its limit.  It pulled so much money out of its bag that it took
billions of Zimbabwe dollars to buy a loaf of bread.  Next, no
amount of those dollars was enough to buy a slice of bread.

     In 1923 Germany maxed out its magic money bag. 
German marks became so plentiful that they were worthless.  
These are only two of the many instances where governments
have maxed out their magic bags.  Once the magic is gone, all
that remains is bankruptcy.

     Many fairy tales begin "Long ago, far away, in another
land."   Unfortunately, this beginning doesn't apply to the tale of
the magic money bag.  The Continental Congress during the
Revolutionary War maxed out its money bag before the war was
over.  This gave rise to the expression "Not worth a
Continental."

     Did we learn from the experience of the Continental
Congress?  Apparently we didn't learn enough.  The US
government still has a magic money bag.   Since 1914 the
Federal Reserve (Fed) has custody of the magic bag.

     Has the Fed used the magic bag?  It certainly has.  Is the
Fed still using the magic bag today?  It is using the bag like
never before.  Has pulling money out of the magic bag had
consequences?  It surely has.

     A recent article estimated that today's dollar is worth
about eight 1914 cents. Others calculate that today's dollar is
worth less than a 1914 nickel.  These estimates appear to be
reasonable.  All of the decrease in the value of our dollars was
caused by the Fed using the magic money bag to create more
dollars.  The good news is that those who have magic money
bags will never run out of money.  The bad news is that the
money eventually becomes worthless.

     So what if our dollars are now worth only eight cents? 
We can still buy stuff.  We have survived almost 100 years with
the Fed and its magic money bag.  Why not try for another
hundred?  Whatever happens after that won't matter to any of us.

     During the first 59 years the Fed had compelling reason
to limit its use of the magic bag.  From the beginning (1914) the
Fed could print all of the dollars it wanted to.  It had a bigger
brake on its want to than it does now.

     Those printed dollars were backed by gold.  The
government promised to redeem then for gold.  When the Fed
printed more dollars than it had gold, it risked bankruptcy.  It
was gambling that the holders of  those dollars wouldn't all
demand gold.

     In 1933 Franklin Roosevelt reneged on that promise to
everyone in the US.  Foreign governments could sill demand
gold.  In 1971 the gold was flowing out so fast that the US
government faced running out of gold if it kept printing more
dollars.

     Did government quit pulling money out of the magic
bag?  Of course not.  Nixon slammed shut the gold window at
the Fed.  Even foreigners could no longer demand gold.  It isn't
coincidence that after Nixon slammed the gold window shut,
inflation roared.  It wasn't until the Reagan administration that
the Fed closed the magic bag far enough to bring down inflation.

     Our money will retain value in the future only if the Fed
exercises restraint in reaching into the magic bag.  Next time:
What should we expect from the Fed and its magic bag?

                                 * * * * *
                                  * * * *
                                   * * *
                                    * *
                                     *
Copyright 2012
Albert D. McCallum
18440 29-1/2 Mile Road
Springport, Michigan 49284

The Magic Money Bag

     Fairy tails and other stories about magic money bags are
intriguing.  How many have dreamed of having their own magic
money bag?  Would it be paradise on Earth to be able to reach
into your magic bag and pull out all the money you wanted,
whenever you wanted it?

     How might a magic money bag change its owner's life? 
First, we must remember that money isn't what we really want. 
How many people would seek money if all they could do is keep
it?  What would they do with that money?  Paper their walls? 
Burn it for fuel.  Unless it was printed on edible paper, it
wouldn't make very good food?

     To get money we give others things they want.  We then
give the money to others in exchange for the things we want. 
This works for so long as individuals are willing to produce
valuable things and exchange them for money.

     The individual with the magic money bag wouldn't have
to produce anything and give it up to get money.  For him it
would be all take and no give.  All he would ever give would be
the money that flowed from his bag.

     How might this affect the bag owner's life?  Suppose he
wanted to move to another city?  He would simply buy another
house with money from his bag.  He has no need to sell his old
house.  He could keep it.  Instead of staying at a motel when he
returned for a visit, he could spend the night in his old house.

     With his magic money he could hire servants to take care
of  the house and serve him on his visits.  Why stop at one extra
house?  Buy vacation homes wherever he wanted them.  Why
stop at homes?  Buy entire resorts with golf courses,  swimming 
pools, tennis courts and whatever.  Cost isn't a limitation.

     He could skip airport security by building his own
airports and buying his own airline.  He could also pick up a
railroad or two if he wanted them.  So what if he never used
them.  They would be there just in case.

     If he felt the need for security, he could hire his own
army.  For the person with the magic money bag, even the sky
isn't the limit.  He is limited by only two things, the extent of
his imagination, and the willingness of other individuals to
accept the money as payment for real wealth.

     Why wouldn't others accept the money from the magic
bag?  It would be just as real and just as valuable as any other
money.  The man with the money bag would likely pay more
than anyone else to buy what he wanted.  If by doubling the
price anyone else offered he could easily make his purchases,
Why not do it?   It would be just as easy for him to pull two
million dollars out of the bag as to pull out one million.

     Magic money would have consequences.  The owner of
the magic bag would have no reason to work for money.  He
would produce nothing.  When it comes to real wealth he only
takes.  With his magic money he takes what others have
produced.  Everything he takes reduces what the producers have
left for their own use.

     Meanwhile, he is increasing the supply of money
available to buy those leftover things.  With more money and
less available to buy, it is inevitable that each dollar will buy
less.  If the owner of the magic bag pushes its use to the limit he
will create so much money that all money will be worthless.  No
one will accept it in exchange for real wealth.

     The magic bag will still produce unlimited amounts of
money, all worthless.  Its owner's life as a parasite is over.  He
could still trade his accumulated wealth for things produced by
others, unless they got mad and lynched him first.  The magic
money bag only provided its owner a stealthy way to steal from
others.  More next time.

aldmccallum@gmail.com
                                 * * * * *
                                  * * * *
                                   * * *
                                    * *
                                     *
Copyright 2012
Albert D. McCallum
18440 29-1/2 Mile Road
Springport, Michigan 49284

How Should We Build Safety Nets?

     We hear much about safety nets.  Mostly we hear about
the government safety net.  Some people don't seem to believe
there are other safety nets.  I have heard people excited about
how many millions have been caught by the government safety
net.

     Safety nets are as old as history.  The simplest safety net
is savings.  Store up reserves for use after a fall, whatever the
fall may be.  The next stage of safety nets is family members
catching each other when someone falls.

     Beyond this neighbors catch falling neighbors.  There
may be no formal agreements about how these safety nets work. 
Individuals recognize that they may someday need help.  This
encourages them to help others to keep the safety net working in
case they fall someday.

     Lodges and fraternal organizations provided more
structured safety nets.  Such associations are partly financed by
dues.  Benefit may be limited to members.  At least, members
are likely to get first preference.

     Insurance is another safety net.  Individuals face the risk
of a loss that will not hit most of them.  They all pay in small
amounts.  These premiums provide a pool of funds from which
to reimburse the few who suffer losses.

     We also see organizations, such as The Salvation Army
and Goodwill, that raise funds mainly from donations.  They
provide help to those who didn't land in some other safety net.

     There are spontaneous safety nets.  When disaster strikes
a community or family, donations roll in.  After the Chicago fire
donations flowed to Chicago from around the nation.

     When government moves into an activity it becomes the
600-pound gorilla.  Government drives others from the field. 
Many forms of safety nets live on.  Shaded by the government
tree, many of them withered to slivers of what they would be in
the sunlight of voluntary association and freedom.

     To a large extent dependence on the government safety
net springs from the existence of the government safety net.  It
sucked the life out of the competition.  This is akin to killing
someone's helper and then taking his place.  Should we take the
killer seriously when he brags about providing a service he
claims that only he can provide?

     Are people better off with one all purpose, gargantuan
safety net than with many specialized smaller ones?  If there is
only one safety net and someone misses it, he lands on the
concrete floor.  When there are many safety nets he may be
caught by another.

     What happens if the giant net collapses?  Then everyone
slams down on the floor.  Imagine only one grocery store in the
city, and it burns down.  If there are many stores the loss of one
isn't the end of the world.

     There is also the matter of efficiency.  Up to a point
bigger is usually more efficient.  Beyond that point diminishing
efficiency sets in.  If all we have is one government safety net, it
is guaranteed that it will be big.  Well over 90 percent of
donations to The Salvation Army go to a person in need.  Less
than one third of tax dollars spent on government welfare
programs goes to a needy person.  The rest is consumed by the
bureaucracy.  This seems to suggest something.

     The trapeze artist performing over a net is likely to take
more chances than he would without the net.  People who
believe they live over a big, strong safety net will also take more
chances.  If Social Security didn't exist, How much more would
people have saved for retirement?  If unemployment insurance
didn't exist, How much quicker would the unemployed find jobs
at which they could earn something?  The list goes on.

     If government hadn't ventured into the safety net
business, we would now have a vast, and to us unimaginable,
array of private nets.  One of the most important would be
increased private savings.  No one would miss the government
safety net, when they had a far better system.

aldmccallum@gmail.com
                                 * * * * *
                                  * * * *
                                   * * *
                                    * *
                                     *
Copyright 2012
Albert D. McCallum
18440 29-1/2 Mile Road
Springport, Michigan 49284