Someone Else’s Economy

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I was talking to a small business owner over the weekend—you know—and I reminded him not to feel too good about himself.

After all, it wasn’t really him that was responsible for his success; by now, you know the drill…it was ‘somebody else.’

Those are words that, at first, I thought the president would want to take back if he could.  Nobody says the right thing all the time, everybody has verbal miscues, and sometimes, what sounds good on paper sounds horrible when spoken.

And yes, I beat up on the Prez over it, because, like millions of Americans working to get ahead, it really struck a nerve with me…

Maybe because I have had a couple of rounds starting enterprises—an independent brokerage and a film production company…

The successes I had were not due to federal handouts, I can tell you that.  In fact, government regulation and taxes made both efforts much more costly and difficult than they had to be…

So, it seemed likely to me that even though it may be truly what the Prez thinks, it wasn’t his intent to insult so much of his constituency.

But then I thought, to whom was he really speaking and why?  And then it hit me…

Creating dependents

If you do a little math, you know that about half of the households in the country receive some kind of federal assistance, and about the same amount do not pay federal income taxes…

That’s a lot of voters.

Then, factor in the recent advertising blitz encouraging Americans to get food stamps…

I’ve seen the ads; they make it seem like it’s the most normal, middle class American thing to do, like going to the dentist or filing your income taxes.

Those commercials aren’t just about food stamps; they’re about changing Americans’ view on how to live.

The very American idea of self-sufficiency is undermined by those ads.  Again, the idea is, “you can’t make it on your own.  You need ‘someone else’ to help you.”

And you know what?

As the economy continues to limp along, the president is becoming more right all the time.

But wait; there’s more…

There’s another constituency that the administration, via the Federal Reserve, is supporting…

Corporate dependency

That, of course, is the financial industry and corporate America.

Banks’ dependency upon non-market sources of funds—whether it is the Fed’s various versions of injecting capital into the high economy via quantitative easing, Operation Twist, or whatever else it has or may try—has so warped that industry, that many have ceased to be banks in the traditional sense.

I have explained this transformation before here in The Gorrie Details, but briefly, banks haven’t lent the funds they’ve been given; rather, they’ve hoarded it.  Why risk all that capital lending to small businesses in a weak economy when instead, they can earn a relatively high yield of interest on their “excess reserves” paid by the Fed and/or buy 10 year T-bills with zero risk?

And, of course, corporate earnings are near the top of their curves.  An economy with high unemployment simply cannot sustain consumption levels that used to be normal only a few years ago.  But not to worry, because again, the Fed’s QE policy has kept the stock market high, giving firms a ton of money…

Which they’re not spending, but rather, letting sit in cash.

Why?

Because of the great uncertainties in the economy and in government policies.

Is this stupidity on the part of the administration?

Or is it by design?

Is the administration incompetent at running a market economy?

Or does it simply excel at ruining one?

See what I’m saying?  If you create enough American dependent upon you for their survival, you get their vote; you stay in power.

Creating the ‘Newly Poor’

How do you get the middle class vote?  Easy…you make more of the middle class lower middle class or poorer.  Once they, too, are dependent upon ‘someone else’, you got them.  They will vote to keep their benefits because the economy is so bad, they can’t afford not to.

And at the other end of the wealth spectrum, you will get the Wall Street vote for the same reason

Add in the union votes—those jobs are increasingly government jobs by nationalization or subsidy—and you’ve got yourself elected to four more years.

Note that the economy itself is no longer the issue.  The Prez isn’t about helping the economy at large; it’s a helping the masses keep food on the table as the “old, market economy” continues to crumble…

It’s about creating and expanding the class of the “newly poor”; and then throwing them a bone via food stamps.  The worse the economy gets, the more Americans are dependent upon ‘someone else’, the better the Prez’s chances for re-election become, both for corporate America and the rest of us.

By driving the economy further down the ditch, the administration is betting that in that voting booth, when no one else is looking, more Americans will vote with their belly—and their children’s bellies—than will vote on economic principle.

And those are…The Gorrie Details.

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