Friday, April 27, 2012

Capitalism Explained

This one is easy. I can't believe what I hear. Gas prices are to high, so we should tax the oil companies? If you think that makes sense please raise your hand so some one can come by and dope slap you.

Here's how capitalism works people: Some one makes something or provides a service that some one else needs or wants. The person who with the need/desire will buy the product only if his need or desire is great enough to justify the price.

Competition forces each company to try to keep costs to a minimum by innovating and making themselves as efficient as possible.

Taxes imposed on the person/business providing the product or service increases their costs and so to continue to make a profit they must raise their prices at least as much as they are taxed. Usually though they must increase it more to cover extra accounting and legal fees associated with complying with the new tax. Those costs get passed on to you, the customers of course.

If the need or desire of the customer is great enough then the business will continue on, despite the higher price induced by the tax. However, with every price increase, you will drive away those who can't justify the increase in price, and as such the corporation will lose customers, profits will shrink, layoffs will ensue, and the tax revenue will decrease as a result. Remember the government taxes employment as well as profits.

This is exactly what is going on with gasoline. Most of us must have it. Therefor no matter how expensive it gets we will still buy it until it is so expensive it becomes counter productive, that is costs more to drive to work than you get paid. But as the costs go up we all find ways to reduce our consumption. This, as I stated before, reduces profits for the oil companies, forces layoffs, and reduces tax revenue.

Now on to the nonsense that big corporations love to shaft their customers. This idea goes back to what we call the "robber barons." They were the business men way back in the day that treated the market like the game monopoly. Once they had a monopoly on a particular item they could determine it's price because they then had no competition.

This is why today we have laws against forming monopolies. I'm all for encouraging competition. You see, so long as there are no monopolies the free market will regulate the prices and government never needs to step in. The only thing the government needs to do is to make sure monopolies aren't' formed, and in that endeavor they should be very cautious and only break up conglomerates if absolutely necessary.

Even today there are seaming monopolies, on certain products. Cement for an example. The reason this isn't a problem though is that in the modern era, most have realized that if you keep your prices low more people buy your product or service and you make more money. If you artificially inflate the price, you sell less, and make less money. That is why I say the government should only step in if absolutely necessary. What constitutes necessary is a whole discussion in of itself.

The oil companies don't have a monopoly. There are many companies selling gasoline. Ever see two gas stations across the street from one another, with one priced a few cents below the other? I see that almost every day. And if they aren't across the street they are within a minute of each other on the same road. That's competition at work.

So then why is gasoline so high? Instability in the middle east is a good start. Supply and demand regulates price. If demand exceeds supply, prices rise. If supply exceeds demand, prices decrease. Supply is being threatened, and this drives the price up on the market. Demand is also increasing, especially in China and India. This also increases the price of oil.

In the good ol' US of A the President and his administration have started a war on fossil fuels. The Keystone Pipeline being a prime casualty in that war. They are also preventing drilling, preventing new refineries from opening, and closing down current refineries. All of that increases the price of gasoline as it reduces the supply.

Now on top of that, if Obama raises taxes on the oil producers, he will be raising the price of gasoline, and possibly increasing unemployment. This will drive up the cost of EVERYTHING else you buy as it all takes oil to move goods from those who make the stuff to the store where you buy it. Still like his idea? Didn't think so.

NOW, lets review what we've learned today. 1) People in business provide a product or service that others either want or need 2) If the desire or need is great enough to justify the price then they purchase the product or service 3) In a free market system competition keeps the price as low as can be with current technology 4) Taxes increase prices for every one, and raising taxes will generally reduce demand, reduce employment, and reduce revenue.

Now that you understand Capitalism at it's most basic level,  please stop blaming it for our problems. Government is the problem. Get government out of the way and our economy will flourish and gasoline will be about $2 a gallon.

Long live the Free Market!

Wednesday, April 4, 2012


I'm not sure if thuggery is a word, but Chicago thuggery is the only thing I can think of that accurately describes the Presidents actions concerning the Supreme Court. By now I'm sure you've heard Obama's attempt to influence the SCOTUS decision on his Affordable Healthcare Act, and it makes me sick to hear this from our Fearless Leader.

The Court should ONLY take into account the Constitutionality, that is the Legality, of Obamacare. Nothing else should be considered. I do mean NOTHING. No one's opinion, wish or desire matters. No one's hopes and dreams matter here. No false appeals to sympathy matter here. The ONLY thing that should matter to each and every member of the Court is whether or not Obamacare is legal.

Already we have 3, maybe 4 people on that Court who hate the Constitution and want to rewrite, or at least re-interpret it. We have at least one justice, Justice Kagan, who should have recused herself but didn't. She was Solicitor General for Obama, and helped write the defense of Obamacare before being appointed to the Court! I believe her actions in not recusing herself warrant impeachment. But then I shouldn't be surprised by her lack of action. She was appointed by Obama, and his administration has shown absolutely no moral fiber.

Even with a stacked deck Obama is nervous. He's acting like a 4 year old: impatiently speaking down to people he should be holding in silent respect. I call this thuggery because he is not a 4 year old child, he is the President. No I don't think he is threatening the well being of any one on the Court, that's absurd. What Obama is getting at is letting the justices know that if they don't rule in his favor he will make them out to be the bad guys. And unlike him, they won't have a podium to rebut the public slighting that would ensue. That's political thuggery right there.

Think about it for a minute. You are a public figure as a Supreme Court Justice, but your not in the spot light very often. You also don't have press releases, or media statements. Now you have the President of the United States threatening to tell the whole country you made a bad decision. Think of that.

These Justices are supposed to be free from political pressure, hence the lifetime appointment. Hence the lack of elections. The President has stepped way out of line on this. It shouldn't' be a surprise though. He insulted them to their faces before when they didn't rule the way he would have liked in Citizen United. If Obama had the even an iota of respect for the Country, the Constitution, and the Justices, he would keep his mouth shut. You just don't do what he is doing in a polite society. But then since when has the Liberal Left been polite?

Obama's actions are despicable, once again. It's not the first time and I wager it isn't the last. I hope there is backlash on this from every angle. No the Liberal Media will only defend him. But I hope and pray that this power grab is reigned in by the people of this still just-barely-great nation.

God Bless America, and God Save America!