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THE OWS PERSPECTIVE ON ECONOMICS (aka “Obamanomics”)

Posted by Tim Bryce on May 30, 2012

– How do they propose to replace capitalism?

(Click for AUDIO VERSION)
To use this segment in a Radio broadcast or Podcast, send TIM a request.

To observe May Day (May 1st), Sean Hannity of the Fox News Channel invited as a guest on his show Harrison Schultz of the Occupy Wall Street (OWS) movement to explain his organization’s objectives and motives. According to his LinkedIn profile, the 29 year old Schultz is a General Co-Organizer of the OWS and self-described “Anarchist.” Needless to say, the interview with Hannity, the polar opposite of Shultz politically, was rugged. Shultz argued, “The problem here is capitalism. That’s what needs to change. That’s what is failing all of these people.”

During the interview he went on to say he believes the government and big companies should provide the citizens free education, free health care, free dental care, free day care, free housing, and free transportation. “The government and corporations should get off our backs, stop enslaving us through debt, …”

Schultz’ comments on capitalism provides some rare insight into how the OWS movement perceives business and economics in general. Let’s consider the impact of each of Shultz’ proposed freebies:

In terms of EDUCATION, the average salary for a public school teacher is approximately $50.4K, High School teachers are $54.3K, and college professors average $80K to $120K depending on their specialty. This of course does not include school administrators, bus drivers, and maintenance personnel, nor construction costs for facilities, all of which has to be paid by someone, either the taxpayer, the consumer, or private benefactors.

For HEALTH CARE, the average salary for a nurse is $71.7K, and a doctor is $174.9K. This too, does not include office staff, medical technicians, or the cost of facilities, equipment and research. Likewise, this has to be paid by someone, either the taxpayer, the consumer, private benefactors, or insurance companies. On the average, the annual health insurance premium for a single person is $2.9K and $6.3K for a family.(1)

For DENTAL CARE, the average salary for a dentist is $141.7K and $61.7K for a dental hygenist. This too does not include the costs for facilities, equipment and support staff.

DAY CARE teachers average a salary of $27.8K and, of course, need facilities and equipment. Further, the national average cost for full-time day care is $611 a month.

As to HOUSING, single apartments range from $127-$360/month on the average; $616-$823/month for family apartments. This does not include utilities ranging from $60-$190/month. Then there is the matter of the salaries of the construction workers, architects, planners, engineers, managers and inspectors required to build the facilities, not to mention the materials needed for construction.

CNN recently reported, spending on public TRANSPORTATION totals roughly $50 billion a year, and noted that 75% of those dollars find their way to private companies in the form of construction contracts, fuel purchases and other expenditures.(4)

As an aside, the average cost for a bus is $424.8K, a railroad car averages $1.9M/car, and locomotives average $2.4M each.(5) Finally, the average cost for compact automobile ranges from $10K-$17K.(3)

This is how business works. If you perform a service, you expect to be compensated accordingly. If you build a product, you have to market it. All work involves competition and risk. The person who markets and delivers a better product or service at a more cost effective price will succeed while others fail. It also means nobody is irreplaceable; if you stumble and fall, someone will surely take your place. This is capitalism and if it sounds remarkably like Darwin’s theory of evolution whereby the strong survive and the species evolves, it is.

If we did everything Shultz suggests, the country would go broke at warp speed. There is a big difference between lending a hand or providing a safety net and giving everything away. People expect to be paid for services they render. Perhaps the OWS movement would want all of the people in the professions listed herein to waive their salaries and perform their services on a gratis basis. Unfortunately, this will not support their living requirements. The OWS have many complaints but no solutions other than Socialism which would do nothing but increase our debt. I do not believe they grasp the significance of debt as a concept. You do not spend what you cannot afford, for at some point your creditors will come knocking at your door demanding payment. You tighten your belt when times are lean, and you loosen it when you can afford to do so.

We have somehow developed a generation of people who sincerely believe they are entitled to everything as opposed to earning it, which is why they do not comprehend the concept of austerity. They want it all, they want it now, and they sincerely believe they deserve it. After all, if others can have nice possessions, why shouldn’t they? Envy has turned to rage. This is why the thought of earning and paying your own way is a foreign concept, not just to OWS, but to the Socialist Europeans as well.

To illustrate the point, following the Fox interview, it was reported Hannity offered Shultz a job which he refused as he wouldn’t settle for anything less than a starting salary of $80K. I wish I could have started at $80K. Don’t we all? You have to walk before you can run. It’s called “paying your dues.” Unfortunately, we are saddled with a country of Whizz Kids who believe they should start at the top. I don’t know where they were imbued with such genius, or perhaps it is nothing more than naive stupidity.

The one harsh reality the people do not want to recognize is, you are entitled to nothing. If you want something, you are going to have to go out and earn it. An education is not a right, it is a privilege. So is health care, dental care, housing, and transportation. Nothing is free. Forget what the promotion says, people do not offer something without wanting something in return. In the United States, the only thing you are entitled to is the freedom to try and hopefully succeed, but there is also the distinct possibility you might fail, a concept that frightens the laziest of people.

There is one last thing you are not entitled to, a helping hand. But if one is extended, you should definitely thank God and the person or institution offering it, but do not be so naive as to believe it is a right or free.

Keep the Faith!

1 – About.com
2 – Salary data from Salary.com
3 – Car costs from Motor Trend
4 – CNN – March 12, 2012, “Mass transit use rises as gas prices soar”
5 – American Public Transportation Association (2007-2008 figures)

Note: All trademarks both marked and unmarked belong to their respective companies.

Tim Bryce is a writer and the Managing Director of M&JB Investment Company (M&JB) of Palm Harbor, Florida and has over 30 years of experience in the management consulting field. He can be reached at timb001@phmainstreet.com

For Tim’s columns, see:
timbryce.com

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Copyright © 2012 by Tim Bryce. All rights reserved.


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4 Responses to “THE OWS PERSPECTIVE ON ECONOMICS (aka “Obamanomics”)”

  1. Tim Bryce said

    A J.P. of Toronto, Ontario wrote…

    In this I agree with you. Nothing of any real value is free. Good education, health care, transportation and so on all cost money, lots and lots of money.

    The radical socialist wants all of it paid for from money raised by government from taxation and other sources of revenue, such as duties, licence fees, fines and so on. The radical capitalist wants none of it paid for by government, instead advocating private purchase of these things in a free market, itself limited by no external rules. It is important, then, to understand where the agreement exists – none of it is free, and the only issue is who pays. Incidental to this is a rejection of private profit and, indeed, of much of the business model for shaping a society in the first place.

    Obviously, if government pays it will be by heavy taxation on those who can pay, the wealthy and the middle classes. Indeed, they may pay so much that they will be forced in consequence to live very much like those who could not afford to pay to begin with. But, and this is a big but, all would have good education, health care, transport, housing and so on, not just some.

    Conversely,under unregulated capitalism the control or ownership of wealth would be so lop-sided that only a relative few would have the very best that a society can offer, and vast millions would have to accept less. Thus, the United States in the era of the “Robber Barons” at the end of the nineteenth century and on into the early twentieth century.

    I believe the best road is down the middle, where government – that is those who have money pay for under compulsion of law, or at least heavily subsidize, essential services for all – health care being at the top of the list, with education a close second. That is, to a considerable extent, the way it is in Canada. However, there must be also a large and robust private enterprise economy, and that will certainly include inumerable goods, services and products. Finally, many goods and services are well suited to a combination of public and private activity – transportation, energy goods and services and utilities such as electricity, heating and the public water supply.

    Almost all of these discussions, when rational, boil down to who pays, how much and why. It is my belief that mixed economies work best, provided they are sustainable in terms of the total wealth realistically available. It is failure to live, collectively, within available means that has Greece, Portugal, Spain and possibly Ireland all in deep financial and social crises right now.

    To put it another way, a wealthy country can be substantially socialist and all live well. A poorer nation can also be substantially socialist and all will live not quite so well. Socialism, itsef, does not create wealth, but only speaks to how it is to be managed and distributed in terms of products, goods and services, including optimal infrastructure for the private sector.

    I sometimes think of the public sector and the private sector as being in a symbiotic relationship. The education of the workers, the efficient highways that carry goods and services to market, law and order itself – all of these and much more make business and profit possible. However, without the wealth produced by the private sector, the education, roads, law and order and so on would not exist. Business, as we know it, cannot survive without a robust public structure infrastructure, but only the private sector can actually create wealth. As I say, a symbiotic relationship.

    The kids have generally lived a very affluent life, and are shocked that if they wish to continue they must now work to maintrain what their parents gave them until now. In this sense, I agree, this particular young man is a spoiled brat. Keep in mind, however, most of our young adults are not like him.

    Because I am very left-wing, I take issue with the statement that health care and education are not “rights.” To the contrary, I believe they are, every bit as much as free speech or the right to peaceable assembly and so on. |They cost money, but every society, within the limits of its collective means, should provide both to all its citizens or, at the very least, heavily subsidize both. This would not, necessarily, preclude private schools parents choose. The government can still pay the fees, or heavily subsidize them. This becomes an especially interesting example of the constant discussion of where to draw the line between public and private in detail.

    Finally, I would make a point about efficiency. I believe efficiency is a direct function of size, not whether an organization is public or private. However, I will also accept that free market discipline provides a built-in incentive for efficiency not always present in government.

    There is also a lingering unspoken issue in all this: if you should succeed or fail by your own efforts, children of the wealthy cannot be allowed to inherit the millions or tens of millions achieved by parental sweat, luck or efforts. The socialist will argue for true equality at “the start line.”

    Part of the problem, too, is that capitalism is itself unstable. It requires constantly developing new markets and constant growth. In Greece and indeed much of the rest of Europe, leaders are beginning to target years of slow private sector growth as the real root of the problem, not socialist programs as such.

    As to the “helping hand,” there is an old saying: “cold as charity.” The socialist takes the position that transfer of wealth on a regular basis from those who have it to those who do not by tax funding and government program is a more rational, stable and less emotionally humiliating system as opposed to the uncertainties, hit-and-miss and unbalanced nature of charity as a transfer-of-wealth system.

    Keep in mind, as well, that every legal tax loophole or allowable deduction is government spending, albeit via the less obvious back door as opposed to “front door” programs. In this sense one of our leading socialists here in Canada, coined the classic phrase, ” corporate welfare bums.”

    It should also be noted that public money spent on health care and education pays direct financial dividends in terms of less need to spend money elsewhere – prisons, welfare, and protection from attack or robbery by costly police and security measures. For example, would you rather spend a million dollars in the next ten years on education, health care and basic housing for a poor young male who then arrives at maturity as a peaceable, wage-earning, tax paying and productive young citizen or, would you rather not and spend two million on him in police, courts, welfare, domestic violence and prisons until he eventually dies at eighty-five, previously having invaded your home and trashed the place?

    The greatest weakness of socialist programs and “big government,” in my view, is there is not enough external compulsion to live within the total wealth available to the society or nation. Whether one is socialist or capitalist, no society can indefinetly live beyond its collective means. Whether or not the United States has crossed that line at this time is hard to tell. Let us hope not.

    Another issue may be stated in terms of priorities. For example, I once saw a cartoon of an American strike fighter jet dropping a load of bombs on a target in Afghanistan. Each of the dozen or so bombs had a label on it – health care, education, good food, decent housing – and so on. I do not, here, say that such a way to spend the public money available was necessarily wrong, but it was a decision in terms of what matters. Ultimately, you cannot have both guns and butter unless your economy can truly afford both.

    Like

  2. Tim Bryce said

    An L.M. of Philadelphia, Pennsylvania wrote…

    How clueless is Obama and his officials quote:

    He made this remark while promoting his jobs bill: “I think people are frustrated. And the protestors are giving voice to a more broad based frustration about how our financial system works,”

    VP Biden: expressed empathy for the Occupy Wall Street Movement, he believes the American people have been screwed…. the American System has run amok, not fair for the vast majority of Americans, quote: “Look guys the bargain is not on the level anymore in the minds of the vast majority of the American (people) the middle class has been screwed,”

    Prancing Nancy Pelosi: ” I support the message to the establishment whether it’s Wall Street or the political establishment and the rest that change has to happen……I think people are angry that they don’t have jobs by and large….”

    Talk about clueless, it’s not about “jobs” stupid! These people aren’t looking for work, they believe they are entitled to what you and I have worked for.

    Like

  3. Tim Bryce said

    A J.H. of Providence, Rhode Island wrote…

    “How do people get this stupid?”

    A J.S. of Skidway Lake, Michigan wrote…

    “This belief in free entitlements sounds like a wish for mediocrity. Where would be the incentive to excel and produce the best? It’s like a house of cards.”

    Like

  4. Tim Bryce said

    An H.S. of Las Vegas, Nevada wrote…

    “If all of these things were provided for free, let’s see….. everyone would have to have exactly the same thing. Everyone gets a small gray car. Everyone gets a small gray house. Everyone gets a bad tooth pulled rather than repaired. Everyone has 2.3 children and 1 dog. Has Mr. Shultz thought this through? What did he major in? Basket weaving? (Not that there’s anything wrong with that)”

    Like

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