Compared to the cast of characters being appointed to high-level posts in Washington, Rod Blagojevich is starting to look appealing. The guy reeks with vintage Chicago chutzpah, he's got style (What can you say about a spandex jogging outfit?), and he's entertaining.
In fact, had B.O. appointed him Secretary of the Treasury, I think he would have added some much needed panache to the otherwise drab Obamastration. I challenge you to name anyone who has a better nose for money than Blago. He's forgotten more about it than Ben Bernanke will ever know.
But, alas, it was not to be. Blago is far too busy talking to Geraldo and the Obama Bitches on The View. So, I guess it's up to us common folks - the ones who are, in effect, Kali carbonicum coming up with the money to bail out Wall Street and the big banks - to figure out what Obama's up to with his "stimulus package."
And a good place to begin is with economics. Economics is defined by one dictionary as "the science that deals with the production, distribution, and consumption of wealth (goods and services)." Simple translation: Economics is the study of how people get the things they want.
By "the things they want," I am referring to material things. Economics does not deal with love, religion, ethics, philosophy, or emotional issues. These and many other "things" may be important to most people, but they simply have no place in the science of economics.
What economists call "wealth" is food, clothing, TV sets, automobiles, and other products that people desire. Money itself is not wealth. Money is just a medium of exchange. To a businessman, wealth also may consist of factories and equipment, things that can be used to produce products and services that consumers want.
What stimulates real economic growth - i.e., the production of wealth - is action on the part of individuals trying to improve their own well being by obtaining what they desire on a voluntary-exchange basis. It is unfortunate that this bothers some people so much that they attempt to interfere with this natural process. What is even more unfortunate is that many of them are economists who are advocates of the strong arm of government as the most effective way to do it.
When such interference occurs, one of the basic laws of economics - the law of supply and demand - is violated. It is this law that establishes a logical and honest relationship among prices, wages, and costs. If, for example, prices go up, that causes demand to drop... which, in turn, causes employees to be laid off... which, in turn, causes wages to go down... which, in turn, causes fewer goods to be produced.
On the other hand, if natural conditions create an excess supply of goods in the marketplace, those goods will then be offered at a lower price. That, in turn, increases demand... which, in turn, pushes prices back up... which, in turn, attracts more entrepreneurs to that particular industry... which, in turn, leads to higher wages and more employees... and on and on the cycle goes. Unless, of course, government intervenes to stop the natural flow of the market - which is what it is doing as I write this, and what it is promising to do even more in the future.
What is good about the creation of an excess supply of goods in the marketplace is that it leads to an increase in plants and equipment, which, in turn, leads to the creation of both new jobs and new products. The sale of these products to consumers leads, hopefully, to profits - and a large percentage of those profits are then reinvested in still more plants and equipment or in research and development. Thus, economic growth continues and the well being of those who are willing to work is improved.
But what if profits are not reinvested? Good question, and one that I will address in Part II of this article. Read Part II.. Sign up for Robert Ringer's FREE wisdom-filled e-letter, A Voice of Sanity in an Insane World. Ringer is the author of three #1 bestsellers, including two books listed by The New York Times among the 15 bestselling motivational books of all time.
Copyright 2009 by Robert J. Ringer. Reprinted by permission of the author.
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