Economics 101

At our mortgage company CEO monthly meeting today, our CEO told us we had thousands of people calling in to our customer service and collections departments ever since Tuesday and telling us that they're going to stop paying their mortgage payment now that Obama was elected, and that if we want our money we just have to wait till January, when these mortgage payments will arrive, along with everyone's very own bag of magic beans and personal unicorn. I think I'm going to name mine "Sprinkles."

Now as much as I am looking forward to receiving my own magical $4,000 check (or will it be direct deposit?) on January 20th, as well as for the accompanying lowering of the sea levels and the repopulation of the entire unicorn species, I'm not sure if I will find it funny or tragic when these people wake up to a cold, hard, dose of reality. Probably funny, but still.

Our CEO also told us our corporate tax rates are expected to almost double under the Obama administration, and that this is going to result in a few things:

• Greater overhead in our expenses, which means less company income.


• Fewer new hires, and likely an employee runoff through attrition (this means we won't replace employees if they quit)


• Less income means a lower credit line for corporate advances. In the mortgage servicing industry, financing your advances is everything. If you can't finance loan-level advances, you can't service mortgages. We'll still be in business, but we won't be able to grow the business unless we can reduce advances. This means taking loans to foreclosure faster, because we'll have less time with which to work to find a workout option for that mortgage customer.
  
• Lower raises for the company employees.

This is Economics 101 for any person who thinks that cutting an individual's taxes but not cutting corporate taxes or not cutting taxes on the wealthy (i.e. the most productive members of society who have the smarts and means to organize successful business plans and therefore create jobs) is a swift route to increased fairness or prosperity. In reality, it's like letting the air out of someone's car tires and then giving them a coupon for a free sno cone. Great! You got a check for $1000. Dang-you're unemployed. Thanks...

This also shatters the myth that it's OK to let corporations pay all the taxes, because by definition corporations are faceless and evil. Corporations are made up of people, and when you cause businesses to be less successful, you hurt not just the company but the employees, stockholders, and customers as well. Increased overhead is ALWAYS passed on to the consumer. When gas prices go up, the cost of goods and services goes up. When insurance plans are used extensively and claims are filed, premiums go up. Raising taxes on these things doesn't take money off the top-it takes it from the bottom.

The bottom line is that the government cannot create wealth. Let me say that again. The government cannot ever create wealth; they can only move it around, and moreover it is more expensive to have the government move it around than to do it yourself. If you want to spend $13 million dollars on something, it will cost the government $500,000 to do so. Why not just keep that money ourselves and let us spend it on whatever we best see fit? Cut out the middle man.

Capitalism is 'dog eat dog'? If by that you mean people in a free market system have to compete against each other for the consumer's money, then you're right-it is dog eat dog, except both the dogs survive and buy dog condos and a barrel of snacky bones. The consumer wins because the sellers have to entice the consumer to spend their money on their product. The sellers then both have a vested interest in selling the best product possible-the better the product, the more likely the consumer will buy it. Now remove the free market and you just have sellers who no longer have to compete-the government will decide for us which is the better product. Do you think you'll get a good product? Do you think it will be as affordable as it was when they had to compete for buyers? Do you think they'll jack the price up as high as possible because the government has 'deep pockets'?

It would be great if everyone had plenty of money. The thing is, there's nothing stopping anyone. Now that we've proven racism is extinct, it should be apparent that anyone anywhere can get a job, or two, if necessary. Everyone who tries can get into school. The free market is difficult sometimes because as employees, we're a commodity ourselves-we have to be something our employers want to 'buy.' And unfortunately, employers can't always afford to buy us, especially when you have naive idealogues who have never held a job that involved actual responsibility raising your corporate taxes because they think that will make life for all employees more fair. And that is how you wind up hurting the very people you are trying to help.

People say 'why give the money to the rich'? Ignoring the fact that the government cannot give money away-they can only let us keep more of the money we earn-and interpreting this to mean 'why give tax cuts to the rich when it is the little guy who needs the money?', the answer is because this system rewards work, and moreover valuable work that is a proven valuable commodity and not pretend work like 'artist' or 'musician' or 'actor.'

Think back to the last really transparent time the government handed out money directly to the poor. When Hurrican Katrina hit, the government handed out 10,000 debit cards loaded with $2000 each directly to the poor people directly affected by the storm. What did they do with them? They spent the money on Louis Vuitton handbags, breast implants, plasma TVs, and strip clubs.

So I say give the money to people who will use it to create jobs for others, or will use it to invent something useful, or will use it to invest in someone else's business. Don't just take the money from the people who can best use it and give it to people who can't. Remember-most of the time, poor people are poor a reason, and it's not because the world is unfair.