Economics
It’s Not the ATMs, Mr. President!
I was tempted to use a different head-line on this one:
“It’s Not the ATMs, Stupid!”
That would be a take-off on Bill Clinton’s famous slogan against President George H.W. Bush during the 1988 presidential campaign when he remarked, “It’s the Economy, Stupid!” while trying to frame the most important issue of that presidential campaign cycle.
But I don’t want to be be disrespectful to the president of the United States. I don’t believe he’s stupid and I greatly respect the office.
Yet, he sure said a dumb thing on the NBC Today Show on on June 15, 2011 that will come back to haunt him during the 2012 presidential campaign.
It also revealed a lack of understanding of basic economics.
Here’s what he said…
In a Today show interview with Ann Curry, President Obama talked about one of the reasons he thought employment numbers have been slow to rebound–self-service automation–specifically kiosks and ATMs.
In the interview, he said, “There are some structural issues with our economy where a lot of businesses have learned to become much more efficient with a lot fewer workers. You see it when you go to a bank and you use an ATM, you don’t go to a bank teller, or you go to the airport and you’re using a kiosk instead of checking in at the gate. All these things have created changes in the economy. “
According to the Washington Examiner’s Philip Klein, ATM Industry Association CEO Mike Lee sent him an email response that said, in part, that “President Obama should never use ATMs as an example of how technology replaces human labor because ATMs today play a critical role in providing extensive employment in the ATM and cash-in-transit industries.”
Economics 101: Innovation multiplies jobs–it doesn’t shrink them.
No, it’s not the ATMs, Mr. President!
It’s bad economic policies. In the past three years we have done all the wrong things to try and create jobs. Government intervention and growth doesn’t do it.
And it’s pretty scary that at the highest levels of our current government, they just don’t seem to understand how wealth is created, how jobs are made, and what economic drivers are essential for prosperity.
Now I will be the first to admit that economic theory in its various forms can be hard to understand. That’s why so many people call it an imperfect science.
But for the past twenty-five years, Shirley and I have home-schooled our kids on the tenets of modern free enterprise capitalism. Those basics include:
- It is individuals, and the businesses they start, that create wealth. Government doesn’t create wealth. It only distributes it according to its goals and desires.
- Tools are essential to increasing productivity. The more-and-better tools that man creates (including ATMs), the more wealth (capital) can be generated.
- Over the past five hundred years, the creation of the middle class–which has grown exponentially worldwide–has been due to the wonderful development in technology which has increased jobs– never taken away opportunities to get ahead.
Yes, it is true, whenever man innovates, or new technologies are created, then older jobs and trades go away. Certain jobs are lost when new technologies are introduced.
For example, there are millions of people in America today named “Smith.” They wear that surname because many of their ancestors were “back smiths” who worked with metals that were essential to an agricultural society. They made horseshoes, plows, and other metal objects that were vital for industry for hundreds of years.
But machines eventually took their place–did a better job of making metal objects–and all the “smiths” of the world had to move on to other professions.
Did the “Smith Family” suffer from these changes in technology? Maybe for a time. But I can guarantee that there are more wealthy, employed and prosperous “Smiths” in America today than in any other historical period. Innovation didn’t create long-lasting job loss. It actually became a vehicle for greater wealth among the Smith clan.
There are two classic examples of economic change–producing more jobs not less jobs–in the past few hundred years. The first was the Industrial Revolution.
The Industrial Revolution
The Industrial Revolution was a period from the 18th to the 19th century where major changes in agriculture, manufacturing, mining, transportation, and technology had a profound effect on the economic and cultural conditions of the times. It began in England, then subsequently spread throughout Europe, North America, and eventually the world.
The Industrial Revolution was a major turning point in human history; almost every aspect of daily life was influenced in some way. Most notably, average income and population began to exhibit unprecedented sustained growth. In the two centuries following 1800, the world’s average per capita income increased over 10-fold, while the world’s population increased over 6-fold. In the words of Nobel Prize winner Robert E. Lucas, Jr., “For the first time in history, the living standards of the masses of ordinary people have begun to undergo sustained growth. … Nothing remotely like this economic behavior has happened before.”
In other words, using machines to do more for human beings did not decrease jobs or prosperity. It greatly multiplied job opportunities for billions of people. World population actually exploded because it was easier for people to live and work.
Starting in the later part of the 18th century, there was a transition in parts of Great Britain’s manual labour and animal–based economy towards machine-based manufacturing. It started with the mechanization of the textile industries, the development of iron-making techniques and the increased use of coal. Trade expansion was enabled by the introduction of canals, improved roads and railways.
The introduction of steam power produced dramatic increases in production capacity. The development of all-metal machine tools in the first two decades of the 19th century facilitated the manufacture of more production machines for manufacturing in other industries. The effects spread throughout Western Europe and North America during the 19th century, eventually affecting most of the world, a process that continues as industrialization. The impact of this change on society was enormous.
What are those impacts? More wealth, a higher standard of living, more jobs, and greater opportunities for all.
The Information Revolution
The second great quantum leap in job creation and increased prosperity has been the Information Revolution that has taken place in our lifetime–in the past thirty or forty years. Much of it took place through the invention of one tiny object: the micro-chip.
Arthur Laffer, Stephen Moore and Peter Tanous share the amazing benefits of that little innovation in their groundbreaking book, The End Of Prosperity: How Higher Taxes Will Doom the Economy If We Let It Happen:
“The dawning of the age of the microchip and all the attendant, fabulous technological advances have played a vital role in this wild and wonderful ride. Ingenious and daring entrepreneurs from Bill Gates to Fred Smith (there’s that name again!) to Larry Ellison to Google founders Sergey Brin and Larry Page launched whole new industries and made billions of dollars for themselves and billions more for workers and society. More wealth was created in the United States in the past twenty-five years than in the previous two hundred. In 1967 only one in 25 families earned an income of $100,000, whereas now, almost one in four families do.”
And millions of new jobs were created as a result of the Information Revolution. The tiny machines didn’t take jobs away–they exploded the opportunities for people to create wealth.
I sometimes wonder what many men and women did a hundred years ago when there was no such thing as hardware and software–or electronics. Think how many “geeks” have come into their own because one little mechanical innovation allowed them to use some God-given abilites that the hoe and plow never offered.
The lesson is extremely clear: Improved technology grows jobs if you’re willing to look for the possibilities.
And here’s where we get down to the troubling aspect of President Obama’s comments. Producing jobs and prosperity is really the result of a worldview–a “faith” that is always dreaming of more opportunities and improvements in life, family, and human culture.
Because what is really multiplied when technology enhances human life, even taking away some short-term job occupations in the process, is that it gives human beings a greater opportunity to be creative–to think through how the latest innovation can be enhanced and expanded. Greater leisure through better tools produces more time for creative thinking–and that valuable activity greatly multiplies human activity (i.e. jobs).
Better tools–like ATM machines–give us the time to use our creative imaginations to explore new ideas, make new applications, and create more products. We’re not enslaved to the ancient technologies or limitations.
Machines multiply creativity–if we believe there’s a Creator to follow and a world to improve.
That’s where the worldview is crucial: God. Man made is His creative image. A mandate to improve the world. Faith to do so by his power and grace. Innovation. Improvement. Jobs. Prosperity.
We need to say to ourselves “It’s the worldview, stupid!”
Then have faith and imagination to keep improving that world for our benefit and his glory.
Finally–A Serious Plan to Save the American Dream
Today, the accumulated debt of of 235 years of American civilization reached 14.3 trillion dollars–over $46,000 for every man, woman, and child in the United States.
For the next few weeks or months, Congress will fiercely debate whether to keep adding to that debt, or make some radical choices to control spending which could save the American Dream.
That Dream is not personal peace and affluence. It’s a commitment to human liberty, centering on freedom to worship God, that made the United States a very special nation for centuries–and produced an amazing degree of blessing and prosperity.
Exceptional application of biblical principles built an exceptional nation.
Can that nation and its economy be saved?
I believe the answer is yes if we believe and act wisely.
The Heritage Foundation has produced a serious economic plan to save the American Dream. It will require much prayer,, corporate repentance, courageous senators and congressmen, and a new American president to implement it.
But it is totally necessary. As Heritage points out, our national economy is in decline and could actually collapse unless we deal ruthlessly with our careless addiction to government largesse and indebtedness.
Representative Paul Ryan has also produced a Congressional road map to economic solvency. But the Heritage plan is more realistic, detailed, and politically possible if we vote in a good slate of leaders in the 2012 elections.
But we also need to understand that election results and the economies and laws they produce are a reflection of the hearts of a people. In the coming months, millions of American hearts need to:
- Seek the face of God for forgiveness for our personal and national sins. We need a renewal of the American spirit that will be the wind behind societal change.
- Become again a people of faith. Faith in God, faith in his principles, and faith in economic freedom that is not based on government dependency, regulation and bail outs.
- Restore a sense of morality and self-control to their personal and public lives. Our runaway spending and deficits are a reflection of personal bad habits and uncontrolled desires. There will be little change at the “top” if there is not fundamental realignment at the “bottom.”
- Accept some suffering and sacrifice to clean up our national economic mess. Just as individuals and families must cut back, work hard, and persevere over time to overcome their poor business decisions, so we as a nation must do the same. No pain, no gain.
But there’s hope on the horizon. Please read Heritage Foundation President Ed Feulner’s announcement below and click on the link to gain a perspective on Saving the American Dream.
Then pray and do your part to make it a reality. RB
Saving the American Dream – May 10, 2011
By Ed Feulner
Fellow Americans:
Today, I am excited to announce the release of The Heritage Foundation’s comprehensive agenda that sets a new course for the size and scope of the federal government. The new report, “Saving the American Dream: Heritage’s Plan to Fix the Debt, Cut Spending, and Restore Prosperity,” lays out specific policy recommendations in Social Security, Medicare, Medicaid, health insurance, the tax code and federal spending. Saving the American Dream envisions real solutions for staving off America’s potential decline while strengthening the economy for current and future generations.
We are doing this because we have come to a time of decision in America. For far too long, Congress has been on an unsustainable binge of spending, taxing, and borrowing. Our nation is going broke, and we are passing the costs of these misguided policies to our children and their children.
Over time, our national government has become bloated, overextended and unrestrained, oblivious of its core functions, operating far beyond its means and vastly outside of its proper constitutional bounds. Unchecked, the course we are on now will cripple our economy, undermine our prosperity, and lead to fiscal insolvency. By robbing the future of opportunity and freedom, it will destroy the American Dream for future generations.
Already, we are living through the shame of being publicly lectured by our Communist Chinese creditors, who have contempt for our profligacy. The day it was announced that Standard and Poor’s had lowered the outlook on our economy, a collective gasp went through the international community. If our elected leaders keep it up, we are certain to face financial crises like Greece or Portugal.
America is on the verge of becoming a country in decline—economically stagnant and permanently debtbound, heavily regulated and bureaucratic, less self-governing and less free.
But this fate does not have to be our future. We can get spending under control, balance the budget, and shrink our debt. We can limit the size of government and set free once again the unlimited genius of Americans to create wealth and jobs. We can turn the tide and change our nation’s course.
Saving the American Dream is our plan to fix the debt, cut spending and, above all, restore prosperity. It balances the nation’s budget within a decade—and keeps it balanced. It reduces the debt and cuts government in half. It eliminates government-mandated health care and fully funds our national defense. In order to get our fiscal house in order, we must address Social Security, Medicare, and Medicaid, the three so-called entitlement programs which together account for 43 percent of federal spending today. Far too many seniors still lack enough help to avoid poverty. Saving the American Dream therefore does not end these programs; instead it focuses them on those who need them.
Our plan also encourages Americans to become more fiscally responsible themselves. It redesigns our entire tax system into an expenditure tax that will have a single flat rate. This is a structure that will promote savings, therefore benefiting individual Americans, our body politic, and the economy. Greater savings mean stronger capital formation and thus a more robust economy, which means real jobs for Americans.
This plan substantially reduces the size and scope of the federal government, fundamentally increases the role of the states in choosing their own practices, and brings decision-making closer to the people rather than unelected administrators. These are crucial steps that will get our nation on a path of fiscal, political, and constitutional responsibility. It is part of our larger effort to get our country back on track, reclaim its truths, conserve its liberating principles, and build an America where freedom, opportunity, prosperity, and civil society flourish.
At the end of the day our plan, while economic in nature, has a higher moral purpose. If entitlements are not reformed, the next generation and future ones will have to pay punitive tax rates that will end liberty as we have known it. Our proposal aims to preserve America’s promise bequeathed to us by past generations.
Edmund Burke reminds us to think of our time on this earth not as an individual and temporary event, but rather as a partnership “between those who are living, those who are dead and those who are yet to be born.” Keeping faith with this partnership is what we aim to do with Saving the American Dream.
We have been here before, and every time the American people have always risen to the occasion and seized the moment. In 1776 we were told that no upstart colonists could defeat the strongest nation in the world, and we decided to change the course of history. In 1860 we were told the Union could not hold and that America was over, and we brought forth a new birth of freedom. In 1980 we were told that the American century was at an end, and we launched a great economic expansion, rebuilt our military, and revived our national spirit.
Hard times demand tough choices. The future of our nation is at stake.
All that is required, as my hero Ronald Reagan once said, is “our best effort, and our willingness to believe in ourselves and to believe in our capacity to perform great deeds; to believe that together, with God’s help, we can and will resolve the problems which now confront us.”
Together, let us seize the moment, change our country’s course, and save the American Dream.
Edwin J. Feulner
President, The Heritage Foundation
When Water Reaches the Ceiling, Don’t Raise It–Start Pumping!
I believe we need to bring back an important word that people hesitate to use in politics:
Lie.
Have you noticed that politicians usually skirt that little word? The news anchor says, “Do you think you lied about this or that?” The answer usually comes back, “Well, it might be an untruth , but”….or “I wouldn’t call it a lie, but…”
That’s not good enough anymore. We are being told a number of lies by our government because we are in grave trouble and there is much to cover up. We don’t tolerate lies in our personal lives and dealings, and we shouldn’t in the civil sphere either.
The current lie being told is that we need to raise the United States debt limit or go into default. They’re lying to us because because they need to scare us into getting their way–to keep on spending recklessly.
But it’s a lie–and it’s time we called their bluff.
Yes, we can with integrity oppose the raising of the US debt ceiling; No it will not cause a default or put in jeopardy “the full faith and credit of the United States;” And we must oppose it at this hour because our burgeoning debt is grossly immoral and could cause a collapse of the entire world economy.
Now is the time to say NO.
I cannot un-wrap this subject better than Redstate.com and the Heritage Foundation have done in the following articles. Please read them carefully and do everything in your power to oppose the raising of the US debt ceiling.
It’s not time to raise the ceiling. It’s already far too high. We need to start pumping the flood of government debt out of the precious dwelling we call the United States of America.
On April 25, Redstate exposed the debt ceiling lie quite clearly. Here is their take:
“Reporters, Democrats, and even some Republicans have begun repeating an infectious lie in the prelude to the debt ceiling debate. Secretary of Treasury Tim Geithner started it off and it has been repeated by reporters in print, on radio, and on television, including Fox News.”
“The lie is very simple: a failure to raise the debt ceiling will cause a default on American debt. This is utterly and categorically a lie. Anyone who says otherwise is a liar.”
“As Senator Pat Toomey noted the other day,
“Next year, about 7 percent of all projected federal government expenditures will go to interest on our debt. Tax revenue is projected to cover at least 70 percent of all government expenditures. So, under any circumstances, there will be plenty of money to pay our creditors.”
‘Moreover, as the Congressional Research Service has noted, the Treasury secretary himself has the discretion to decide which bills to pay first in the event that a cash flow shortage occurs.’
“Nonetheless, the media and Democrats keep repeating the lie. And it is a lie.”
“Veronique de Rugy and Jason Fichtner chronicled debt ceiling fights in the Washington Times and, from their writing, we can categorically show it to be a lie to claim a failure to raise the debt ceiling will cause a default on American debt obligations.”
‘In 1985, Congress waited nearly three months after the debt limit was reached before authorizing a permanent increase. In 1995, 4 1/2 months passed between hitting the ceiling and congressional action. And in 2002, Congress delayed raising the debt ceiling for three months. In each case, the U.S. and the economy survived.’
“Not only did the economy survive, but the United States did not default on its debt obligations, the United States did not lose its credit rating, and interest rates did not go up as a result of the default.”
“To say that failing to raise the debt ceiling will cause a default is a lie and anyone who says it is a liar.”
“If we fail to raise the debt ceiling and do default, it will not because because of a failure to raise the debt ceiling. It will be because Barack Obama and Tim Geithner chose to default for political gain.”
“Again, as Senator Toomey points out:
‘As the Congressional Research Service has noted, the Treasury secretary himself has the discretion to decide which bills to pay first in the event that a cash flow shortage occurs. Thus, it is he who would have to consciously, and needlessly, choose to default on our debt if the debt ceiling is not promptly raised upon reaching it. It takes a lot of chutzpah to preemptively blame congressional Republicans for a default only he could cause.'”
The Heritage Foundation gives this wise explanation to the debt ceiling debate:
“All across Western Europe—the land of platinum-plated social benefits, the 35-hour work week, tony retirement plans and government-funded health care—countries are coming to the realization that they can no longer afford these luxuries amid skyrocketing deficits. Yet here in the United States, as we face a $14.3 trillion deficit, some are calling for increasing our government’s ability to borrow even more money without any concern for spending reform. Congress can’t allow that to happen, lest we become the Europe of the West.”
“The U.S. government is fast approaching its $14.294 trillion debt ceiling — the statutory limit on how much money it can borrow to finance spending. Just how big is that? To put it in perspective, it would take essentially everything that Americans produced in all of last year to pay off the existing national debt. That comes out to $45,000 of debt for each American.”
“Unfortunately, it’s all too common for Congress to reach that ceiling and keep raising its own credit limit, letting itself borrow and spend even more. In fact, Congress raised the debt ceiling from $6.4 trillion in 2002 and nine times thereafter to its present levels. Hopefully, though, this time will be different.”
“Yesterday on “Face the Nation,” Senator Mark Kirk (R-IL) said, “I will vote ‘no’ on raising the debt ceiling unless we have comprehensive, dramatic, effective, and broad-based cuts to federal spending including the reform of entitlement spending.” Sen. Kirk’s instincts are right. The solution starts with Congress. David Addington, Vice President for Domestic and Economic Policy at The Heritage Foundation, writes:
‘Federal spending has been out of control for decades, and federal borrowing has therefore also been out of control for decades. America has amassed a giant, unaffordable debt and a giant, intrusive government. This did not happen by accident. Congress passed all the laws that made it happen. Fortunately, Congress has under the Constitution all the power it needs to solve the problem it created. It needs only the will to do so and the support of the American people.'”
“Here’s how Congress should use that power. As Addington writes, Congress should not increase the debt limit until it puts the government firmly on the path to financial responsibility. And it can get there by cutting current spending, restricting future spending, and putting a more effective federal budgeting process in place.”
“The Heritage Foundation identified $343 billion of potential spending cutsthat could be made on top of the cuts passed by the House in February and the repeal of Obamacare appropriations, which the House approved in January. When it comes to future limits on spending, Congress can impose enforceable caps on out-of-control entitlement programs and pass a balanced budget amendment. The budgeting process should be reformed, too, by making it more transparent and imposing new limits on federal agencies. Merely raising the limit without reforms is the worst option, Addington says:
‘The least acceptable outcome is for Congress to continue to raise the debt ceiling over and over, doing nothing to drive down federal spending and borrowing, and to pile trillions of dollars in debt upon the shoulders of America’s children and the generations to follow.'”
“President Barack Obama and White House officials have warned of global economic Armageddonif Congress does not act now to raise the debt limit. Their warnings, though, are reckless hyperbole. A greater threat is the U.S. government’s unchecked expansion of unsustainable deficit spending. Congress must break its pattern of borrowing more and spending more by acting now to cut spending and get the government’s fiscal house in order. Only then can it avert a real crisis.”
Now that’s the TRUTH about the grossly immoral US debt and debt ceiling.
No more raising the lid. It’s time to drain the swamp to salvage the nation we call “home.”
Congressional leaders: Just say NO.
President Obama and Administration: Don’t tell us a lie.
Forget the debt ceiling and start pumping! We’re ready to help you with the clean-up and re-building of our once financially prudent nation.
But the buck stops (being borrowed and cheapened) with you.