Someone is out to kill George Washington. Yes, I know he's been dead for nearly two hundred years. But all the same, old George had better look out.
I'm not actually speaking about those in this country who revise history and change the heros into villains, who are ashamed of our past, who have taken our shortcomings as a nation and held them up as a sign that this whole social experiment is flawed. This will be a topic for a different post.
Instead, I am concerned about the cures that many advocate for our economic woes. These supposed cures may be turn out to be worse than the disease itself.
Contrary to popular belief, George Washington did not die of natural causes. Two days before his death, he went out riding on his land in cold weather to inspect his plantation. The next day, the healthy 68-year old President complained of a sore throat. He refused to let a little thing like a cold get him down, so he went out riding again, this time in heavy snow.
By the next morning, the President was having difficulty breathing. He sent for the doctor and tried various concoctions to ease the sore throat, along with some generous blood-letting. (At the time, too much blood was thought to be the cause of various ailments, and many, including the President, believed that deliberately opening a vein and removing blood could cure many illnesses.) At 10:10 pm on December 14, 1799, President George Washington breathed his last.
For many years, scholars and physicians have speculated about the identity of the illness to which the President succumbed. What many have overlooked, however, is a cause of death hiding in plain sight. When the records of the various doctors involved in the care of the President during his final hours are examined carefully, it becomes evident that nearly 8 pints of blood were removed from his body within a span of hours. Considering that the average man has a total blood volume of only 11 pints, it becomes clear that regardless of the source of the sore throat, it was the excessive bloodletting that actually killed our first President. And this was at the hands of his doctors and at the specific urging of the President!
What can we learn from this bizarre history lesson? And what in the world does this have to do with the United States economy?
1. It is possible for the experts to be completely wrong. The physicians of the day were convinced that blood-letting would cure many diseases. Now science has proven them wrong. Many economists would argue that we can spend our way out of this recession. In fact, just today the Fed chairman Ben Bernanke guessed that many jobs would be lost if the federal budget was reduced. Wouldn't that imply that if the government did just the opposite that jobs would be created? Maybe if the government spent a billion dollars for every citizen, we could eliminate unemployment the world over!
2. Intentions don't matter nearly so much as results. Many of those who advocate raising taxes to help pay for unemployment benefits and higher salaries for teachers and school lunch programs have great intentions. They just don't fully understand the dire economic consequences of ever increasing taxes and deficits that threaten the very life of this nation.
3. Everyone runs out of blood eventually. Our first President was an impressive man, at 6' 3" and over 200 pounds. But when enough blood was taken from him, there was no way he could recover. Let the politicians bicker over what has caused this economic turmoil. One thing is sure, raising taxes will only bleed us dry.
References:
1. Vadakan, V ibul V, MD, FAAP "The Asphyxiating and Exsanguinating Death of President George Washington" The Permanente Journal Spring 2004 Web. 28 Feb. 2011. http://xnet.kp.org/permanentejournal/spring04/time.html
2. Wallenborn, White McKenzie, MD "George Washington's Terminal Illness: A Modern Medical Analysis of the Last Illness and Death of George Washington" The Papers of George Wasington Web. 28 Feb. 2011. http://gwpapers.virginia.edu/articles/wallenborn.html
3. Elert, Glenn "Volume of Blood in a Human" Web. 28 Feb 2011 http://hypertextbook.com/facts/1998/LanNaLee.shtml
Tuesday, March 1, 2011
Saturday, February 19, 2011
The Government Soup Kitchen
Why can't the government just give everyone a million dollars? Wouldn't that "boost" the economy?
This is the wrong idea on so many levels!
1. Money is not the same thing as wealth! (See my previous post.) When the government prints money (or borrows it) the government is adding money to the system. Adding money to the system decreases its value, leading to inflation. Have you seen the pictures of people with a wheelbarrow full of paper money on their way to the grocery store?
If the government were to give everyone $1,000,000, suddenly everything is going to cost a whole lot more! Any money you have in the bank is going to be worth a whole lot less in terms of what you can get for it. In effect, the government would be robbing you of your purchasing power, not giving you more.
It's like a great big pot of soup. Wealth is the vegetables, noodles, meat, and seasoning. Money is just the water that everything floats in. If the government adds more water to the pot, the soup just gets more watered down, and your share (expecially if that share is fixed--like people on fixed incomes) is going to have less nutritional value. What the soup really needs, if it's going to feed more people, is more of the "wealth."
How is wealth created? When you have a product or service that people want. It's all about entrepreneurs--not government spending!
2. Printing money is another form of redistributing wealth. (Taxes is the other way.) In actuality, when the government prints or borrows money and gives it to people (even if it distributes it equally to everyone), this actually amounts to redistributing wealth. Let's say I have $10,000 in the bank. If the government were to give everyone $1,000,000, the price for everything would go up exponentially. Suddenly the $10,000 I have in the bank can only buy me what $1 could have bought me yesterday. In effect, the government would have stolen $9,999 in purchasing power from me.
Many people don't realize this, but the government has already printed (or borrowed) $46,000 per person, and they already spent it for you!!! The federal deficit has reached 14 trillion, and the population of the U.S. is about 300 million. Many of us lose track of how much money is really being discussed here. Instead of giving you your "fair share" of this printed money, the government has already spent it--yes, it is all gone!
3. Government redistribution of wealth discourages wealth creation. Why should I work hard for my money, if the government is going to take it from me anyway? People don't take risks if there is no reward.
When the government prints money, watering down the economic soup, the lines at real life soup kitchens just get longer.
This is the wrong idea on so many levels!
1. Money is not the same thing as wealth! (See my previous post.) When the government prints money (or borrows it) the government is adding money to the system. Adding money to the system decreases its value, leading to inflation. Have you seen the pictures of people with a wheelbarrow full of paper money on their way to the grocery store?
If the government were to give everyone $1,000,000, suddenly everything is going to cost a whole lot more! Any money you have in the bank is going to be worth a whole lot less in terms of what you can get for it. In effect, the government would be robbing you of your purchasing power, not giving you more.
It's like a great big pot of soup. Wealth is the vegetables, noodles, meat, and seasoning. Money is just the water that everything floats in. If the government adds more water to the pot, the soup just gets more watered down, and your share (expecially if that share is fixed--like people on fixed incomes) is going to have less nutritional value. What the soup really needs, if it's going to feed more people, is more of the "wealth."
How is wealth created? When you have a product or service that people want. It's all about entrepreneurs--not government spending!
2. Printing money is another form of redistributing wealth. (Taxes is the other way.) In actuality, when the government prints or borrows money and gives it to people (even if it distributes it equally to everyone), this actually amounts to redistributing wealth. Let's say I have $10,000 in the bank. If the government were to give everyone $1,000,000, the price for everything would go up exponentially. Suddenly the $10,000 I have in the bank can only buy me what $1 could have bought me yesterday. In effect, the government would have stolen $9,999 in purchasing power from me.
Many people don't realize this, but the government has already printed (or borrowed) $46,000 per person, and they already spent it for you!!! The federal deficit has reached 14 trillion, and the population of the U.S. is about 300 million. Many of us lose track of how much money is really being discussed here. Instead of giving you your "fair share" of this printed money, the government has already spent it--yes, it is all gone!
3. Government redistribution of wealth discourages wealth creation. Why should I work hard for my money, if the government is going to take it from me anyway? People don't take risks if there is no reward.
When the government prints money, watering down the economic soup, the lines at real life soup kitchens just get longer.
What is Wealth?
Money, right?
Wrong! This is a common misconception. Money is only a means of exchange. That means we use money to buy what we want. The money itself has no significant value unless you are a coin collector.
Many people would agree with the idea that money itself is not wealth. Instead, they would argue that wealth is simply resources. While this is closer to the right answer, it still is not quite correct. Resources only have a value because people want them.
Wealth, simply put, is getting what you want. The more often you can get what you want, the wealthier you are.
Wrong! This is a common misconception. Money is only a means of exchange. That means we use money to buy what we want. The money itself has no significant value unless you are a coin collector.
Many people would agree with the idea that money itself is not wealth. Instead, they would argue that wealth is simply resources. While this is closer to the right answer, it still is not quite correct. Resources only have a value because people want them.
Wealth, simply put, is getting what you want. The more often you can get what you want, the wealthier you are.
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