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Thursday, August 4, 2011

Progressive/Socialists Have No Clue About Money Or the Real Nature of Wealth


It's tragic that we've become so disconnected from nature. Once we were farmers, and understood the rhythm of the seasons, and the ebb and flow of markets. We knew intimately the link between supply and demand; that when supply soared, prices dropped, and vice versa. With the arrival of the Industrial Revolution many Americans became factory workers, and still we understood the basic economics of free markets.

Today, though, Americans are far more disconnected from market forces. We work in offices and shuffle papers that - for the most part - have nothing to do with large-scale, real world markets. This is what caused the Soviet Union and Chairman Mao's China to disintegrate. They deluded themselves that bureaucrats in Moscow or Beijing could control and manipulate their nation's economies and people. For them, papers became very real, whether those papers were reports, orders to underlings, or the money they printed and sent out to the provinces. All those papers are dust now, and the dust has blown away.

The real wealth of nations is determined by the goods and services they produce, and what other nations are willing to pay for those products. Money is only a symbol of wealth, and usually declines in value. Which is why gold and silver - being commodities - increase in value. They are products of labor, and have intrinsic value. All religious scripture warns us about becoming disconnected from nature, and God who created its forces.
Progressive/Socialist/Democrats today think only of spending. They don't like to see people acting on their own to generate new wealth. They strangle production with idiotic regulations, and discourage wealth achievement. They're entirely clueless about the nature of wealth, and how it's created. Here's the proof: Whenever they identify a new type of poverty or grievance group they funnel a river of money to it, subsidizing it and inevitably inflating the price.

In the real world, supply and demand determine price. Increasing the supply of goods and services causes their price to decline; unless the market is being manipulated by powerful people or government regulation. We suffer from market interference, which is often deliberate and malicious.

Higher education is a perfect example. Rather than increase supply of higher education by making it easier to build new colleges, Democrat/Progressives pour money onto the problem, providing more money to "those in need". Thus, the costs of higher education have soared far beyond the rate of inflation, and another economic bubble has been created.
This is what happened with housing in this decade. Fannie Mae and Freddie Mac poured money into the hands of low income people. Thus, the per-square-foot cost of entry level housing soared beyond reason, equaling the per-square-foot cost of the finest housing in many areas of the country. This was entirely unsustainable. The bubble's collapse affected lower cost housing far more than luxury housing.

It's just as terrible to be ignorant of basic economics as it is to be of reading and writing English.