Tidbits 600: Economic Sense

Grasp of the fundamental principles of economics the best means of evaluating government policy. One illuminating example is Say’s Law.



Say’s Law (after Jean Baptiste Say) states that supply creates demand. Apple’s i-phone is a stunning illustration, when its features attracted millions of buyers. But, at a more profound level “supply” means innovation – new ideas and products that attract customers due to their usefulness or other appeal. New car models, for example, appeal to us because of better engineering and body design. Innovations in technology and management create efficiencies that improve productivity, thus reducing the cost of goods, and increasing investment.



Some believe government spending creates jobs, a concept amply disproved. It represents a cost to the American taxpayer, and a deprivation of capital for business investment and expansion. Private sector innovations cost taxpayers nothing, and even generate more revenue for government services.



So, most essential is providing the conditions that foster innovation and eliminating those that inhibit it, such as complex tax laws, regulatory proliferation and burgeoning bureaucracies. Even worse is profligate government spending, that burdens future generations with government debt.



It is accumulated wealth that funds innovation. But, we hear argument for “spreading the wealth.” This means taking from those who have been assiduous in study and work, frugal in their spending habits, and wise in their financial decisions. Those who promote “spreading” think that the poor are merely unfortunate due to no fault of their own, and the rich merely lucky. This has not been my observation over the 83 years of my life. I have been poor several times and know what it is like to work 14-hour days to get out of it. I am also clear that my predicaments were due largely to poor judgment.



Every day I witness people of all ages making poor decisions and experiencing the consequences. During the past month I hired a part-time gardener through a local employment firm. He is 25 years old, never graduated from high school, and has accumulated precisely nothing. I discovered, though, that he was an excellent worker, took instructions well and had a pleasing personality. I gave him guidance on how to build a business in gardening, and even lent him my truck, so he could market his skills through real estate offices and door to door. I introduced him to several employers that would soon have openings. He doesn’t have a car, not even a bike, and he was living with an aunt for free.



But he lied to his aunt over some matter and she forced him to leave. Then he lived with a cousin for a week, but they were losing their house due to failure to pay their mortgage. He then assured me that he was about to move in with another aunt. Since then I have been unable to reach him because he is not up to date on his cell-phone bill, despite receiving several hundred dollars from me in payment for his gardening work. I suspect drugs is behind this.



As the president of a mentoring foundation I meet many young people and we try to help them through instructional programs and one-on-one mentoring. It’s easy to see that the differences in these youth, as to accomplishment, correspond to their commitment to the virtues, or lack of it. Whether they come from broken and poor families, dysfunctional sub-culture, or from high-income and intact families, it is their habits of thought and effort that determines their fate. Recently, for example, an American Indian youth was valedictorian of a local high school.



We should provide all youth with opportunity, but not largess. We should give them love and mentoring, but not a free ride. They need to experience accountability. We all learn better by taking responsibility for our mistakes. A free ride is a ride to indolence and low expectations.



“Merit” is not a meaningless word. It means virtue will be rewarded and irresponsibility punished. Why is that so difficult to understand? Charity means that we will help people get back on their feet and make use of their God-given capabilities, not carry them on our backs rendering them spineless.