by Jerry Robinson | FTMDaily Editor-in-Chief
HOUSTON, Apr 4
There has been much talk recently about the ever-widening gap between the rich and the poor in America today. This gap exists for a reason. Let me explain.
Who makes your food? Do you produce your own food? Or do major corporations prepare and package your food and leave it lying in tidy little stacks in grocery stores for you in exchange for your money?
Who creates your entertainment? Do you create your own? Or do you willingly trade your hard earned dollars to the cable company, and to Hollywood studios in exchange for it?
Who provides heat and cool to your home? Do you? Or do you pay utility companies to do it for you?
Who makes your clothes? Do you? Or do you willingly exchange your money for those who do it for you?
Who makes your paper towels? Do you? Or do you willingly exchange your paper money for the convenience?
Who employs you? Do you employ yourself? Or do you willingly exchange your time to a company who is willing to take the necessary risks to produce a good or service of value to society?
We can go on… who makes your cotton swabs, your make-up, your jewelry, your paper, your computers?
Are you catching my drift? What I am saying is that we are the most consumption-crazed nation on the planet.
Do you want to know the secret behind building wealth? It is unbelievably simple. So much so that most people will completely ignore it.
The secret to wealth: Produce something of value that “consumers” will buy. That’s it! There’s nothing more to it. Sure, there are some more creative strategies to implement later in the game, but this sums it all up nicely.
Those who are truly wealthy think like “producers”, not “consumers,” in almost every situation. And those who are broke, and one paycheck from foreclosure or bankruptcy, think like “consumers.”
How many people do you know who actually produce any of the items that I just mentioned above? I guarantee that almost everyone you know consumes exclusively. Those who make the real money in this society are those who produce. Those who are broke in this society are those who opt to consume only, while never producing anything of real value for society.
So why should the “producers” be ashamed? And why should the “consumers” demand their fair share of the producer’s profits? When we take away the profits from the producer, we are essentially taking away his incentive to produce for you.
Broke American “consumers,” who rely on those “rich and powerful” producers to make everything for them, are now claiming that the “producers” have an unfair advantage and that the government should tax them more heavily and give the consumers even more money.
America’s “entitlement” mentality exists at every level of our society today.
Many Americans today believe that they have a “right” to a job, when no such right exists. We are not owed a job. If someone loses their job, that is not society’s problem. It simply means we must get up, dust ourselves off, and find a way to bring value to society.
Many Americans today believe that they have a “right” to healthcare, when no such right exists. We are not owed healthcare at the expense of other people. If someone pays into a faulty system and that system fails, that is not our grandchild’s problem. We should take responsibility for our own generation’s mistakes by confronting those responsible and should not seek to pass the headache on to future generations all in the name of preserving our own lifestyle — and protecting our “rights.”
Many today believe that the nation’s producers (i.e. corporations, employers, etc.) should be heavily penalized for being rewarded for their innovative inventions and production. Are we really willing to make our own clothes, our own entertainment, our own food, etc? If not, why do we bite the hand that feeds us? If we take away the incentives from the “producer” to keep making your $100 pair of jeans and your $3 roll of paper towels, we will find that we have to actually make things ourselves.
Many today claim that their circumstances, (lack of a college education, born on the wrong side of the tracks) hold them back. You do not need beneficial circumstances to produce something. Put down the video games, the remote control, and invest in a free library card. You do not need a college degree to learn how to add value to society.
Many today, who add little to no value to society, want their “equal share” of national resources. If someone does not add value to society, and instead chooses to give all of their money to those who do, why should they be given special treatment?
This system is broken and cannot continue. America’s entitlement mentality, which has been created by politicians, and encouraged by the population at large, has led this nation down the wrong path. It runs contrary to basic logic and common sense.
$4 Trillion in Cuts… It’s a Good Start
Speaking of entitlements, this week, Republican House Rep. Paul Ryan will unveil his 2012 budget proposal which seeks to cut $4 trillion from Federal spending over the next decade. How?
1) Medicare overhaul. Rep. Ryan is proposing a much needed change to the Medicare system which currently foots the medical bills for 48 million elderly and disabled Americans. Rep. Ryan’s proposal seeks to convert Medicare from a direct payer of healthcare costs into a “premium support” system. In essence, eligible indivduals would select their own private health insurance coverage and would receive up to $15,000 towards those premiums each year. The proposed new system would apply to those currently under the age of 55.
2) Medicaid Reform. Rep. Ryan is proposing to convert Federal funding for Medicaid into block grants for the states. This would apparently be a formula-based fixed amount given to the states to help fund their state-run Medicaid programs.
3) Social Security Reform. The plan will also contain large cuts to the Social Security program. The specific details on these cuts in Ryan’s plan, however, are less than clear.
America’s entitlement programs are out of control and will only get worse without massive and immediate intervention. The Medicare system currently costs the Federal government around $400 billion per year and annual spending on the program is estimated to reach $500 billion by 2016. Medicaid and Social Security are both crippling America’s financial future and have to be dealt with directly. According to the Congressional Budget Office, the Federal government is set to spend almost $46 trillion over the next decade. Rep. Ryan’s plan to cut $4 trillion from this total over the next decade represents a good start. Rep. Ryan should be applauded for his efforts. Few politicians have the backbone to suggest entitlement cuts in our current era of government handouts.
Also In The News…
2. EURO BULL: The Euro currency posted its best quarter on record in Q1 2011…
3. HOT COMMODITIES: The commodities sector continues to be one of the best places to be as prices climb to two-year highs.
4. PROFITS SOAR: A new report shows that S&P 500 earnings have rebounded at the fastest pace since 1900…
5. BID FOR PREZ: This week, Pres. Obama plans to kick-off his re-election campaign… Can’t believe its here already.
Some are shocked that Rep. Ron Paul raised $3 million in the first quarter of 2011 for his 2012 bid for the Presidency. May the best man win…
Why So Serious?…
Its time to laugh a little. Here’s a sampling from some of the late-night jokers.
“A new study found that our happiness peaks in our late 80s. Mainly because all the people who annoyed you are dead by then.” –Jimmy Fallon
“Republican Congressman Tom Marino, who is on the Foreign Affairs Committee, said: ‘If we go into Libya, where does it stop? Do we go into Africa next?’ So, you see why he’s not on the Intelligence Committee.” –Jay Leno
“The IRS is auditing more millionaires than ever before. Especially real estate millionaires with funny hair who are questioning where the President was born.” –Jay Leno
Cartoon of the Day…
Jerry Robinson – FTMDaily.com
Jerry Robinson is an economist, published author, columnist, international conference speaker, and the editor of the financial website, FTMDaily.com. In addition, Robinson hosts a weekly radio program entitled Follow the Money Weekly, an hour long radio show dedicated to deciphering the week’s economic news.