Profits

Our President has made it clear that he doesn't like the idea of corporations making profits.  He apparently sees profits as unnecessary and unjustified.  Time after time he has attacked those who have achieved success, especially in the business world.  He finds their success to be odious.  Speaking in Roanoke, Virginia on July 13, 2012, President Obama said, "If you've got a business, you didn't build that. Somebody else made that happen…"  Clearly the President does not believe in Horatio Alger's America.  He doesn't believe America is the land of opportunity where anyone, regardless of what condition they were born into, can climb the ladder of success.  For Obama, the government is the end all and be all of everything.  Perhaps that's because he has never worked one day in the private sector.  He knows very little about America and everything he has accomplished in life has been thanks to government.

While the reality is that government is an impediment to success in business, our President sees government as the key to success.  He believes that no businessman really achieves success on his or her own and, therefore, all citizens share equally in that success and should be rewarded equally from that success.  It's his rationalization for socialism.  It's his rationale for attacking corporate profits.  It's why he can say in the midst of the longest and deepest recession since the Great Depression that "the private sector is doing just fine."

Our President has no understanding whatsoever that it is the private sector that funds the government.  Government workers, including politicians, create no wealth of any kind.  They get their wealth from those in the private sector—those businessmen that make profits, and those people who have jobs that offer consumer goods and services.  I seriously doubt that this President understands that a dollar is simply a convenient representati0n of wealth that has been created in the private sector.  The dollars he receives as President come from those who produce goods and services; they don't just appear out of thin air.

And just in case he is interested, the private sector is not doing fine.  The private sector is struggling because it is laboring under a crushing load of taxes and endless regulations issued by the government he is in charge of.  Twenty-four million Americans are unemployed, under employed or are no longer seeking work because they have given up.  Forty-eight million Americans are on food stamps.  Mr. President, your policies created this mess!  Your policies have caused businesses to be unprofitable and to go out of business, laying off workers.  You are the problem, not the solution.

In a recent speech the President bragged about General Motors and said he wanted to do for other businesses what he did for General Motors.  Setting aside the fact that according to a Forbes headline "General Motors Is Headed For Bankruptcy – Again" the President is talking about what all socialists dream of, nationalizing major industries.  His view is that if he can only nationalize all the major industries he will have access to their profits that he can then spend on more socialistic schemes.  Of course, as history shows, those profits will disappear once the government is running these businesses.

The President has no problem with the rich in Hollywood that feather his political nest, and provide millions for his re-election campaign.  What the President has problems with is businessmen who are successful and think that they earned that success.  Like all good liberals, the President doesn't believe that risk taking should be rewarded.  He believes it is without merit whatsoever.  In fact, as I have been told by a professed liberal, those who are successful in business have simply been lucky in the lottery of life.  I'm not kidding.  That's what liberals believe.  They believe all success is just built on luck.  Some people are lucky and some people aren't.  Similarly, these "intellectual liberals" believe that some countries are lucky and some are not.  That's how the President arrived at his conclusion that America is no more exceptional or unique than any other country.  Left unsaid is his belief that America is prosperous just because it is lucky. 

Now I believe that success in business is a product of many things including hard work, innovation, risk taking, decision making, leadership and God's blessing.  I do not believe in luck, but I do recognize that most business start-ups fail.  Starting a business is a high risk proposition and staying in business is also a high risk proposition.  If a businessman makes just a few missteps or bad decisions, he will go over the cliff.  That's what running a business is all about, walking along the edge of a cliff, doing your best not to fall over the edge and into the abyss of failure.  This analogy applies to all businesses—small, medium or large.  Each year businesses of all sizes—including billion dollar companies—file for bankruptcy.  New businesses, established businesses and businesses that have been around for a hundred years make bad decisions, take bad risks and fall by the wayside.  That's the nature of being in business.  Staying in business is a high wire act.

So why do people go into business in the first place?  The truth is that in most cases it's not to earn a lot of money.  Sure, profits are essential, but they are not the driving force for most businessmen.  While investors put their money into stocks and bonds for one purpose—to get a financial return, entrepreneurs are born risk takers.  They like the risk and excitement of doing something new or better than others are doing it.  They are willing to risk everything to start up and run a successful business.  Most learn by doing and most have failed at one time or another.  As for me, I successfully started my business (although I did not plan to go into business for myself), but I made bad decisions that jeopardized everything I had built.  At one point my wife and I had three mortgages on our home and the company had a negative net worth of nearly $2 million.  Most successful businessmen can tell a similar story.  But our President doesn't see that aspect of being in business, he only sees profits—profits that he wants to build his socialist utopia.

The catch is that profits make it possible for an enterprise to not only stay in business, but the necessity of making a profit imposes on a businessman a discipline that demands his business be run with a maximum of efficiency.  Without efficiency a business is sure to fail.  It is this discipline in the marketplace, combined with the demands of customers and clients for quality services, quality products and good prices, that makes the free market system work.  It is the reason that free enterprise is the best economic system in the world.  Businesses that are not run efficiently and don't provide quality goods and services at good prices fail.  A business that does not innovate is destined to fail.  The President has derided the idea that businessmen are smart and he may be right.  Who in his right mind would risk everything to start a business? 

But, on the other hand, who in their right mind, would pack up all they had and sail to a land they had never seen before to start all over again?  That's exactly what my grandparents and millions and millions of people from around the globe did.  They risked everything, including their lives, to come to America.  It is because they had a dream, the American Dream of a better life—a life of freedom and opportunity, including an opportunity to worship their own God and live their lives free of government interference.

Those who were cruelly and evilly forced to come here as slaves did not see America as the land of opportunity.  But, amazingly, through faith, courage, and incredible insight they survived slavery, Jim Crow and other racist indignities.  They eagerly grasped the opportunities that only America offers.  Men like Frederick Douglass and Booker T. Washington saw the promise of America in the US Constitution.  Today, thanks in large part to them and brave leaders like Dr. Martin Luther King, Jr., the United States is filled with African American men and women of great accomplishment and success.  These men and women include business leaders who founded and head up some of the most profitable enterprises in our land.  To these men and women and the tens of thousands of people they employ, profits are not a dirty word.

These business leaders know that profits are not evil.  They understand that profits are essential to staying in business and that they provide an incentive for offering clients and customers better products and better prices.  It hardly needs saying that socialism cannot compete with businesses that are run by free men and women.  There is no mechanism in socialism for setting the price for goods and services or determining the amount of wages.  Socialism eliminates all incentive to innovate, to seek high quality goods and services, and to provide good service at the best price possible.  There is simply no mechanism in a government operated business to create efficiency and quality—none.  Socialism is a dangerous, goofball idea that has never worked and can never work.  It can only exist in a society that settles for economic misery for all and limited freedom for all.

Freedom, on the other hand, enables entrepreneurs to risk everything to create a better widget.  And freedom works!  In spite of America's problems, the standard of living for Americans is far higher than it is in any non-free socialist country.  Freedom rewards the hard working, the perseverant, and the honest with jobs that pay fair and good wages.  And, as Soviet Premier Nikita Khrushchev learned when he visited Disneyland, and saw all the cars owned by average Americans, it is the best economic system for distributing wealth all across the spectrum to anyone willing to work.  While Socialism claims to be the most fair, the most just economic system in the world, reality tells a different tale.  In socialist nations around the globe there is no middle class, there are only the wealthy, powerful government apparatchiks, the rich crony capitalists, and the poor.  Everything about socialism is a lie, from beginning to end.

Government does not work.  I've been employed in both city government and in the federal government.  I defy anyone who has worked in government at any level to say with a straight face that government operates efficiently and without corruption.  You can say it, but it would be a lie.  From top to bottom, from Washington, DC to the smallest city, government is inefficient and subject to corruption.  All the money that goes to government is a drag on the economy and lowers the standard of living of all Americans.  We should all take comfort in the words of the late Nobel winning economist, Milton Friedman, "We're just lucky we don't get as much government as we pay for."

As for President Obama and his braggadocio in regard to General Motors, the company is failing again not in spite of, but because it was bailed out.  It doesn't help your child to bail him or her out of all their problems.  That just breeds future failure.  Businesses, like children, need to suffer the consequences of their actions.  I'm not shocked at all that GM is losing market share and is about to go bust again.  It was a mistake to bail out GM.  They made bad decisions and they were not forced to make the hard decisions necessary to survive in business.  Of course, it didn't help that the stockholders and the bondholders were screwed by government and those who were primarily responsible for the failure, i.e. the unions, were given half of the stock in the new GM corporation.  On top of that, the Obama Administration forced GM to build the non-marketplace Chevy Volt.  Even after an $8,000 per car subsidy to buyers in the form of tax credits, they can't give the Volt away.  It's a glorified golf cart that no one wants. 

No business should be hurt or helped by government.  Right now my business is suffering because of government.  We depend on the Post Office for delivery of our mail.  Postal rates have accelerated at the rate of medical care and college tuition increases due to gross mismanagement and inefficiency.  Any business that is a government monopoly, like the Post Office, has no marketplace imposed discipline that demands efficiency, quality service, and market rates for wages and benefits.  Such discipline is essential to survival.  Bailing out the Post Office and General Motors once again will only guarantee failure again in the future.  Let's let them both go bust and instead let those in the free market provide better services and products at a lower cost.

Ford Motor Company risked all and won.  Ford mortgaged every asset of the corporation to avoid a government takeover—$27 billion in all.  Unlike GM and Chrysler (another candidate for failure) that demanded bail outs so that they could continue their profligate ways, Ford refused all government help.  And today as the market share of GM continues to contract, Ford's market share continues to expand. 

General Motors pays nearly double the hourly rate its competitors pay for wages and wonders why it cannot compete in the marketplace.  Obama had a solution.  His solution was to force all the other car companies located in right to work states to pay the same wage rates and bloated benefits as General Motors.  What a stupid solution.  Let's punish millions of American car buyers and force them to pay non-marketplace prices for their automobiles whose cost is already inflated due to unnecessary government imposed regulations.  Like the cost of government itself, government intervention in the marketplace always lowers the standard of living of all Americans.

Those companies that do not make profits deserve to fail.  That's a bold statement for a businessman because everyone who has been in business knows that they are only a few missteps or bad decisions away from failure.  But it is a true statement.  I do not deserve to be in business if I do not make good decisions that lead to profitability. 

The problem in America is not profits, but a lack of profits that cause businesses to go out of business and lay off workers.  The President of the United States has it backwards.  We need more profits, not less profits.  Government needs to unshackle business so that we can once again become a prosperous nation.

And speaking of this unshackle thing that the Vice President likes to talk about, the fact is that the policies of President Obama have hurt those in poverty more than any group of Americans.  By attacking quality education in the most impoverished areas of our nation, by artificially keeping the price of gasoline high, by imposing higher and higher minimum wages, the President's policies have driven unemployment among young black Americans to nearly 50%!  In order to have a good job, you first must have an entry level job. 

Obama's policies are destructive to the poor because he is denying the poor a good education by putting the wishes of the teacher's union above the needs of his own people.  And by driving up energy prices he is hurting the poor the most because energy is a much higher percent of expenses for the poor than it is for the middle class or the rich.  His spendthrift ways have made the ladder of success harder and harder to climb for the poor.  He is denying poor Americans an opportunity to share in the American Dream.  And his attack on profits has reduced the number of jobs available for all Americans.

Like businesses, government must learn to live within its means.  Politicians need to understand that their first and most important role is to maintain and preserve freedom for individual Americans.  It's not to give them something, or to tell them what to do or how to live.  Their number one responsibility is to guard our liberty and get out of the way of those who want a piece of the American Dream.  As Vice-Presidential candidate, Paul Ryan, said, "America is an idea."  The idea is that you and I are more capable of running our own lives than are those in Washington, DC.  We are the masters, they are the servants.  Under the US Constitution we have the right to succeed or fail, and we have the right to choose where we will live, how we will live, what we will eat, what kind of car we will drive, what kind of light bulb we will use, and what kind of business we will run.  We have the right to succeed and to fail in business.  Businessmen and women have the right to make a profit.

When government interferes or when public leaders like President Obama attempt to demonize free men and free women who have started and run businesses, he is attacking the foundation of American prosperity.  When he attacks profits and sets one American against another, he is dividing our nation.  We expect our President to unite us and to appeal to our better angels, but this President seeks to bring us down and to set one person against another.  He defames our nation, he besmirches the American Dream, and seeks to make the United States of America just another nation.  His socialist schemes, irresponsible spending, and dictatorial policies undermine our freedom and threaten our democracy.  His policies have taken this nation to the brink of bankruptcy and still he blames everyone but himself for his failures that span the globe.  Mr. President it's time to stand up, take responsibility and act like a man.  If you owe an apology to anyone, you owe it to the American people for stomping on the American Dream.