Thursday, January 12, 2017

Gladly Paying Tuesday For A Hamburger Today!

Nowhere is the trend of kicking the can down the road more prevalent than in government as politicians goal of being reelected takes front and center. This has reached a point where those in office are surrendering their better judgment as they go seeking jobs at any cost. We constantly see government bargaining with, and making concessions to companies like Amazon to locate facilities in their State. This is often done just to gain a few jobs with little thought to the long-term consequences. Sometimes it is exempting sales tax, sometimes it is giving the company free utility build-outs or forgiving property taxes. I use Amazon as an example because it is an exploiter of the brick and mortar stores that line the streets of our cities and neighborhoods.

Postponing Payment Does Not Make Lunch Free!
The sweet allure of getting and receiving the benefits while setting back the negatives, this story is not new or is the desire from which it flows. It is often the catalyst of bad policy, this is even apparent when it comes to the Affordable Care Act or what is commonly known as Obamacare. After promises the ACA would lower healthcare cost while extending coverage to millions of Americans the decision was made to "phase in" the program starting with a small penalty to those who choose not to participate. In just a few years we have seen healthcare cost soar and the penalties become substantial moving Obamacare towards the brink of failure. As usual whoever is handed the task of cleaning up such a mess is faced with the unpopular task that will leave many people unhappy.

By giving some companies advantages states may be lowering the ability of others to compete and in the long run, they often lose more jobs than are created in the short term. In Fort Wayne, Indiana years ago the city backed a bond and the loan to build a massive hanger at the airport for an air-freight company named Kitty Hawk. They promised a slew of new jobs when they located their hub in the city, the company is now bankrupt and the jobs are gone. The taxpayers of Fort Wayne are now paying for an empty hanger that they are trying to lease at an aggressively low price. This hurts those private investors and property owners that lease building space as they are now forced to compete against the government to which they are forced to pay taxes.

Estimates Can Be Very Very Wrong!
The Devil is in the details when these so-called "pay you later" deals are crafted and when dealing with the Devil we often pay a great price. It is not uncommon to find promises broken and estimates way off the mark as to final cost. Sadly, as we move toward President-elect Trump taking office in later this month the National Debt Clock is fast approaching the 20 trillion dollar mark. The chart to the left predicted that by 2019 the national debt would top 12 trillion dollars, boy they really missed that one! Projections made by the government or any group predicting budgets based on events that may or may not happen at some future date are simply that, projections or predictions and not fact. This means that such numbers are totally unreliable.

The lesson is that delayed payment should be viewed as sidestepping reality rather than a solution. Short-sighted attempts to sidestep real structural failures and problems often fail. Real problems must be addressed with real solutions not just promises of future action or put off until a later date. Unfortunately not taking the proper steps often causes more problems down the road. This brings to mind the words of Winston Churchill who said, "The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place we are entering a period of consequences" My point is, we too are entering the dark and dangerous place where we must pay the piper. 

 Footnote; This post dovetails with many of my recent writings, other related articles may be found in my blog archive, thanks for reading, your comments are encouraged.             


  1. Thank you for helping increase awareness....My concern is for the elderly. I don't believe the government will begin CCC (Civilian Conservation Corps) Camps for grey haired knitters. Pensions are being devastated, never mind the coming devaluation of the dollar. Moving into their parent's basement will not be an option. So far the only direction I see is co-operatives. Apparently the Netherlands has made good progress in co-operatives for the elderly; although some countries such as England are beginning to make progress. The U.S. has a tradition of innovation. It is time now to innovate for and with the elderly.....As a tangent, "real" science seems to be supporting cold weather growing as a result of a sun cycle. What kind of co-operatives exist in Siberia?

  2. The government collapses if interest rates go back to normal. Since most retired folks are just scraping by and (if they have savings) are putting them in relatively risky investments to generate some income, the system is really fragile. The next recession is going to be quite bad as most of the recovery is just an illusion.