Archive for the ‘Finances’ Category

While reading “Developing the Leader Within You” by John Maxwell, I was intrigued by the chapter dealing with problem solving. As I was going through it, it reminded me of what should be done to solve the problems with the economy and how what is now being done goes against these key principles. What stood out first for me was the first step:


John Maxwell writes:

‘Too many times we attack the symptoms, not the cause. Ordering your staff to stay at their desks until quitting time is a Band-Aid solution that does not answer the question, “Why does the staff leave early?” Your job is to identify the real issues that lie beneath the symptoms.’

This can be applied to many different areas. The first thing that came to mind when reading was this is relatable to what many are saying about the growing income inequality, and the rich needing to be taxed more. But are they really identifying the problem, or just a bad symptom of the real problem? Will the solution really fix what’s wrong? I would say the poor being poor is the problem, and if the rich being taxed more brings them down closer to the level of poverty, will they now be better off? Why do people just point to the gap and say ‘BAD’? Why don’t they ask “What is causing the gap to occur?” The taxing the rich idea is just a band-aid solution that does nothing to stop the gap from occurring in the first place. I won’t go into all the nasty effects that solution would have on the economy in general, or the poor, in particular in this post.

When I see surveys done asking if a government program should be funded, I see the question asked and the results to go along with it, and wonder how accurate it truly is. I don’t mean in statistical terms with the margin of error, but in terms of the question being asked, and what question is actually being answered.

It also makes me wonder what are the motives of the people asking the question, and are they looking to get a certain answer? do they themselves truly understand the question being asked, and understand how the public will respond to the wording of the question?

I read an article not long ago about the conservative government planning to cut funding to the CBC (Canadian Broadcasting Corporation), and when I read the part about a survey asking the public if it should be funded, I thought the question a little misleading. For someone who understands economics it is clear enough. However it is my experience that most people don’t care about the subject and many outright despise even thinking about economics. If you don’t truly understand the question, you will end up giving an answer based on your understanding and not on the truth of what is really being asked. Does this make sense to you?

Before you comment or send me messages about how the CBC is an institution that should be funded and I’m wrong for thinking otherwise, understand that I’m not saying one way or the other whether it should be (at least not in this post), as that is beside the point.

The point I’m bringing up concerns all surveys of this kind, whichever side your on.

During my study of Austrian Economics, it has become very clear how government spending is bad economics. However, when I engaged in conversation with someone on the issue, it has always been difficult to have them understand the rational behind the school when they have not themselves studied the work of the Austrian school. This all changed the other day when I found a simple way that is easy for everyone to understand.

To really understand why taxes are bad, I believe it is important to understand how money is spent. I was listening to a CD about freedom called ‘Freedom Isn’t Free‘, in which Bob McEwan (6 term member of the US congress) was giving a speech. Based on everything I’ve read and heard, I’m going to share that information along with some of my own thoughts.

When you spend your own money on your behalf, you care about two things; the price and the quality. Nobody can make that decision for you as good as you can. Let’s take the example of bananas. When you stand looking at the bananas in the market, you look at the price and make a judgement on how long they are going to last. You also consider if perhaps you will have the nephews and nieces over this weekend because they might go bad.  Not only are you considering the price (you are probably buying them here because this store has cheaper bananas, or it’s cheaper than spending gas to drive further for them) but also the quality. You want to buy the banana’s that will bring you the most satisfaction – like not going bad before they are eaten.

It’s also important to remember here the subjective value theory. It basically says that people value things in different ways, and it is impossible for an exchange to be equal between two persons. For an exchange to be made, person A who has item X must value item Y possessed by person B more than he values item X. On top of this, person B must value item X more than item Y. If A & B gave the same value to the items, there would be no exchange as at least one of them was not gaining anything. In the example above, the buyer of the bananas values those particular bananas more than the money he would be spending.

So when you spend the money on yourself, you spend it at its peak value and, again, no one can spend it like you can. You decide whether you need the shoes, the clothes, etc. This is 1st party spending; something for you, using your money.