Giving back? What was taken?
By John | August 18, 2008
“Giving back to the community.” Do you realize how many times that expression shows up in various articles each day? What does it mean?
Well, I think I know what it means, and I don’t like it. The implication is that, if someone has become successful, it is because the “community” made him so. Success does not derive from individual effort, it is an outcome of something that was taken from others.
So, for example, successful NBA basketball players are expected to work in the community, “giving back.” Let’s examine that idea.
Michael Jordan dedicated his life to becoming the best basketball player he could possibly be. He worked countless hours, days, weeks, months, years - most of his life - to become one of the best in the world. He competed against literally millions of others who also wanted to become one of the best in the World. Upon attaining his goal, Michael Jordan’s skills were at such a high level that millions desired to watch him play, both live and on TV. Collectively, Michael’s fans were willing to pay millions of dollars each year for his services - to watch him play basketball at a very high skill level.
Michael Jordan’s fans willingly paid to watch him. Why? Because he gave them pleasure. He entertained them. He provided them benefits for which they gladly paid.
Now, in what sense does Michael Jordan owe more than he has already given? In what sense has Michael Jordan “taken” from the community, so that he must now give something back? Michael Jordan was well paid for his performances. But he earned everything he got. How do I know that? Because Michael Jordan offered his services in an open and free market. No one was forced to pay money to him. Everyone paid voluntarily. That is the way the free market works in a capitalist economy. Providers of goods and services offer them to the public, and the public decides what they will choose to purchase. They will only part with their money if they believe they are receiving something in exchange that they will value more.
Millions of people chose to voluntarily relinquish their cash in exchange for the entertainment value provided by Michael Jordan. Michael gave repeatedly over many years. Fans kept coming back. Voluntarily. Giving up their money in exchange for entertainment benefits.
All participants in all of these transactions acted without coercion. There was no fraud involved. In what sense does Michael Jordan still owe more than what he has given?
We are regularly bombarded with NBA ads that show NBA basketball players “giving back to the community.” Again, implying that they took something, and now they owe something in return.
I cannot think of many people who owe less than NBA players. They Have given - much more than most. Why should they be the ones asked to “give back?”
I am in no way suggesting there is anything wrong with volunteerism or community service. I think it is a good thing. I think it is great that NBA players are willing to set an example by volunteering.
What is wrong here, however, is the characterization of that volunteerism. It is just that: “volunteerism.” It is not paying back a debt. That is something criminals do, not professional athletes.
The reason I object so strenuously is that words do matter. And I am afraid the use of the expresssion, “giving back to the community” perpetuates the socialist belief that no one should rise above the average. To do so establishes a debt to society.
I am a capitalist. I believe people deserve what they have earned.
No, it doesn’t “take a village.” It takes effort, determination, perserverance, commitment. Let’s not pretend that we all make an equal contribution, or that our contributions happen without the prospect for reward.
Capitalism works. Socialism doesn’t.
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Open Letter to Jennifer Granholm, Governor of Detroit and other outstate communities
By John | August 2, 2008
Dear Jennifer:
Jennifer! Jennifer! I’m afraid I have bad news. You remember “Scottville”, that obscure little town located somewhere over there in Western Michigan? You know, the one you imposed your infamous “Main Street” program on - the program that was going to turn that little town around and demonstrate the benefits of your economic program?
Well, anyway, Steve’s Great Food and Spirits, a downtown fixture in Scottville for over 60 years, is closing! I mean, how ungrateful! I know your administration is spending big bucks dressing up the facades of downtown Scottville. And now the businesses behind those facades are closing!
Wait a minute. I think I get it. New facades on unoccupied buildings. Just like those Hollywood film studios. You are going to use Scottville to produce movies with your elitist friends from California. You can pretend the town is still occupied with real people, like in the olden days before high taxes and excessive government regulations drove all of the businesses to other states.
So, never mind. I see you have everything under control.
Your humble servant,
John L. Pehrson
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Raising Cane
By John | June 25, 2008
The State of Florida has announced the purchase of about 300 sections of farmland from U.S. Sugar. U.S. Sugar has raised sugar cane on this land since the 1930’s, when they carved this farmland out of swampland. Now it must be returned to its natural state. We don’t need it to raise sugar cane anymore. We eat too much sugar anyway. Let’s just make a swamp out of it.
300 sections. That’s almost 200,000 acres. Out of private hands. Into the public
sector.
$1,750,000,000 of taxpayer money to take private land out of circulation. And that’s just one example from one state. It’s happening all over the United States. A few
hundred thousand acres here, a few hundred thousand there. It’s raising cane with the
market for vacant land.
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The Good News
By John | June 2, 2008
You have heard the stories about plummeting home values and credit drying up for real estate acquisitions. Development land is offered for sale everywhere, with no takers. REIT values have been falling. Commercial developers experience difficulty financing developments, as lenders back away from previous commitments. Isn’t there any good news in the real estate world?
Yes, there is. Not all real estate is alike. Get away from the metropolitan areas and everything is just fine. Farmland values have been rising steadily, and credit from rural banks and financial institutions serving rural areas is readily available. Only those financial institutions that got caught up in the feeding frenzy and got burned by their mortgage-backed securities now must pull in their horns.
How about rural recreation land? No, it hasn’t gotten caught up in the farmland craze. Neither has it suffered directly from the bursting housing bubble, but it is being affected by dropping consumer confidence. There appears to be an increasing supply of vacant recreation land on the market, and demand has softened. Because of that, I believe we are facing a buying opportunity.
Why? There are vast amounts of money sloshing around the economy. It came out of the stock market at the turn of the century. It came out of the housing market in the past couple of years. It has been going into the commodities market recently. Where is it headed next? There are very good reasons why it will go into rural vacant land.
Land is in limited supply. There is no substitute for land, unlike most commodities. The population is growing in the U.S. and worldwide. The population is spreading out, as technology makes it unnecessary to congregate in huge cities. Productivity growth, advances in technology, and falling trade barriers are enabling the creation of vast amounts of wealth throughout the planet. That wealth needs a home.
A few decades ago, world currencies abandoned their ties to precious metals and became fiat currencies. It is the stated policy of central banks to inflate their currencies. Where can one safely invest where purchasing power will not be steadily eroded away?
The U.S. has the most stable government on earth. Private property rights are stronger here than in most countries. The U.S. is the capitalist center of the Universe.
Rural vacant land started rising in price several years ago. In many areas it has become de-coupled from its underlying ability to produce revenue. Now we are experiencing a lull in rural land pricing. This is a buying opportunity. But the window won’t be open long. land values are headed up.
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Financial Turmoil Creates Investment Opportunity
By John | April 10, 2008
The recently announced policies of the Federal Reserve (to lower interest rates and provide liquidity to U.S. financial institutions) and of the Federal Government (to bail out mortgagors facing foreclosure) reinforce my opinion that rural land is, and will be in the future, an excellent investment.
Lowering interest rates and pumping up the money supply while asset values are exploding on the upside is a perfect formula for increasing inflation and continuing the downward spiral of the dollar in international currency exchanges.
Allocating taxpayer funds to bail out real estate borrowers demonstrates that, given a choice between responsible financial management and enhancing political standing during an election year, responsible financial management loses every time.
How does this affect you as an investor? You had better stay clear of any dollar denominated assets and look for “real” assets that retain their value despite government policies. In fact, the more irresponsible government policies become ,the more astute investors are being driven towards inflation-hedge type investments, such as rural, vacant land. The more investors move into rural land investments, the higher the price. The higher the price, the more investors move into rural land. Does this sound like the high-tech stock market of the 1990s? The difference is that new stock can always be created. Land is in limited supply.
Look for rural land prices to continue escalating. The movement is in its infancy.
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Character
By John | March 12, 2008
That word needs a new introduction into our culture, and into analyses of the daily news.
As we condemn the behavior of Elliot Spitzer, as unbecoming of the governor of
New York, let’s not forget that he was elected by the people of that state. He was elected after serving eight years as Attorney General, giving voters plenty of
opportunity to observe his character. And those that followed his career know that he provided plenty of evidence of his character in the way he conducted himself in office.
As we wring our hands over the precarious state of our national economy, let’s not lose sight of how we got here. Mortgage defaults are the consequence of people not meeting their contractual obligations, obligations they knew, or should have known, in most cases, that they could not meet.
Lenders and borrowers alike entered into contracts based upon their short-term interests, without regard to their long-term interests, or those who would be relying on them to meet their obligations. People of good character don’t behave like that.
In a presidential election year, as we contemplate how (or whether) to cast our votes, let’s not be drawn into the debate as to who will give us the most - who will enhance our entitlements, steer earmarks our way, and fill us with pork. Let’s try to rise above the rancor and heat of the election battles. Let’s ask ourselves who would best represent our country and its values and lead us in the right direction.
Let’s not overlook character.
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The Land Investor
By John | March 9, 2008
Hi.
Welcome to my blog.
I am a rural, vacant land investor. My investment strategy is unorthodox, as I believe in buying out of favor properties in locations that are not in the path of progress. I don’t buy and hold. I buy, add value, and sell. I believe my strategy is a low-risk, high reward method. It generates income, while building net worth.
I am a capitalist. I believe capitalism creates the greatest good for the entire population. It creates more than wealth. It encourages everyone to live his life to the fullest.
You will see these opinions, and many others, expressed on this site in the futures.
Feel free to comment.
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