The Freedom Delusion
By John | December 31, 2009
The word “freedom” is tossed around freely in the U.S. Our military exists to defend our freedom. We fought wars in defense of freedom. Our politicians say they are protecting our freedom. International diplomacy is conducted with the objective of maximizing freedom throughout the world. Founding documents, establishing the United States, make freedom the highest priority. The very structure of our government was designed to provide checks and balances so that government could not infringe upon the freedom of U.S. citizens.
What is seldom discussed in conjunction with “freedom” are the contradictions that have arisen over recent decades.
Can freedom coexist with the Nanny State? Can government provide for your health care, your retirement and your education without taking away your freedom in exchange? Can huge national bureaucracies formed to control agriculture, education, energy, etc. coexist with freedom? Can the government rescue favored businesses from failure, while allowing others to vanish, without trampling on the freedom of its citizens? Can regulations, laws, and even tax policies be used to dictate desired behavior with respect to drug use, pornography, automobile mileage, abortion, smoking, etc., in a “free” society?
The citizens of the United States need to consciously address priorities. What is government for? Is it to take care of its citizens from cradle to grave? Is it to support the special interests of those with political power?
The U.S. Constitution says the purpose of government is to protect the freedom of the people, not to be the greatest threat to that freedom.
Why is it that those who seem to use the term “freedom” the most are the same ones who are most actively denying freedom to others? Why is it that so few in the media frame the political debate in terms of freedom - the basis on which this country was founded?
Let’s at least be honest about the laws and policies that are being proposed. Health care costs are high. Some cannot afford health care. Carbon dioxide emissions may be contributing to climate change. U.S. education is of poor quality. Every time a problem is identified, the solution is always the same. We have too much freedom. Choices must be removed from individuals and transferred to government. Too much freedom means too many bad decisions. Government officials look out for the public good (and never seek their self-interest). The private sector only seeks self-interest.
Everything from the housing bubble to imaginary global warming is blamed on the private sector making bad decisions. Free markets cannot be trusted. They must be replaced with government central planning. Only government can make correct decisions. So government advances, while freedom retreats.
So let’s not continue to delude ourselves. Government, at all levels and under all administrations, systematically takes away personal freedom - takes away the authority of individuals to make decisions for themselves - and transfers power to government.
We are not “fighting for freedom” in this country. We are retreating from it as fast as we can.
Topics: Commentary | 3 Comments »
Compliance
By John | October 29, 2009
Yesterday I went to the bank and requested that a bank wire be sent to an account at another bank. Thinking the wire would be sent without delay, I was out of town for the rest of the day. When I returned at 10 p.m. last night, I found two voice mails from the bank. They had not sent the wire. Why? Because they had failed to copy the driver’s license they had been given at the time the wire was requested.
Now this seems like a trivial reason. There was plenty of money in the account. The wire instructions were complete and routine. The bank teller had seen the driver’s license, she had just failed to copy it, per bank policy.
What would you do in this instance? I would send the wire as instructed and ask the customer to come in so I could complete my file later. After all, who am I serving, the customer, or the file?
Well in this instance, the bank was clearly not giving priority to serving the customer. Why? When I pointed out to the branch manager that his bank had been faced with a clear decision to either serve the interests of the customer or comply with a government requirement, he admitted he had chosen government compliance over customer service.
Now, in this case, just money was involved. Banks deal in money. The Federal Government has all but nationalized the banks. Banks are afraid of the government bureaucrats - more afraid of offending a bank regulator than of losing a customer.
But what if more than money was involved? What if my life were at stake? What if I was not dealing with a bank, but with a hospital or a doctor? Would it really make any difference in that choice to serve the customer or the government? I don’t think so. The employee defers to the boss. The bank manager defers to the government bank regulator. With nationalized health care, the doctor defers to Big Brother in Washington. He gets paid by the government. He is licensed by the government. He is controlled by the government.
I was amazed the other day to watch a debate on TV regarding health care. One speaker was pointing out the danger of government takeover of health care. The other was asking, “What’s wrong with that?”
As my bank experience illustrates to me, there is a lot wrong with that. In the private sector, you are a customer or a patient. You are to be served by the institution you are visiting. In the public sector, you are not important. You have lost control. The institution will either properly serve the government, or it will go out of existence. It is institutional suicide to give priority to serving the customer or patient.
It is appalling to me to observe the compliant attitude toward this massive government power grab. I can’t believe this trend would have been possible a generation or two ago. The government education system has changed a lot since I was in school. Compliance is in. Independent thinking is out.
Freedom is no longer valued. Government advances. Freedom retreats.
Topics: Government Excesses | 3 Comments »
Investing
By John | October 9, 2009
If I tell you I invest in land, what is your vision of what I do? Most people think I buy land in a metropolitan area in the path of progress, wait for new development to reach my land, then sell it for a profit to a land developer. That’s not only not what I do, that’s not even investing. It’s speculating.
So, what’s the difference?
In a capitalistic economic system, “investors” are those who allocate capital so that it is most productively utilized. Capital is “put to work” so that it might produce a return to the investor.
Now, when you buy land in the path of progress, then wait for circumstances to make your land more valuable, are you putting your capital to work? No! Your capital is waiting idly on the sidelines. It is unemployed!
If you buy gold, are you investing? No. Gold is not an investment. It may be an insurance policy against hyper-inflation and, as such, may be a wise move. But make no mistake about it, that is not an investment. Your capital is waiting idly on the sidelines, producing nothing.
If you purchase a home to live in, are you investing? No. The home you live in is an expense, not an investment. Your capital is not only not producing anything, it is depreciating, as the home depreciates. I know some still believe a home can be an investment, even after our recently popped housing bubble. This was an example of speculators chasing the latest asset that is increasing in price. The speculators are seeking a quick buck. But if nothing of value is being produced, this is a zero-sum game. You may have some winners and some losers, just like you do in a casino, but your capital is not working for you. Your capital is being gambled instead of being put to work.
Many people have believed their home to be an investment because they believed they sold it for more than they paid for it. In many cases, however, that “gain” represented a decline in the value of the dollar, not an increase in the value of the home.
If you buy stock in a company, are you investing? Hopefully, yes. Why? Because you are allocating your capital (either directly or indirectly) to the management of a viable enterprise - one that creates wealth through the production of a good or service that the public values and will voluntarily purchase, generating profits for the company and its investors.
This is not to say that no one speculates in the stock market. Many do. Traders, for example, are doing nothing more than betting on the price direction of a stock. They are not allocating capital to a productive enterprise. Many of the “products” that Wall Street creates are not legitimate investments. There has been an explosion of new derivatives recently. Most benefit their creators at the expense of their purchasers.
Warren Buffett is a well-known stock investor. He allocates capital to deserving enterprises that, in turn, generate profits for Warren. That homeless guy you just saw sitting under the expressway overpass? He was a speculator.
You see, to be invested, the capital must be employed along with labor to produce something of value - it must be put to work.
In my book, Investing in Vacant Land, I make the clear distinction between investing and speculating. I advocate investing. I advocate “working your land” after you own it - doing something to add value to that land. Otherwise you are just speculating and, as I state in my book, investors make money because they deserve to make money and speculators lose money because they deserve to lose money.
Know the difference between investing and speculating. Then only invest.
Topics: Commentary | 1 Comment »
Cash for Cadavers
By John | September 20, 2009
If you believe “cash for clunkers” was a success, you should be even more enthusiastic about this next idea.
The objective of the Obama Administration is to enact new health care legislation, bringing “free” health care to everyone, while not increasing costs or negatively impacting the economy.
You have heard that most of the cost of health care is incurred in the last couple of years of life. So if we could just lop off a couple of years from everyone’s life, just think of the savings!
So, how do we accomplish that? Well, we just need a little incentive. If we could pay $4,500 to retire cars early, why not $4,500 to retire people early? Turn Granny into a clunker, so to speak.
I know what you’re going to say. When Government death panels were proposed before, people balked. But the problem, as I see it, is that the program was not properly sold.
So here’s the sales pitch: Granny’s getting long in the tooth. She’s not going to last much longer. And while she keeps going, she’s not just costing the government for her health care, she’s spending my inheritance! The alternative - I turn her over to the government “End of Life Planning Committee” or whatever they are going to call it, the government sends me a “Cash-for-Cadavers” check, a funeral home gets a stimulus payment, the economy gets a boost, and I get to keep my inheritance! And Granny? She’s old. She’ll never know what hit her. Everyone wins!
So write your congressman today. Demand that he support “Cash-for-Cadavers” legislation. Your inheritance may depend on it.
Topics: Commentary | 2 Comments »
Extraordinary Ted
By John | August 30, 2009
Last week Ted Kennedy died. This weekend the tributes to him have been truly extraordinary. His funeral was attended by a who’s who of American politics.
What was so extraordinary about Ted Kennedy? What did he do in his 77 years to deserve such an outpouring? Well, he served 47 years in the U.S. Senate. And he had to overcome enormous obstacles throughout his life. What obstacles, you ask? Here are a few:
1) His background. Ted was terribly handicapped by being born a Kennedy. His father was an amoral and ruthlessly ambitious person who used political connections to amass fame and fortune. Ted grew up in a family of users; not producers. Joe Kennedy exhibited a contempt for those who earned their way, a contempt he passed on to his heirs. In the Kennedy world, you get ahead by stepping on the heads of others. Those poor saps who work for a living need to be cared for by the elite, political class. Teddy never had a chance. He didn’t understand capitalism.
2) His morality. Being from the political class, Ted was above morality. Morality is for suckers - you know, the working class. Ted was kicked out of Harvard for cheating. In 1969 he left a party after a few drinks with a sexy babe, drove into a lake, then left the young lady in the car to drown while he figured out how to avoid prison time for manslaughter while driving drunk. Being from the political class, Ted was able to avoid reporting the incident until he sobered up, and was only charged with leaving the scene of an accident. A moral person would have thought about the victim, reported the accident immediately, been given a blood alcohol test, and spent several years in prison.
3) His slovenly personal life. Ted spent a good share of his life with his belly to the bar, one hand on a drink, and the other hand up someone’s skirt, his puffy red face perched atop his marshmallow body. His athletic build melted inside his enormous girth. Most people living this life style would have ended up homeless. Ted, however, was cursed with trust accounts left to him by his greedy father, and was never forced to come to grips with reality.
4) His isolation from reality. Ted believed in fairy tales. Ted envisioned a kingdom ruled by a jolly old soul with a puffy red face and an enormous girth. This jolly old soul was superior to ordinary human beings. He planned their lives for them, as they were too stupid to care for themselves. He granted them “rights”, like the right to food, clothing, homes, and free medical care. In Ted’s world, the jolly old soul would just wave his magic wand and all goods and services would appear - they didn’t have to be earned by the people. And even if they did, people who worked and earned things were held in contempt by Ted and his political cronies, so it wouldn’t matter if they were exploited.
Yes, Teddy was terribly handicapped. Can you imagine anyone with so many strikes against him becoming, not only a U.S. Senator, but the “lion” of the Senate? A presidential candidate? A man respected and honored by millions?
Truly extraordinary.
Topics: Commentary | 1 Comment »
Dear Canada
By John | August 16, 2009
Dear Canada,
I see your bureaucrats recently detained one of your own citizens in Africa for several months. Maybe you should examine some of your bureaucratic policies and recognize the damage your bureaucrats are capable of.
You see, I, too, was detained recently by your bureaucrats. I was denied entry to your country and accused of violating Canadian law. Am I a terrorist? No, I was accused of being a thief!
I was entering Canada from the United States to inspect some of my Canadian land. I was taking a couple of “for sale” signs with me to place on the land. When Canadian Customs learned of my egregious crime, I was referred to Canadian Immigration, where I was detained for over an hour and accused of theft. What kind of theft? I was stealing Canadian jobs!
How so, you might ask? Well, if I was taking “for sale” signs into Canada to sell real estate, I was denying Canadians the opportunity to sell that real estate.
I was asked if I had sold Canadian real estate before. I said I had. I was told I had committed a crime by doing so.
I can’t sell my own property in Canada? Yes, you can. But you can’t sell land for others, and you are working for a company.
“Working”? A company? The property I sold previously was in my name.
Oh. OK. That was legal. But now you are selling land for a company.
Yes, the real estate is in the name of a Michigan limited liability company. That company was established by me for the sole purpose of owning this particular parcel of Canadian real estate. I am going to the property to place “for sale” signs on it. So, by your definition I am “working”.
Am I being paid for this “work”? No! If Canadians want to work for nothing, they can have my job!
Well, finally, Immigration realized how ludicrous their assertions were, and let me enter the country. But, here is what I didn’t tell them: I purchased that land with American dollars. I improved that land with American dollars, paid to Canadian citizens. I was not stealing Canadian jobs; I was creating them. But if my efforts are going to be treated like this by you, Canada, I will stay out of your country.
Now, I’m not picking on Canada. The U.S. has its share of bureaucrats, as does the rest of world. But there is a lesson to be learned here. If you want to create and protect Canadian jobs, GET THE HELL OUT OF THE WAY! Your harassment deters me from wanting to do business in Canada. And, if I, and others, don’t do business in Canada, Canadians have fewer jobs.
Just another example of bureaucratic policies having the opposite effect of their intended purpose.
Canada, you, like the United States, need to learn to appreciate capitalism. You need to listen to your own national anthem: …glorious and FREE…
Freedom creates jobs. Not bureaucrats.
Topics: Government Excesses | 1 Comment »
Bruce Smith
By John | August 9, 2009
Yesterday, Bruce Smith was inducted into the Pro-Football Hall of Fame, recognizing his excellence as a football player with the Buffalo Bills and the Washington Redskins. Bruce contributed as an athlete and entertainer over a sparkling career, and certainly is deserving of this recognition.
But Bruce’s contribution at yesterday’s induction ceremony may have been even greater than that of his stellar football career. Like most inductees, Bruce thanked many who contributed to his success over his lifetime. But in addition to crediting people, Bruce credited principles - principles he has striven to live by, and principles which also contributed to his success. Among those principles were honesty, integrity, hard work, and the willingness to never give up.
In fact, Bruce told the story of the first time he went out for football as a young teenager. It was hot. Football practice was hard. So, like many teenagers might be inclined to do, Bruce quit. And, that could have been the end of Bruce’s football career. But Bruce had a father who lived by principle, and his father simply told Bruce to “never quit.” He told him verbally, and through his own life example. Perhaps his father realized Bruce had come to a crossroads in his life. Probably, his father had no idea the effect his simple statement would have on his son. But it did. Bruce didn’t quit. Inspired by his father’s words and example, Bruce went on to become one of the best football players to ever play the game.
Yesterday, Bruce accepted the honor bestowed upon him by the Pro-Football Hall of Fame. As one of the true giants of the sports world - a man respected by millions - Bruce revealed the secret of his success. As his father had before him, Bruce told the world, and all of those young athletes aspiring to become a Bruce Smith, the secret of success.
Honesty. Integrity. Hard work. And NEVER quit!
Topics: Commentary | 2 Comments »
America’s Youth
By John | July 30, 2009
I saw an interview of medical students on TV the other day. It triggered the following thoughts on America’s youth:
Today’s youth seem socially mature and socially sophisticated. They are self-confident and believe they deserve to get what they want. They are team players, and see themselves as part of a social group. They believe in the economic, social and educational systems in which they participate. They are articulate, upbeat and happy.
Today’s youth seem shallow - almost mechanical in the way they think. They buy into the latest fads. They believe in environmentalism, global warming and government energy policies. They believe in socialism, fairness and the good intentions of others.
Despite their self-confidence, most young people are relatively incompetent. They have spent the vast majority of their lives in institutional settings, and have developed few of the individual competencies of their predecessors.
Most young people are self-centered, but don’t see themselves that way. If they are store clerks, they will give priority to conversations with friends and ignore customers. They are unwilling to make sacrifices - they tend to do what they like doing - which can be both a positive and a negative, depending upon circumstances.
A couple of generations ago, we would not have needed to import migrant labor to harvest crops and perform menial tasks. Kids were expected to help out. Today’s kids don’t do menial tasks. They expect to enjoy what they are doing. If not, don’t do it! If I don’t have something to do that I enjoy, entertain me! I am entitled.
Like most young people throughout history, today’s youth are naive. They believe what they are told, and idealize their world. They don’t handle responsibility well, because they lack experience with it. They have been trained to trust in “the system.”
Now, getting back to that medical student interview I observed on television. When asked if they believed that the health care system needed reform, they all raised their hands. They don’t question the very need for a “system.” They don’t question the motivations of those advocating reform of the “system.” Their responses to questions were robotic, like they had memorized the party line.
As you can see, I am somewhat critical of today’s youth. I like them. They are pleasant people. However, they are products of an institution I don’t respect - government schools. Many of their beliefs won’t hold up in the real world. Let’s hope they adjust.
Topics: Commentary | 2 Comments »
PawnLand
By John | July 28, 2009
Pehrson Capital Corporation is announcing a new investment program, designed to take advantage of the lending malaise currently gripping the real estate industry.
After lending recklessly for several years, the pendulum has now swung the other way. Credit-worthy borrowers are unable to secure funding for worthwhile projects. Banks take deposits and hold on to them, instead of recycling the funds in the local community. Some of these would-be borrowers own free and clear assets, such as real estate. Under normal lending circumstances, this real estate would serve as collateral for loans. However, banks are not lending.
So, why don’t these real estate owners simply sell their properties? Without lenders to support the market, and with prospective users of these properties unwilling to expand their businesses in this economic environment, these properties can only be sold at a steep discount. Owners are unwilling to take such a “hit” on their properties. So, nothing happens. Worthwhile projects go unfunded. Valuable real estate sits idle, benefiting no one.
That’s where Pehrson Capital Corporation (PCC) comes in. PCC matches investors seeking superior returns on secured investments with these worthwhile projects.
Here’s how it works:
Let’s say Mr. Brown has a building under construction, but his lender refuses to advance any more funds. Mr. Brown has a tenant for the building, but he lacks the funds to finish it. Once finished and under lease, Mr. Brown can get a loan secured by the building, but he needs about $100,000 and time to finish the building.
Let’s also suppose that Mr. Brown owns some development land free and clear. Even in this distressed market, that land should be worth $200,000. He knows this land will be very marketable once the economy recovers, so is reluctant to sell it at the steep discount necessary to attract investors.
Mr. Brown approaches PCC, seeking funding. PCC matches Mr. Brown with an investor. After some negotiations, the investor agrees to purchase Mr. Brown’s vacant land for $100,000, lease it back to him for a little more than the carrying costs on the land, and gives Mr. Brown up to two years to re-purchase the land from the investor. During the first year, the re-purchase price is $110,000. During the second year, the re-purchase price becomes $125,000. And after two years? The re-purchase option expires, and the investor is free to sell the land at whatever price he can get to whoever he wants to sell it to.
Mr. Brown is confident he can utilize the proceeds from his vacant land sale to complete the building, lease it out, and obtain new financing secured by the building within one year. Therefore, he is willing to sell his vacant land at a steep discount, knowing he can buy it back. Even after paying the markup and some closing costs, this is a good deal for Mr. Brown.
And the investor? He receives a return several times greater than keeping his money in the bank. And if Mr. Brown doesn’t re-purchase the land? He has an even better deal. He bought property at 1/2 the current market price.
PCC is acting as a real estate pawn shop. If you, or someone you know, is seeking an opportunity like this, you may contact me at jlpehrson@mac.com or by calling 616-240-1919.
Topics: Rural Land Investment | No Comments »
Conservatism vs. Freedom
By John | July 16, 2009
Conservative spokespersons like Rush Limbaugh, Shawn Hannity and Ann Coulter claim that conservatism is the answer to our current economic debacle and that the majority of Americans are conservative. Polls indicate otherwise.
The news media would have you believe that all Americans can be placed neatly in one of two categories: Conservative or Liberal. If there are any left over, they must be Undecided, and still trying to choose into which camp they belong. I believe this perception is more than an over-simplification – it is an outright distortion of the truth.
America’s claim to fame – and its historical tradition – is one of freedom. Freedom is what made our country’s founding unique – the idea that government derived its power from the consent of the governed – the idea that government was to have its authority restricted to only specific functions – the idea that individual citizens were to be allowed to make decisions for themselves, as long as those decisions did not infringe upon the freedom of others – the idea that the individual was to be valued more than the collective. These were the unique characteristics of the American form of government, a form of government that not only flourished for over two centuries, but succeeded beyond the wildest dreams of its creators.
Neither conservative nor liberal can claim to represent this tradition. In fact, both repudiate it in favor of their own vision for America.
Liberals would have an all-powerful government – a nanny-state – that cares for everyone. They advocate government health care, government energy programs, government welfare and government education. In each case, to provide these benefits, the government must take first, before giving, thereby taking away personal freedom. (Freedom from want is not a right.)
Conservatives are more subtle. They constantly advocate less government and more freedom, at least with respect to economic issues. However, conservatives would constrain your freedom with respect to personal issues. They would close our borders (Do you really think they are primarily concerned about terrorists?), outlaw pornography, outlaw abortion, make Christianity the national religion and spend billions of dollars (and fill up the prisons) fighting their war on drugs. (Freedom to make bad decisions, as long as they don’t impact others, is a right.)
What America wants and needs is principled leadership. As a matter of principle (and constitutional requirement), the Federal Government is assigned the primary responsibility of protecting the freedom of its citizens. However, elected officials have abandoned that responsibility, have hijacked the government, and turned that government into the greatest threat to freedom its citizens face.
Liberals hijack the government and, acting on behalf of their constituents, turn the U.S. into a nanny-state. Conservatives hijack the government and, acting on behalf of their constituents, turn the U.S. into a police state.
Polls would seem to confirm that most Americans want the country its founders envisioned. They respect the Constitution. They want freedom. And, given that freedom, are willing to accept personal responsibility for fulfilling their own wants and needs.
Conservativism, in its present form, is not what Americans want.
Topics: Government Excesses | No Comments »
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