“It is a lot harder to create income and wealth than it is to spend it.” -Will Luden. We all know that from our daily lives, e.g., which is harder; earning and saving money for vacation, or spending it while on vacation? And this observation about earning and spending lines up nicely with common sense.
The Golden Goose is our American capitalist economy, an economy that is by far the largest and most successful in the history of history. Hundreds of millions of people over 300 years worked long and hard to have created this robust income and growing wealth. COVID-19 is causing two massive spending-related responses, one more worrisome than the other:
- The approved and planned spending bills have either sanctioned or contemplated everything from free money, including direct cash payments and indirect money through rent and mortgage deferrals, and suspensions of loan repayments, to almost everyone in the US, with a couple trillion or so for businesses.
- The House is working hard to hold up COVID response money to push its agenda of medicare for all, free tuition at public colleges, and additional financial help for those it deems needy as time goes by.
It took hundreds of millions of hard working Americans 300+ years to create this wealth; at the hands of certain politicians and political groups, all of this achievement could start to crumble in a few short years.
Today’s Key Point: We cannot do all of the enacted and contemplated COVID-related spending, or even come close to that amount of spending, without killing the Golden Goose.
That is the subject of today’s 10-minute episode.
Fighting COVID has been likened to fighting a war. Let’s look at life in the US during WWII.
- Service members did not sign up for a fixed time commitment; they signed up for the “duration of the war.”
- Of those service members; 407K died, and 672K were wounded.
- You needed a government-issued ration book for almost everything. And you had to register your tires with the authorities.
- To get classification and rationing stamps, you had to appear before a local War Price and Rationing Board which reported to the feds. Each person in a household received a ration book, including babies and small children who qualified for canned milk not available to others. To receive a gasoline ration card, often restricted to 3 gallons a week, a person had to certify a need for gasoline and ownership of no more than five tires. All tires in excess of five per driver were confiscated by the government due to rubber shortages.
- Sugar was the first consumer commodity rationed, with all sales halted in April of 1942 and resumed in May, with a ration of 1/2 pound per person per week, half of normal consumption. Bakeries, ice cream makers, and other commercial users received rations of about 70% of normal usage. Coffee was rationed nationally in November 1942, cut to 1 pound every five weeks, about half of normal consumption, in part because of German U-boat attacks on shipping from Brazil.
- As of March 1942, dog food could no longer be sold in tin cans, and manufacturers switched to dehydrated versions. Starting in April of 1942, anyone wishing to purchase a new toothpaste tube, then made from metal, had to turn in an empty one.
- By June 1942 companies also stopped manufacturing metal office furniture, radios, television sets, phonographs, refrigerators, vacuum cleaners, washing machines, and sewing machines for civilians.
Note that people still had to pay for what they wanted; having a valid coupon for, say, gas, in your ration book did not get you the gas. It simply allowed you to buy it. Today, in the COVID days, hoarders are the ones forcing rationing, and the government seems to want to make more and more products and services free. Whether or not these products and services have anything to do with the virus.
The current US national debt is $24T–trillion, and it looked like we were going to add in the order of a trillion every year–until the pandemic came along. In a rush for approval and votes, politicians are looking to add $4T or $5T–or more–in the next year or two. Perhaps worse, politicians on both sides of the aisle are telling people that no matter what, we will be taken care of. Lost your job or not, here’s $1,200. Lost your job or not, rent and mortgage abatement are both being demanded and offered. And in the first month after a possible job loss. And if you did lose your job, likely temporarily, you might even make more on unemployment than you did while you were working. The standard is clearly changing from a “social safety net” to making people whole, giving people enough money, soon enough that they do not suffer any consequences–so they can continue to live as they always have. We are demanding to be made whole, not simply to be given enough to get by until we can get back on our feet ourselves.
In the COVID response world, this “make us whole” thinking is said to be temporary. Don’t believe it. The forces are in place to make all of this permanent. Remember the “Give a man a fish wisdom?” Let me repeat it here, with key Revolution 2.0™ thinking added.
Most of us have indeed heard the piece of wisdom pointing out that if you give a man a fish, you feed him for a day. And if you teach that man to fish, you will feed him for a lifetime. Well, not so fast. In order for someone to want to fish for themselves, buying and maintaining the tackle, sometimes going out in the cold and rain, and occasionally spending most of the day and coming back with nothing, they must be motivated. Without motivation, they will still want the free fish.
Now, let’s add one more level to using fishing as a metaphor for feeding humanity. Teach a man to teach others to fish, and how to motivate them, and you feed a nation.
Knowing how to fish is the how. Motivation is the why. Free things, in excess of the need or for too long, destroys motivation. COVID kills on its own. We destroy motivation all by ourselves.
Let’s close today’s podcast with a re-look at the Revolution-2.0’s “Can’t vs Won’t” diagram. Have you seen this before? If not, does it make sense without explanation?
As we get ready to wrap up, please do respond in the episodes with comments or questions about this episode or anything that comes to mind, or connect with me on Twitter, Facebook, and LinkedIn. And you can subscribe on your favorite device through Apple, Google, or Stitcher.
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Will Luden, coming to you from 7,200’ in Colorado Springs.
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