Thursday, November 18, 2010

An open letter to the President from an American businessman

Website here. I'm reprinting the letter in full, but there is more to his original post. Be sure to read the whole thing.

Dear Mr. President,

Mr. President, please allow me to introduce you to America’s small business owners. They reside in every state and town in the country. These men and women are the backbone of the communities where they live. They represent the 20% that do 80%. They are the ones who serve on school boards and hospital boards, coach Little League, lead Boy Scout troops, serve in Indian Guides and volunteer in their churches and synagogues. They pay a disproportionate share of the property taxes that build the public schools and hospitals. They give generously to local charities and United Way, buy the uniforms for the Boys & Girls Club basketball teams and make anonymous gifts to send underprivileged kids to summer camp.

You may not care about the community service and enrichment activities that mark the lives of so many small businesspeople. But did I mention that the 34 million small businesses provide 144 million jobs (75% of the jobs in this country) and generate over half of the private GDP? Since our country is in the midst of a recession that you say is “the worst economic downturn since the Great Depression,” I assume that the health of the engine that sustains employment might be of some concern to you. However, your proposed tax increases upon the “rich” will land squarely on small businesses like a ton of bricks. You see Mr. President, 66% of those who earn above $250,000 are small businessmen. I understand that you believe that business owners are rich predators who “need to give more,” but have you considered the effect of your policies upon their employees? I respectfully direct you to Boetcker’s warning that “you cannot lift up the wage earner by pulling down the wage payer.”

As a businessman facing the prospect of higher taxation, please allow me to personalize the likely effect upon my own small enterprise. First, you must understand that taxes are a direct deduction from my bottom line and capital reserve. Why is this important? Every dollar you subtract from my bottom line is a dollar I cannot use to give raises, increase benefits or add employees. Although this may appeal to your “spread the wealth” instincts, it may not be such good news to my current employees or to job-seeking college graduates. Every dollar you take from my capital reserve is a dollar I cannot invest in new property or equipment. This may satisfy your sense of “shared prosperity,” but will not be as heartwarming to my suppliers or to those hoping to market assets next year. Is this beginning to make any sense to you?

The decision to increase my taxes will of course also reduce my disposable income. This will result in fewer dollars allocated to consumption which, ironically, you say is critical to the economic recovery of the nation. Although you may be delighted that I won’t have as much discretionary money to travel, buy a condo at the beach, or remodel my home, those employed by the airlines, mortgage companies, real estate industry and the construction trades may not be as cheery. And though you may be pleased to see me mowing my own lawn and cleaning my own pool again, it may not bring as much joy to my long-time contractors, Bibiano Ortega and Gina McDaniel.

We have observed your tendency to punish your “enemies” and borne witness to your willingness to use executive power to sanction certain industries. Your unwarranted drilling moratorium that has decimated the oil and gas and service sectors in the Gulf States provides a recent example. This policy has already created more unemployment and inflicted more economic carnage on small businesses in Texas, Mississippi, Louisiana and the other gulf states than the actual oil spill could have ever done.

Finally, Mr. President, let me assure you that we have nothing in common with your friend Tony Rezko and we bear no resemblance to your benefactor George Soros. After laboring all of my adult life in the private sector, I know a thing or two about real entrepreneurs. First, we were made to innovate and risk capital to support our dreams and visions. But we will only do so when we feel that the rules of the game are fair and predictable. Secondly, we will not put our hard-earned money at risk if we feel that the portion absorbed by taxation is too great. Lastly, when we sense an animus toward us from the highest office in the land that questions our motivations, integrity and patriotism, we begin to take defensive measures, not increase our investments. I hope this letter provides you with a more accurate view of who the real small businessmen in this country are. And I hope it helps you realize the destructive consequences of your policies on the small businessmen you profess to support.

Kyle Stallings is the Managing Partner of a small oil and gas investment company in Midland, Texas and serves on the Governor’s Business Council of Texas.

Two Thoughts on Socio-Economy

By Littlefish

If one has received a certain amount of compensation for performing a certain procedure, they should not expect more money at a later time for performing the same procedure.

Unless some new element has been invented, or some procedure has been streamlined, or some other proactive benefit to production has been introduced, there is no new value added and therefore no new reason for increased income. Furthermore, without such increases in productivity or invention, there is no reason to expect that some new amount of money has been created to be distributed.

If a group of employees have been performing the same task for a period of time, and the only thing that has changed is the profit margin of the company, the workers that are still performing the same duty as ever were not the cause of the increase in revenue, unless they increased efficiency or procedure in some way. It was more likely a cause of more targeted advertising, better input sourcing, or a shift in consumer need. Employees are hired to perform tasks, a task is only worth as much as any other individual capable of performing that task would charge to perform it, absent any obfuscating government intervention that may make the employee feel as though they deserve more when in fact they are performing the same task as always, and that many other people could also perform.

This is even more true when talking about government jobs. For example, processing licensing applications (for anything, business, autos, etc), managing the office in which such processing happens, or cleaning the room in which the processing occurs, are each the same job today as they were yesterday. There may be more license applications to process, but there are still only eight hours to work with in a day, so, processing, managing, or cleaning will occur for eight hours, and then pick up again tomorrow, no matter how many applications were processed. Why is someone, who’s job it is to file, or manage, or clean at the government level, paid more one year than they were paid the year before? Did the work get harder? Likely, in recent history, because of technological advancements (created by people actually creating wealth in society) have made the jobs less technically and or physically difficult, and logically, this should allow for the positions to pay less, not more. Remember, there is no profit in a government agency, any savings at that level is a savings for every member of society.

Cost of living increases have the same insidious affect on the economy as artificial minimum wages or ‘prevailing wage’ contracts, inflation, inflation that eliminates any perceived gain that a cost of living increase or any upward movement in a false wage such as a minimum wage was supposed to provide. Without value added, there is no value added. That is why milk used to cost a nickel and now costs 5 bucks, while people used to make 70 a week, now likely make 700 a week and are no better off. Why?

People expect increased pay without increased effort or productivity, and there is an entire industry of snake oil salesmen that continually spout off about the evil businessman profiteering off the backs of the lowly working man, never mind that both are trying to raise families.

It seems to be assumed that making more money is some measure of increased value in society. That might be one basic metric of success if there weren’t hundreds of government programs designed to allow people to believe that the same amount of effort should garner ever increasing shares of pseudo wealth. Actual wealth, the kind that spreads throughout society and increases living standards for all, isn’t created by using political strong arm tactics to cause people to be paid more to do the same thing they’ve always done, wealth is created by people inventing, creating efficiency, and generally doing new things that add new value, new products, new systems and new opportunity to society by fulfilling needs in a new or more efficient way.

Along the same lines…

If you think the answer to your problems lies in a government program, I am sorry to say, you are the problem. Until you realize that you are the only path to your own salvation, whether it be financial, physical, spiritual, or in regards to any other possible human consideration; until you realize that you are the only person that can be dependably consulted as to how to actually advance or even maintain your position in life in a comfortable and sustainable way, you will always be part of the problem.

You are not part of some socio-economically oppressed minority, as those who profit from selling you continued plight would have you believe. You are a capable and beautiful individual, who has more than a thousand thoughts on how the world could be a better place, and you have every asset at your disposal to enact those positive changes if you would just get up and ignore the doom salesmen that profit from your plight and take a stand yourself.

Have an idea, and fulfill it. You are needed in society! You have thoughts that no one else has, every one does. If everyone acted on their own dreams, instead of waiting for someone to provide the bare minimum, then we would finally approach true equality. Equality will never be found by having one group of people confiscate wealth from another group of people to distribute to a third group of people, all the while selling themselves as saviors, implying that the ‘saved’ are helpless without them. They are modern day slave masters, nothing more, parading as saints. It’s despicable. Anyone who creates a system that purports to help you, yet only passes out favors, money, food; those people aren’t trying to help you, they are trying to bring meaning to their own lives, whatever the long term cost to your psyche may be.

Unless you can’t walk, talk, or breathe, I suggest you practice this mantra: “I am fine, and I do not need your hand out. You cannot buy my vote with your incessant stealing and gifting. It is shameful that you would suggest I need help, don’t you think I am capable of doing this myself?”