Creative Destruction

There is an element to capitalism, and economics in general, that I feel it is important to bring up in our current economic situation. It is called creative destruction. The concept has two definitive points to it. First, is the point that new innovation will kill off old and outdated products and industries. Think about what Cd's did to cassettes and what the iPod is doing to Cd's. As the new innovation came along, the old process died out. Second, is that when something dies out, other products and industries will pick up the remaining market share. The best example here is the collapse of Washington Mutual and Wachovia. They died out and their customers went to other banks. This is what creative destruction is, and it is a great thing.

It sickens me that our elected officials are so short sighted that they forget about this great feature of a free market economy. I am tired of hearing that if General Motors goes bankrupt, then it will mean millions of people will be out of work and that it will be a death nail to the United States manufacturing industry. I actually heard someone dumb enough to say that "as GM goes, the US goes." There is not doubt that if GM goes bankrupt it will cause a temporary increase in unemployment and a temporary drop in US manufacturing, but this is where creative destruction kicks in to make it better.

If General Motors goes out of business and never makes a car again, (which for the record is not what would happen if they filed bankruptcy) the result would not lead to an equal drop in demand for cars. The reality is that the demand for cars would stay roughly the same in the short term and would be completely unchanged in the long term. As a result, other car companies would have to make more cars to meet that demand and capture GM's old market share. These companies would have to open new plants, buy more parts, hire more workers, etc. The closure of General Motors would spur the growth of other auto makers. Many of the jobs lost by the General Motors closure would be re-created by this growth. In fact, the real reason that the White House and Democrats are trying so hard to save GM and Chrysler is because they know that these new jobs will be created in "Right to Work" states and will probably not be union jobs. Since union workers are such a big part of the democratic constituency, these people must stay employed so democrats can continue to have control of those Midwest swing states.

The other current example of creative destruction not being allowed to run its course is in newspapers. To be clear, the internet has made print journalism largely obsolete. Add in the growing popularity of Kindles and it is easy to see that printing newspapers is not good business anymore. Internet news sources can be more current and offer a wider variety of opinion. It is cheaper for the reader and in most cases, makes more economic sense to the newspaper company than the print copy. This is how creative destruction makes a process better but must destroy an old process in the act. Once again, the liberals in this country do not want to see creative destruction run its course in this instance because it is harmful to them. Liberal ideology runs the print media and has a nice monopoly of information going. However, once the medium for sharing information goes to the internet completely, then competing viewpoints are more easily accessible and widely distributed. Just think about how much liberals hate Fox News. Once upon a time you had to get your news with a liberal bias. Because of creative destruction that is no longer becoming the case.

Creative destruction is a great thing. It makes life better for our nation as a whole. Just remember, you can't make an omelet without breaking a few eggs.

- The Banker

Uniting the States of America

The election is over. Barack Obama is our President-elect. Congratulations to Obama and all of his supports for a fantastic campaign, and for helping to make American history. America having its first African-American president is a source of pride as well as a testament to the progress we have made as a nation. In forty years, we have gone from African-Americans being unable to eat at certain restaurants to having an African-American as the leader of the free world. Not enough can be said about the millions of men and women that have helped pave the way for the progress that has been made and I can not begin to understand the joy being felt by African-Americans.

For the millions of Americans that did not vote for Obama, it is now time to respect the democratic process that we love and cherish as Americans. It is time to support our new president and do everything in our power to help him be the best president that he can be. That does not mean blindly following him, but it does mean giving him the respect owed to the president. No one should oppose Obama because he is a democrat. No one should hope that Obama fails for political or personal reasons. All Americans need to be united around our leader and support him in making our nation a better place.

However, that does not mean that Obama is above criticism. If an American disagrees with the decisions or the policies of Obama, then it is that person's right to voice the opposition. As long as the opposition is done with respect. For example, I am opposed to the idea of another stimulus package, so I will oppose Obama in instituting another stimulus package. I am not opposing Obama, I am opposing his policy and decision.

(On a side note, people need to stop being so disrespectful to President Bush. You can disagree with someone without being disrespectful. History will be the judge of his presidency, there is no need to heap insults on the man that has served our nation for the last eight years. The American people have voted in new leadership. Piling disdain on the Bush administration is in no way constructive for our country and makes those insulting him look like children ganging up to pick on the unpopular kid.)

As far as unity is concerned, our country would be better off if our political parties could work together. Unfortunately, neither party is willing to make the first step with any conviction. Speeches are words, and words can lie. Actions are different. One of the parties needs to act in a bipartisan manner instead of just criticize the other party for not being bipartisan. A huge step in the right direction would be for Americans to stop saying idiotic things like "I hate Nancy Pelosi" or "Sarah Palin is stupid". Until Americans get over making politics about people instead of making politics about ideas, then we aren't going to get any unity.

At this point, it would make the most sense for Republicans to make this gesture. The GOP is out of power and needs to make changes in order to change that. The GOP needs to spend the next two years working with Democrats to solve problems. The GOP needs to spend the next two years making its message about the issues and not the individuals in the Democratic party. The GOP needs to work with Democrats on fixing the economy, reforming the tax code, securing energy independence, and defeating terrorists. Bipartisan solutions that have the public in mind are the solutions that stand the test of time. Partisan solutions that are put in place in spite of the other party die as soon as power changes. We need our representatives to put common support behind the solutions for our nation. Americans are entitled to a government that is solution driven, not power driven.

People can rally around a common cause or a vision, as long as they don't hate each other.

-The Banker-