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 First, is the point that new innovation will kill off old and outdated products and industries.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

The Banker goes to a rock show

In an attempt to make me more culturally relevant, the Rocker asked me to come out to see his band play. In spite of having to go to work the next day, I decided to be a good trooper and come watch. The following is the running diary of the night.

10:12 – Finding a parking spot on the square in Denton requires 15 minutes of driving in circles (I guess technically in squares) until someone is leaving and you are in the right place at the right time. Epic fail.

10:27 – I was supposed to be at the show at 9pm to pre-party with the band, but Pale Rider was on AMC. Then the end of the Bucket List was on and if Morgan Freeman narrates something then I am forced to watch it. After the Bucket List, Cinemax was airing a movie called Super Ninja Bikini Babes. I decided to skip Super Ninja Bikini Babes to go to the Rocker’s show. I am forced to acknowledge the marketing brilliance of adult filmmakers. It is awfully hard to pass up a show titled Super Ninja Bikini Babes, but I am a true fan of Redefine. (The Rocker’s band)

10:29 – The Rocker asks if I Tivo’d Super Ninja Bikini Babes. For the record, I did not. The only thing sadder than Tivoing soft core pornography on Cinemax is a grown man living in his mom’s basement. Or possibly writing a running diary during a rock show.

10:32 – The opening band’s name should have something to do with man boobs.

10:35 – Redefine groupies….check. Bankers do not have groupies. Advantage Rocker.

10:37 – The lead singer of Man Boobs tells an uninterested audience to do something. They do not. Fail.

10:42 – I have gone upstairs on the loft to write in peace. There is a nasty couch up here that looks like it was a hand me down from the club owner’s cousin. The cousin that was an adult filmmaker in the 70s. I have never been afraid of furniture until now.

10:44 – The Man Boobs have a song called “Panty Dropper” that they are about to perform. Unless it is about the fact that they regularly drop their sister’s delicates when they fold laundry back at their parent’s house then it must be entirely fictional.

10:45 – The song is fictional.

10:47 – I wish this place had a cocktail waitress. If a club has multiple levels then it should have either a bar on each level or cocktail waitresses. This needs to be a city building and zoning ordinance. We need to campaign for this kind of change. YES WE CAN!

10:50 – The Man Boobs forget the name of the next band in an extremely awkward silence that is only broken by a member of the crowd that is casually listening and yells out the next band’s name. The Rocker is mortified because Redefine is the next band.

10:52 – The lead singer of Man Boobs gives the following advice about life. “This next song is about fate. It’s in your hands. Live your life and change your fate!” The inspiring words hit me like a ton of bricks. Until I use my brain and realize the irony of controlling your own fate.

10:54 – The song is so good that I have the free time to look up the definition of fate on my Blackberry.

Fate – an inevitable and often adverse outcome, condition, or end.

The key word of that definition is inevitable.

10:58 – The Man Boobs are done. The Rocker is setting the stage for his turn to rock. Time for me to mingle with the crowd.

11:01 – I went to college with the bartenders at the bar. I consider this moment in time as an incredible advertisement for the virtues of occasional class attendance and devoting as much energy towards scholastic achievement as alcoholic beverage consumption when one is attending college. They are good bartenders though so maybe they have a Brian Flanagan thing going.

11:03 – There is a very weird lady walking around looking for the right guy to buy her enough drinks. There is nothing out of the ordinary about seeing girls like this in a college town, but most of them do not dress like the leading lady in an 80s hair band music video. The long, black coat with the fur collar is a nice touch with the overly curled and teased blond hair.

11:08 – Setting up for their turn on stage proves that all band guys are A/V nerds.

11:10 – The Rocker has the coolest rock girlfriend ever. She is also a banker which I feel gives her the above mentioned coolness. She is the perfect hybrid.

11:15 – I can’t help but smile when I think about how many overdraft fees will be caused by bar tabs and pretty girls at the venue tonight. I think this puts me about two steps away from being the kind of evil banker that forecloses on orphanages and the elderly.

11:18 – The rocker uses two guitars to rock but I only need one pen to bank. The pen is mightier.

11:21 – I just looked at the roof here. By no definition of structural integrity would I consider this to be secure. I am literally risking my personal safety by being here. This along with the fact that I passed up Super Ninja Bikini Babes proves my Redefine fan street cred.

11:22 – I want to set up a merch booth at my bank. People need shirts commemorating my banking skills and service, and I need more of their money.

11:24 – Watching the soundboard guys gives me a new found appreciation for him. His job seems extremely too difficult given the size of the soundboard and the number of knobs and buttons on it. He deserves groupies too.

11:25 – I openly wonder why we don’t have more shows about the dumb things that drunk people do. It seems like these kinds of shows would be wildly entertaining.

11:26 – In response to my drunk show question, I am immediately reminded about MTV by those around me. I was completely wrong about the entertainment value of shows about drunk people being idiots.

11:32 – The Rocker does a lot of hair flipping. If there was a talent scout from Pantene or L’Oreal then he would be sponsored in a heartbeat.

11:34 – I am amazed at people that can write original music. The talent it takes to make sound that people will like and lyrics they will identify with is insane.

11:35 – Why are more recorders not used in bands? We all know how to play them. It seems like learning Hot Cross Buns in the 2nd grade is the instrument’s peak.

11:37 – A bearded man in a Hawaiian shirt sits down and is consumed by the mystery couch. The properties of this couch may be of interest to both the Center for Disease Control and Prevention and Stephen Hawking.

11:40 – Someone just bought a shot for the Rocker. This has never happened to me at work. Advantage Rocker.

11:48 – Where on the classiness scale do you place the girl that makes out along the railing of the loft of a smoky bar in Denton, TX with a guy in cargo shorts?

11:51 – The girl on the railing is the weird lady from earlier. Was it the fur collar or the heels that put her Mr. Right Now over the top? Had they made out on the mystery couch my head may have exploded.

12:00 – The Rocker just apologized for something. Rock means never saying you are sorry for anything.

12:01 – The best thing about Redefine, other than the music and the Rocker’s hair, is that the Broski count in the audience is zero. This is a sign of quality music.

12:03 – The audience is fighting one another. I am told this is another sign of quality music.

12:05 – I’m disappointed that Redefine does not have a song about women’s undergarments and the effect of gravity upon said undergarments. They have a lot to learn from Man Boobs.

12:07 – In spite of my concern, I am told that the constipated face that the Rocker is making is a natural and good “rock face”. WebMD begs to differ.

12:15 – The show is over and I am heading home for the night. It was a good show and I learned a lot of interesting things. I mention that the Rocker should come to the bank tomorrow and do a running diary of me at work. He slurs out some kind of response that I think meant that the bank would be closed for the day before he would be awake. The life of a rocker…

- The Banker

Switzerland Bound

There is a lot of talk in Washington about fighting for American jobs. Talks about wanting to keep companies from outsourcing jobs to other countries. While nearly all economists will agree that preventing such things from happening is not good for the nation's overall economy, I can respect the desires to protect American jobs.

The problem is that the actions that Washington is taking, specifically higher business taxes, are actually chasing companies away from the United States. Washington's solution to this problem has been to propose higher taxes on companies that outsource jobs. It does not take much to see the flaw in this logic.

In the mean time there are quite a few major businesses that are looking to move their business to other, more tax friendly nations. This is an excellent story about the benefits that Switzerland is feeling because of their business friendly tax code.

A tax code that is not business friendly is not the way to spur economic growth in a time of recession. It is about like throwing water on a fire to make it burn.

- The Banker

Too poor to what?

This is just a quick commentary, but I was driving around today trying to find something to eat for lunch. I was in the uptown area, and found myself at a stoplight behind a car that is easily 15-20 thousand dollars more expensive than mine. Normally, make, model, and price of an automobile is of little importance to me. However, when it comes to this story, it is 100% vital to what I have to say. On the back of this particular automobile was a bumper sticker that read the following:

"Too poor to vote Republican."

Besides the fact that there are many obvious things wrong with this claim (you know, the tired, old argument that the Republican party is only comprised of a few hundred rich white guys), it occurred to me that for every idiot who has this sticker on their car, we should replace it with a more truthful statement. I propose the following:

"Too stupid to properly comprehend economics."

There, that seems much more logical, doesn't it? In fact, the sentence above seems to make more sense, and certainly seems to fall in line more with the current liberal philosophy of spend, spend, spend - nevermind where all this "mystery money" is supposed to come from. But don't worry - Nancy Pelosi needs 30 million dollars of your hard earned money for a mouse, and the eco-marxists in congress need millions more for electric golf carts to get around Washington.

Just an observation.

-The Rocker-

It's simple, Stupid

With everyone rushing to determine what is the best thing to do to stimulate the economy, I decided it is a good time to offer my advice to individuals. There is a lot of conflicting ideas about what the average American should do once they start receiving that extra $12 a week.

The answer is simple. Americans need to live responsibly. Americans need to save money and make sound investments. Americans need to live at their means, possibly below them for a while - depending on their current state of debt.

In addition, the last thing that the average American needs to do is increase their consumption spending, unless the individual as the means and the desire to increase the spending.

It is outrageous that we have a government that is trying to manipulate Americans into increasing their consumer spending. It is reckless, irresponsible, and incredibly short sighted. The fact that the tax credit in the stimulus package that Americans are getting is divided up to promote spending instead of given in lump sum (which would promote saving and debt reduction) is a clear example of the selfishness of those in power.

To be clear, the government wants an increase in consumption spending because it makes the economy look better now. Consumption spending does not fix the root cause of the economic problem nor does it promote long term economic growth. Our "leaders" are only after consumption spending because it looks good in the short term and ultimately, their only concern is the short term. There are elections coming up in 2010 and 2012. Those people that are currently in power merely want to inflate the economy long enough to get re-elected.

The alternate, which is Americans saving and investing instead of spending, would lead to long term economic growth but would most likely cause short term loss. Some industries would suffer if luxury spending tightens even further and that is unfortunate. The important thing is that while a few would suffer, the great majority of Americans would be much better off.

On a national level, the savings and investment would lead to a growing economy that is more stable. Private investment equals growth because private investors invest money in places where they have a high expectation of return.

On a personal level, the average American would be in a great financial position with more money saved, more money invested, and with less debt. To boot, once individuals reach a point where they have lower debt with more money saved and invested, they will start to increase their spending. Only this spending is done at a sustainable level.

The great thing about a capitalistic economy is that if everyone acts in their own best interest in a legal way, then the economy does well as a whole. It is only in a socialistic society where individuals are asked to sacrifice their own interests for the good of the society as a whole....

-The Banker

Our Green President

One of the most important aspects of being POTUS is your ability to keep your composure when there is a crisis. This particularly important because it gives confidence to average Americans to see their leadership in control and positive. President Obama's ability to keep his composure during this economic downturn has been an abject disaster. Either President Obama has no ability to keep his cool under pressure or he is using fear as a political tool. Both explanations are a condemnation of his ability to lead this country.

President Obama often likes to talk about FDR as an example of how he must handle the current situation. While I find the constant public references to the Depression to be repugnant, if he is to learn something from FDR, maybe it should be how to remain confident and optimistic about the nation's economy. That is, unless President Obama does want to undermine consumer confidence in order to promote his economic agenda. I for one would like to believe that my President would not intentionally undermine our nations confidence for political gain. I did not believe it when President Bush was accused of it, and I refuse to believe it when President Obama is accused of it.

The sad truth of the situation is that President Obama is inexperienced and naive. He is doing the best that he can to deal with the problems of our nation. He wants to fix the problems and improve the lives of everyday Americans. However, the problem is that his naivete is causing him to be overrun by other members of his party. His inexperience and idealism is causing him to make decisions that are neither pragmatic nor practical. It is my hope that he is learning from the mistakes he is making right now so that we can look forward to better leadership from him. So far, President Obama's leadership has been an oxymoron.

-The Banker-

Barry Obama - caught red-handed lying on his own website.

Barack Obama is already not living up to his promises - just three weeks into his Presidency. On change.gov, Obama promises the following in regards to his "Ethics Agenda":

End the Practice of Writing Legislation Behind Closed Doors: As president, Barack Obama will restore the American people's trust in their government by making government more open and transparent. Obama will work to reform congressional rules to require all legislative sessions, including committee mark-ups and conference committees, to be conducted in public. By making these practices public, the American people will be able to hold their leaders accountable for wasteful spending and lawmakers won't be able to slip favors for lobbyists into bills at the last minute.

(source: http://change.gov/agenda/ethics_agenda/)

Now, look at this video posted today by Chairman Tom Price (R-GA):



Funny...I thought Barack Obama promised in writing that there would be no more closed door meetings. If that's the case, then what the hell is going on here?

So this is the new era of Obama - agree with Barack Obama, or get the hell out of the room. In pure Alinsky-esque fashion, opposing viewpoints are ignored and then they attempt to laugh them off as dismissible and destroy them. This is not democracy. This man is holding his first job ever as President of the United States, and has no idea how to handle conflict. He and Pelosi shut out the voices of all who oppose in order to further push ahead their Socialist agenda. These people are Socialists, they are Marxists, and they are power hungry. They don't care about anything more than retaining their own power. America, we must stand up against this style of politics before it's too late.

-The Rocker-