Sunday, June 21, 2009
COPD vs Obamanomics
In several ways patients with COPD (Emphysema) are like small business. In these patients the lungs are having a hard time getting oxygen into the blood. As a result the patients body compensates. As the lungs start to fail, the body starts shutting down all nonessential functions. The pateints lose weight, the kidneys and other organs barely function. To keep things going, the body then concentrates the blood by making sure that every cc of blood has as many red cells as it can to carry the vital oxygen to the deprived organs. The hyperconcentrated blood compensates for the lungs failure and the patients keep going. If these patients lose blood, bad stuff happens fast. Their body is already on the edge. You have to replace their blood. If you just give them fluid and dilute what blood they have bad things happen fast. In other words, you dilute the blood, they die.
Small business is very similar. As the economy decreases and people buy less, the business has to compensate. At first it can lower prices temporarily to try to keep the volume up. This is like breathing faster. Eventually however you burn up what ever profit you have and start to lose money. Because you have certain demands to stay in business (overhead) you cut where ever you can. Since the vital organs of a business are its employees, they get cut as much as possible. You then get to a point that you have cut all that you can and volume of business is low. So low that the only way you can stay in business is to increase the price of your product. This causes inflation because you had to raise the price just to compensate for the economy. This inflates the dollar because it takes more dollars to buy the same thing. So, what decreases this whole process? The answer is to decrease overhead or the stress on the system. For business, one of the big stressors is taxes! The other thing that needs to be done is to make the dollar stronger!
Instead, in Obamanomics you increases the taxes on business to further decrease their ability to stay afloat and mandate more costs per employee which speeds up and increases the cuts that have to made in the staff and lastly devalue the dollar by massive unbacked spending. So now you really have to increase the cost of your products just to stay in businees and really have to lay off as many people as possible just to stay in business. Thus raising unemploment and letting inflation run wild.
In other words, it is like a making a patient with COPD carry another patient on his back while running on a treadmill which you are making up hill while you literally suck the blood out of him.