Individual Liberty — Individual Responsibility 

Repost: Unnatural selection and other inversions

The following post was published about a year and a half ago – well before the economy collapsed near the end of George W. Bush’s presidential term. The post remains unchanged here, except I took out the horizontal lines within it.

How’s that “hope” and “change” working out?

The socialist elite seem to be strong believers in natural selection and the survival of the fittest. If they don't, they play the game well anyway. A casual observer might be confused by this statement though, because if you examine the policies that they espouse you might think that they were working against their constituents. You would be right, they are working against their constituents, but they honestly appear to believe that their constituents won't notice, and in that they might just be right.

The socialist's economic goal for the people is an equal outcome for all. All that is, except for the socialist elite, the leaders of the socialist movement, but we mustn't speak of that. To the socialist planners, there are two classes of people in constant struggle — "the rich" and "the poor". To the socialist, an economy is a zero sum game, in order for someone to be enriched, someone else must of necessity be impoverished. Effectively this means that there is an inherent injustice in every success story — there is no virtue in work, ingenuity, investment and entrepreneurship because they all must of necessity leave someone impoverished. To correct this injustice, the socialist demands that we lift up the impoverished and cast down the rich.

This is certain to be a popular notion with "the poor". After all, who among us doesn't desire better circumstances for ourselves and our posterity? If you're living in an apartment or a small house and you're struggling to make the rent or house payments and having to choose between paying the electric bill, your credit card debt, or buying food, then anything that promises to improve your lot looks attractive. It might even appear more attractive if it doesn't require you to do anything on your own to lift yourself out of those circumstances.

Working for a living is hard, especially when it involves long hours of back breaking physical labor. Working in hot greasy conditions is uncomfortable. Some jobs are just plain hot and dirty work. Typically these type of jobs don't pay top dollar either, especially when they involve unskilled labor. To the man digging a ditch or wrestling with heavy weights, it seems that the supervisor has it really easy, and the executive has it even easier.

The notion might enter the laborer's head that somehow it's wrong that the man sitting behind a desk wearing a white shirt and tie earns three or four times as much money for sitting on his backside as the laborer does wearing out his body and suffering aches and pains. This might even tend to rankle even more as the executive hires younger, stronger men to do the same work as the laborer, thus threatening his job security and future wages. Who then could blame labor for resenting management?

The struggle for survival is hard, especially when you are debt ridden. Working at hard labor to satisfy the desires of some rich man that sits on his backside all day simply isn't fair, especially when it pays so poorly and there are always younger men ready to take your place. Why, our modern system of capitalism must be completely upside down, mustn't it? Can you see where the seeds of class warfare might be sown?

No doubt the socialist elite does. And so the notion is spread that the rich can only have gotten rich by perpetrating an injustice upon those they impoverished to obtain their riches. It's only right that the rich be brought down to the same level as everyone else, if not punished even more severely for their treading upon the backs of the poor and the hard working laborers. And the proletariat laps it up. Socialists are fond of telling us that the means of production is held in the hands of the laboring class. They would have us believe that the rich produce nothing.

Socialists espouse policies that discourage entrepreneurship. They discourage the building of wealth by taxing it disproportionately. The more money you earn, the more your income is taxed. The better your investments perform, the more they want to tax them. The more you save the more they want to take from your estate before you can pass it on to your children. If you've amassed enough wealth, but your investments perform poorly so that you take a net loss for the year, they want to consider your wealth to be "income" so that they can tax you anyway. If you spend some of the money that you have left over after they take and take and take it from you, they'll charge you a luxury tax or an excise tax.

The top fifty percent of income earners are, by most of the accounts I've read or heard, shouldering ninety seven percent of the tax burden in the United States. When you consider this, it's no wonder that any time a Republican leader tries to cut taxes the Democratic leadership complains about "tax cuts for the rich". The Democratic leadership is right. All tax cuts are almost exclusively "tax cuts for the rich", because only the rich are paying taxes in the first place. At least, only the rich according to the socialist's definition of "the rich".

It almost seems that the socialist elite want to punish economic success. Only the economically successful members of our society are taxed. Consider this and think again of natural selection, this time in terms of survival of the economically fittest.

Let's step back, and once again consider "the poor", or at least the "in debt".

Every day on the radio I hear advertisements for "credit counseling services". This must be a booming business. The interesting thing is that these companies are looking for people that have over $10,000.00 in credit card debt. In one of these advertisements, a man is talking to the credit counselor and complaining that he's paying usurious interest rates above twenty percent. In another a woman is talking with a bill collector about her payment history on her large credit card debt. She used to make regular payments and was keeping her debt in line, then her payment amounts dropped until she was making the minimum payment, and then her payment frequency became erratic and she was falling further and further behind. The bill collector's solution? Talk to a credit counseling service to get her debt reduced. I see similar advertisements on television. In one set of advertisements the appeal is made to people that owe the I.R.S. back taxes. The more, the better it seems. Here too people are being offered a chance to "settle" their tax debt for "pennies on the dollar".

It's plainly obvious that people in need of such services have a real problem. I can easily imagine the problems that would be associated with owing 10, 15, or even 25 thousand dollars to the I.R.S. in back taxes, or to a credit card company charging 20% or higher interest rates. At one time I was well down the road to having that sort of problem, owing roughly $5,000.00 in credit card debt at 23% interest. I too was making just the minimum payments, and I was watching my credit card debt climb, even though I was no longer using the cards. I was fortunate in that I obtained a job that allowed me to pay off my credit card debt. I no longer use or even hold a credit card, not because I cannot, but because I will not. Dunning notices and calls from collection agents aren't worth it to me, and I don't want to fall into that trap again. Still, you should be able to see that I understand how it is that people can amass that sort of debt and the problems that it can cause.

A person falls into that sort of trap by making bad decisions. Yes, it's possible that a person can fall into that sort of trap due to unfortunate circumstance as well, but in my experience and in most cases that I've heard of it's simply a matter of making poor choices. It's not a matter of "injustice". The credit card companies aren't forcing people to take their cards. The credit card companies aren't forcing consumers to buy products that they can't afford "on credit". Yes, I know that the credit card companies are sending out lots and lots of "pre-approved" credit offers to homeowners and just about everyone and their dog. Even so, people cannot blame the credit card companies for their own foolishness. Nobody who amasses $10,000.00 in credit card debt can honestly say that it's the credit card company's fault. You don't attain that sort of debt simply by accepting the card and putting it in your wallet, you have to buy things and not pay for them with your own money to amass that kind of debt.

Buying things that you do not need and cannot afford simply to satisfy your ego or your wants is a bad idea. Especially when you do it with borrowed money that you cannot afford to pay back. Using a credit card to make it possible to buy that cool gadget or that giant screen HD television may feel good, but if you can't afford to do it with your savings you're just asking for trouble. If you can't pay for it within the "grace period", you're going to be paying interest on it for a long while. If all you can afford to pay is the minimum payment on your credit card balance, you're never going to pay off that hot new toy. Keep making these sort of decisions and soon you may need one of those services that promises to eliminate your debt for pennies on the dollar. Tell me please… if you purchase $10,000.00 worth of goods and services using money belonging to the credit card company and then settle your debt so that you only pay $1,000.00 or however much the credit service settles for — who is really committing the injustice? You or the credit card company that you entered into a contract with — a contract that you subsequently broke?

The "mortgage crisis" that has been in the news so much lately is another sad tale. "Good people" are "losing their homes" due to foreclosures. Mortgage bankers are going out of business because of "bad loans". We read news stories about "predatory lenders". We hear about the "victims" of these "sharks". Our politicians, especially the socialist elites, would have us believe that it's the mortgage bankers who are at fault. There have been calls for "bailouts" for people who lost their homes to foreclosure.

The parallels to the credit card debt or back taxes scenario I just described should be obvious. I have yet to hear of a single person that was forced to enter into one of these mortgages. No, in all cases that I've heard of, someone got greedy and convinced themselves, or allowed themselves to be convinced, that it was a good idea to borrow well beyond their means because the interest rate was so low and the payments were so low. After all, real estate was the "soundest investment possible". It was only going up and up and up in value. And who really bothered to pay attention to the word "adjustable" in the term adjustable rate mortgage when interest rates were low and looked to be dropping all of the time. Surely home values wouldn't plummet and interest rates wouldn't go up! At least not at the same time!

All through the 1990s economists and market analysts were warning investors about the "tech bubble". Those were heady days for some investors. If you bought the right stock you could become rich almost overnight. A few thousand dollars worth of Microsoft's stock bought in the late 1980s would have turned into many millions of dollars by the late 1990s. Some companies were trading at ridiculously high prices even though they had never even come close to turning a profit. Nevertheless, those days came to an abrupt end. As Judge Jackson came closer and closer to his verdict against Microsoft there were signs that the bubble was about to burst. Microsoft's comeuppance came nearly simultaneously with the bursting of the bubble. Overnight the stock plummeted in value, as did many other tech stocks. Some "Microsoft Millionaires" that were heavily leveraged lost just about everything, suddenly finding their assets turning into debt. Such are the consequences of poor decisions and unbridled greed.

After the tech bubble burst, economists and analysts began warning about the "real-estate bubble". Naturally, people ignored the warnings. Real estate didn't compare to "dot coms" after all. Property was "real", cyberspace wasn't. Real estate values kept going up and up with no apparent end in sight. Interest rates kept going lower and lower at the same time. There was a need to keep the economy "stimulated" after all.

When interest rates are going down, adjustable rate mortgages seem to make a lot of sense. After all, if your mortgage interest rate goes down, so too does the amount you have to pay. Besides, a fixed rate loan is probably going to have a higher rate than an adjustable rate loan while rates are declining. If you keep the same payment level up, you can reduce the principal in your loan faster and possibly pay it off early. An adjustable rate mortgage isn't such a nice thing when interest rates go up though, and they'll always rise after they fall and reach their minimum. I've heard it said (in a mortgage advertisement on the radio naturally) that when the rate on a $500,000.00 adjustable rate loan goes up a bit that your payment can jump as much as $500.00 to $1,500.00 per month. That can be painful in a hurry, especially if interest rates keep climbing.

Of course the game to play, according to some, is to refinance and convert that adjustable rate mortgage into a fixed rate mortgage. It sort of makes sense if you think about it, because you'll keep a stable payment. In fact, if you've got that credit card debt problem we talked about earlier, you can even use some of the money to pay off those credit cards (just be sure not to start using the cards again, or you'll fall right back into that trap, this time with no equity in your home). According to one advertisement on the radio "it's the biggest no-brainer on the face of the planet".

Ah… but there's the little matter of that "real-estate bubble" those economists had been warning us about. And what do you know? Those economists appear to have been right. Real estate prices and home values have gone down quite a bit in the last couple of years. It looks like the bubble has burst. So what do you do if you've borrowed more money than you can really afford, your interest rate on your adjustable rate loan has jumped a half a point or even a whole percentage point, and now you owe more money on your mortgage than your house is worth? It's going to be really hard to re-finance that don't you think?

Ooh! That's gonna hurt!

Remember the discussion about class warfare? I can assure you that our socialist elites haven't forgotten it. Those mortgage companies must be evil to foreclose upon homeowners. It's an injustice. Politicians aren't so dumb either. This is a "crisis" that must be solved. People are hurting. Easing their pain might be worth votes.

The natural solution? A bailout. Let the government fix the problem. Shield the masses from the consequences of greed and poor decision making. And what about the mortgage giants? What about the companies that hold all of those bad loans? Our politicians tell us that "they cannot be allowed to fail", even though they made the business decision to make loans to people on shaky footing in the first place. If you ask me it's foolishness. Perhaps we need to suffer the consequences of our choices from time to time in order to learn to make better choices.

Oh, I know that there's a problem. I know there's a lot of pain. The newspapers remind us. The radio reminds us. Television reminds us. Our politicians remind us. But… if there's a bailout for the borrower, where do you think the government will get the money? If there's a bailout for the lender, where do you think the government will get the money?

The bottom half of the economic food chain will praise the politicians and the socialist elite for raising them up. They are after all, shielded from economic failure through government entitlement programs. They are, also, taught that their problems are the result of injustice, and that they are therefore entitled to have their government provide for them at the expense of the evil rich. The middle class may well praise the politicians and the socialist elite too, for shielding them from the consequences of their own poor decisions through mortgage and credit bailouts.

Under this system we're selecting for failure and against success. It's a form of survival of the least fit. The "rich" are brought down to the level of the poor, and the "poor" already wealthy by the standards of much of the rest of the world and of history are hardly raised at all.

This is what I mean by "unnatural" selection. Our politicians and the socialist elite punish the behaviors that lead to success in our economic system. Our politicians and the socialist elite reward the behaviors that lead to failure in our economic system. They reduce our fitness to compete in the world beyond our borders. This is an inversion of the things that Darwin taught.

For what good? For their own good. After all, they insure the gratitude of the masses by "fixing their problems" for them. What better way to continue to get votes? And in politics, survival of the fittest means getting the most votes. Maybe the socialist elite are Darwinists after all.

One thing I didn't mention in the original post that comes to mind, especially as I'm starting to hear some of those same mortgage ads recommending refinancing as a way to get out of the trouble our weak economy has helped some of us settle into – is that when you refinance your mortage, you may reduce your payments, but you’re also resetting the clock on how long you’ll be paying out on that home. If you had a 30 year mortgage with a (relatively) high interest rate, and you’ve paid on it for ten years refinancing will set the clock back to 30 years again – and the unpaid interest and principal will be the new principal.

Something to think about?