Sunday, July 10, 2011

We need more, not less, government planning

I listened to John Stossel's latest show today on Fox Business (see link below), in which he cited Austrian-born economist F. A. Hayek's 1944 book, The Road to Serfdom, which warned against the tyranny that Hayek felt inevitably results when government controls national direction via a central planning function. Stossel was supportive of Hayek's view, and seemed to imply that planning and goal-setting by themselves equate to harsh government control and the elimination of personal freedoms. Essentially, he said we should rely on the capitalist system and let our corporations do our planning for us, as if corporations -- which are largely global today and without national allegiances -- can somehow be relied upon to put the American public's interests before their own.

Hmm... With unemployment so high, with government spending and our national debt out of control, with our infrastructure in decay, with our economy repeatedly bouncing from boom to bust, and with over 25% of our national wealth in the hands of less than 1% of our population (up from 9% thirty years ago), does it seem like we're on a a good course and that it's a good idea to continue to not do any long-term planning with the people's interests in mind? Furthermore, ironically, the corporations that Mr. Stossel so admires all have central (i.e., strategic) planning functions. Such functions are considered to be essential in the business world. Given that people like Stossel constantly advocate for government to be run more like business, then why shouldn't such a function exist within government, but with the national interest in mind? As it is now, in the absence of a strong planning function, we aimlessly meander from election to election, never building towards a unified vision of a better society. In the meantime, China, which does have a strong central planning function, is gaining ground on us every day. It's very frustrating.

You can't get where you want to go without a road map, and a road map is a product of planning.

To read about Stossel's show on his blog, click here. The show will be repeated again tonight, Sunday, July 10th, at 6pm on Fox Business (Comcast channel 130 in the Bay Area).

Saturday, January 22, 2011

Helpful Behaviors for Building Wealth

There are some really good points in this article (link below), although the title is a little misleading. It's not so much about becoming super-rich, but rather, it's really about the behaviors that may help someone become more wealthy than they otherwise might, whatever their income level may be.

The author refers to these things as being traits, but they're really skills that can be developed by anyone. Not everyone has the ability or opportunity to become a financial expert or to even go to college, but that doesn't need to condemn them to a life of financial insecurity. It's never too late to develop these skills either, although they're certainly more beneficial if picked up at an early age. I agree that comfort and confidence with basic math is really important, as is developing a methodical approach to problem-solving. The article emphasizes planning skills as well. In my experience, I've found that many people have an aversion to planning simply because they are afraid of the unknown and what they might learn from the planning process. The simple truth, though, is that it's better to be prepared and to learn about potential problems as soon as possible in order to maximize the amount of time available to rectify them. Developing a willingness to encounter uncertainty and a fearlessness about tackling problems, therefore, can by extremely valuable behaviors. If parents could help their kids zero in on these skills, it would go a long way to improving their children's long-term prospects no matter what those kids end up doing in life.

What can someone do to develop these skills or to instill them in their kids? First, you get comfortable with planning simply by doing it. Start small in order to stay within your comfort zone. For example, if you find yourself running out of cash every month, then put together a simple monthly budget. If you're concerned about retirement, then play around with some of the retirement calculators that are available on the Internet. They'll help you determine how much you have to save every month prior to retiring in order to support your lifestyle in retirement. As far as the kids go, there's nothing wrong with getting them involved in household budgeting. Explain to them how much you make, how much comes off the top in taxes, and how you budget the remainder, which hopefully includes some savings. Demonstrate to them that it's important to not spend more than you make. Explain the concept of priorities. Help them understand that maybe spending $100 a month on a cell phone for them isn't a great idea when mom and dad are concerned about their retirement or making tuition payments. If kids don't know what the limitations are, then there will be no limit to their expectations. The main point, though, is you'll be getting them used to the planning process early, which they will hopefully carry forward into their adult lives.

Click here to read "Character Traits and Behaviors that Make You Rich," by Laura Rowley.