Category Archives: Government

TEST: Selling Portable Generators

A test on the selling of generators:

At the time of the early aftermath of hurricane Katrina, two young men in their early twenties heard that there was a dire need for portable generators in the destruction zone.  These two men purchased two generators, loaded them into the back of a pickup truck, and drove down to the area.  They sold the generators for $5,000.00 each.

generator

 

Is that a good thing, or a bad thing?

Question

 

Most people have a knee jerk reaction to this that is something like:

“That is TERRIBLE!  They are just taking advantage of people when they are in their greatest need.   Jerks!”

But here is the thing:  They found a need.  They filled the need.  They were very well compensated for their efforts.  Nobody forced the buyers to purchase or pay that price.  And most importantly, two folks, and likely those around them, now had access to generated power that was not available to them before.

It reminds me of when I was a young boy, and I saw a man talking on a phone in the back seat of what was clearly a VERY expensive car.  I told my mom about it, excited that I saw someone talking on a PHONE in the back of a car!  How on earth did he get that?  Every phone at the time was tied to a line, and you could get a REALLY long cord that might let you get 20 feet from the base, but nobody had a phone in their car.  Well, almost nobody.  It was about 1972.

Now, how much do you think that man paid to have that phone in his car?  I would guess anywhere from $5,000 to $20,000 per year in 1972 dollars.  So, was that not fair?  Should we have kept him from having a phone because nobody else had one?

But then something amazing happens…The technology improves.  Folks compete.  The cost comes down.  And today, some grade school kids have phones, and most Junior High kids have phones.  And those kids’ phones have GPS, mapping, texting, any number of video games, and even stock trading.

That man back in 1972?  His phone allowed him to talk to people. It didn’t even have a clock.

Similarly, those young men made a great profit on their generators, but others heard about it, and the competition was on.  You can bet that folks were very willing to put in the effort to meet that need, and at a lower price.  So, like the phone example, some  early buyers paid a pretty high price, and the costs came down, and the demand was met, and the market balanced out.

Free markets are a GOOD thing.  It is up to the buyer and seller to determine the value of a product or service.  It is not up to us unless we are a party to the transaction, and it is certainly not up to the government.  Because all that would have happened if we followed our knee jerk reaction and made it illegal to “take advantage of people,” is that the two folks that were willing to pay the high price would not have had their generators, and the market for generators would have been slowed down or stopped completely, so folks would have gone without the generated electricity for a longer period of time.  All because someone who was not a party to the transaction decided that they should be the transaction’s ultimate arbiter.

Free enterprise rocks.

TAXES: How Much Do You Pay?

Another quick test for you…

How much do you pay in taxes?
Taxes1040

Do you know?

Think about it for a couple of seconds…How much do you pay in taxes?

Most folks will think about their tax returns or their W-2 forms.
Not even close.  If you are purchasing something, do you want to know the price?  If you said “no,” you are kidding yourself.  Your tax dollars are purchasing the services provided by the government.  So here is the problem:  We can’t hold the government accountable because we have no idea what we are paying them, or what we are getting from them.

No idea.

So back to taxes.  Here are a couple things to think about:  Have you ever purchased any consumer packaged goods from any company that made any profit during your lifetime?  Think Coke, Kellogg’s, Tide detergent.  Some like to talk about companies paying “their fair share of taxes.”  Here is the problem, those companies don’t pay the taxes, we do.  So, do you know how much you paid in taxes for every single US company from which you purchased something?  Of course not.  And that is a problem.

How about taxes on your gas purchases for you car?  Do you know how much of the purchase price of a gallon of gas is a direct tax?  According to the American Petroleum Institute the taxes, on average throughout the country, are 48.23 cents per gallon for regular, and 54.38 cents per gallon for diesel.  For Californians, those numbers are 63.79 cents and 65 cents respectively.  Here in Colorado, those numbers are 40.4 and 44.9 cents respectively.  Think that might add up?  That about $8.00 to $13.00 every time you fill up a 20 gallon tank!

Now, how about the non direct taxes paid by business?  Things like property taxes on triple net leases.  Those businesses must earn the money to pay those taxes, and they get that money from the customers they serve.  That is you.

I hope you get the idea.

Nobody has any idea how much of their hard earned income is being funneled into government coffers.  Nobody.   And that includes you and me.

There are so many layers to our tax laws, it is impossible to keep up.  Which of course puts every single citizen of this country at risk of breaking the law.  Talk about tyranny.

But the biggest problem is that we the people are left with no meaningful way to hold our government accountable.  We don’t know what we are paying and we don’t know what we are getting.  How can we have any idea if we are getting any value at all?
How can we know if our government is doing a good job?

This has to change.  We the people need to do better.   We need to expect more.  We need to demand more.