The commentary this week deals with the stunning special election in Massachusetts. My thoughts and prayers go out to the Kennedy family with the loss of Senator Ted Kennedy. I was also encouraged by his courageous battle with cancer.
His death meant that the State of Massachusetts was required to hold a special election to fill his vacancy in the Senate. With voter registrations in Massachusetts running 3 to 1 in favor of Democrats and Independents, most believed that a Democrat was guaranteed to win election. However, Scott Brown had plans to thwart their hopes.
Scott Brown saw the falling approval numbers of President Obama and Congress and believed that the people of Massachusetts were ready for real change and not the phony change offered by the current administration. He knew that the country elected Obama with the hope that he knew what direction the country needed to go in but after a year in office all they have seen is jobs lost, out of control deficits, and debt that will shackle future generations. Scott Brown knew that this was not the change the nation was seeking.
The Nation is seeking change to a more fiscally responsible government. The nation seeks lower taxes so they can have more investment capital and discretionary income. With the election of Scott Brown, the nation once again has hope that the disastrous healthcare and cap and trade legislation will not be passed by this congress and senate due to the loss of the Democrat super majority in the U.S. Senate.
Energized by the positive results of the elections in Virginia, New Jersey and now Massachusetts conservatives now have real hope of gaining a majority in the Congress and possibly even the Senate. However, this is not the time to rest in our laurels.
The Liberals are crafty and must be continually watched. There is already talk of the House of Representatives simply adopting the Senate version as is, thus circumventing the reconciliation process. This sneaky maneuver would mean the Senate would not be required to vote on the legislation again. However, if Nancy Pelosi cannot get a majority of the votes in the House, the Senate version cannot be passed sending both the house and senate versions into the reconciliation process. Any bill that comes out of the reconciliation process will require 60 votes in the Senate to avoid a filibuster, something unlikely with the election of Scott Brown.
The recent elections in Virginia, New Jersey, and Massachusetts have many Democrats in the House running scared, believing that they will loose their re-election bids in November. This makes it doubtful Pelosi will be unable to gain majority support for passage of the Senate Version.
I recommend not taking a great deal of time celebrating the conservative victory in Massachusetts and instead remain vigilant, keeping a watchful eye on what the liberals are doing in the Congress. The people of Virginia, New Jersey, and Massachusetts have given us an example to follow by running and electing conservatives to office. Let us continue to follow their lead to victory in November.
Saturday, January 23, 2010
Free Markets (Part 3)
The law of supply and demand determines prices for goods and services in the market. As demand increases for a good or service, its price increases to insure demand does not exceed supply. Conversely, if demand decreases, prices go down so the good or service is more affordable thus increasing demand (Sowell, 2007). External forces of externalities can distort the law of supply and demand resulting in shortages or surpluses (Hackett, 2006). This week we will look at how government intervention through price controls affects the natural actions of supply and demand.
Politicians need to get votes in order to gain election to office. During campaigns, the public is exposed to a litany of promises designed only to get votes. Once a politician gains election to office, the promises are quickly forgotten. However, politicians often develop programs to either keep prices high in order to gain favor with suppliers or keep prices low in order to gain favor with the public.
Rent control is one such idea. Rent controls began during World War II as part of temporary wartime price controls (Tucker, 1997). The intention was to insure affordable housing. Rent controls continued after the war in order to provide affordable housing for returning GI’s. However, even programs started with the best of intentions have unforeseen circumstances that cause them not to achieve the desired results.
A scan through the classifieds of many rent-controlled cities reveals that there are very few moderately priced rental units available. In fact, most advertised units are priced well above the actual median rent (Tucker, 1997). The logical question to ask here is how can rents exceed the median price when prices are held below market value through price controls.
One explanation is found by looking at how the law of supply and demand works. With prices kept below the median price governed by the law of supply and demand the demand for rentals is held high. However, with prices held low there is little incentive for individuals to go into the rental business or to build rental properties. This results in a shortage of available rental units (Sowell, 2007).
To compensate for this shortage, policymakers exempt significant properties from rent control. To compensate for properties under rent control, these properties usually rent at above the median rent (Tucker, 1997). Most likely, these properties remain available and listed in the classifieds. For these reasons, rent control has been repealed in many communities.
Another form of price control that distorts the normal operation of the law of supply and demand is price subsidies that keep prices above the median price governed by the law of supply and demand. An example of such a subsidy is farm subsidies in the United States.
The first attempt by government to control prices came in 1920 when congress passed the McNary-Haugen bill. This bill fixed prices for some commodities in order to preserve the high prices that occurred during World War 1. However, President Coolidge vetoed the bill. In President Coolidge’s veto message he stated “I do not believe that upon serious consideration the farmers of America would tolerate the precedent of a body of men chosen solely by one industry who, acting in the name of the Government, shall arrange for contracts which determine prices, secure the buying and selling of commodities, the levying of taxes on that industry, and pay losses on foreign dumping of any surplus” (Folsom Jr., 2006).
President Coolidge understood the economic repercussions of price subsidies. He understood that other industries would have to be taxed to pay for the subsidies. He knew that keeping prices high would result in surpluses that the government would have to buy back and give away to foreign countries. Unfortunately, the next two presidents did not share the opinions of President Coolidge and farm subsidies exist today (Folsom Jr., 2006).
With price subsidies we also pay farmers not to grow crops in order to prevent surpluses that price subsidies create. The talents of these idle farmers could be put to use on other industries but as long as they can earn income for not working, they have no incentive to learn new skills that could be useful in other parts of the economic system. The economic system as a whole pays a high opportunity cost because of this wasted talent.
In both of these examples, we have seen that the operation of the law of supply and demand is distorted when government sets prices either at a level above or below the median price. Rent control show us that fixing prices below the median results in shortages and causes the prices of goods and service that are not fixed to be above the median to compensate for the lower fixed prices. When prices are kept high through subsidies, surpluses are created which have to either be bought back by the Government, at taxpayer’s expense, or given away. Governments also begin paying producers not to produce, again at taxpayer’s expense, in an effort to reduce surpluses. This paying of individuals to remain idle results in a high opportunity cost to the economic system.
Next week we will look at the affect of government intervention on the supply of goods and services produced.
References
Folsom Jr., B. (2006). The origin of american farm subsidies. The Freeman: Ideas on Liberty, , pp. 34-35. Retrieved January 19, 2010, http://www.fee.org/pdf/the-freeman/0604Folsom.pdf
Hackett, S. C. (2006). Environmental and natural resources economics (3rd ed.). London: M.E. Sharpe.
Sowell, T. (2007). Basic economics (3rd ed.). New York: Basic Books.
Tucker, W. (1997). How rent control drives out affordable housing. Retrieved January 19, 2010, http://www.cato.org/pubs/pas/pa-274.html
Politicians need to get votes in order to gain election to office. During campaigns, the public is exposed to a litany of promises designed only to get votes. Once a politician gains election to office, the promises are quickly forgotten. However, politicians often develop programs to either keep prices high in order to gain favor with suppliers or keep prices low in order to gain favor with the public.
Rent control is one such idea. Rent controls began during World War II as part of temporary wartime price controls (Tucker, 1997). The intention was to insure affordable housing. Rent controls continued after the war in order to provide affordable housing for returning GI’s. However, even programs started with the best of intentions have unforeseen circumstances that cause them not to achieve the desired results.
A scan through the classifieds of many rent-controlled cities reveals that there are very few moderately priced rental units available. In fact, most advertised units are priced well above the actual median rent (Tucker, 1997). The logical question to ask here is how can rents exceed the median price when prices are held below market value through price controls.
One explanation is found by looking at how the law of supply and demand works. With prices kept below the median price governed by the law of supply and demand the demand for rentals is held high. However, with prices held low there is little incentive for individuals to go into the rental business or to build rental properties. This results in a shortage of available rental units (Sowell, 2007).
To compensate for this shortage, policymakers exempt significant properties from rent control. To compensate for properties under rent control, these properties usually rent at above the median rent (Tucker, 1997). Most likely, these properties remain available and listed in the classifieds. For these reasons, rent control has been repealed in many communities.
Another form of price control that distorts the normal operation of the law of supply and demand is price subsidies that keep prices above the median price governed by the law of supply and demand. An example of such a subsidy is farm subsidies in the United States.
The first attempt by government to control prices came in 1920 when congress passed the McNary-Haugen bill. This bill fixed prices for some commodities in order to preserve the high prices that occurred during World War 1. However, President Coolidge vetoed the bill. In President Coolidge’s veto message he stated “I do not believe that upon serious consideration the farmers of America would tolerate the precedent of a body of men chosen solely by one industry who, acting in the name of the Government, shall arrange for contracts which determine prices, secure the buying and selling of commodities, the levying of taxes on that industry, and pay losses on foreign dumping of any surplus” (Folsom Jr., 2006).
President Coolidge understood the economic repercussions of price subsidies. He understood that other industries would have to be taxed to pay for the subsidies. He knew that keeping prices high would result in surpluses that the government would have to buy back and give away to foreign countries. Unfortunately, the next two presidents did not share the opinions of President Coolidge and farm subsidies exist today (Folsom Jr., 2006).
With price subsidies we also pay farmers not to grow crops in order to prevent surpluses that price subsidies create. The talents of these idle farmers could be put to use on other industries but as long as they can earn income for not working, they have no incentive to learn new skills that could be useful in other parts of the economic system. The economic system as a whole pays a high opportunity cost because of this wasted talent.
In both of these examples, we have seen that the operation of the law of supply and demand is distorted when government sets prices either at a level above or below the median price. Rent control show us that fixing prices below the median results in shortages and causes the prices of goods and service that are not fixed to be above the median to compensate for the lower fixed prices. When prices are kept high through subsidies, surpluses are created which have to either be bought back by the Government, at taxpayer’s expense, or given away. Governments also begin paying producers not to produce, again at taxpayer’s expense, in an effort to reduce surpluses. This paying of individuals to remain idle results in a high opportunity cost to the economic system.
Next week we will look at the affect of government intervention on the supply of goods and services produced.
References
Folsom Jr., B. (2006). The origin of american farm subsidies. The Freeman: Ideas on Liberty, , pp. 34-35. Retrieved January 19, 2010, http://www.fee.org/pdf/the-freeman/0604Folsom.pdf
Hackett, S. C. (2006). Environmental and natural resources economics (3rd ed.). London: M.E. Sharpe.
Sowell, T. (2007). Basic economics (3rd ed.). New York: Basic Books.
Tucker, W. (1997). How rent control drives out affordable housing. Retrieved January 19, 2010, http://www.cato.org/pubs/pas/pa-274.html
Transformational Leadership (Part 4)
When a transformational leader attempts to force change upon their followers, it often runs into difficulty. Followers may recognize the need for change and they may even share the leader’s vision but if changes are forced upon them, they will resist. The key for successful implementation of change is for the leader to learn how to overcome the resistance to change.
The first step in understanding the resistance to change is to understand why individuals resist change. A study by Shaul Oreg at Cornell University (2003) looks at four reasons for resistance to change the first of these reasons is reluctance to lose control. Some researchers have emphasized this as a primary reason for resistance to change. Individuals like to feel in control of their situation and feel threatened by changes that they perceive as taking away this control.
The second reason for an individual’s resistance to change is cognitive rigidity. This type of resistance usually occurs in dogmatic individuals. These individuals tend to be rigid in their ways and close-minded to change. This rigidity makes them less able to adjust to the changes being imposed on them (Oreg, 2003).
The third reason involves a lack of psychological resilience. Change is viewed as a stressor and therefore an individual’s ability to adapt to change is dependent upon their psychological resilience. Individuals with a low resilience will experience greater resistance to change where as those with greater resilience will be better equipped to accept change (Oreg, 2003).
The forth reason involves some individuals intolerance to the adjustment period involved in change. Change within an organization often requires adjustment and learning. Some individuals are better able to go through this adjustment and learning process then others. An individual’s ability to endure this adjustment period will determine their level of resistance to change (Oreg, 2003).
The fifth reason involves an individual’s preference for low levels of stimulation and novelty. Some individuals function best within a framework of well-defined and familiar settings. Individuals who are innovators exhibit a need for novel stimuli (Oreg, 2003). These individuals may actually thrive during the change period.
The final reason presented by Oreg (2003) is a reluctance to give up old habits. Many researchers see this as a common characteristic of resistance to change. Since familiarity breeds comfort, changes that introduce new stimuli and unfamiliar situations will be uncomfortable since they will require the learning of new habits. However, since all habits were once new habits there is no reason to believe that these new habits cannot be learned (Oreg, 2003).
Determination of an individual’s reason for resisting change will help the transformational leader develop a plan for lowering this resistance and empowering the individual to make the needed changes. A transformational leader who ignores the causes of resistance to change and instead attempts to force changes on individuals will only reinforce their reason for resisting change. Successful implementation of change requires a sense of empathy with their follower’s reason for resistance. If the followers know change is needed and share the leader’s vision for change, knowing that their leader empathizes with their reasons for resisting change eases the stress they experience during the change process. This lowering of resistance will smoothen out the implementation process.
The transformational leader must also be aware of the cycle of change. This cycle goes through four phases, the comfort zone, the no zone, the chasm, and the go zone. Prior to change implementation, individuals live in a comfort zone. In this zone, the individual is comfortable and has a sense of control over their situation (Craine, 2007). When change is implemented, the individual’s resistance will go up. It is at this point that the leader must show empathy with the individual concerns. Knowledge of which of the six reasons for resistance to change (Oreg, 2003) will help the leader develop empathy with the individual’s concerns.
The change cycle now enters the “no zone”. When change is introduced, individuals will have several reactions. First, they experience shock at being forced out of their comfort zone. Next individuals move into a stage of denial. At this point they may say things such as “This won’t affect our department” of “I’ll give it six months and it will pass”. Individuals may even begin to refute the reasons for the need for change in the first place (Craine, 2007). The no zone is an extremely emotional phase and the leader must continue to demonstrate empathy based upon the individuals underlying reason for resisting change.
The change cycle now moves into the chasm. At this point individuals begin to realize that there is no going back. In this phase individuals may begin to doubt whether they will be able to adapt to the changes. They begin to wonder if they will fit in (Craine, 2007). The transformational leader must reassure individuals that they are an important part of the needed change and reinforce his of her vision for how changes will have a positive effect on their lives.
Finally, the change cycle enters into the go zone. In this phase change is accepted and resistance is virtually gone. At this point change has been successfully implemented, individuals have developed new habits, and are beginning to function in a new comfort zone (Craine, 2007).
By knowing the reasons individuals resist change, the transformational leader can begin to empathize with their follower’s reluctance to change. The leader can then successfully lead individuals through the change cycle and change can be successfully implemented. Once again, we see the importance of involving individuals in the change process and not just forcing change on them. Individuals who view their leader as someone concerned with their resistance to change are more apt to adopt their leader’s vision, buy into the reason for change, and help in the implementation of change by learning, adjusting, and developing new habits. Next week we will begin looking at personality types and traits of leaders.
References
Craine, K. (2007). Managing the cycle of change. Information Management Journal, September/October 2007, pp. 44-50. Retrieved January 19, 2010, http://web.ebscohost.com/ehost/pdf?vid=13&hid=5&sid=07a78323-a248-4b97-b957-3b989244fa21%40sessionmgr10
Oreg, S. (2003). Resistance to change: developing an individual differences measure. Journal of Applied Psychology, 55, pp. 680-693. Retrieved January 19, 2010, http://web.ebscohost.com/ehost/pdf?vid=4&hid=5&sid=07a78323-a248-4b97-b957-3b989244fa21%40sessionmgr10
The first step in understanding the resistance to change is to understand why individuals resist change. A study by Shaul Oreg at Cornell University (2003) looks at four reasons for resistance to change the first of these reasons is reluctance to lose control. Some researchers have emphasized this as a primary reason for resistance to change. Individuals like to feel in control of their situation and feel threatened by changes that they perceive as taking away this control.
The second reason for an individual’s resistance to change is cognitive rigidity. This type of resistance usually occurs in dogmatic individuals. These individuals tend to be rigid in their ways and close-minded to change. This rigidity makes them less able to adjust to the changes being imposed on them (Oreg, 2003).
The third reason involves a lack of psychological resilience. Change is viewed as a stressor and therefore an individual’s ability to adapt to change is dependent upon their psychological resilience. Individuals with a low resilience will experience greater resistance to change where as those with greater resilience will be better equipped to accept change (Oreg, 2003).
The forth reason involves some individuals intolerance to the adjustment period involved in change. Change within an organization often requires adjustment and learning. Some individuals are better able to go through this adjustment and learning process then others. An individual’s ability to endure this adjustment period will determine their level of resistance to change (Oreg, 2003).
The fifth reason involves an individual’s preference for low levels of stimulation and novelty. Some individuals function best within a framework of well-defined and familiar settings. Individuals who are innovators exhibit a need for novel stimuli (Oreg, 2003). These individuals may actually thrive during the change period.
The final reason presented by Oreg (2003) is a reluctance to give up old habits. Many researchers see this as a common characteristic of resistance to change. Since familiarity breeds comfort, changes that introduce new stimuli and unfamiliar situations will be uncomfortable since they will require the learning of new habits. However, since all habits were once new habits there is no reason to believe that these new habits cannot be learned (Oreg, 2003).
Determination of an individual’s reason for resisting change will help the transformational leader develop a plan for lowering this resistance and empowering the individual to make the needed changes. A transformational leader who ignores the causes of resistance to change and instead attempts to force changes on individuals will only reinforce their reason for resisting change. Successful implementation of change requires a sense of empathy with their follower’s reason for resistance. If the followers know change is needed and share the leader’s vision for change, knowing that their leader empathizes with their reasons for resisting change eases the stress they experience during the change process. This lowering of resistance will smoothen out the implementation process.
The transformational leader must also be aware of the cycle of change. This cycle goes through four phases, the comfort zone, the no zone, the chasm, and the go zone. Prior to change implementation, individuals live in a comfort zone. In this zone, the individual is comfortable and has a sense of control over their situation (Craine, 2007). When change is implemented, the individual’s resistance will go up. It is at this point that the leader must show empathy with the individual concerns. Knowledge of which of the six reasons for resistance to change (Oreg, 2003) will help the leader develop empathy with the individual’s concerns.
The change cycle now enters the “no zone”. When change is introduced, individuals will have several reactions. First, they experience shock at being forced out of their comfort zone. Next individuals move into a stage of denial. At this point they may say things such as “This won’t affect our department” of “I’ll give it six months and it will pass”. Individuals may even begin to refute the reasons for the need for change in the first place (Craine, 2007). The no zone is an extremely emotional phase and the leader must continue to demonstrate empathy based upon the individuals underlying reason for resisting change.
The change cycle now moves into the chasm. At this point individuals begin to realize that there is no going back. In this phase individuals may begin to doubt whether they will be able to adapt to the changes. They begin to wonder if they will fit in (Craine, 2007). The transformational leader must reassure individuals that they are an important part of the needed change and reinforce his of her vision for how changes will have a positive effect on their lives.
Finally, the change cycle enters into the go zone. In this phase change is accepted and resistance is virtually gone. At this point change has been successfully implemented, individuals have developed new habits, and are beginning to function in a new comfort zone (Craine, 2007).
By knowing the reasons individuals resist change, the transformational leader can begin to empathize with their follower’s reluctance to change. The leader can then successfully lead individuals through the change cycle and change can be successfully implemented. Once again, we see the importance of involving individuals in the change process and not just forcing change on them. Individuals who view their leader as someone concerned with their resistance to change are more apt to adopt their leader’s vision, buy into the reason for change, and help in the implementation of change by learning, adjusting, and developing new habits. Next week we will begin looking at personality types and traits of leaders.
References
Craine, K. (2007). Managing the cycle of change. Information Management Journal, September/October 2007, pp. 44-50. Retrieved January 19, 2010, http://web.ebscohost.com/ehost/pdf?vid=13&hid=5&sid=07a78323-a248-4b97-b957-3b989244fa21%40sessionmgr10
Oreg, S. (2003). Resistance to change: developing an individual differences measure. Journal of Applied Psychology, 55, pp. 680-693. Retrieved January 19, 2010, http://web.ebscohost.com/ehost/pdf?vid=4&hid=5&sid=07a78323-a248-4b97-b957-3b989244fa21%40sessionmgr10
Jesus is Still on the Throne
We live in uncertain times. There is uncertainty economically, there are attempts to detonate bombs on planes flying into the United States, and our government seems to be totally out of touch with the wants and needs of the people. It would seem we have nowhere to go for help. However, even in these uncertain times, the Lord Jesus is still on the throne.
Isaiah lived during difficult times. He lived in the palace with king Uzziah. He no doubt had all of his needs met and lacked nothing. However, after the death of King Uzziah, Isaiah’s future was uncertain. Isaiah 6:1 tells us that
“In the year King Uzziah died, I saw the Lord. He was sitting on a lofty throne, and the train of his robe filled the Temple.”
NLT.
Later Isaiah reveals that his kingdom will never end
Isa 9:6-7
7 His ever expanding, peaceful government will never end. He will rule forever with fairness and justice from the throne of his ancestor David. The passionate commitment of the LORD Almighty will guarantee this!
NLT
However, how do we know that Jesus is the one on the throne? In Isaiah 11:10 we are told that he is the heir to David’s throne. Since we already know that this kingdom is eternal, we can conclude that it is Jesus since he is the only heir of David that could possibly have an eternal kingdom.
When facing uncertain times, we need to do what Isaiah did. We need to look up to the Lord for help, knowing that he is still seated on the throne. From this lofty position he has access to what is needed to get us through any difficulty we encounter. Not only do we know he is on the throne, but we also know he has experienced whatever we are experiencing
Heb 4:15
15 This High Priest of ours understands our weaknesses, for he faced all of the same temptations we do, yet he did not sin.
NLT
As believers in Christ we can have peace in difficult times, knowing our Lord and Savior is still on the throne. We can also find comfort knowing that he will return to establish is kingdom on earth.
Rev 22:1-5
22:1 And the angel showed me a pure river with the water of life, clear as crystal, flowing from the throne of God and of the Lamb, 2 coursing down the center of the main street. On each side of the river grew a tree of life, bearing twelve crops of fruit, with a fresh crop each month. The leaves were used for medicine to heal the nations.
3 No longer will anything be cursed. For the throne of God and of the Lamb will be there, and his servants will worship him. 4 And they will see his face, and his name will be written on their foreheads. 5 And there will be no night there — no need for lamps or sun — for the Lord God will shine on them. And they will reign forever and ever.
NLT
Unfortunately, not everyone has this peace in their lives. As believers, we need to share our source of peace with these unbelievers so they too can experience the peace that comes from the prince of peace in their lives. This peace is the only thing that will get us through these difficult times.
Isaiah lived during difficult times. He lived in the palace with king Uzziah. He no doubt had all of his needs met and lacked nothing. However, after the death of King Uzziah, Isaiah’s future was uncertain. Isaiah 6:1 tells us that
“In the year King Uzziah died, I saw the Lord. He was sitting on a lofty throne, and the train of his robe filled the Temple.”
NLT.
Later Isaiah reveals that his kingdom will never end
Isa 9:6-7
7 His ever expanding, peaceful government will never end. He will rule forever with fairness and justice from the throne of his ancestor David. The passionate commitment of the LORD Almighty will guarantee this!
NLT
However, how do we know that Jesus is the one on the throne? In Isaiah 11:10 we are told that he is the heir to David’s throne. Since we already know that this kingdom is eternal, we can conclude that it is Jesus since he is the only heir of David that could possibly have an eternal kingdom.
When facing uncertain times, we need to do what Isaiah did. We need to look up to the Lord for help, knowing that he is still seated on the throne. From this lofty position he has access to what is needed to get us through any difficulty we encounter. Not only do we know he is on the throne, but we also know he has experienced whatever we are experiencing
Heb 4:15
15 This High Priest of ours understands our weaknesses, for he faced all of the same temptations we do, yet he did not sin.
NLT
As believers in Christ we can have peace in difficult times, knowing our Lord and Savior is still on the throne. We can also find comfort knowing that he will return to establish is kingdom on earth.
Rev 22:1-5
22:1 And the angel showed me a pure river with the water of life, clear as crystal, flowing from the throne of God and of the Lamb, 2 coursing down the center of the main street. On each side of the river grew a tree of life, bearing twelve crops of fruit, with a fresh crop each month. The leaves were used for medicine to heal the nations.
3 No longer will anything be cursed. For the throne of God and of the Lamb will be there, and his servants will worship him. 4 And they will see his face, and his name will be written on their foreheads. 5 And there will be no night there — no need for lamps or sun — for the Lord God will shine on them. And they will reign forever and ever.
NLT
Unfortunately, not everyone has this peace in their lives. As believers, we need to share our source of peace with these unbelievers so they too can experience the peace that comes from the prince of peace in their lives. This peace is the only thing that will get us through these difficult times.
Sunday, January 17, 2010
Free Markets (Part 2)
In last weeks posting we discovered that economics is the “the study of the use of scarce resources which have alternative uses” (Sowell, 2007). The internal forces of supply and demand drive the operation of markets. In addition there are external forces or externalities that affect market operation (Hackett, 2006). We also discovered that economic systems that manage these markets are either centrally controlled or operate mostly free of centralized command.
This week we will look closer at how the law of supply and demand works. The relationship between supply and demand for a product determines its price. As demand for a product increases, the price will increase in order to insure demand does not exceed the supply of the product resulting in shortages. However, if supply for a product out paces demand, the price will go down in order to increase demand and use up excess supply (Dictionary.com, 2010).
In an economic system managed by centralized control, the job of keeping supply and demand in equilibrium belongs to the controlling entity. However, if the controlling entity is a blotted bureaucracy it may not be able to react quickly to changes in the supply and demand for products and services in the market. The result if this inability to quickly react to these changes results in excess supply or shortages. In a small economic system (e.g. a small business or household), a central command structure of economic management may be able to function well. This is because the volume of economic activity will be small and manageable. However, as an economic system grows, it becomes more complicated overtaxing the central control entity, making it difficult for it to react promptly to changes in the market (Sowell, 2007).
Free market economic systems are driven by a profit motive. When demand for a product increases, the profit potential in the market for this product increases. This increase in profit potential encourages other producers to enter the market increasing supplies insuring there are no shortages. However, as demand decreases or there is a surplus of supply due to too many producers in the market, some of these producers will either go out of business or begin producing other products that are in greater demand. This natural slow down in production insures there is no excess supply (Sowell, 2007).
Opponents to free market economics point to the fact that the layoffs and downsizing that result from reductions in production brought on by excess supply or falling demand are cruel. They cite that this is why there is a need for a centralized control of the economic system to insure fairness in the system. However, creative destruction is critical to a healthy economy and society (Forbes & Ames, 2009).
Forbes and Ames (2009) elaborates by explaining that creative destruction renders old products obsolete. Some jobs may be destroyed but other jobs, and more of them, will be created. This insures that the limited resources of the economic system go where they are most needed. Creative destruction also paves the way for the introduction of wealth producing innovations. Without creative destruction the economy stagnates, living standards decline and unemployment actually increases.
The problem with a central controlled economic management system is that creative destruction is often not allowed to occur. There may be due to political pressure brought on by labor unions or other advocates that do not allow producers to decrease production. Consumer advocacy groups may also exert pressure on producers to keep prices down, not allowing a profit motive to develop encouraging additional producers or innovation. In contrast, free market systems have demonstrated an ability to thrive due to allowing creative destruction to occur uninhibited.
As an example of supply and demand in operation, let us look at what happens to petroleum prices in the market. We are currently experiencing an extremely cold winter. This is especially true in the northeast. Since many homes are heated with petroleum in this area, there is currently an increased demand for petroleum. This has caused the price of crude oil to go over $80 per barrel, resulting in higher gas prices at the pump.
With this increased price, producers of crude oil are currently pumping more crude oil. However, when the weather warms up, the demand will decrease. The producers of petroleum will then have to reduce production and the price will go down to encourage more demand so that excess supplies of crude oil are used up.
Next week, we will look at what occurs when the externality of governmental regulation distorts the market through price controls. We will be looking at the examples of rent control and farm subsidies. The book Basic Economics by Thomas Sowell is an excellent source of information on this topic.
References
Dictionary.com (2010). Supply and demand. Retrieved January 15, 2010, http://dictionary.reference.com/browse/supply+demand
Forbes, S. & Ames, E. (2009). How capitalism will save us (1st ed.). New York: Crown Business.
Hackett, S. C. (2006). Environmental and natural resources economics (3rd ed.). London: M.E. Sharpe.
Sowell, T. (2007). Basic economics (3rd ed.). New York: Basic Books.
This week we will look closer at how the law of supply and demand works. The relationship between supply and demand for a product determines its price. As demand for a product increases, the price will increase in order to insure demand does not exceed the supply of the product resulting in shortages. However, if supply for a product out paces demand, the price will go down in order to increase demand and use up excess supply (Dictionary.com, 2010).
In an economic system managed by centralized control, the job of keeping supply and demand in equilibrium belongs to the controlling entity. However, if the controlling entity is a blotted bureaucracy it may not be able to react quickly to changes in the supply and demand for products and services in the market. The result if this inability to quickly react to these changes results in excess supply or shortages. In a small economic system (e.g. a small business or household), a central command structure of economic management may be able to function well. This is because the volume of economic activity will be small and manageable. However, as an economic system grows, it becomes more complicated overtaxing the central control entity, making it difficult for it to react promptly to changes in the market (Sowell, 2007).
Free market economic systems are driven by a profit motive. When demand for a product increases, the profit potential in the market for this product increases. This increase in profit potential encourages other producers to enter the market increasing supplies insuring there are no shortages. However, as demand decreases or there is a surplus of supply due to too many producers in the market, some of these producers will either go out of business or begin producing other products that are in greater demand. This natural slow down in production insures there is no excess supply (Sowell, 2007).
Opponents to free market economics point to the fact that the layoffs and downsizing that result from reductions in production brought on by excess supply or falling demand are cruel. They cite that this is why there is a need for a centralized control of the economic system to insure fairness in the system. However, creative destruction is critical to a healthy economy and society (Forbes & Ames, 2009).
Forbes and Ames (2009) elaborates by explaining that creative destruction renders old products obsolete. Some jobs may be destroyed but other jobs, and more of them, will be created. This insures that the limited resources of the economic system go where they are most needed. Creative destruction also paves the way for the introduction of wealth producing innovations. Without creative destruction the economy stagnates, living standards decline and unemployment actually increases.
The problem with a central controlled economic management system is that creative destruction is often not allowed to occur. There may be due to political pressure brought on by labor unions or other advocates that do not allow producers to decrease production. Consumer advocacy groups may also exert pressure on producers to keep prices down, not allowing a profit motive to develop encouraging additional producers or innovation. In contrast, free market systems have demonstrated an ability to thrive due to allowing creative destruction to occur uninhibited.
As an example of supply and demand in operation, let us look at what happens to petroleum prices in the market. We are currently experiencing an extremely cold winter. This is especially true in the northeast. Since many homes are heated with petroleum in this area, there is currently an increased demand for petroleum. This has caused the price of crude oil to go over $80 per barrel, resulting in higher gas prices at the pump.
With this increased price, producers of crude oil are currently pumping more crude oil. However, when the weather warms up, the demand will decrease. The producers of petroleum will then have to reduce production and the price will go down to encourage more demand so that excess supplies of crude oil are used up.
Next week, we will look at what occurs when the externality of governmental regulation distorts the market through price controls. We will be looking at the examples of rent control and farm subsidies. The book Basic Economics by Thomas Sowell is an excellent source of information on this topic.
References
Dictionary.com (2010). Supply and demand. Retrieved January 15, 2010, http://dictionary.reference.com/browse/supply+demand
Forbes, S. & Ames, E. (2009). How capitalism will save us (1st ed.). New York: Crown Business.
Hackett, S. C. (2006). Environmental and natural resources economics (3rd ed.). London: M.E. Sharpe.
Sowell, T. (2007). Basic economics (3rd ed.). New York: Basic Books.
Transformational Leadership (Part 3)
In the first part of this series on transformational leadership, we discovered that the transformational leadership of Barak Obama is failing due to its inability to institutionalize change. It started out with a definite view of the need for change and a vision that led to Obama’s election as president but as the institutionalization of the promised changes fails to occur, the fervor for change is waning evidenced by falling polling numbers.
In part two we discovered that the transformational leadership of Ronald Reagan succeeded because instead of mandating change on the public, it empowered the public. This sense of empowerment made institutionalization of change easier resulting in the desired results. In part three, we will look at who I believe is the most influential and successful transformational leader in history, Jesus Christ.
The connection of Jesus with mankind did not start with his birth in Bethlehem but began at creation. John 1:1-3 tells us that John “In the beginning the Word already existed. He was with God, and he was God. 2 He was in the beginning with God. 3 He created everything there is. Nothing exists that he didn't make” (NLT). This scripture also tells us that Jesus is God so when mankind fell Jesus was there as well.
He also knew of God’s plan for him to restore or redeem man back to his position of fellowship with God. We find this in Genesis 3:14 “From now on, you and the woman will be enemies, and your offspring and her offspring will be enemies. He will crush your head, and you will strike his heel." (NLT). This is the first mention of God’s plan for his son that he would be born of a woman and strike down Satan. The first act of the transformation had begun the recognition of the need for change (Tichy & Devanna, 1990).
The next act of the transformational leader is creation of a vision for change. In 2 Peter 3:9 we are told the following “The Lord isn't really being slow about his promise to return, as some people think. No, he is being patient for your sake. He does not want anyone to perish, so he is giving more time for everyone to repent” (NLT). Jesus wants all fallen men and women to repent and come to him but since we all have a free will, this will not occur but this scripture tells us that he is delaying his return so everyone will have a chance to repent.
Jesus understood that institutionalizing change works best when the choice is left up to each individual. In this case, the choice to accept the transformational change offered by Christ is up to each individual. Individuals who make the choice view the choice as theirs and thus easily buy into it and make it part of their lives.
Jesus also empowered his followers by first taking the death penalty for their sins “But God showed his great love for us by sending Christ to die for us while we were still sinners” (Romans 5:8, NLT). Jesus also spent three years teaching his disciples so they would be equipped with the knowledge they would need to carry on his ministry. Finally, he empowered them with the Holy Spirit so they would be motivated to minister even under the threat of death for their belief.
The prime example of the success of the transformational leadership of Christ is Peter. Peter, who three times denied even knowing Christ in his moment of greatest need, was now empowered to speak out, under threat of death, because of the transformation that had occurred in his life. Jesus also promised to return, giving his followers hope to get them through difficulties they would encounter (Acts 1:9-11).
The transformational leader greatly increases his or her chance for successful institutionalization of change by making the change personal. When individuals realize that the proposed changes will be beneficial to them, their resistance to change lowers and institutionalization of the transformation can begin. Those that benefit from the changes will also be empowered to share it with others. This insures the continuation of the benefits of the changes. The Church that started spreading the gospel, or good news, of Christ is still being spread around the world and since Jesus has not returned, there must still be people in need of his transformational change in their lives.
Next week we will begin looking at the greatest challenge faced by the transformational leader, the natural human resistance to change. The transformational leader who learns how to help others overcome this resistance will experience great success in implementation of change.
Reference
Tichy, N. M., & Devanna, M. A. (1990). The transformational leader: The key to global competitiveness. New York: John Wiley & Sons Inc.
In part two we discovered that the transformational leadership of Ronald Reagan succeeded because instead of mandating change on the public, it empowered the public. This sense of empowerment made institutionalization of change easier resulting in the desired results. In part three, we will look at who I believe is the most influential and successful transformational leader in history, Jesus Christ.
The connection of Jesus with mankind did not start with his birth in Bethlehem but began at creation. John 1:1-3 tells us that John “In the beginning the Word already existed. He was with God, and he was God. 2 He was in the beginning with God. 3 He created everything there is. Nothing exists that he didn't make” (NLT). This scripture also tells us that Jesus is God so when mankind fell Jesus was there as well.
He also knew of God’s plan for him to restore or redeem man back to his position of fellowship with God. We find this in Genesis 3:14 “From now on, you and the woman will be enemies, and your offspring and her offspring will be enemies. He will crush your head, and you will strike his heel." (NLT). This is the first mention of God’s plan for his son that he would be born of a woman and strike down Satan. The first act of the transformation had begun the recognition of the need for change (Tichy & Devanna, 1990).
The next act of the transformational leader is creation of a vision for change. In 2 Peter 3:9 we are told the following “The Lord isn't really being slow about his promise to return, as some people think. No, he is being patient for your sake. He does not want anyone to perish, so he is giving more time for everyone to repent” (NLT). Jesus wants all fallen men and women to repent and come to him but since we all have a free will, this will not occur but this scripture tells us that he is delaying his return so everyone will have a chance to repent.
Jesus understood that institutionalizing change works best when the choice is left up to each individual. In this case, the choice to accept the transformational change offered by Christ is up to each individual. Individuals who make the choice view the choice as theirs and thus easily buy into it and make it part of their lives.
Jesus also empowered his followers by first taking the death penalty for their sins “But God showed his great love for us by sending Christ to die for us while we were still sinners” (Romans 5:8, NLT). Jesus also spent three years teaching his disciples so they would be equipped with the knowledge they would need to carry on his ministry. Finally, he empowered them with the Holy Spirit so they would be motivated to minister even under the threat of death for their belief.
The prime example of the success of the transformational leadership of Christ is Peter. Peter, who three times denied even knowing Christ in his moment of greatest need, was now empowered to speak out, under threat of death, because of the transformation that had occurred in his life. Jesus also promised to return, giving his followers hope to get them through difficulties they would encounter (Acts 1:9-11).
The transformational leader greatly increases his or her chance for successful institutionalization of change by making the change personal. When individuals realize that the proposed changes will be beneficial to them, their resistance to change lowers and institutionalization of the transformation can begin. Those that benefit from the changes will also be empowered to share it with others. This insures the continuation of the benefits of the changes. The Church that started spreading the gospel, or good news, of Christ is still being spread around the world and since Jesus has not returned, there must still be people in need of his transformational change in their lives.
Next week we will begin looking at the greatest challenge faced by the transformational leader, the natural human resistance to change. The transformational leader who learns how to help others overcome this resistance will experience great success in implementation of change.
Reference
Tichy, N. M., & Devanna, M. A. (1990). The transformational leader: The key to global competitiveness. New York: John Wiley & Sons Inc.
Tragedy and a New Villain
My heart and prayers go out to those in Haiti. The damage is horrific and I am proud of the response of both our government and private charities but I urge my readers to be careful to whom they give money. Unfortunately, there are individuals out there who like to take advantage of tragedies like this. Give your money to organizations you can trust.
On the economic front, several items come to attention this week. The job losses continue, retail sales drop, and 2009 was a record year for foreclosures (Crutsinger & Rugaber, 2010) (Crutsinger, 2010) (AP News, 2010). It is not surprising that President Obama’s approval rating is hovering around 45 percent and a majority now says that they would vote against him if the election were today (Rasmussen Reports, 2010).
The solution to this dilemma is simple; stimulate the private sector of the economy. With stimulation (e.g. tax cuts and reduced regulation) the private sector will expand, jobs will be created, individual discretionary income will rise leading to increased spending, and people will actually make their mortgage payments. However, President Obama can have none of this and instead has chosen a different tactic.
You may recall that this whole crisis started in September of 2008 when the banking industry nearly collapsed due to numerous home foreclosures. This led to creation of the TARP fund, the intention of which was to bail out banks for the band loans on their books. Many of the banks receiving TARP funds have been able to repay them with interest and have returned to profitable operations. In my opinion this is good since profitable banks will not be coming to the taxpayers for a bailout but the president does not share this opinion.
Instead, he has decided that the banks are too profitable and are paying bonuses, oh my. President Obama cannot allow this to happen so he has decided to impose fees (i.e. penalties) on the banks (AP News, 2010). These additional fees will mean banks will have less money to lend and will increase the fees they charge their customers (e.g. ATM fees, annual fees, interest). Of course, these banks may choose to continue lending money and not increase fees, wait for the next financial crisis, and come to the taxpayers for a bailout.
Perhaps this is what the president wants to happen so he can continue to have control of the nation’s financial market. We must remain diligent and throw these Marxists out of office in the next election. We must elect leaders that will stimulate the free market instead of their campaign contributors.
We have a powerful voice and in November we can standup and speak loudly. In the mean time, we need to support candidates for office who support our free market ideas. This is our country and it is time to take it back!
References
AP News (2010, January 14, 2010). Obama seeking tax on bigger banks. Retrieved January 14, 2010, http://apnews.myway.com/article/20100114/D9D7F1MGO.html
AP News (2010, January 14, 2010). Record year for foreclosures as unemployment rises. Retrieved January 14, 2010, http://apnews.myway.com/article/20100114/D9D7AN700O.html
Crutsinger, M. (2010, January 14, 2010). December retail sales drop 0.3 percent. Retrieved January 14, 2010, http://finance.yahoo.com/news/December-retail-sales-drop-03-apf-3350007934.html
Crutsinger, M. & Rugaber, C. S. (2010, January 14, 2010). Retail sales fall unexpectedly; jobless claims up. Retrieved January 14, 2010, http://finance.yahoo.com/news/News-jobless-claims-rise-more-apf-1551827594.html
Rasmussen Reports (2010, January 14, 2010). January 14, 2010. Retrieved Daily presidential tracking poll, http://www.rasmussenreports.com/public_content/polotics/obama_administration/daily_presidential_tracking_poll.html
On the economic front, several items come to attention this week. The job losses continue, retail sales drop, and 2009 was a record year for foreclosures (Crutsinger & Rugaber, 2010) (Crutsinger, 2010) (AP News, 2010). It is not surprising that President Obama’s approval rating is hovering around 45 percent and a majority now says that they would vote against him if the election were today (Rasmussen Reports, 2010).
The solution to this dilemma is simple; stimulate the private sector of the economy. With stimulation (e.g. tax cuts and reduced regulation) the private sector will expand, jobs will be created, individual discretionary income will rise leading to increased spending, and people will actually make their mortgage payments. However, President Obama can have none of this and instead has chosen a different tactic.
You may recall that this whole crisis started in September of 2008 when the banking industry nearly collapsed due to numerous home foreclosures. This led to creation of the TARP fund, the intention of which was to bail out banks for the band loans on their books. Many of the banks receiving TARP funds have been able to repay them with interest and have returned to profitable operations. In my opinion this is good since profitable banks will not be coming to the taxpayers for a bailout but the president does not share this opinion.
Instead, he has decided that the banks are too profitable and are paying bonuses, oh my. President Obama cannot allow this to happen so he has decided to impose fees (i.e. penalties) on the banks (AP News, 2010). These additional fees will mean banks will have less money to lend and will increase the fees they charge their customers (e.g. ATM fees, annual fees, interest). Of course, these banks may choose to continue lending money and not increase fees, wait for the next financial crisis, and come to the taxpayers for a bailout.
Perhaps this is what the president wants to happen so he can continue to have control of the nation’s financial market. We must remain diligent and throw these Marxists out of office in the next election. We must elect leaders that will stimulate the free market instead of their campaign contributors.
We have a powerful voice and in November we can standup and speak loudly. In the mean time, we need to support candidates for office who support our free market ideas. This is our country and it is time to take it back!
References
AP News (2010, January 14, 2010). Obama seeking tax on bigger banks. Retrieved January 14, 2010, http://apnews.myway.com/article/20100114/D9D7F1MGO.html
AP News (2010, January 14, 2010). Record year for foreclosures as unemployment rises. Retrieved January 14, 2010, http://apnews.myway.com/article/20100114/D9D7AN700O.html
Crutsinger, M. (2010, January 14, 2010). December retail sales drop 0.3 percent. Retrieved January 14, 2010, http://finance.yahoo.com/news/December-retail-sales-drop-03-apf-3350007934.html
Crutsinger, M. & Rugaber, C. S. (2010, January 14, 2010). Retail sales fall unexpectedly; jobless claims up. Retrieved January 14, 2010, http://finance.yahoo.com/news/News-jobless-claims-rise-more-apf-1551827594.html
Rasmussen Reports (2010, January 14, 2010). January 14, 2010. Retrieved Daily presidential tracking poll, http://www.rasmussenreports.com/public_content/polotics/obama_administration/daily_presidential_tracking_poll.html
Recovering Lost Things
Have you ever lost or misplaced your keys or wallet. I have on numerous occasions but something happened this past Sunday that taught me a valuable lesson about recovering lost things in life.
I was in the process of getting ready to go to church and discovered my wallet was missing. My Wife, Son and I proceeded to turn the house upside down looking for it but could not find it in the usual places. At this point I began to panic thinking I had left it somewhere when my Wife and I were out shopping on Saturday. Thoughts of identity theft and someone buying that 60 inch HDTV they have been dreaming about with my credit card ran through my head.
Once sanity came in I went online and discovered, much to my relief, that there were no new charges on my card but I was about to call my bank to cancel my card just in case. Of course that would mean I would not have a credit or debit card for the next couple of weeks and would have to do to DMV to get a new drivers license.
It was at this point I decided to pray. A couple of minutes later I felt compelled to check under the covers of the bed and much to my amazement, I discovered my wallet. I know now that it was the Lord that compelled me to check there. The lesson I learned is that God knew all along where my wallet was and was just waiting on me to pray and ask for help.
Luke 12:6-7 tells us that even the number of hairs on our head are known by God. I do not even know how many hairs are on my head meaning that God knows more about me than I do. God knows what we have lost in our lives and wants to help us find them.
What have you lost in your life, a job, a home, a relationship? Pray and ask God to restore what you have lost in your life.
Phil 4:19
19 And my God shall supply every need of yours according to his riches in glory in Christ Jesus.
ASV
Even if we have lost our job or source of income, God will meet our needs. He will even help us find a job if we ask.
Matt 6:31-32
31 Be not therefore anxious, saying, What shall we eat? or, What shall we drink? or, Wherewithal shall we be clothed?
32 For after all these things do the Gentiles seek; for your heavenly Father knoweth that ye have need of all these things.
ASV
He will not leave us naked and homeless but knows our condition and will supply our need (Phil. 4:19).
John 14:18
18 I will not leave you desolate: I come unto you.
ASV
We are never alone for Jesus is always with us.
Whatever we have lost or misplaced in our lives can be found or recovered by praying and asking God for help. Just remember the saga of the missing wallet.
I was in the process of getting ready to go to church and discovered my wallet was missing. My Wife, Son and I proceeded to turn the house upside down looking for it but could not find it in the usual places. At this point I began to panic thinking I had left it somewhere when my Wife and I were out shopping on Saturday. Thoughts of identity theft and someone buying that 60 inch HDTV they have been dreaming about with my credit card ran through my head.
Once sanity came in I went online and discovered, much to my relief, that there were no new charges on my card but I was about to call my bank to cancel my card just in case. Of course that would mean I would not have a credit or debit card for the next couple of weeks and would have to do to DMV to get a new drivers license.
It was at this point I decided to pray. A couple of minutes later I felt compelled to check under the covers of the bed and much to my amazement, I discovered my wallet. I know now that it was the Lord that compelled me to check there. The lesson I learned is that God knew all along where my wallet was and was just waiting on me to pray and ask for help.
Luke 12:6-7 tells us that even the number of hairs on our head are known by God. I do not even know how many hairs are on my head meaning that God knows more about me than I do. God knows what we have lost in our lives and wants to help us find them.
What have you lost in your life, a job, a home, a relationship? Pray and ask God to restore what you have lost in your life.
Phil 4:19
19 And my God shall supply every need of yours according to his riches in glory in Christ Jesus.
ASV
Even if we have lost our job or source of income, God will meet our needs. He will even help us find a job if we ask.
Matt 6:31-32
31 Be not therefore anxious, saying, What shall we eat? or, What shall we drink? or, Wherewithal shall we be clothed?
32 For after all these things do the Gentiles seek; for your heavenly Father knoweth that ye have need of all these things.
ASV
He will not leave us naked and homeless but knows our condition and will supply our need (Phil. 4:19).
John 14:18
18 I will not leave you desolate: I come unto you.
ASV
We are never alone for Jesus is always with us.
Whatever we have lost or misplaced in our lives can be found or recovered by praying and asking God for help. Just remember the saga of the missing wallet.
Saturday, January 9, 2010
Free Markets (Part 1)
It seems like the free market is constantly under attack. Even though millions of transactions occur in the free market on a daily basis and most companies operate in a fair and equitable manner, the news media and politicians never cease presenting examples of someone cheated or treated unfairly by some evil corporation. Because of this constant presentation of the negative side of the free market, many have come to believe that the free market is evil and needs to be controlled or even stopped.
In this section of teaching regarding free markets, we will look at how the free market operates keeping in mind that it is not perfect because imperfect people run it. However, history will prove that the free market is the most efficient economic system for dealing with the internal and external forces that affect market operation but first we need to lay the groundwork by defining some terms. If you already have basic economic knowledge, you will already be aware of these definitions so this will be a good review. If not, take time to learn these definitions.
Thomas Sowell (2007) defines economics as “the study of the use of scarce resources which have alternative uses”. Markets are where these resources are traded. Each community has an economy and a market for the trading of resources. The differences in economic systems are in how a community chooses to manage the use of these scarce resources.
At one extreme, we see economic systems that characterized by a strong central government that controls how resources are allocated. At the other extreme, we see systems where individuals freely enter into agreements to buy resources from each other with minimal governmental oversight. In truth, most economic systems today consist of aspects of both extremes with some leaning more towards centralized control and some leaning towards a free market approach.
Nations also move from leaning toward central control, back to free markets, and then back to centralized control depending upon who is in power at the time. Our study of cases where nations have made these shifts will provide evidence as to which type of system is more successful.
Internally, supply and demand determine how a market operates. As demand for a product or service increases the market goes into action to satisfy the demand. In an economic system with a centralized control, it is the job of the controlling entity to insure the economic system satisfies this demand. In a free market system, entrepreneurial individuals are encouraged to supply this demand because of the profit they can make in satisfying this demand.
If there are sufficient supply of the product to meet the demand all works well no matter what economic management system is used. However, if the economy lacks sufficient supply to meet demand, the system must find ways to satisfy the need. In a centralized control system, either the government finds additional supply or they ration supply in order to insure there are no shortages. In a free market system, the price goes up which prices some individuals out of the market thus lessoning demand. However, with this increase in prices comes an increase in profits, allowing suppliers to invest in additional supply or production that is more efficient. The increased profit potential also provides incentive for additional suppliers to enter the market (Sowell, 2007). In either case the market price for the product will decrease due to increased supply.
If supply is greater than demand, a surplus occurs. This will result in a decrease in prices and profits that will drive companies to reduce production. This will reduce supply until it reaches a point where it is in line with demand.
The law of supply and demand seems simple enough but there are also external forces (i.e. externalities) that can distort the market and disrupt this supply and demand principle. Examples of these externalities are technology, environment, political climate, war or acts of terrorism, and government intervention.
There are two types of externalities, positive and negative. A positive externality is defined as an unpaid for benefit to the market (Hackett, 2006). For example, the development of the technology of electronic fuel injection doubled the gas mileage of automobiles thus allowing for the more efficient use or petroleum and reductions in pollution.
Hackett (2006) defines negative externalities an uncompensated harm. The oil embargo of the 1970’s is an example of a negative externality. This politically based embargo led to the doubling of oil prices and rationing (e.g. people could only by gas on odd or even days based on whether their license plate number ended in an odd or even number).
An efficient economic system is one that deals with negative externalities while embracing positive externalities. In our studies, we will investigate how each type of economic system manages these externalities. The reader can then decide which system is most efficient.
Beginning with our next study, we will begin looking at the various economic systems in use today. We will look at how they manage supply and demand within their systems. We will also look at how they respond and react to negative externalities as well as how quickly they embrace positive externalities. The reader will then be able to logically decide for themselves which system is best, rather than having to depend on media hype. Armed with this knowledge, my hope is that the reader will be equipped to make better and more intelligent economic decisions and be able to discern the truth from hype and lies.
References
Hackett, S. C. (2006). Environmental and natural resources economics (3rd ed.). London: M.E. Sharpe.
Sowell, T. (2007). Basic economics (3rd ed.). New York: Basic Books.
In this section of teaching regarding free markets, we will look at how the free market operates keeping in mind that it is not perfect because imperfect people run it. However, history will prove that the free market is the most efficient economic system for dealing with the internal and external forces that affect market operation but first we need to lay the groundwork by defining some terms. If you already have basic economic knowledge, you will already be aware of these definitions so this will be a good review. If not, take time to learn these definitions.
Thomas Sowell (2007) defines economics as “the study of the use of scarce resources which have alternative uses”. Markets are where these resources are traded. Each community has an economy and a market for the trading of resources. The differences in economic systems are in how a community chooses to manage the use of these scarce resources.
At one extreme, we see economic systems that characterized by a strong central government that controls how resources are allocated. At the other extreme, we see systems where individuals freely enter into agreements to buy resources from each other with minimal governmental oversight. In truth, most economic systems today consist of aspects of both extremes with some leaning more towards centralized control and some leaning towards a free market approach.
Nations also move from leaning toward central control, back to free markets, and then back to centralized control depending upon who is in power at the time. Our study of cases where nations have made these shifts will provide evidence as to which type of system is more successful.
Internally, supply and demand determine how a market operates. As demand for a product or service increases the market goes into action to satisfy the demand. In an economic system with a centralized control, it is the job of the controlling entity to insure the economic system satisfies this demand. In a free market system, entrepreneurial individuals are encouraged to supply this demand because of the profit they can make in satisfying this demand.
If there are sufficient supply of the product to meet the demand all works well no matter what economic management system is used. However, if the economy lacks sufficient supply to meet demand, the system must find ways to satisfy the need. In a centralized control system, either the government finds additional supply or they ration supply in order to insure there are no shortages. In a free market system, the price goes up which prices some individuals out of the market thus lessoning demand. However, with this increase in prices comes an increase in profits, allowing suppliers to invest in additional supply or production that is more efficient. The increased profit potential also provides incentive for additional suppliers to enter the market (Sowell, 2007). In either case the market price for the product will decrease due to increased supply.
If supply is greater than demand, a surplus occurs. This will result in a decrease in prices and profits that will drive companies to reduce production. This will reduce supply until it reaches a point where it is in line with demand.
The law of supply and demand seems simple enough but there are also external forces (i.e. externalities) that can distort the market and disrupt this supply and demand principle. Examples of these externalities are technology, environment, political climate, war or acts of terrorism, and government intervention.
There are two types of externalities, positive and negative. A positive externality is defined as an unpaid for benefit to the market (Hackett, 2006). For example, the development of the technology of electronic fuel injection doubled the gas mileage of automobiles thus allowing for the more efficient use or petroleum and reductions in pollution.
Hackett (2006) defines negative externalities an uncompensated harm. The oil embargo of the 1970’s is an example of a negative externality. This politically based embargo led to the doubling of oil prices and rationing (e.g. people could only by gas on odd or even days based on whether their license plate number ended in an odd or even number).
An efficient economic system is one that deals with negative externalities while embracing positive externalities. In our studies, we will investigate how each type of economic system manages these externalities. The reader can then decide which system is most efficient.
Beginning with our next study, we will begin looking at the various economic systems in use today. We will look at how they manage supply and demand within their systems. We will also look at how they respond and react to negative externalities as well as how quickly they embrace positive externalities. The reader will then be able to logically decide for themselves which system is best, rather than having to depend on media hype. Armed with this knowledge, my hope is that the reader will be equipped to make better and more intelligent economic decisions and be able to discern the truth from hype and lies.
References
Hackett, S. C. (2006). Environmental and natural resources economics (3rd ed.). London: M.E. Sharpe.
Sowell, T. (2007). Basic economics (3rd ed.). New York: Basic Books.
Transformational Leadership (Part 2)
Last week we looked at the transformational leadership of President Obama. We introduced the three acts of transformational leadership 1) revitalization or recognition of the need for change, 2) creation of a vision for change, and 3) institutionalizing of change (Tichy & Devanna, 1990). We learned that during the election the nation slipped into an economic decline bringing about act 1. Obama successfully created a vision for change during the election and the electorate responded to voting him into office.
However, after taking office he began to have trouble implementing his policies, causing the vision for change to diminish in the eyes of the people. People still want change but the changes proposed by President Obama are not the changes the people were looking for.
This week we will look at another transformational leader who took office in a similar situation but with different results. This leader is the 40th president of the United States, Ronald Reagan.
When Reagan took office in 1980, the nation was experiencing 14 percent inflation and unemployment at almost 10 percent (Kudlow, 2004). This situation violated the traditional laws of economics which believed that the rate of inflation and unemployment have an inverse relationship. This means that as one increases the other will decrease. A new term “stagflation” was coined to explain this unusual economic condition. Because of stagflation many, including then President Carter, believed that the nation’s best days were behind it and that we would never again experience the greatness we once did.
Foreign affairs were also a mess with the Russian invasion of Afghanistan followed by the hostage situation in Iran (Kudlow, 2004). The nation was weak militarily as well evidenced by the failed rescue attempt in Iran known as Operation Eagle Claw (Pierre). Similar to conditions present when President Obama took office, the state of the nation at the time produced the recognition of the need for change.
In his acceptance speech at the Republication Convention in 1980, Candidate Reagan began to unveil his vision for the Nation. He chastised the current administrations belief that the nation’s best days were behind it and instead shared a vision of a nation that once again would be great. He reminded the nation that Mr. Carter told the American People to trust him. They did and found themselves out of work and with their savings devoured by inflation (Reagan 2020, 2006).
The electorate bought into the vision and elected Reagan to office in an historic landslide (Leip, 2005). However, would President Reagan be able to implement or institutionalize the changes he was proposing? The answer lies in the results.
When Reagan left office in 1989, the nation had experienced 35 percent growth or an average of 4.5 percent. Inflation had fallen to 1 percent and unemployment had fallen to 5.5 percent. The economic growth was not just in numbers but Reagan’s economic policies produced real growth evidenced by the emergence of new industries in computing, software, communications, and the Internet. Reagan’s foreign policy also laid the groundwork for the collapse of the Soviet Union and the end of the Cold War without even firing a single shot (Kudlow, 2004).
Critics of Reagan’s policies cite rising deficits and claim this represents failure of the policies. However, the budget gap between the deficits and Gross Domestic Product (GDP) was at 2.5 percent of the economy and remained unchanged throughout Reagan’s term. Since statistical data must always be compared with the context of the population as a whole, it is statistically sound to conclude that the deficit relatively remained unchanged (Kudlow, 2004).
The contrasting difference between the leadership styles of Reagan and Obama lye in whom they believe has the power to bring about change. With Obama, it is the central government. He believes that it is the responsibility of government to mandate change through legislative and judicial fiat. They view the individual as unable to make the necessary changes without the help of government. They handle the resistance to change by ignoring it hoping that once the changes are made, the people will learn to accept them. Perhaps this philosophy is at the root of the difficulties Obama is having in implementing his vision.
With Reagan, the philosophy is to empower the individual through tax cuts and reduced governmental regulation. This provides individuals with the capital needed for real economic growth and frees them of the chains of excessive governmental regulation. This bottom-up approach made acceptance of change much easier since individuals knew they were free to pursue their dreams and goals. This unleashed the creativity of the American People leading to the innovations in computing, software, communications, and the Internet.
The lesson learned here is that institutionalizing change is much easier and meets with less resistance when it is done by empowering individuals rather then forcefully mandated by the state. This is because an empowered people will come up with creative ways to solve problems where as state control monopolizes the creative means and cheats the nation of the creative force of an empowered people. What is lacking today in America is a transformational leader to empower the people and unlock their creativeness.
Next week we will be looking at the world’s most successful transformational leader of all time so I look forward to meeting with you through this medium next week. I also urge you to tell your friends and invite them to become followers of this blog
References
Kudlow, L. (2004, June 10, 2004). Reagan's link. Retrieved January 4, 2010, http://www.nationalreview.com/kudlow/kudlow/200406100915.asp
Leip, D. (2005). 1980 presidential election results. Retrieved January 4, 2010, http??uselectionatlas.org/RESULTS/national.php?year=1980
Pierre, T. (). What was Operation Eagle Claw, the failed rescue of American Hostages in Iran?. Retrieved January 4, 2010, http://middleeast.about.com/od/usmideastpolicy/f/me090413c.htm
Reagan 2020 (2006). Acceptance of republican for president at te 1980 Republican National Convention in Detroit, Michigan. Retrieved January 4, 2010, http://reagan2020.us/speeches/nomination_acceptance_1980.asp
Tichy, N. M., & Devanna, M. A. (1990). The transformational leader: The key to global competitiveness. New York: John Wiley & Sons Inc.
However, after taking office he began to have trouble implementing his policies, causing the vision for change to diminish in the eyes of the people. People still want change but the changes proposed by President Obama are not the changes the people were looking for.
This week we will look at another transformational leader who took office in a similar situation but with different results. This leader is the 40th president of the United States, Ronald Reagan.
When Reagan took office in 1980, the nation was experiencing 14 percent inflation and unemployment at almost 10 percent (Kudlow, 2004). This situation violated the traditional laws of economics which believed that the rate of inflation and unemployment have an inverse relationship. This means that as one increases the other will decrease. A new term “stagflation” was coined to explain this unusual economic condition. Because of stagflation many, including then President Carter, believed that the nation’s best days were behind it and that we would never again experience the greatness we once did.
Foreign affairs were also a mess with the Russian invasion of Afghanistan followed by the hostage situation in Iran (Kudlow, 2004). The nation was weak militarily as well evidenced by the failed rescue attempt in Iran known as Operation Eagle Claw (Pierre). Similar to conditions present when President Obama took office, the state of the nation at the time produced the recognition of the need for change.
In his acceptance speech at the Republication Convention in 1980, Candidate Reagan began to unveil his vision for the Nation. He chastised the current administrations belief that the nation’s best days were behind it and instead shared a vision of a nation that once again would be great. He reminded the nation that Mr. Carter told the American People to trust him. They did and found themselves out of work and with their savings devoured by inflation (Reagan 2020, 2006).
The electorate bought into the vision and elected Reagan to office in an historic landslide (Leip, 2005). However, would President Reagan be able to implement or institutionalize the changes he was proposing? The answer lies in the results.
When Reagan left office in 1989, the nation had experienced 35 percent growth or an average of 4.5 percent. Inflation had fallen to 1 percent and unemployment had fallen to 5.5 percent. The economic growth was not just in numbers but Reagan’s economic policies produced real growth evidenced by the emergence of new industries in computing, software, communications, and the Internet. Reagan’s foreign policy also laid the groundwork for the collapse of the Soviet Union and the end of the Cold War without even firing a single shot (Kudlow, 2004).
Critics of Reagan’s policies cite rising deficits and claim this represents failure of the policies. However, the budget gap between the deficits and Gross Domestic Product (GDP) was at 2.5 percent of the economy and remained unchanged throughout Reagan’s term. Since statistical data must always be compared with the context of the population as a whole, it is statistically sound to conclude that the deficit relatively remained unchanged (Kudlow, 2004).
The contrasting difference between the leadership styles of Reagan and Obama lye in whom they believe has the power to bring about change. With Obama, it is the central government. He believes that it is the responsibility of government to mandate change through legislative and judicial fiat. They view the individual as unable to make the necessary changes without the help of government. They handle the resistance to change by ignoring it hoping that once the changes are made, the people will learn to accept them. Perhaps this philosophy is at the root of the difficulties Obama is having in implementing his vision.
With Reagan, the philosophy is to empower the individual through tax cuts and reduced governmental regulation. This provides individuals with the capital needed for real economic growth and frees them of the chains of excessive governmental regulation. This bottom-up approach made acceptance of change much easier since individuals knew they were free to pursue their dreams and goals. This unleashed the creativity of the American People leading to the innovations in computing, software, communications, and the Internet.
The lesson learned here is that institutionalizing change is much easier and meets with less resistance when it is done by empowering individuals rather then forcefully mandated by the state. This is because an empowered people will come up with creative ways to solve problems where as state control monopolizes the creative means and cheats the nation of the creative force of an empowered people. What is lacking today in America is a transformational leader to empower the people and unlock their creativeness.
Next week we will be looking at the world’s most successful transformational leader of all time so I look forward to meeting with you through this medium next week. I also urge you to tell your friends and invite them to become followers of this blog
References
Kudlow, L. (2004, June 10, 2004). Reagan's link. Retrieved January 4, 2010, http://www.nationalreview.com/kudlow/kudlow/200406100915.asp
Leip, D. (2005). 1980 presidential election results. Retrieved January 4, 2010, http??uselectionatlas.org/RESULTS/national.php?year=1980
Pierre, T. (). What was Operation Eagle Claw, the failed rescue of American Hostages in Iran?. Retrieved January 4, 2010, http://middleeast.about.com/od/usmideastpolicy/f/me090413c.htm
Reagan 2020 (2006). Acceptance of republican for president at te 1980 Republican National Convention in Detroit, Michigan. Retrieved January 4, 2010, http://reagan2020.us/speeches/nomination_acceptance_1980.asp
Tichy, N. M., & Devanna, M. A. (1990). The transformational leader: The key to global competitiveness. New York: John Wiley & Sons Inc.
Unexpected Increase in Joblessness?
The U.S. unexpectedly lost 85,000 jobs in December after showing a gain in November. This is after the economy showed a gain of 4,000 jobs in November, the first gain in almost two years (Willis, 2010). This confirms that the news of a recovery might have been premature and the signs of recovery (e.g. the increase in jobs in November) may be unsustainable. What is puzzling to me is that the news of a rise in joblessness in December would be unexpected.
Retailers traditionally hire temporary workers to help with the Christmas rush. They hire these employees in November so they can be trained and ready for work the day after Thanksgiving or Black Friday. This accounts for the increase in jobs in November.
After December 24, these companies no longer need these employees and have to let them go. After being let go, they are eligible to file for unemployment if they do not have another job. In years past these employees were most likely working at these retailers for a second job so they could have more money for Christmas but in a recession there are a greater number of these employees who took these jobs because they were unemployed.
The truth is that the increase in joblessness in November was not a sign of a recovery. We have now returned to the reality that we are still in a recession and will remain there unless the government provides incentives to the free market in the form of lower taxes and less regulation. However, our geniuses in congress and The White House are determined to pass a massive health care bill with massive tax increases and regulations on both individuals and businesses. In addition, they want to pass a cap and trade (i.e. cap and tax) bill which will tax energy usage, something that will affect every individual and business in the nation.
It is time for the geniuses in Washington to stop the nonsense and get out of the way. We each know what we need to do in order to succeed in our businesses and careers. There are individuals in our nation who have ideas for new products and services that will create completely new industries and thousands of jobs but the threat of massive government regulation and taxation holds them back. What we need is to unleash the creativeness of the American People, sit back, and watch what happens.
We did this in the 1960’s and we were able to put a man on the moon. We did this in the 1980’s and created the computing industry, cell phones, and the Internet. There is no reason to believe that it will not work in the 2010’s.
Reference
Willis, B. (2010, January 8). Payrolls in U.S. drop 85,000; unemployment at 10% (correct). Retrieved January 8, 2010, http://www.bloomberg.com/apps/news?pid=20670001&sid=aQjqUKCuj_is
Retailers traditionally hire temporary workers to help with the Christmas rush. They hire these employees in November so they can be trained and ready for work the day after Thanksgiving or Black Friday. This accounts for the increase in jobs in November.
After December 24, these companies no longer need these employees and have to let them go. After being let go, they are eligible to file for unemployment if they do not have another job. In years past these employees were most likely working at these retailers for a second job so they could have more money for Christmas but in a recession there are a greater number of these employees who took these jobs because they were unemployed.
The truth is that the increase in joblessness in November was not a sign of a recovery. We have now returned to the reality that we are still in a recession and will remain there unless the government provides incentives to the free market in the form of lower taxes and less regulation. However, our geniuses in congress and The White House are determined to pass a massive health care bill with massive tax increases and regulations on both individuals and businesses. In addition, they want to pass a cap and trade (i.e. cap and tax) bill which will tax energy usage, something that will affect every individual and business in the nation.
It is time for the geniuses in Washington to stop the nonsense and get out of the way. We each know what we need to do in order to succeed in our businesses and careers. There are individuals in our nation who have ideas for new products and services that will create completely new industries and thousands of jobs but the threat of massive government regulation and taxation holds them back. What we need is to unleash the creativeness of the American People, sit back, and watch what happens.
We did this in the 1960’s and we were able to put a man on the moon. We did this in the 1980’s and created the computing industry, cell phones, and the Internet. There is no reason to believe that it will not work in the 2010’s.
Reference
Willis, B. (2010, January 8). Payrolls in U.S. drop 85,000; unemployment at 10% (correct). Retrieved January 8, 2010, http://www.bloomberg.com/apps/news?pid=20670001&sid=aQjqUKCuj_is
Immanuel, God with us:
Christmas and New Years are behind us now and we begin another year and decade. As we look forward to the coming year, we will undoubtedly experience times of worry and fear. In last weeks posting I shared some words of encouragement regarding handling worry and fear. This week I want to share from a message I heard Wednesday night from my pastor entitled “Immanuel, God with Us”.
Immanuel is not a word commonly used today but we may have heard it in a Christmas carol this past Christmas. Since the word is not commonly used today, many do not know its meaning. However, an understanding of Immanuel can bring encouragement to our lives.
The first use of Immanuel is in Isaiah 7:14
14 All right then, the Lord himself will choose the sign. Look! The virgin will conceive a child! She will give birth to a son and will call him Immanuel — 'God is with us.'
NLT
This prophecy is later fulfilled in Matthew 1:18-23
18 Now this is how Jesus the Messiah was born. His mother, Mary, was engaged to be married to Joseph. But while she was still a virgin, she became pregnant by the Holy Spirit. 19 Joseph, her fiancé, being a just man, decided to break the engagement quietly, so as not to disgrace her publicly.
20 As he considered this, he fell asleep, and an angel of the Lord appeared to him in a dream. "Joseph, son of David," the angel said, "do not be afraid to go ahead with your marriage to Mary. For the child within her has been conceived by the Holy Spirit. 21 And she will have a son, and you are to name him Jesus, for he will save his people from their sins." 22 All of this happened to fulfill the Lord's message through his prophet:
23 "Look! The virgin will conceive a child!
She will give birth to a son,
and he will be called Immanuel
(meaning, God is with us)."
NLT
John Elaborates on the significance of Immanuel in his gospel
John 1:1-5
In the beginning the Word already existed. He was with God, and he was God. 2 He was in the beginning with God. 3 He created everything there is. Nothing exists that he didn't make. 4 Life itself was in him, and this life gives light to everyone. 5 The light shines through the darkness, and the darkness can never extinguish it.
NLT
John 1:14
14 So the Word became human and lived here on earth among us. He was full of unfailing love and faithfulness. And we have seen his glory, the glory of the only Son of the Father.
NLT
John purposely mimics Genesis 1 to emphasize that the same almighty God who created the universe has decided not to turn his back on fallen man but to instead come and live with us. By living with us, he is able to experience what we experience. He knew what it was like to run a business by helping Joseph in his carpentry business. He knew what it was like to loose a loved one (Joseph) and a friend (Lazarus). He knew temptation, pain, and homelessness. He also experienced rejection and death.
Immanuel does not just dwell with us but he can dwell in us if we invite him into our lives. Knowing that God lives in us brings peace because we know he is right there when we cry for help. By having dwelt with us, we also know he understands our situation.
Heb 4:14-16
14 That is why we have a great High Priest who has gone to heaven, Jesus the Son of God. Let us cling to him and never stop trusting him. 15 This High Priest of ours understands our weaknesses, for he faced all of the same temptations we do, yet he did not sin. 16 So let us come boldly to the throne of our gracious God. There we will receive his mercy, and we will find grace to help us when we need it.
NLT
Therefore, if worry or fear takes hold of us, all we need to do is cry out for help and Immanuel will be there to help us.
You can download a free download of the pod cast by going to the link for Calvary Community Church on this website. You will need to download the massage for Wednesday January 6, 2010.
Immanuel is not a word commonly used today but we may have heard it in a Christmas carol this past Christmas. Since the word is not commonly used today, many do not know its meaning. However, an understanding of Immanuel can bring encouragement to our lives.
The first use of Immanuel is in Isaiah 7:14
14 All right then, the Lord himself will choose the sign. Look! The virgin will conceive a child! She will give birth to a son and will call him Immanuel — 'God is with us.'
NLT
This prophecy is later fulfilled in Matthew 1:18-23
18 Now this is how Jesus the Messiah was born. His mother, Mary, was engaged to be married to Joseph. But while she was still a virgin, she became pregnant by the Holy Spirit. 19 Joseph, her fiancé, being a just man, decided to break the engagement quietly, so as not to disgrace her publicly.
20 As he considered this, he fell asleep, and an angel of the Lord appeared to him in a dream. "Joseph, son of David," the angel said, "do not be afraid to go ahead with your marriage to Mary. For the child within her has been conceived by the Holy Spirit. 21 And she will have a son, and you are to name him Jesus, for he will save his people from their sins." 22 All of this happened to fulfill the Lord's message through his prophet:
23 "Look! The virgin will conceive a child!
She will give birth to a son,
and he will be called Immanuel
(meaning, God is with us)."
NLT
John Elaborates on the significance of Immanuel in his gospel
John 1:1-5
In the beginning the Word already existed. He was with God, and he was God. 2 He was in the beginning with God. 3 He created everything there is. Nothing exists that he didn't make. 4 Life itself was in him, and this life gives light to everyone. 5 The light shines through the darkness, and the darkness can never extinguish it.
NLT
John 1:14
14 So the Word became human and lived here on earth among us. He was full of unfailing love and faithfulness. And we have seen his glory, the glory of the only Son of the Father.
NLT
John purposely mimics Genesis 1 to emphasize that the same almighty God who created the universe has decided not to turn his back on fallen man but to instead come and live with us. By living with us, he is able to experience what we experience. He knew what it was like to run a business by helping Joseph in his carpentry business. He knew what it was like to loose a loved one (Joseph) and a friend (Lazarus). He knew temptation, pain, and homelessness. He also experienced rejection and death.
Immanuel does not just dwell with us but he can dwell in us if we invite him into our lives. Knowing that God lives in us brings peace because we know he is right there when we cry for help. By having dwelt with us, we also know he understands our situation.
Heb 4:14-16
14 That is why we have a great High Priest who has gone to heaven, Jesus the Son of God. Let us cling to him and never stop trusting him. 15 This High Priest of ours understands our weaknesses, for he faced all of the same temptations we do, yet he did not sin. 16 So let us come boldly to the throne of our gracious God. There we will receive his mercy, and we will find grace to help us when we need it.
NLT
Therefore, if worry or fear takes hold of us, all we need to do is cry out for help and Immanuel will be there to help us.
You can download a free download of the pod cast by going to the link for Calvary Community Church on this website. You will need to download the massage for Wednesday January 6, 2010.
Friday, January 1, 2010
Commonsensenomics (Introduction)
When I began the blog commonsensenomics.blogspot.com, my goal was to present a common sense approach to economics. In a little over 200 years, the United States has grown from a fledgling nation to an economic power. The greatest contributor to this economic growth has been the promotion of free markets in our economy with little governmental interference. In addition, the constitution guarantees citizens of the U.S. the right to own private property.
Free markets allow people be innovative and creative, seeking new ways to meet the demands of consumers. The constitution limits government’s ability to interfere in commerce and limits its actions to that of a referee guaranteeing everyone the right to engage in commerce as they see fit. The right to own and keep private property means that once an individual prospers from their labors, they can keep and enjoy the fruits of their labors.
As with any man made system, the capitalistic system of the U.S. is not perfect and as had its share of corruption, but this is true of any economic system run by people. It is not the system that is corrupt but the people in the system. However, the capitalist system, if allowed to operate as it should, is equipped to correct corruption because customers of corrupt corporations can refuse to purchase their goods. In addition, the stockholders of these corporations can replace corrupt leaders.
Commonsensenomics is comprised of the following 10 principles.
1) Markets work best when they are free
2) Less tax = more economic activity
3) Regulation driving with the brakes on
4) Why not use our own resources?
5) Environmentalism the economies number one threat
6) Godly principles the plan that always works.
7) Profit is good
8) Education what is lacking most.
9) Keep the government out of our healthcare
10) Capital the oil that keeps the machinery running.
In the next few weeks we will be exploring these principles in greater detail. The continued success of the economy of both the U.S. and other countries of the world hinges on adherence to these principles. I would encourage each of you to invite your friends, family, and business associates to follow these weekly teachings as well as the other teachings on leadership and Biblical financial principles. The Bible says in Hosea 4:6 that “My people are destroyed for a lack of knowledge”. My goal is to disseminate knowledge to my readers so they can avoid financial destruction.
Free markets allow people be innovative and creative, seeking new ways to meet the demands of consumers. The constitution limits government’s ability to interfere in commerce and limits its actions to that of a referee guaranteeing everyone the right to engage in commerce as they see fit. The right to own and keep private property means that once an individual prospers from their labors, they can keep and enjoy the fruits of their labors.
As with any man made system, the capitalistic system of the U.S. is not perfect and as had its share of corruption, but this is true of any economic system run by people. It is not the system that is corrupt but the people in the system. However, the capitalist system, if allowed to operate as it should, is equipped to correct corruption because customers of corrupt corporations can refuse to purchase their goods. In addition, the stockholders of these corporations can replace corrupt leaders.
Commonsensenomics is comprised of the following 10 principles.
1) Markets work best when they are free
2) Less tax = more economic activity
3) Regulation driving with the brakes on
4) Why not use our own resources?
5) Environmentalism the economies number one threat
6) Godly principles the plan that always works.
7) Profit is good
8) Education what is lacking most.
9) Keep the government out of our healthcare
10) Capital the oil that keeps the machinery running.
In the next few weeks we will be exploring these principles in greater detail. The continued success of the economy of both the U.S. and other countries of the world hinges on adherence to these principles. I would encourage each of you to invite your friends, family, and business associates to follow these weekly teachings as well as the other teachings on leadership and Biblical financial principles. The Bible says in Hosea 4:6 that “My people are destroyed for a lack of knowledge”. My goal is to disseminate knowledge to my readers so they can avoid financial destruction.
Transformational Leadership (Part 1)
President Barak Obama came to office on a platform of change. Change is what transformational leadership is about but change for the sake of change is rarely a good idea and often ends in disaster. As the Obama administration approaches its first year in office, let us look at how Barak Obama has done as a transformational leader.
There are three components or acts to successful transformational leadership (Tichy & Devanna, 1990). The first of these is revitalization or recognition of the need for change. As the 2008 presidential campaign went on, the economy began to slip into a recession. Everything came to a climax with the banking crisis in September of 2008. The unrest caused by the economic crisis helped fuel this recognition for change. Since then Senator Obama was running on a promise to bring change, this crisis worked in his favor and contributed to his election. However, after almost one year in office, do the American people still have the same recognition of change?
Obama’s poll numbers have been slipping ever since he came into office. This leads us to believe either the American people have lost their desire for change or they do not like the change coming from the administration. With the country still suffering the affects of the recession and unemployment at over 10 percent, it is safe to assume that the people still desire change. Therefore, it is safe to assume the people have problems with the change this administration is bringing.
Obama came into office with a nation desiring change and believing his proposals were what the country needed. The nation still believes in the need for change but it has lost faith that Obama is the transformational leader the nation needs at this time. His act 1 of revitalization started strong but has weakened over time.
The second act of transformational leadership involves the creation of a vision (Tichy & Devanna, 1990). Once again, the candidate Barak Obama did a good job of creating a vision of an improved nation brought about by his proposed changes. However, the polls indicate that the American people have lost faith in the vision Obama spoke of as they see rising unemployment and a protracted recession. Act two, just like act 1, started strong but has grown weaker over time.
The final act of transformational leadership involves the institutionalizing of change (Tichy & Devanna, 1990). The hype over the need for change and great visions of what the change will bring are useless if the change is not successfully implemented. The Obama Administration has embarked on a policy of spending the country out of the recession. This policy was used during the great depression and caused the depression to last eight years longer than it should have. This is evidenced by the fact that unemployment peaked at 25 percent in 1933 and did not dip below 10 percent until the U.S. involvement in World War II in 1941 in spite of the massive spending of The New Deal (Random Facts, 2009). If the Obama administration is to restore the public’s belief in Obama’s need and vision for change, they need to change the direction of their policies.
There is a model for successful implementation of transformational change and in next weeks posting we will look at another transformational leader who successfully used this model to implement the changes the nation needed. The country desires change and shares a common vision of a greater America but there is a division on how to implement these changes.
References
Random Facts (2009, March 28, 2009). 50 interesting facts about the great depression. Retrieved December 29, 2009, http://facts.randonhistory.com/2009/04/12_depression.html
Tichy, N. M., & Devanna, M. A. (1990). The transformational leader: The key to global competitiveness. New York: John Wiley & Sons Inc..
There are three components or acts to successful transformational leadership (Tichy & Devanna, 1990). The first of these is revitalization or recognition of the need for change. As the 2008 presidential campaign went on, the economy began to slip into a recession. Everything came to a climax with the banking crisis in September of 2008. The unrest caused by the economic crisis helped fuel this recognition for change. Since then Senator Obama was running on a promise to bring change, this crisis worked in his favor and contributed to his election. However, after almost one year in office, do the American people still have the same recognition of change?
Obama’s poll numbers have been slipping ever since he came into office. This leads us to believe either the American people have lost their desire for change or they do not like the change coming from the administration. With the country still suffering the affects of the recession and unemployment at over 10 percent, it is safe to assume that the people still desire change. Therefore, it is safe to assume the people have problems with the change this administration is bringing.
Obama came into office with a nation desiring change and believing his proposals were what the country needed. The nation still believes in the need for change but it has lost faith that Obama is the transformational leader the nation needs at this time. His act 1 of revitalization started strong but has weakened over time.
The second act of transformational leadership involves the creation of a vision (Tichy & Devanna, 1990). Once again, the candidate Barak Obama did a good job of creating a vision of an improved nation brought about by his proposed changes. However, the polls indicate that the American people have lost faith in the vision Obama spoke of as they see rising unemployment and a protracted recession. Act two, just like act 1, started strong but has grown weaker over time.
The final act of transformational leadership involves the institutionalizing of change (Tichy & Devanna, 1990). The hype over the need for change and great visions of what the change will bring are useless if the change is not successfully implemented. The Obama Administration has embarked on a policy of spending the country out of the recession. This policy was used during the great depression and caused the depression to last eight years longer than it should have. This is evidenced by the fact that unemployment peaked at 25 percent in 1933 and did not dip below 10 percent until the U.S. involvement in World War II in 1941 in spite of the massive spending of The New Deal (Random Facts, 2009). If the Obama administration is to restore the public’s belief in Obama’s need and vision for change, they need to change the direction of their policies.
There is a model for successful implementation of transformational change and in next weeks posting we will look at another transformational leader who successfully used this model to implement the changes the nation needed. The country desires change and shares a common vision of a greater America but there is a division on how to implement these changes.
References
Random Facts (2009, March 28, 2009). 50 interesting facts about the great depression. Retrieved December 29, 2009, http://facts.randonhistory.com/2009/04/12_depression.html
Tichy, N. M., & Devanna, M. A. (1990). The transformational leader: The key to global competitiveness. New York: John Wiley & Sons Inc..
Words of Encouragement from God’s Word:
As we begin a new year, many of us face uncertainty. Some have lost their jobs while others have lost their homes. For those fortunate enough to still have their jobs they may be concerned that if the economy does not recover they will join the ranks of the unemployed. Others who lost their jobs have found new employment and must battle the concerns about whether they will be able to perform well in their new jobs.
With these concerns in mind, I thought it best to share some words of encouragement from God’s Word. When facing difficult times I have always found stability in my relationship to God and encouragement from his Word, The Bible. Here is what the Word has to say about fear, worry, and the provision of God.
Luke 12:7
7 And the very hairs on your head are all numbered. So don't be afraid; you are more valuable to him than a whole flock of sparrows.
NLT
I do not even know how many hairs are on my head. If God knows this much detail about me I can rest assured that he knows about my present situation. God is also concerned about the sparrows and provides for their needs (Matthew 6:26). This verse tells us that we are more valuable to God the Father than these sparrows so I know he will also provide for my needs.
Matt 6:25-27
25 "So I tell you, don't worry about everyday life — whether you have enough food, drink, and clothes. Doesn't life consist of more than food and clothing? 26 Look at the birds. They don't need to plant or harvest or put food in barns because your heavenly Father feeds them. And you are far more valuable to him than they are. 27 Can all your worries add a single moment to your life? Of course not.
NLT
Once again God reminds us that He is concerned about all of his creation. If he is willing to meet the needs of the birds of the air, why would I waste time and energy worrying about my needs? I can find peace in the fact that God has promised to take care of my needs.
Phil 4:19
19 And this same God who takes care of me will supply all your needs from his glorious riches, which have been given to us in Christ Jesus.
NLT
God is the creator of everything in the universe. He owns all that is in the universe. This verse reminds us that God is not only willing to meet our needs but has the resources necessary to meet them.
It is my hope and prayer that these passages of scripture will bring you encouragement as we face the New Year. I pray that you will grow in your relationship with the Lord and if you have never committed your life to him, I encourage you to ask him into your life today. You can do so by praying like this:
1) Acknowledging that you have sinned or missed the mark of God’s standards.
2) Repent or decide to turn away from your sinful behavior.
3) Confess with your mouth the Jesus is now Lord of your life and acknowledge that Jesus came, died, was buried, and rose again to save you from your sins
Congratulations, Jesus has now forgiven you for your sins and you have begun a new life with him. Find a church where the Bible is taught and become involved. I also encourage you to begin reading the Word. A good place to start is with the Gospels (Matthew, Mark, Luke, and John). The easiest of these to understand is John so that is a good place to start.
With these concerns in mind, I thought it best to share some words of encouragement from God’s Word. When facing difficult times I have always found stability in my relationship to God and encouragement from his Word, The Bible. Here is what the Word has to say about fear, worry, and the provision of God.
Luke 12:7
7 And the very hairs on your head are all numbered. So don't be afraid; you are more valuable to him than a whole flock of sparrows.
NLT
I do not even know how many hairs are on my head. If God knows this much detail about me I can rest assured that he knows about my present situation. God is also concerned about the sparrows and provides for their needs (Matthew 6:26). This verse tells us that we are more valuable to God the Father than these sparrows so I know he will also provide for my needs.
Matt 6:25-27
25 "So I tell you, don't worry about everyday life — whether you have enough food, drink, and clothes. Doesn't life consist of more than food and clothing? 26 Look at the birds. They don't need to plant or harvest or put food in barns because your heavenly Father feeds them. And you are far more valuable to him than they are. 27 Can all your worries add a single moment to your life? Of course not.
NLT
Once again God reminds us that He is concerned about all of his creation. If he is willing to meet the needs of the birds of the air, why would I waste time and energy worrying about my needs? I can find peace in the fact that God has promised to take care of my needs.
Phil 4:19
19 And this same God who takes care of me will supply all your needs from his glorious riches, which have been given to us in Christ Jesus.
NLT
God is the creator of everything in the universe. He owns all that is in the universe. This verse reminds us that God is not only willing to meet our needs but has the resources necessary to meet them.
It is my hope and prayer that these passages of scripture will bring you encouragement as we face the New Year. I pray that you will grow in your relationship with the Lord and if you have never committed your life to him, I encourage you to ask him into your life today. You can do so by praying like this:
1) Acknowledging that you have sinned or missed the mark of God’s standards.
2) Repent or decide to turn away from your sinful behavior.
3) Confess with your mouth the Jesus is now Lord of your life and acknowledge that Jesus came, died, was buried, and rose again to save you from your sins
Congratulations, Jesus has now forgiven you for your sins and you have begun a new life with him. Find a church where the Bible is taught and become involved. I also encourage you to begin reading the Word. A good place to start is with the Gospels (Matthew, Mark, Luke, and John). The easiest of these to understand is John so that is a good place to start.
Are we safe?
Many of us were busy on December 25. We were enjoying time with our families, watching our kids and grandkids get excited about what they found under the tree. We ate well, some of us, myself included, too well. However, if not for the heroic exploits of a film producer from Amsterdam, our day would have been ruined by news of a terrorist caused plane crash in Detroit in which almost 300 people died. This leads to the logical question, are we safe?
After the foiled terrorist attack, our incompetent homeland security secretary stated that we averted a disaster and that our airline security system worked like it was supposed to. Are they kidding, is our airline security now dependent on passengers risking their lives to foil terrorist attacks? Such incompetent leadership is not tolerated in the private sector and most definitely should not be tolerated where the safety of the American People is at stake.
In response to this, the TSA has further inconvenienced innocent passengers by requiring them not to have anything on their laps and to have their hands in plain view on their laps for one hour after takeoff and one hour before landing. This new policy means that passengers on flights of less then two hours will not be able to read a book or use their laptops during the flight. In addition, all potential terrorist need to do is detonate their explosives after the first hour of the flight and before the last hour of the flight.
If we are to be truly safe when flying in this country, we need to do what law enforcement agencies all over this country do, profile potential criminals. For example, in most major cities, there are certain areas where gang and drug activity are more prevalent. The city lacks the resources necessary to check everyone living in the city so they allocate more resources to these neighborhoods.
It is common knowledge that terrorism originates from radical Islam. Therefore, we need to monitor more closely the activities of people traveling from these countries. If they complain about the increased scrutiny, we need to tell them to complain to the people in their countries that condone terrorism.
The most important job of government is not providing health care. We do not need the government to bail out our banks and automakers. We do not need the government to protect our environment. What we need the government to do is keep us safe. Therefore, Mr. President, if your secretary of homeland security cannot keep us safe, you need to replace her with someone who will. We may not be fortunate enough to have a hero on the next flight and many innocent people may die. That would be a tragedy. A tragedy that we can avoid by simply paying attention to the warning signs (e.g. buying a one-way ticket, paying cash for a ticket, and being on a terrorist watch list).
All we are asking Mr. President is for you to do your constitutional duty of keeping us safe.
After the foiled terrorist attack, our incompetent homeland security secretary stated that we averted a disaster and that our airline security system worked like it was supposed to. Are they kidding, is our airline security now dependent on passengers risking their lives to foil terrorist attacks? Such incompetent leadership is not tolerated in the private sector and most definitely should not be tolerated where the safety of the American People is at stake.
In response to this, the TSA has further inconvenienced innocent passengers by requiring them not to have anything on their laps and to have their hands in plain view on their laps for one hour after takeoff and one hour before landing. This new policy means that passengers on flights of less then two hours will not be able to read a book or use their laptops during the flight. In addition, all potential terrorist need to do is detonate their explosives after the first hour of the flight and before the last hour of the flight.
If we are to be truly safe when flying in this country, we need to do what law enforcement agencies all over this country do, profile potential criminals. For example, in most major cities, there are certain areas where gang and drug activity are more prevalent. The city lacks the resources necessary to check everyone living in the city so they allocate more resources to these neighborhoods.
It is common knowledge that terrorism originates from radical Islam. Therefore, we need to monitor more closely the activities of people traveling from these countries. If they complain about the increased scrutiny, we need to tell them to complain to the people in their countries that condone terrorism.
The most important job of government is not providing health care. We do not need the government to bail out our banks and automakers. We do not need the government to protect our environment. What we need the government to do is keep us safe. Therefore, Mr. President, if your secretary of homeland security cannot keep us safe, you need to replace her with someone who will. We may not be fortunate enough to have a hero on the next flight and many innocent people may die. That would be a tragedy. A tragedy that we can avoid by simply paying attention to the warning signs (e.g. buying a one-way ticket, paying cash for a ticket, and being on a terrorist watch list).
All we are asking Mr. President is for you to do your constitutional duty of keeping us safe.
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