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J. E. Clark

It's A Question Of 'Wealth Management'
Thinking Things Over
By Jerry E. Clark
January 29, 2016 -

You almost cannot keep from being exposed to it: the Dow Jones Industrial Average, that well-known staple of investor confidence in the economy, has been gyrating wildly the past few weeks, mostly in the negative direction.

The "markets" are going through what most financial analysts call "a correction." This is a term used to explain a decline in various stock prices as a result of an elevated price that may have been achieved more due to a certain momentum, rather than the basics or fundamentals of the company involved.

Unsophisticated investors routinely get 'taken' in such situations, bowing to fear that everything will collapse, their 401(k), IRA or other retirement funds will be severely diminished or worse, the nation will fall into a depression. Normally what happens is that street smart Wall Street sharks wait for prices to fall from 7 -15%, then rush in and buy back shares they've dropped, picking up very valuable stakes in companies with bright futures. The massive losses often fall upon those who are the most vulnerable. They get fleeced quickly as billions of so-called wealth vanishes with a flurry of quick computer trades. Poof, and it's gone.

The most important question before the American public this election year hasn't been mentioned very often, I've noticed.

While almost every candidate tells us how they will defeat ISIS or deal with illegal immigration, few tell us how they plan to reverse one of the most disturbing trends in American life: income stagnation and its sister, family wealth. The reason why most of the candidates avoid this is that they simply have no clue actually how to achieve it.

The one candidate talking about the family wealth issue has a solution that is 100% nonsense, or diametrically opposed to making our capitalistic society more productive and more healthy. Sen. Bernie Sanders hasn't an idea how the nation's business community works, but has a great deal to say about how people should be paid, how people need to be taxed and how companies should be regulated. That's the socialist mind and it's a weak one to be sure.

The way for the average American to achieve higher pay and for the average American family's wealth to increase is, alas, relatively simple: American companies' profits and American competitiveness must be emphasized in every way possible.

Those who advocate the arbitrary raising of minimum wages and other regulations which force higher costs on American companies (including whacko taxation grabs) fail to recognize reality: to get costs into line, companies will merely slash their employment levels and other costs to deal with each and every new government mandate. This results in far less money for companies to give out in bonuses, less resources to grant new pay and benefits and far less money to use for additional investment in new plants and equipment.

The political left in our nation continues to misinform Mr. Average American, calling national corporate success "greed" and decrying the success of a few few at the top as excessively wealthy, allegedly "harming" the rest of us normal folks. Nothing could be farther from the truth.

Allowing an ever increasing amount of national economic activity to come from government, in all its forms, means more control by government and less ability for the private sector to expand. When our private sector, i.e. our companies and businesses, expands, it's obvious where the real source of American wealth is: right there. More economic activity brings in billions more in regular tax revenue, less results in lower tax revenues. We can fund the ever increasing wealth of all American families by continuing to understand that as American business goes, so goes the wealth prospects of everyone, from the richest to the poorest.

Competition, in all its forms, tends to solve many vexing national economic problems. If our companies are the best in the world at what they do and what they produce, their sales and prospects will soar and thus, their employees have a far greater chance of doing far better. The opposite means stagnation, income declines, and poverty.

We have, therefore, one clear choice - and that choice is to fully embrace the reality of a highly competitive world "market" that respects quality and economic power. That power comes from a superiorly educated American work force, a business sector that has the full support of its government, a taxation system that respects investment and research, and a population which understands that its future is increasingly bright when it chooses more hard work and dedication over leisure.

Well now, we can adopt this kind of attitude or, alternatively, start learning Mandarin. Because if we don't get off our duffs soon, the Chinese and others will give us an economic lesson the likes of which we might not have imagined...

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