Just For The Hale Of It

The Monster Gets Bigger

We ran across some alarming stats that should provide yet another reason for financial advisors to rise up and marshal their clients into a voting force that will change the complexion of Congress this November and lay the groundwork for a new President in 2012.

The increasing size of government provides an indication of what’s to come if we don’t sharply change course. Just within the past year, the federal government has added 86,000 permanent, non-Census jobs, according to the Bureau of Labor Statistics. And these aren’t “Mickey Mouse” jobs, but relatively high-paying ones. The number of federal jobs paying annual salaries of more than $100,000 increased by more than 50% just since the recession.

What’s worse, today’s average federal worker earns 77% more than the average private sector worker, according to data from the federal Office of Personnel Management.

This is a very dangerous development. It puts a heavier and heavier tax burden on the private sector, suppressing the innovation and entrepreneurship required for growth and real opportunity.

If these trends are not stopped in this year’s elections – and reversed in 2012 – the cherished American values of self-reliance, initiative and ingenuity will continue to degenerate and eventually disappear. More and more Americans -- especially young adults – will abandon the private sector as they see the government paying higher wages, offering better job security, allowing earlier retirement and guaranteeing lavish pensions. Would-be entrepreneurs will choose safety and comfort rather than risk and reward.

All this is discussed fully by Arthur C. Brooks, president of the American Enterprise Institute, in his new book: The Battle: How The Fight Between Free Enterprise and Big Government Will Shape America’s Future.

Capturing the hearts and minds of young adults is crucial to winning this battle, for they are the future innovators, entrepreneurs and risk-takers – if there are to be any. This is not easy given that these young minds have already been poisoned by the legendary hostility to capitalism at the colleges and universities from which they’ve recently come. Academics are overwhelmingly aligned with the far left – more so than any other profession, according to countless surveys over the past decade.

With this baggage, how are young adults to cope with the constant attacks on free enterprise and America’s basic values from a corrupt and incompetent media and an America-bashing entertainment industry.

Brooks describes Barack Obama’s “three long-term strategies” to keep young people in the big government camp.

• Pay Off Their Debts. Obama would cancel student loan debts for those who work 10 years for the government or a non-profit organization. Thus, if you start your own business, you pay off your own debt. But if you work for the IRS to tax someone else’s business, your debt is forgiven.

• Give Them Government Jobs. (See beginning of this epistle.)

• Destroy Their Incentive. Obama’s tax policies ensure that an increasing number of people will never have a “pocketbook interest in free enterprise. Even as they grow older, develop their careers and earn more money, many will never pay a dollar in federal income tax because they’ll never catch up with an increasingly progressive tax system,” Brooks wrote.

He makes this stark observation:

“The current trend will increase the percentage of Americans who are permanent net takers from our society, who use more in public resources than they contribute and for whom a free enterprise system of entrepreneurship and limited government holds few obvious personal rewards”

The battle to stop this and save the very fabric of America’s being far transcends anything currently commanding the attention of the organizations representing retail financial advisors and advocating for them in Washington.

It dwarfs fiduciary vs. suitability “standard of care,” insurance commission disclosure, protection of the insurance tax havens or a couple of percentage points in marginal tax rates – important as these issues are. As Brooks writes in The Battle. . .

“This is a struggle between two competing visions of America’s future. In one, America will continue to be a unique and exceptional nation organized around the principles of free enterprise. In the other, America will move toward European-style statism grounded in expanding bureaucracies, increasing income redistribution and government-controlled corporations. These competing visions are not reconcilable. We must choose.”

Unfortunately, the professional organizations representing financial advisors haven’t seen fit to join this battle – at least not in any meaningful manner.

So individual financial advisors must.

FA

E. Hale Jones
FA Editor & Publisher

Email your comments and questions about the ‘Hale Of It’ to editor@financialadvisorpublications.com