Our Way of Life

We have inherited quite a life here in the U.S. It isn’t a perfect society. It never was and probably never will be. It seems that people are never satisfied with the society they have inherited. They keep trying to make it even more perfect than what it is. There are those who would seek to make government a very visible part of our every day lives while others would like to make it as invisible as possible.

It can be said that our society is made up of two factors, "the for profit" side of society and the "not for profit side" of society. It can also be said that it is "the for profit" segments of society that supports "the not for profit" segments. This can be broken down even further, family and business being the profit segments and charities and governments being the not for profit segments. Economics is not only the engine that drives a society but it is also the fuel that keeps it running.

All four segments of society use the same basic formulation of economics, input – output =. The bottomline. The differences being is that charities and government, in theory, are to do business so that input is equal to output. This contrasts with business and families where, in theory, input is greater than output. We would see this by the following;

Government- tax revenue minus expenses equals zero.
Charities- donations minus charity equal zero.
Business – sales minus expenses equals a profit.
Families – income minus expenses equals savings.

This is a very basic formula for each and is the one people usually think of when talking of each. It also is a very poor way to view them also. A far better formulation would look like this;

Government- tax revenue minus (expenses plus welfare, both domestic and foreign) equals zero.
Charities – donations minus (expenses plus charity) equals zero.
Business – sales minus (expenses plus taxes) equals profit.
Families – income minus (expenses plus taxes) equals savings.

That, while better, is still a socialistic ideal. It doesn’t take into consideration the poor decisions that men make, either collectively or as individuals. Charities are the only segment that can abide by the above formulation realistically. Profit is not a motive of existence therefore; the charity that they can offer is dependent upon the donations minus expenses.

Power, greed, and self-interest, on the other hand, motivate governmental decisions. The agenda of the politician is the determinant of governmental expenditures not fiscal responsibility. This is shown by the fact that the politician will seek to raise revenues to balance the budget rather than cutting expenditures.

Business is probably the best example of fiscal responsibility. Now, don’t start laughing yet just because of the bad news today in regards to the failures of a segment of the business world. Failure is always in the back of the mind of a good businessman. This can be seen in the following formulation:

(Sales plus targeted assets) minus (expenses, taxes, charity) equals profit/loss.

This same formulation can be applied to the family. It would read like this:

(Income plus targeted assets) minus (expenses, taxes, charity) equals savings/debt.

This formulation is especially important in this day of two income families. The reason being is that family budgets are usually determined in light of both incomes rather than just one income as it was in days past. There is no one to replace or help the bread winner anymore in cases of financial emergencies. We have also become too dependent upon others to put bread on the table.
We have also become a society where spending is encouraged and saving is discouraged. If it was savings that was encouraged we would not have the disparity of income distribution that some are always complaining about.