I have not connected dots in a while and thought that I should go back to the basics. If you don't connect dots to figure out what is really going on, you are missing a good bet. With all the misinformation out there, you have to connect the dots all by yourself if you want to get the truth. I have been doing this since I was a kid and it has served me very well. Here are some more dots that need to be connected.
First, let's take our higher education system. Some years ago, out government saw that people who went to college did better in life than those who did not. They earned more and paid more taxes. If that was the case, the government wanted "more". They proposed a simple system where the government would provide loans to kids so they could pay for college. As a kid, I used to hear all kinds of people claim that they would have gone to college, except for the fact that they could not afford it. As a kid, I accepted this reason as fact. It was only later that I found that these people who made this claim were not smart enough to go to and complete college. If they had the basic smarts, they did not have the discipline required to get thru college. I did not notice at the time, but none were planning on a difficult major that required real smarts or much more discipline. The bottom line is that most were phonies. The government did not see thru the smoke and thus came up with a plan to give government loans to people to "encourage" them to go to college. The government was not concerned about the types of majors or the prospects for these kids to get jobs after college where they could earn enough to pay back the loans. Their program worked and many more kids went onto college. If you only looked at the number of kids who went to college, you would have to agree that the program was a success, but it was "not". Here is the first dot that needs to be connected.
The affect of this government program was to increase the cost of college for all kids. Now college cost everyone much more. It hurt the kids who had been going to college and it ended up with the old kids with a lot more debit than they would have had before. Most of the money for this program was borrowed from China and squandered. The program had a "good" idea, but actually made things much worse. Dot #1. We now have a "bubble" in education that is going to burst with fewer people going to college in the future while we need more "real" college graduates and colleges that are much more expensive than they were.
Dot #2 is housing. I blogged before that the USA has a slightly lower percentage of home ownership than Canada, yet we spent billions trying to put people into home they could not afford. Like higher education these programs had the affect of pushing up the prices of homes for everyone while at the same time putting more and more people into homes they could not afford. What was the final net affect of this program? The real estate economic bubble finally burst and almost brought down our total economy and banking system. Real estate was inflated just like the cost of college was inflated when the government got into the picture and poured in more and more of our tax money. That is dot #2.
Dot #3, energy. I think that you must already understand that the use of energy is the main factor that drives the standard of living for us humans. The cheaper and thus the more available energy is the higher the standard of living. It is that simple. We started out with draft animals and then to water wheels and then onto steam power. Steam power was the first time we used "heat" from coal or wood to provide the energy that moved our standard of living up one more notch. Coal powered our factories, ships and trains until we found oil and natural gas. I think that you can see how this all worked, but wait. Now enter the government. We can not just use plain gas in our cars. We have to have special types of gas with alcohol from corn mixed in. We can not just drill holes into our own land and get oil or natural gas out and sell it to the highest bidder. We have to add all the cost imposed by the government so that the basic cost of oil or natural gas has a cost higher in the USA than many countries around the world. Without all the government regulations, many countries around the world, like China, can buy energy for "less" than what it costs here in the USA. Do you think that Mexico requires that they put expensive alcohol from corn into their gas? No way.
I have just connected three dots that our government has gotten involved in and in all cases, we end up on the short end. College cost more and we have no more smart college graduates than before. In the case on Engineers, they hit their peak back in 1986. Home values have had a free fall, back to the values where they should have been. Why people keep looking for a time when home prices will get back to "normal" is beyond me. Normal is about where the are now. So what, if many people are "under water". Look at the price of gas. We can buy oil any place in the world for all our needs and pay the same price as everyone else. We are all on the same level playing field so what is the problem? Oh, we can not compete on a level playing field with much of the world because we don't want to work as hard as they do. Do we need more government or less? That is the question.
