The reason people are poor
and what they can do about it.
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That's it! (You can skip all the intellectual stuff and go right to how to do it by clicking here.)
If your ability to buy things is greater than the cost of your needs, you're rich. If purchasing power related to your needs is ten times what somebody else's is, you're ten times richer than he is. If your needs are greater, you're poor. It's really that simple!
Poverty has very little to do with possessions, or how many one has or what one owns. What it has to do with is what needs a person has, and to what degree he can fulfill those needs by acquiring goods or services.
Of course, there are different kinds of needs. Everybody needs love. If a person can get more love than he needs, he's rich (in love, anyway). If he needs more love than he can get, he's poor. If he's got as much as he needs, he's just getting by.
When most people talk about poverty, they're talking about material wealth, so the rest of this discussion will be restricted to that. It's probably just as well, because it's hard to agree on how to measure love, how much one has, or how much one needs.
It's almost as hard to measure needs in terms of material wealth, but not quite. After all, almost everybody buys things they need with what wealth they possess. Food, clothing, shelter, health care, education, entertainment, Louisiana politicians, Democratic superdelegates; appointees to vacant Illinois Senate seats - all can be measured in terms of the wealth it takes to buy them.
Of course, one can barter; give somebody something he needs (but you don't) in exchange for something he doesn't need (but you do). Maybe both of you need the same things, but he's got more and you've got less, or vice versa. Barter works fine if you can find people who have all the things you need and who are also close enough that you can trade with them directly. About the only people who can do that are the Bambuti Pigmies and the Waodani of the Amazon jungle. All the rest of us have to have something we can carry around in our pockets that we can use to keep track of how much we have donated to satisfying someone else's needs and to what extent we are capable of satisfying our own. We can use cash, checks or plastic.
Money!
Now, as we all know, money doesn't grow on trees. What most of us don't know is that it doesn't come from the government, either. The government, the US Mint and the Bureau of Engraving and Printing, makes coins and notes, respectively, not money. By law, these can be used for money, but so can other things - beads, gemstones, cattle, women, silver ingots, stock certificates, bonds, gold dust, IOU's, pretty shells; whatever. You can even use an idea that has no physical reality at all, called digital currency, of which Bitcoin is only one example. Money is an exchangeable equivalent of the value of things we would otherwise have to lug around to barter. You can print your own if you want, as long as it doesn't compete with US currency. Walt Disney does.
For money to be useful, it has to have value. In the United States, the value of money is measured by the dollar, a certain constantly diminishing fraction of the value of all the goods and services owned in or produced by the US. Determining exactly what that value is turns out to be tricky, but the basic equation is pretty simple. If the total value of the US goes up, so does the value of the dollar. If the number of dollars goes up, the value of each dollar goes down. If the number of dollars rises along with the value of the US, the value of each dollar remains the same.
This is a law of nature, like gravity. The legislators can't change it, no matter how hard they try or what they promise. The best they can do is figure out roughly what the United States is worth, and make sure there are enough dollars to make one dollar worth what they think it should be. The reason they make new ones is that the US is daily worth more, and more goods and services are produced, and the old dollars wear out or get lost or destroyed. They could just make more, but then each one would be worth proportionately less.
Ignorant people think that's a good idea.
If you have at least enough dollars to buy the things you need, you're OK. If not, you either have to get more dollars, or else you have to have fewer needs. Either one will work. Since most people have new needs every day (food, a place to sleep, etc.) they have to have a new supply of dollars every day, which they then exchange for the goods and services they need.
This new supply is called income. Subsistence income is what you need to survive. Disposable income is what is left over, if any. If you don't have subsistence income, you'll eventually die from exposure or starvation or both, but then both your income and your needs will drop to zero. If you have disposable income, you can buy things you want.
Either way, the money you spend represents value. You give Winn Dixie $2.49, they give you a pound of ground beef. They will give you 8 rolls of paper towels for five dollars, or four cans of Blue Diamond almonds or a fifteen pack of Gatorade for twice that.
The money you spend on stuff goes to the people they bought the items from: their store, the things in it, salaries of people who work there, gas, utilities and electricity, insurance, and taxes. This money, in turn, goes to the workers who produced and distributed the things you bought, those who built the store and made the things they built it out of, the people who produced, gathered or dug up those things, the people who made the things in the store, the workers at the gas and electric plants, the insurance company, and the government. Eventually, it gets paid to somebody who did something to add value.
Actually, the food they sell is free; it either grows out of the ground, or comes from something that naturally reproduces itself. The raw materials and fuel are just lying around, ready for someone to add value by gathering them up, packaging them, transporting them, and making them available for other people to buy. The insurance companies consist of their workers and investors, and the taxes go to the people who work for or contract to the government and provide government services for those who pay them. The money involved all goes to people, not places or things.
The money goes to people! Remember that!
So the money doesn't just go into a big pile somewhere. Even if some of these people save their money in a bank, the bank doesn't just put it in their vault. The bank uses their depositors' money to loan out to people so the depositors can make more money. Basically, it goes to people who do stuff to earn it so they can buy things from other people who earn it. The result of all this earning activity is the production of goods and services on which the value of money is based. In effect, each transaction represents a little adjustment in the value of the dollar, with the value of each one being the value of what one buys compared to how much he paid for it.
Smart people try to get the best value for their money, so their money has as much value as possible. They shop around for the best deals and don't buy from places that sell spoiled milk and rotten meat and moldy bread and canned goods full of rat turds. The dollars that people would otherwise spend for rotten grocery products instead buy good food, and everybody's money becomes more valuable as a result. It's called competition.
Competition is a good thing. It makes money more valuable and the things people buy with it better. It also makes the stores that sell crap go out of business and the people who work in them lose their jobs. This can be prevented by restricting competition, by having the government or a dictator or a gang of thugs decide what people should sell or buy, or how much they should pay for it. The government can do this by passing laws that make it illegal to buy certain things or from certain vendors, or by giving money to the crap sellers to keep them in business, or by taxing the sellers of good stuff so much that people can afford only to buy crap. The thugs can beat you up or smash your stuff if you don't buy from their store. In the case of medicinal and recreational drugs, the government stifles competition so much that you have to pay astronomical prices for them, and often subsidize international organized crime besides.
Ignorant people think that's a good idea.
Alternately, the thugs can simply burn down, loot or otherwise destroy the stores that sell good stuff. No matter how its done, when competition is stifled or prevented, the worth of money goes down and some people end up having to buy crap because they don't have any other choices. They do that a lot in the developing countries. They even do it in some neighborhoods right here at home.
It's the same with work. Unlike raw materials or food, which are lying around free for the finding and getting, work has value all by itself, but that value is very low. I buy about 1000 man hours of it every day, which I use to light and heat my home and run my electrical appliances and air conditioner. I pay about $8.20 a day for it, and I get a discount if I buy more. That's one thousand hours of flat out work, not standing around complaining or being out on maternity leave or vacation. I could get the same amount of work out of 125 dedicated slaves, but slaves aren't that dedicated, and they're illegal and surly anyway.
The electric company from which I buy all this work calls it energy, but it's still work; the hauling of heavy things; barge totin' and bale liftin' and things like that. A horse can do the same work as about ten men, so I buy about 100 horsepower hours a day. Horses are used in places that don't have electricity for work that needs more than about ten people. The reason the electric company can sell it so cheaply is that most of this work comes from the burning of coal or natural gas, which is lying around for free, but still needs people to dig it up and transport it and burn it and make the machines that do that. But you can still buy all the work you want for less than a penny a man hour.
Of course, we pay people a lot more for their work, because most jobs that people do can't be done by 1/10 of a horse. Horses can't play basketball or take out your appendix or write video game software. The money that people pay those who do such things is a measure of the value that they put on that kind of work. The President of the United States currently earns $400,000 per year. If you figure that both the President and a horse work about 12.5 hours a day, the Congress assumes that the President is worth a little more than 1069 horses. Some people claim that he's only worth half a horse, but that's still five times better than average!
Competition operates when buying work, too. If all I want is 100 horsepower hours of work every day, I can buy 8 horses and work each of them 12.5 hours a day, or I can buy the work from the electric company. I don't know how much a horse costs to operate and take care of, but I'm pretty sure it's more than $1.03 per day, including whoever looks after it. If I can find 125 people who are willing to work for 0.82 cents an hour, it would pay me to do that, assuming they are all hard workers and show up on time. Otherwise, it makes more sense to just buy the work directly from the electric company and use only what I need. In effect the human worker competes against the electric company to sell me work, and the electric company wins because it's cheaper and more reliable.
If I want more than just plain work, I have to pay more. If I want to go somewhere, My Toyota Prius will take me there in style for $2.79 per hour. The 78 horsepower engine probably operates at about 50% power, so I'm using 39 horsepower. That means I'm paying $2.79 for 390 man hours, or 0.72 cents per hour, a little less than what the electric company charges.
Gasoline costs less than electricity for a fuel efficient car as long as it stays below about $2.00 per gallon.! And people want to buy electric cars!
Of course, I have to buy the Prius, too. With purchase price, license, taxes, maintenance and all, I figure the car costs me about $8.40 per hour, using 390 man hours of work. The total cost of going somewhere in my Prius is therefore 2.87 cents per man hour.
Like I said, the value of just plain work is very low.
Fortunately, smart people can make more money because their work is worth more. Steven Spielberg makes about $130,000 an hour. Oprah Winfrey makes about $50,000 an hour. Michael Jordan makes almost that much, but he doesn't work as much, so his yearly earnings are only a little over a quarter as much as Oprah's. I would guess my doctor makes about $170 per hour, twice as much as the President, all things considered. They are paid to do things with their work, not just work. They compete with each other, and the people who do things better get paid more. There is no limit to how much an individual can be paid to work, especially in the United States of America.
Ignorant people think that's a bad idea.
At present, it is illegal to pay an industrial worker in the US less than $7.25 per hour, even if they're just sitting around complaining about their pay. As a result, employers are doing everything they can to (1) get American workers to do more and (2) get rid of American workers entirely. They're buying machines to replace workers, getting rid of unproductive jobs, closing down whole businesses that are labor intensive, downsizing, and sending jobs overseas where people do more and cost less. Minimum wage workers have priced themselves right out of the job market, and most of them don't know it, but they're becoming unemployed and homeless in record numbers!
They're doing it more and more and more every day. The politicians say that they're going to put a stop to that, that they're going to create lots of new jobs, but those jobs are still going to be done by people, many of whom are gong to be working at minimum wage, 800 times what their work is actually worth. There is exactly one (1) way that they can accomplish that, and they've been doing it all my adult life.
Devalue the dollar!
Ignorant people think that's a good idea.
Back when the minimum wage was a dollar an hour, I remember that gasoline cost 32.9 cents a gallon. A minimum wage worker had to work about 20 minutes for a gallon of gas. Not long ago, he had to work 34 minutes for the same amount. That makes it profitable for the oil companies to fire oil field workers and buy gasoline from places where they don't give a damn about how much a worker makes, but do care about the value of the American dollar. When the value of the dollar goes down, they charge more for the oil they sell, and you damn well pay the price they want or they'll leave it in their ground, no matter how much you complain!
The problem is not that gasoline prices have gone up, it's that the value of the dollar has gone down, and it's all been done by your Congress, whom you elected, who are paid with your money! They keep promising they're going to make things better, but they keep making them worse! The total value of the US has gone up, but the number of dollars in circulation has gone up more. As a result, each dollar is worth less every second. It's becoming worth less and less as you're reading this!
Actually, things are much worse! The value of the dollar is measured by the consumer price index (CPI), which measures the average cost of things that most people buy. In the time the minimum wage has gone up 655%, the CPI has gone up about 800%. The result is that the minimum wage earner can buy only 81% of what he could back in 1955.
Ignorant people think that's a good idea.
In 2006, American voters who were tired of the Republican status quo decided to elect a Democratic Congress. The US economy immediately began to wind down until things got so bad that Congress passed the Economic Stimulus Act of 2008 (Pub. L. 110-185, 122 Stat. 613) in February of 2008. This "stimulus package" cost each American taxpayer about $1,520 dollars, but paid each one of them about $300 for them and each one of their children. Congress didn't buy anything with this money, it simply took it from people who made it and gave it to people who spent it. It stimulated the hell out of the heroin, marijuana, and crack cocaine industries, not to mention those who figured they could put off their hunt for a job for another couple of months. It also raised the credit limit for the purchase of homes mortgaged by Fannie Mae and Freddy Mac so that more and more people could buy bigger and bigger homes that they couldn't hope to afford. American voters liked the results of this debacle so much that they elected even more Democrats to Congress in 2008, and chose an inexperienced demagogue over a seasoned and dedicated public servant to be President. Now his party has voted to spend five times as much on methods that have already caused this catastrophe, and he's promising to screw with everybody's health care and the appointment of federal judges, including three on the Supreme Court. I'm not going even to try to explain the current results, because anyone who doesn't already know wouldn't believe me anyway!
The real tragedy of this mess is that it's all being blamed on George W. Bush, as a result of which the people who really caused it have much more power to do it much faster, and they've already started doing that. They'll probably do that for another eight years and blame somebody else! They killed 360,000 white boys by fighting a war against freeing the slaves, and have managed to maintain the evils of slavery for over 140 years already. I see a bad moon a'risin'!
You can see them all over. People are voting for higher wages and shorter hours and more paid vacations and sick days and paternity leave and more government spending and more affordable housing, all of which mean cheaper dollars. They're demonstrating and going on strike and picketing and making speeches and joining unions and doing everything they can to get other people to pay them what they think they're worth and provide services that they want for free because they can't afford to pay for them, even with the higher wages they expect to get!
What they're not doing is more useful work. The people who are doing that are quietly contributing billions of their own dollars to elect candidates whom they think will vote for the things they want. They're called "rich people," and they do pretty much what they want. Their income has gone up way more than 800%. They can buy more things, including those thing the minimum wagers can't afford anymore. One of the things they're buying is the businesses that the minimum wage earners are working in, and making more money by replacing the minimum wagers with machines. Sometimes they just sell off the business assets and lock the minimum wagers out. The politicians are promising to do something about that, but they haven't done it since I've been alive! What they're doing at the moment is giving failing businesses money to pay to the rich CEOs. If you vote for them, you're putting your destiny and your trust in liars.
Ignorant people think that's a good idea.
Unfortunately, you can't have government without paying for it. That's another law of nature that the politicians can't change. The government gets the money it needs from taxes. Almost nobody likes taxes. The Founding Fathers, who invented the United States of America, didn't like them, either. They had just got over fighting a war over too much in taxes. The problem is, the more government functions you have, the more taxes you have to pay. To keep people from having to pay too much in taxes, the Founding Fathers wanted to keep the government small; to have it do only a few things. They listed the functions of the federal government in the very first paragraph of the Constitution. They are:
(1) Form a more perfect union,
(2) Establish justice,
(3) Insure domestic tranquility,
(4) Provide for the common defense,
(5) Promote the general welfare, and
(6) Secure the blessings of liberty for ourselves and our posterity.
Ignorant people think that's a bad idea.
Ignorant people think that the government should help you buy a house, manage your insurance, find you a job, keep you from being offended by other people, protect you from your own stupidity, take care of you when you're sick, drunk, lazy or old, and care for your momma. These are probably all worthwhile things to do, but, according to the Founding Fathers, they're not government functions, because they don't fall into the six categories above, and they cost money.
If these things are done by businesses or charities, they have to compete with each other, and all this competition makes things better and less expensive. For example, if you buy your own health insurance, you get to choose the insurance company. A company that charges low rates and gives good service gets more customers, and can charge even lower rates and provide better service. The companies that charge high rates or give poor service go out of business, because people don't buy from them. They can lie and cheat, of course, but eventually they're found out and people stop doing business with them.
If you get your health insurance from the government, like they do in Cuba, you pay what they decide to charge and you get what they decide to offer, and if you don't like it you just stay sick or damned well die, because you don't have a choice, and you still have to pay for it. Besides, health care can't make you healthy if you're fat and smoke, and if it's free, it makes you think you can get away with those things, both of which will kill you! (Guess which President smokes and whose Surgeon General is fat!) Government health insurance, like other functions, isn't free, it's paid for by taxes on the rich and loss of purchasing power of the poor because of the lower value of their dollars, which buy fewer things.
Ignorant people think that's a good idea.
US health care is the best in the world, like US private education, which produces the most educated and the most successful graduates. Universal public education, on the other hand, produces almost all the country's ignorant failures. If the government starts dorking around with health care, we'll have the same situation that we have with public education - people will get care, they just won't get well! President Obama promised that under his proposal, if you like your present health care plan, you can keep it. The trouble is, you will still have to pay for other people's "free" coverage, and eventually your insurance company will be forced out of business. Cubans have "free" government health insurance. When was the last time you heard of a load of poor Americans risking their lives in a leaky boat to go to Cuba?
The Founding Fathers thought government should get its money by taxing money spent on trade. It's called outgo tax. You could make as much as you wanted, but if you spent money, you had to pay a tax. This made it attractive for people to work productively, save their money, and make things instead of buying them. They swarmed into the West, working to turn wilderness into ranches and farms. Many became fabulously wealthy by saving their money and inventing things and using them in unique ways.
They invented the cotton gin and steam engine that made it possible to eliminate slavery and child labor. They invented whole new industries: railroads, mining, manufacturing, that employed millions of new workers who could make as much money as they wanted by doing the same thing, working smart instead of hard. All these new inventions produced a better quality of life for everyone, and allowed people to live longer and have more children who were more likely to survive and grow up to be voters.
Unfortunately, more voters does not mean smarter voters!
The Founding Fathers recognized that when a government taxes something, it gets less of it, and when it subsidizes something, it gets more of it. That's why they taxed the spending of money and made taxing the earning of money unconstitutional, to encourage people to earn more and spend less. Poor people like that idea when most people are poor, because they don't spend hardly anything and they want to keep what they earn. But when large numbers of only moderately poor people get disposable income and want to spend more, the idea of taxing income becomes more attractive, as long as the taxes are higher for larger incomes. That's why, in 1913, The People ratified the Sixteenth Amendment to change the United States Constitution to permit the taxing of income. Immediately, people started spending more and earning and saving less, exactly the opposite of what the Founding Fathers wanted.
Ignorant people think that's a good idea.
All my lifetime, elected politicians have passed tax laws based on the theory that rich people should pay more taxes than poor people because they make more money. As a result, rich people are paying for the government that the poor people have to live with. Today, the wealthiest 5% of taxpayers pay roughly well over half (about 60%) of all income taxes, and the poorest half of taxpayers pay about 3% of the taxes on income. A lot of voters don't pay any income taxes at all, because they don't have any taxable income. Many of them get other people's tax money in a "refund" without paying any of their own. They think they're beating the system, but they're all abysmally poor as a result, and they're going to stay poor! Actually, they're going to get poorer and poorer until they die, and their children are going to start being poor where they leave off. In addition to income taxes, most workers pay payroll taxes, which fund social security and Medicare. Some get out of this by not working at all, but then they can't get those benefits when they're old and can't work.
Fortunately, they tend to die young and rid their society of unproductive people!
The intention of the voters who created this mess was probably the mistaken belief that they would be taking from the rich (other people) and giving to the poor (them). Communism is based on this principle, and it doesn't work, either. The way it has actually worked out is (1) the rich have gotten richer, (2) the poor have gotten poorer, (3) the dollar is worth only about 5% of what it was, (4) the government has spent more money than it has taken in, and (5) the politicians, who make these decisions, are all rich. A lot of them have gotten rich because of the laws poor voters elected them to pass to supposedly make the rich poorer and the poor richer. Those voters are still poor. In fact, they're even more poor than they were!
That's because they're ignorant!
Because voters have elected politicians who spend more and more money every year on things the voters want but can't pay for, the federal government has gone into debt to the tune of national debt as you are reading this. That's about $4.15 a day since the beginning of time! The natural law, which the politicians can't change even though the say they can, says that the total value of the US is this much less than what it should be, or there are these many more dollars more than there should be in circulation. Either way, it means that the few dollars that the poor people manage to scrape together are worth less and less and less with each passing second, with no end in sight. Watch the change for yourself!
If you want to see a spreadsheet of the whole sorry mess, click here
People still pay outgo tax. It's called sales tax. States tax just about all sales, and the federal government taxes some things to pay for government services that use those things. Federal fuel taxes, for example, go to build roads for the vehicles that use the fuel. Sales tax rates are the same for almost everything.
Poor people have to spend money for things they need, just like rich people. Rich people, however, can spend money for things they want as well. The poor voter does not have that luxury. The poor voter and the rich voter have an equal number of votes, which is one each. This gives poor voters the same power as rich voters to make the government do what they want, but the rich voter has the overwhelming ability to promote what he wants by campaign contributions, advertising, and by having the finances to run for office in the first place. He also has the ability to find out what works and what doesn't, unlike poor voters, and he has the ability to get the poor voter to vote for things the rich want by appealing to the stupidity of poor voters, which is the only thing they have plenty of.
The fact is, every law that supposedly takes from the rich and gives to the poor makes the poor voter poorer and the rich voter richer over time. Where do you suppose these candidates who appeal to the poor voters are getting all their campaign money?
It is ridiculously easy to convince poor voters to vote for things that benefit the rich instead of the poor because poor voters are dumb as rocks. In spite of the fact that history proves that taxing outgo makes poor people richer and taxing income makes them poorer, poor people still vote for more and more taxes on income because they believe that being paid to be poor is a good thing, and they don't know diddly squat about history. The rich get what they want simply by paying the poor voters to be poor, and the poor voters are voting for that in ever increasing numbers. They've been doing that all my life, and, let me tell you, it's working! The rich are richer and the poor are poorer - by more than 19 percent, even adjusted for inflation, just in my lifetime, and I'm not even dead yet!
Ignorant people think that's a good idea.
The key to this problem is that there is a marked difference between what these people believe and what is true, and a large reason for that discrepancy is the fact that most poor people adhere to religions that maintain that people are saved by faith instead of works, which is demonstrably a bunch of crap! Even the Bible says that we should be doers, not just hearers (James 1:22) and that faith without works is dead (James 2:17-26). These people accept religious leaders who convince them that it doesn't matter what they do, it's what they believe that counts. They claim that it's somebody else's fault that they're poor, and that as soon as "they" are made to pay, everything will be all right. The politicians cater to this delusion by promising benefits such as lower prices, aid to dependent children, food stamps, and "health care reform," but these benefits are paid for by the people who get them having less spending power, overall. Regardless of what they believe, these people are, in fact, poorer by the minute, and it's their own fault, whether they believe it or not.
A good example of faith versus truth is the recent drastic increase in American gasoline prices. The price of a gallon of gasoline is about 3% of the cost of a barrel of petroleum, from which gasoline in made. As the cost of petroleum goes up, so does the cost of gasoline.
Petroleum, like everything else that is bought and sold, is based on the law of supply and demand. If the demand goes up while the supply stays the same, so does the price. If the supply goes up, the price drops. That's the way it has always been throughout history, and that's the way it's always going to be because its a law of nature, and anyone who maintains otherwise is either a liar or just plain stupid. Either way, he or she is not to be trusted. Americans are responsible for running up the price by running up the demand while Congress keeps the domestic supply limited. We use so much petroleum that we have to buy it overseas, where US legislators are, at best, guests and tourists. The Organization of Petroleum Exporting Countries, OPEC, are: Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. With all those places to buy petroleum, competition should result in the best quality at the lowest price, so that the countries that charge too much or don't provide good service shouldn't be able to sell any.
That's why they don't compete.
OPEC eliminates competition. The heads of all these countries get together periodically to decide what they want the price of petroleum to be, and then they see if they can sell it at that price. If they can't, they lower the price a little bit until they can sell it. Then they start raising the prices again. It's the old supply and demand rule, and the OPEC countries don't give a damn what US legislators or US demonstrators or newspaper columnists or ignorant protesters think.
The OPEC countries don't have much else to sell, and the supply of petroleum they do have is strictly limited. If they sell too much now, they won't have any to sell later, and they know that it's eventually going to run out. As long as the US has some petroleum of our own, we can refuse to buy if the price gets too high and use more of our own. We could get them to lower the price a little bit now by using up the rest that we have, but once we run out, the OPEC countries can charge anything - literally anything - they want, and the US will then have to pay that or go without, and that means without gasoline and diesel fuel, plastics, synthetic fabrics, petrochemicals, and asphalt for building roads.
Ignorant people think that's a good idea!
The United States used to be one of very few non-OPEC countries to have a chief executive who was a former oil company chief executive and the son of a President and oil company executive who ran their family oil business. If there's anybody who knew about the oil economy, it was President Bush. If the people in Congress, who didn't know diddly about the oil business, would have given the President a free hand, we would have the most efficiently managed petroleum energy policy in the history of the world.
One of the things we would have is less government regulation. Congress loves government regulation because passing laws is what Congress does. Congress has passed so many laws regulating the oil companies that the only way they can stay in business is by buying petroleum from other countries and selling it here. You can do that, too, by going to Mexico, where it's cheaper, and buying your gasoline there. But Mexicans don't have to pay a $50,000 fine (that's fifty thousand dollars, for you ignorant folks) if they spill some oil, even if it's right next to a road where they spray oil to control the dust, like they do here. The fact is, the difference between what gas costs in the US and what it costs in Mexico is all environmental protection. Environmental protection costs money; how environmentally friendly can you afford to be - especially if you're poor in the first place?
Congress can decrease the price by increasing the supply, but neither the President nor Congress can work miracles, which includes (1) changing the law of supply and demand, (2) Making OPEC do anything they don't want to do, or (3) increase the supply of petroleum in the world. (Congress could increase the supply in the United States by changing the EPA, but nobody is trying to make them do that.) You can write all the letters to congressmen you want, demonstrate all you want, and threaten all you want, but those things just aren't going to happen, no matter what anybody believes about it.
On the other hand, God reportedly can work miracles, so if you're doing anything else besides praying, you're talking to the wrong person.
The price of a gallon of gasoline includes the price of the petroleum from which it's made (73%), cost of refining (10%), transportation, marketing and distribution (6%) and fuel tax (11%). The oil companies take in about $1.07 from selling gasoline for every $1.00 they spend getting it to the pump. Because they spend trillions of dollars doing that, they make billions of dollars every year in profit, but that profit is still only seven percent. As businesses go, that's not very good, but the oil industry is thought to be a pretty safe investment because just about everybody wants it, buys it, and uses it. In addition, 27% of those trillions of dollars the companies spend goes to provide jobs for American workers, including those whose work, at minimum wage, costs 800 times as much as it's really worth. It also goes to the oil company executives who make millions of dollars annually. Unlike the minimum wagers, the oil company executives compete for what they get paid, just like Steven Spielberg, Oprah Winfrey and Michael Jordan. If they aren't worth what they're being paid, they get paid less or fired and replaced by somebody who does the job better. Even if gasoline buyers think those rich guys are doing the job badly, they're doing it less badly than anyone else available, certainly less badly than any of the gasoline buyers whose opinions don't count anyway unless they own stock in an oil company.
The 73% goes to OPEC because it's not very profitable to develop wells in the US any more, thanks to the EPA and Congress.
The 7% profit doesn't go to rich guys with silk top hats, tail coats and spats. It goes to investors in the oil companies, most of them average retirees and workers with IRA's and 401(k) retirement accounts who own just a teensy bit of the companies each. Some of those investors are people with teenaged children who are planning to use the profit to send their kids to college. It's not a very good investment, you understand, but it's safe because all those rich oil company executives are paid those big bucks to make the maximum profit (7% so far) for all those investors, and everybody wants gasoline.
Ignorant people think that's a bad idea.
Any gasoline buyer who doesn't like all the money "they" are making by "ripping him off" can become a gasoline seller, one of "them," by doing what "they" did, which is to buy stock in an oil company. He can even take over the company if he's got enough money just by buying enough stock. If he doesn't have any money to buy stock, he probably doesn't have any money to buy gas, either, no matter how cheap it is, so he doesn't have any reason to bitch about it.
For the last few years, Americans have been paying foreigners for overly expensive oil and praying for the gas prices to drop. At a result, many of them have defaulted on their mortgages because they used their hard-earned money to buy Saudi princes gold plated sports cars instead of buying stuff for themselves. A lot of them are defaulting because they bought houses they couldn't afford and hoped they could afford gas. They got their wish; the gas prices are drastically down, but so is the worth of their homes, and the current administration is promoting "HOPE" instead of reality, because the current reality sucks! See what happens when you dork around with the natural law?!
The stock market has its ups and downs, reported by, among others, the Dow Jones Industrial Average (DJA), which reports the overall prices of industrial stock traded on the New York Stock Exchange, commonly (but not accurately) known as the "stock market." There aren't any "normal" weeks in the stock market, but if there was one during the Bush administration, it would have gone something like this:
Monday morning the DJA starts out at 12500 and closes Monday afternoon at 12650, a gain of 150 points. Tuesday, it opens at 12650, dips to 12400 around noon, and closes at 12640, for a loss of 10 points. Wednesday, it opens at 12640 and closes at 12400, a loss of 240 points. Thursday, it opens at 12400, rises to 12600 around noon, and drops to 12300 at closing, a loss of 100 points. Finally, on Friday, it opens at 12300 and closes Friday afternoon at 12500. The market is said to be fairly volatile, but flat for the week. If somebody bought a stock that "tracked the Dow" Monday morning and sold it Friday evening, he wouldn't have made or lost any money.
Rufus Doofus buys a share of stock for $12.65 on Monday afternoon because the market is doing so well. Tuesday around noon, he panics and sells his stock for $12.40, losing 25 cents. Later that afternoon he buys back the same stock for $12.64 and sells it Wednesday afternoon for $12.40, a loss of 24 cents. Thursday noon he buys the same stock for $12.60 and sells it Friday morning for $12.30, losing 30 cents. Rufus lost 79 cents for the week, a loss of 6 1/4 percent on his original investment, even though the stock market as a whole didn't lose anything!
Bart Smart buys the same stock, Monday morning at $12.50 and sells it Monday afternoon (possibly to Rufus) for $12.65, a gain of 15 cents. Tuesday, he buys it back at $12.40 around noon, and sells it that evening for $12.64, making 24 cents. Wednesday evening he buys the same stock at $12.40, and sells it Thursday noon at $12.60, for a profit of 20 cents. He buys it back that evening at $12.30 and sells it Friday afternoon for $12.50, making another 20 cents. In the exact same market where Rufus lost 79 cents, Bart made 79 cents (possibly directly from Rufus) because he was smart instead of being a doofus. His profit is about 6 1/3 percent. That's a bigger percentage gain than Rufus's loss!
That's how a lot of people get rich, by buying stock at low prices and selling it at high prices, not by "ripping people off." One can make a little money by ripping people off, but eventually he'll get caught and go to jail and his lawyers will get all his money. Making money on the stock market is perfectly legal, and it's open to everyone, rich or poor. Some stocks sell for pennies a share. Of course, nobody knows that the price of stock will be in the next few minutes, let alone the next few days, but overall, it just keeps going up, except for a few that are advertised by spam email. Only stupid people buy these because they eventually become worthless and lose all their investors' money. Some stocks do better than others, but people who know what they're doing in the stock market are generally not poor. The stock market is a continuous game in which you can become fabulously wealthy if you know how to play, or completely broke if you don't, but you can still make money if you just put something in the pot and wait! On the other hand, if you do stupid things like selling your stock for less than what it's really worth, you give your money to smart, rich people. It's called "feeding the bears." In one month not long ago, smart rich people made about eight trillion dollars ($8,000,000,000,000) from stupid poor people. All they have to do to collect it is wait! Moral - don't feed the bears!
Nonetheless, ignorant people think it's a good idea!
The price of gasoline isn't just high here, it's higher all over the world, and it's going to keep rising until the people who use it invoke the law of supply and demand and start using less. Some representative costs in other countries compared to the cost in the US are: Sierra Leone (483%), Aruba (316%), Bosnia-Herzegovina (285%), Eritrea (251%), Norway (229%), United Kingdom (220%), Swaziland (14%), Libya (13%), Saudi Arabia (12%), Iran (10%), and Venezuela (3%). You can buy all you want for 12 cents a gallon, but you have to go to Venezuela to get it. If you want to buy it at the corner 7-11, you've got to pay somebody to bring it there, and those big ships and tanker trucks aren't cheap!
Just imagine, for a moment, what the oil companies do for the American consumer. They make gasoline available at just about every other street corner from pumps that are so easy to operate that just about anybody can do that. The gasoline is blended specifically for the place it's sold, free of gross contamination, contains additives to reduce pollution and keep the engine clean, and is precisely measured. The people who do all this are the oil companies, and they only charge seven percent more than it costs them.
Guess who everybody hates! Right! The oil companies! Congress even wants them to make less than seven percent. That'll show the bastards! Representatives in Congress can get all the gas they want with their fat, bloated, taxpayer-funded salaries, or directly from the Strategic Petroleum Reserve if things get really tough, so they really don't care whether you can get any or not, as long as you keep voting for them.
If we're not careful, the same thing is going to happen with gasoline that happened with gold. When I was in college, gold cost about 3% of what it does now, but at least gold is recyclable. Owning gold nowadays is like owning an oil well, but it's expensive to buy any, because most of it comes from overseas. I don't know anybody who can afford to burn gold in their cars.
If Congress keeps dorking around with the oil companies and changing the rules and laws, they may just manage to screw things up enough so that the stock market will really crash and oil companies won't be able to attract investors, just like they've done with the insurance companies and mortgage companies already. When that happens, the oil companies will all go bankrupt, thousands, perhaps tens or hundreds of thousands, of workers will lose their jobs, millions of old people will lose their pensions and life savings, a gallon of gasoline will cost about $10.00, and most of the time people will have to actually go to OPEC countries to get any.
Ignorant people who think that's a good idea weren't around on October 29th, 1929! Look it up!
Gasoline used to be free. Yeah, that's right; free! The oil companies that made their money selling kerosene just burned it, right near the refinery. The reason American cars run on gas instead of diesel, kerosene, alcohol, peanut oil, hydrogen, natural gas, coal or wood is because when people could first afford cars, gasoline was so cheap. Now that it's becoming more expensive, automotive manufacturers are looking at other ways of moving people and goods from one place to another, but there are still people who have unshakable faith that "somebody" can make the price of gasoline go down to where it was before if they just find out who that person is and beat the dog doody out of him! They have faith, but it's costing them dearly, and it's getting worse by the minute! Seven hundred billion dollars ($700,000,000,000) per year and rising! Instead of setting them free, their misplaced faith has made them the slaves of OPEC. That's what you get for having faith instead of good works, people!
There is a guaranteed way of reducing the price of gasoline, and that's to use less. There are people who say that's not possible, but that's because they're ignorant, or possibly just stupid. Internal combustion engines, the kind that run on gasoline, can run just fine on alcohol, and alcohol is ridiculously easy to make. You can make some (not very much, I'll admit) by just bagging your grass clippings and weeds and leaving them out in the sun for awhile. Commercially, motor fuel can be made from kudzu or algae, both of which grow just about anywhere and trap carbon dioxide that causes global warming. Nowadays, alcohol is being made from corn because it's easy; moonshiners have been doing it for centuries, and they're not the world's smartest people. But that's a bad idea because corn is food and other people are starving to death. What will happen when all those starving people find out that the reason the price of food is so high is that Americans are burning it for fuel is anyone's guess. So far, they're turning rain forests into farmland and climate-warming carbon dioxide faster than the reduction in use of fossil fuels. What will happen when they get nuclear weapons from states that sponsor terrorism is left as an exercise for the student.
Using less gasoline shouldn't be all that difficult. Each American uses enough gasoline to go about 28 miles per day. There are very few people who just have to go 28 miles each and every day, and nobody has to go anywhere on vacation. They can just stay home and watch TV. We don't have to quit, we just have to use less. When the price of gas goes up one percent, we just do one percent less driving. Combine trips. Take a more direct route. Ride with someone else once in a while. Don't go someplace we normally go as often. Rent videos by mail. If we do one percent less driving every time gas goes up a percent, we'll never pay more for gas than we do right now! If half us switch to biodiesel, we won't need foreign oil at all! Something to think about!
As an example, there is a place I visit every day that is 3.4 miles away. It used to be 3.5 miles, but I found that an alternate route, that looks longer, is actually 0.1 miles shorter. That's 2.86% less distance. If gas goes up eleven cents a gallon, I'll still be saving money by taking the shorter route.
Ignorant people think that's a bad idea!
A person can use less gas by driving slower, too. Let's say that you drive a vehicle that gets 32 mpg at 55 mph. It probably gets somewhere around 24 mpg at 75 mph, the legal limit. If you go 100 miles at 55 mph, you'll burn 3.125 gallons of gas, and it'll take you 109 minutes to get there. At $4.00/gallon for gas, it'll cost $12.50. At 75 mpg, you'll burn 4.17 gallons of gas, and it'll take you 80 minutes to get there. It'll cost $16.67. At the slower speed, you'll save $4.17, but it will take 29 extra minutes, almost a half hour. That's $8.63 per hour. If that's more than your time is worth, go for it. Otherwise, you're better off driving fast and paying for the extra gas with the extra money you'll make working.
If you make lots of money, it pays you to go places as fast as possible, and if you're working while doing that, it makes sense to travel as fast as possible. That's why high-priced executives fly corporate jets. Recently Congress made fun of the automobile company executives for flying their jets to Washington to testify, so they all drove fuel efficient cars the next time. Airplanes are built by people in the United States, fuel efficient cars are built overseas by robots. Why do you suppose those rich guys were in Washington in the first place?
Of course, if you don't work, your time is worthless anyway, so you can save money by going as slow as you want - not going anywhere at all, in fact. You won't have to pay for any gas then, either.
If you a drive Prius, like mine, you'll save $4.50 per hour at the slower speed. If you've got a "16 mpg" gas guzzler, you'll save $17.24. Bottom line: only rich people can afford to drive big (or old) cars fast. But rich people drive new, fuel efficient cars; that's one of the reasons they're rich!
Ignorant people often blame "speculators" for the high price of gasoline, but the speculators make money off the stupidity of the consumers, and there's lots of that, especially among poor consumers. What speculators do is buy petroleum at some future time for less than they think it's going to cost then from people who are willing to take that deal now so they can get the money to drill for the petroleum or buy the trucks and ships and refineries in the first place. Without speculators, there wouldn't be any gas, anywhere! As long as people are buying more and more gasoline at higher and higher prices, the speculators are going to make more and more money betting that people will do that. As P. T. Barnum observed, nobody ever went broke betting on the gullibility of the American public.
And as long as ignorant people are lining up to pay Hugo Chavez and the Arabs whatever they want to charge for petroleum, they're going to do that, and the speculators are going to take advantage of it. The reason the they're rich is because they're smarter than the people who don't do anything except demonstrate and complain, all of whom are getting poorer faster than other poor people because they're griping about the problem instead of doing something to fix it.
Ignorant people are giving what little money they have away to the rich in other ways, too. One example is a "cool new thing; just discovered it myself." If you get email, you've probably received one with this title. The author claims that "some guy designed a system that, once you install on your car, can increase your MPG up to 120%." He claims that his "1999 Cadillac Sedan Deville now gets 41.2 mpg," and that he's "actually noticed cleaner emissions..." (I wonder how somebody "notices cleaner emissions.") The "secret" to all this technology that the "Fortune 500 petroleum companies are trying to keep this from you" is one of the many "educational packages" you can get from a company that calls itself "VLN 1956 Platinum Success Inc. 10000 NW 25th St. Unit IV Doral, FL 33172-5685."
If you do that, of course, you will register yourself at Platinum Success as a person who responds to spam emails and is so ignorant that you believe the claim that "water is a POWERFUL fuel but you need the RIGHT match to light it!" Your name will be added to the address lists of people who will gladly take your money to sell you a phony diploma, get you to invest in worthless stock, not enlarge your penis, pretend to teach you how to win the lottery and slot machines, or cleanse your colon of stuff that it is designed by Almighty God specifically to handle. Of course, the claim appeals to the paranoia of ignorant people who believe that somebody else is responsible for the fact that they're poor, but the fact is that water is burned hydrogen, and is no more a fuel than wood ashes are. If you are too ignorant to know that, you deserve to have somebody smarter than you rip you off - Dumbass!
(Yes, you can electrolyze water to get hydrogen and oxygen that you can burn in your engine. It's even explosive, if you make enough of it. It takes more energy to do this than you get back burning the stuff again, and the fact that you get the energy from the battery doesn't help. Battery energy comes from the engine; what do you think that alternator is for? Regardless of what gimcrackery you add, the engine will use more gas, and you'll pay more as well! P. T. Barnum was right: "There's a sucker born every minute.")
Of course, some ignorant people just give their money away to the smart people. Here on the Gulf Coast, rich people have set up huge casinos to relieve welfare recipients of other people's tax money. You can see the jobless single parents and their current sexual partners there any time of the day and most of the night. Because they don't have anything worthwhile to do, they have the time to calmly feed what money they have into the slot machines in the belief that although they're poor, sick, overweight, ignorant, illegitimate, uneducated, downtrodden, boorish, smelly and ugly, they're exceptionally lucky!!!
The fact is, human beings are predators, and anyone who works hard enough at being a victim of others is eventually going to succeed. Poor people have been voting Democrat for all my adult lifetime, and they elected the former President in the belief that the government will take care if them if they just raise income taxes high enough. Even his vice president predicted that he would be "tested" in his first six months in office. The current President's party sponsored a tax law that will make money, including tax money, in the United States $160,000,000,000 worth less than the national debt. It provides permanent tax cuts for the wealthy and temporary ones for everyone else, using your money, with no end to the rise of the national debt in sight. The historical result of this kind of thing has been a war where all the currently jobless have jobs as bullet soakers in the military, making much less than minimum wage. War is good business - invest your son!
Ignorant people think that's a good idea!
As Malcolm X observed, the solution to poverty is absurdly simple: don't be poor! The United States offers unlimited opportunity for poor people to become rich people; that's why so many poor people risk their lives to come here. There are plenty of jobs here, but the Mexicans are doing a lot of them, prisoners are doing others, people are getting rich inventing machines to do still more, and many of the rest just aren't being done at all. We'll even give you free education to help you get rich. But we can't do that if you drop out of school, get pregnant at 14, spend your time committing crimes, shoot up and fornicate instead of working, or if you're just plain stupid! If you think that believing something will make it so, or that someone else is supposed to (or will) take care of you, or that you can burn water in your car, or that somebody is going to make you rich by giving you a "$797 value wealth building course absolutely free," you're going to be poor all your life and you're going to die poor (and probably young), and nobody, nobody at all, especially Jesus, is going to save you from that! And if you vote for somebody who tells you these things aren't so, you deserve to be poor.
The United States of America has always been the land of freedom and opportunity. For generations, millions and millions of people have come here from all over the world, some at the risk of their lives, to make their fortunes here. Many of them have become rich, taking advantage of the freedom to enjoy the full benefit from the fruit of their labors.
Of course, America offers this same freedom and opportunity to be poor, as well. The Government even pays people to do that. Even the poorest person in the United States is incomparably rich when compared to, say, Somalia, but one can become relatively poor here if he really tries.
Because poverty consists of having purchasing power insufficient for one's needs, There are two avenues to poverty; decreasing purchasing power, or increasing needs. Either is sufficient by itself, but to be really successful at being poor, one can combine the two for even greater poverty.
Here are some helpful hints about how to be poor in the United States: