The Free Market Answer for Consumer Protection

The U.S. Federal Government spends billions of your tax dollars every year on consumer protection services. However, if you are interested in lowering your taxes and still receiving the exact same consumer protection services but more efficiently look no further than a free market solution called The Better Business Bureau.

First a quick overview of The Better Business Bureau (BBB). The BBB is a non-profit organization that operates with absolutely zero funding from the government and therefore zero effect on your taxes. BBB issues business reviews on all companies and has been operating for over 100 years now by collecting dues from businesses who qualify and agree to adhere to BBB's high standards for business ethics and marketplace trust. Therefore, consumers know that choosing a BBB Accredited Business is a safe bet due to the rigorous background check completed on each business beforehand. BBB issues ratings for all businesses which is calculated by an algorithm that takes into account several different factors such as complaint volume, time in business, background information and other factors. A common misconception is that company's rating can increase if a business is Accredited with BBB, however, BBB Accreditation is not factored into the algorithm that computes a company's rating in order to keep every business on a level playing field. There are over 100 regional BBB's throughout the United States & Canada. Each BBB is independently governed by their own boards of directors, but must meet international BBB requirements, which are monitored by the Council of Better Business Bureaus.

The best thing about BBB is the services the organization provides are absolutely free to consumers. The BBB has handled complaints regarding marketplace transactions & advertising issues before the FTC even came into existence, except BBB does not need to collect tax money from you in order to do it. According to the FTC's website, the mission of the FTC is "To prevent business practices that are anti competitive or deceptive or unfair to consumers; to enhance informed consumer choice and public understanding of the competitive process; and to accomplish this without unduly burdening legitimate business activity." The BBB has this exact same mission as well but does not require tax money from consumers. BBB regulates the market through their rating system. Each company has a rating that is calculated by using the algorithm I previously mentioned. If that rating drops then consumers that check up on a company via BBB.org before using them will see that and through due diligence will then decide whether or not to hire a company. In the end, if the rating for a company is bad consumers will not choose to do business with that company and the business will lose profit. The BBB also works very closely with the media so if there is a bad company out there not only will that company have an "F" rating but you will hear about them on the T.V. or radio as well.

The BBB can also help you with all of your financial complaints exactly like the Consumer Financial Protection Bureau (CFPB). The website for the CFPB states that complaints can be filed related to banks, credit cards, credit reporting, debt collection, money transfer, mortgages, student loans & vehicle or consumer loans. Ironically, BBB handles all of the complaint categories listed on the CFPB website. The BBB can even shut down fraudulent financial websites when the F.B.I. or FTC does not have time to do so.
The BBB can do the work of the FTC & and CFPB without increasing your taxes or adding to the Federal debt which has now currently passed $17 Trillion! Take a look at the chart below which illustrates how much it takes to run each of these government agencies and ask yourself where they are getting the money for this. The answer is you!

Agency/Organization Start Date 2014 Budget for Public Funding
Better Business Bureau (BBB) 1912 $0.00
Federal Trade Commission (FTC) 1914 $301,000,000.00
Consumer Financial Protection Bureau (CFPB) 2011 $497,493,387.00

Before making a purchase, smart consumers advocate for themselves by checking background information on a company before choosing to do business with them. Consumers are able to visit www.bbb.org to check a business review online or simply call their local BBB office for detailed information on a company. BBB resolves around 80% of all complaints it receives. If a complaint goes unresolved the rating for the company will be affected and therefore serve as a warning to other potential consumers. Once a business becomes aware of a rating decrease they naturally will have a change of heart and resolve a complaint since businesses are incentivized by profit. However, for the remainder of complaints that go unresolved the consumer should then proceed to file their case in court for a resolution.

Although the government agencies above claim to be a free service to consumers it is ultimately the consumer that is paying for them via increased taxes. The BBB has successfully served the United States & Canada before any of these government agencies were even created and they have done this at no cost to the consumer. If you are in favor of the government agencies listed above then I urge you to call you congressman and ask for an increase in your taxes so that more money can be allocated to government run consumer protection agencies. However, if you have ever filed a complaint with the Better Business Bureau then you probably already know that they get the job done must quicker than the government agencies do. The U.S. is currently nearing $17 Trillion in debt and they are wondering where to cut spending. Why not eliminate the government agencies listed above since the free market already has these services covered? Sounds like a Billion Dollars of tax payer money wasted to me.


The Social Security Pyramid Scheme

In 1935 FDR signed into law the largest social welfare program in the United States. Many consider Social Security to be a pyramid scheme due to less people contributing and more people collecting it. Social Security offers the incentive for Americans not to save any money for retirement since the government is going to take care of them. However, the U.S. Supreme Court has already ruled that U.S. citizens have no right to their Social Security contributions. Furthermore, according to an Associated Press Article, people retiring today are the first generation of workers who will have paid more into Social Security than they will ever receive. More and more people are now starting to realize that they are indeed a victim of The Social Security Pyramid Scheme.

According to the Federal Trade Commission (FTC) Pyramid Schemes "are quite seductive because they may be able to deliver a high rate of return to a few early investors for a short period of time. Yet, both pyramid and Ponzi schemes are illegal because they inevitably must fall apart. No program can recruit new members forever. Every pyramid or Ponzi scheme collapses because it cannot expand beyond the size of the earth's population. When the scheme collapses, most investors find themselves at the bottom, unable to recoup their losses." Sounds familiar right!? This is exactly what is happening with Social Security which means that the collapse of Social Security is inevitable.

I want you to look at your paycheck and calculate how much Social Security Tax & Payroll Tax is taken out. That amount is the amount you could be putting towards your private retirement account which you would have control over. Shouldn't you have the freedom to use the money you make as you wish? Social Security is essentially like having your retired neighbor knock on your door and ask for a check from you so they are able to retire. However, it is not your responsibility to pay for your neighbor! This Social Security Administration (SSA) is now bigger than ever. The SSA is so big it is now hiring for positions such as "Counterintelligence Operations" with job duties including "working with members of law enforcement" and "resolving counterintelligence" that presents a "credible threat" to the SSA according to a recent posting on USAjobs.com. This latest example sounds like the biggest welfare program should now belong in a spy novel! Who would have thought that the socialist retirement program would need someone to " prevent hostile or enemy intelligence organizations from successfully gathering and collecting intelligence" which happens to be the definition of 'Counterintelligence'.

The resolution is simple. We need to begin phasing out this failing program. What I want to hear from our President would be the following.

"Every American born beginning today will not receive Social Security and will not be forced against their will to contribute to it. Instead, when they wish they can have additional money taken out of their paychecks and put towards mutual funds that they actually own. Any other Americans who wish to back out of the program can do so without penalty. These Americans will not receive any check in the future but will also no longer be forced to contribute. Once this decision is made it cannot be changed. All Americans who wish to continue to contribute can do so and will receive their Social Security benefits when the time comes."

This resolution will allow Americans the freedom they deserve in deciding how they want to allocate their money for their own retirement. The best part about the proposed resolution is that everyone wins. The citizens who wish to take the risk of not owning their own money can let the government handle it and the American citizens who wish to make a profit on their investment can do so without the government putting their filthy hands all over it.


The Profit Motive

Many states have price gouging laws that prevent businesses from increasing their prices when demand is at its peak. What these states fail to realize is they are doing nothing by enacting these laws. A simple understanding of supply and demand will show that these laws are actually hurting the consumers they were intended to protect.

When a price cap is put in place it discourages businesses from increasing their supply of necessities during a time of disaster. Without a price cap the business has every incentive to increase their supply of products/goods that are in demand because they will be able to charge more due to the demand and earn a greater profit. However, when a price cap is put in place the incentive a business has to increase their supply is reduced dramatically. Another unintended consequence of price cap laws is that it will bring a black market to the industry. After a price cap is put in place people like me will go to these stores and buy up as much supply of the product in demand and then re-sell it outside the store at the true market price which is much higher than the caps put in place. Therefore, consumers will not benefit from this price cap either way.

Anyone who can grasp the concept of freedom knows that consumers do not have to purchase a product if the price is too high. If the price is indeed too high the business will not sell any of their product and will go out of business unless the price is brought back down. Therefore, it does not benefit the business not does it make sense to set prices too high because they will not sell anything. However, if the price remains high it is only because consumers are willing to pay that price for the product. Here's the kicker, without a price ceiling there is a PROFIT motive which will increase competition which will actually push down the price due to the increase in competition. Sometimes it's strange how economics works isn't it. Most laws are put into place with the best intentions but most of the time they simply yield the same negative results. A new law that was meant to help consumers will typically just throw a corkscrew into the daily operations of a business which will end up hurting consumers in the end.

The main reason price gouging laws are put in place is because demand for a product is too high and/or supply is too low. However, as long as consumers have free will there is always an option to not purchase a product if a price is indeed too high. If enough consumers do not purchase the product the business will be naturally forced to lower the price to what the consumer is willing to pay. Price cap laws encourage hoarding and prevent the product from getting to where it needs to go. Even if you think price gouging is unethical, putting in a price cap doesn't make sense since it will only cause a decrease or ELIMINATION of the supply which prevents the product from reaching the people that need it the most! This is why price caps can sometimes lead to chaos since the product is only available on a first come first serve basis so you can bet people will be running to get in line! Price caps will always result in a shortage, leaving most consumers completely without a necessary product in the time of need. To truly help consumers, there should NEVER be a price ceiling so that everyone can have an opportunity to purchase a product if they wish.


Obama vs. Debt

The thing about the national debt is that eventually you have to pay it back. Spending beyond your means can be fun for only a short amount of time but like I said the U.S. will have to pay it back. Paying off the national debt can be accomplished by either raising taxes, reducing spending or printing dollars like crazy so the U.S. can then pay the debt back using cheaper dollars. However, if the last option is chosen this will also result in hyper inflation which would lead to economic destruction.

Since President Obama seems to enjoy raising the debt we are faced with a tough decision which I will now ask you. Would you rather raise taxes for everyone or make major spending cuts to balance the budget?

  1. The U.S. national debt is on pace to more than double during Obama’s eight years in the White House.
  2. Barack Obama will accumulate more debt then ever other U.S. President in history combined.
  3. Since 2007, the U.S. debt to GDP ratio has increased from 66.6 percent to 101.6 percent.
  4. During Barack Obama’s first four years in the White House, the amount of new debt accumulated by the federal government is equilivant to approximately $50,521 for every single household in the United States.
  5. The United States already has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain.
  6. At this point, the United States government is responsible for about a third of all the government debt in the entire world.
  7. According to the U.S. Treasury, foreigners hold approximately 5.6 trillion dollaras of our debt.
  8. The amount of U.S. government debt held by foreigners is about 5 times larger than it was just a decade ago.
  9. Between 2008 and 2012, U.S. government debt grew by 60.7 percent.
  10. Obama still hasn't balanced the budget!


Food Stamp Cutbacks

A recent NBC News article has stated that food stamps will be reduced in November of this year. This may be the beginning of a series of cuts to the socialist food stamp program that 48 million American's have taken advantage of.

The food stamp program is set to scale back its benefits on November 1st of this year. If you live in a household of four than your benefits will decrease by $36 according to USDA.gov.

Based on these numbers we now have more American's on food stamps then at any other time in history so maybe this is a good thing that the benefits are being reduced. Would it be so bad for food stamp receipients to go to a free soup kitchen instead. The hungry can also obtain free food from charities and food banks. The food stamp program is simply yet another socialist program that welcomes fraud. Heck, just last month a store called "Obama Express" along with nine other retailers in Baltimore, Maryland were arrested for exchanging food stamps for cash instead of their intended purpose which of course was meant to be food. If the poor/hungry don't care enough to use them for their intended purpose then why continue the program. Socialism never works and only adds to the $17 Trillion debt! There are so many non-governmental organizations out there that provide for the hungry so much more efficiently than a government ever could.


The Worst President Ever for Your Economic Freedom

The most prosperous economies around the world are thriving because of economic freedom. Economic freedom provides more jobs, higher wages and lower prices for consumers. However, after looking at all the U.S. Presidents in history there was one U.S. President that has hurt economic freedom the most and in turn prevented the U.S. from reaching its true potential long after his Presidency.

FDR may have had one of the most difficult tasks when it comes to the economy but the socialist policies he implemented only made things worse and they are still harming the U.S. economy today. To begin, FDR was the only U.S. President in history to issue an executive order for a 100% income tax on all income over $25,000 which is about $350,000 today. Putting an income limit on the most productive U.S. entrepreneurs only incentivized those captain's of industry to exert minimal effort once that income cap was reached. Therefore, once their income reached that limit for the year they would stop hiring and expanding their companies after all they weren't going to see another penny of the profits. The already high unemployment rate was not made any better by preventing business owners from hiring. Furthermore, to fund the war, congress also broadened the base so that almost every employee was paying federal income taxes. Following shortly after was withholding taxes in 1943.

As if a 100% income tax and a new withholding tax wasn't enough, FDR created the biggest pyramid scheme that is still in play today called Social Security. Social Security has less and less citizens paying into it every year which is probably why the Supreme Court has ruled that citizens have no right to their Social Security contributions. Furthermore, it has now been proven that if you were to retire today you are not going to get back what you have already put into the system. Then there's the issue of the debt ceiling. If America ever defaulted on its debt which seems very possible at this point considering the U.S. has gone from about a $5T national debt in 2000 to $17T in 2013, then there is a chance that once again Social Security checks would not go out. So like I was saying we are now up to a 100% income tax, a withholding tax, a Social Security tax and a payroll tax which was put in place to fund the Social Security system which can be taken away at any time because we the American people have no control over the money that we put into it.

FDR not only prevented the unemployment rate from dropping with an enormous increase of taxes but he also stifled economic growth by telling businesses they could not hire as many workers by signing into law the minimum wage. FDR seemed to think that picking an arbitrary, artificially high wage would make everyone richer but instead it only caused a higher unemployment rate. Anytime a wage is set above the market equilibrium a surplus results. Even though surplus sounds like a very positive word, a surplus of labor is also commonly referred to as unemployment!

The last major mistake I want to point out is FDR's confiscation of privately held gold. This executive order that was issued by FDR demanded that gold was to be sold to the U.S. Treasury and the price of $35 per ounce. If any U.S. citizen was caught hoarding gold they were off to jail for 10 YEARS if a fine of $10,000 ($500,000 today) was not paid. This shows that FDR had not read or understood Article I, Section 10 of the U.S. Constitution that states, "Only gold & silver can be used as legal tender." It wasn't until 1975 before it once again became legal to own gold.

I apologize if I have offended every teacher out there that thinks FDR saved the U.S. during the Great Depression but the truth is that if you value your economic freedom at all you will understand the great harm this President is still doing to our economy today. Without a minimum wage the unemployment rate would be lower. Without a socialist retirement system we may actually earn a little return on our money. Lastly, without the several tax increases FDR put in place we may actually realize that we should have the freedom to use our own money as we please. To each their own!


Maximum Wage without Minimum Wage

People are continuously asking for an increase in the federal minimum wage to $9, $12.50 or $15/hr. from its current $7.25. Regardless of what you think the minimum wage should be, should we really be taking the one size fits all approach to wages?  In 2012 President Obama called for a $9 an hour minimum wage. I'm going to disagree with this proposal because I am not a fan of the number 9. The number 9 has always been a weak number to me since I heard about 7 eating 9, after all, that’s why 6 was afraid of 7. My point is how is an arbitrary number the most efficient for every one of the 30,000,000,000 businesses in the United States? If President Obama really cared about wages why not raise the wage to $12.50/hr. like Washington DC recently proposed or $15/hr. like the Socialist Party's current platform? In the end, $9 was the number drawn from the hat so that’s what was proposed.
Some would argue that working for minimum wage does not afford you the means to survive. I would agree and would argue that it is because of minimum wage laws that wages are so low. Why not find a way where no minimum wage is necessary and workers can get paid MORE than what the current minimum wage is today! The truth is that minimum wage laws lower the wages of the people it intends to raise them for. Anytime a wage is set above the market equilibrium a surplus results. Even though surplus sounds like a very positive word, a surplus of labor is also referred to as unemployment! If minimum wage laws did not exist, each market would set a wage where the number of people looking for jobs would equal the number of jobs available so everyone who wanted a job would have one. This sounds a little too good to be true for most people so it helps to look at an example of a country where no minimum wage laws exist. In Singapore there are no minimum wage laws so of course everyone is getting paid one penny an hour and the standard of living is crap right?. Wrong! In Singapore, with the absence of minimum wage laws, everyone who wants a job has one. Singapore currently has an unemployment rate of 2.1% which has caused the demand for labor to skyrocket! When a company goes out to look for a new worker to build their company they have a much more difficult time finding that person with such a low unemployment rate. Therefore, a company must offer higher wages or better benefits than their competition in order to attract and retain workers. On the other hand, if a country has a high unemployment rate employers know that there are many people looking for jobs so they can get away with paying them a lower wage since there are so many workers currently making $0 due to being unemployed. I would imagine that if you would ask most hard working unemployed Americans if they would rather be unemployed or have a job that pays less than minimum wage they would choose the low paying job. It least with a low paying job it gives them an opportunity to prove themselves and also would provide valuable work experience needed to obtain a higher level of employment. The elimination of minimum wage laws would allow for these unemployed workers to be given that opportunity.

"Anytime a wage is set above the market equilibrium a surplus results. Even though surplus sounds like a very positive word, a surplus of labor is also referred to as unemployment!"

Examples of the harmful effects generated by minimum wage laws unfortunately can be found everywhere. One recent example of the harmful effects of minimum wage laws can be found at the New York Hilton Hotel. The Hilton in New York has recently eliminated room service. On May 31, 2013, the Hilton on Sixth Avenue announced that they would be eliminating 55 jobs. John Fix, senior vice president of PKF Consulting recently said, "I don't think anyone makes a profit on room service because of its labor costs," he then added, "I'm sure all the big hotels will be looking at what the Hilton is doing." The problem is not that workers are not getting paid enough. The problem is that one group of legislators think they know what wage is best for every industry out there. According to the U.S. Bureau of Labor Statistics the teenage unemployment rate is currently 23.7%! I bet if you ask these teenagers without cars and without money for movie tickets if they would work for less than minimum wage the majority of them would say yes because their current unemployment status is not getting them anywhere and is certainly not getting them any respect. Once again, the legislators are setting an arbitrary wage above the market equilibrium resulting in greater unemployment.
On the other hand, minimum wage advocates will attempt to point out that a high minimum wage will not hurt a country's growth. The example is typically that Australia has a $16.88/hr. minimum wage while the U.S. sits at $7.25/hr. which would put Australia's minimum wage at 2.3x the amount of the United States. However, what this argument fails to take into account is the cost of living difference. For example, a pack of cigarettes in the U.S. is around $6 while in Australia it is $16.57 which is 2.8x the amount of the price in the United States. Furthermore, a pair of jeans on average will set you back $40 in the U.S. while in Australia they hover around $92.05 a pair which would make them 2.3x more expensive in Australia. In the end Australia still has an unemployment of 6% which means 6% of the population still can't find a job. Do we really want to settle for a 6% unemployment rate when it could be at 1% or better!

So what is the optimum minimum wage? The answer is $0 because it differs by industry, market, geography, etc. It's almost laughable that some egotistical individual can think that one wage is best for everyone. A $9 minimum wage in Iowa might sound a heck of a lot better then a $9 minimum wage in DC. A $10 minimum wage in the U.S. may sound great but if implemented in Australia people would barely survive. An easy way to sum this up is, "to each their own." Let each citizen decide how much they believe they are worth. Freedom is the answer.
The common misconception is that if minimum wage laws were eliminated then workers would get paid much less. However, in the case of Singapore, the supply of labor is equal to the demand for labor and workers of course have the option to work for the wages they are offered by a business. If the wage offered is too low for them they have the freedom to look elsewhere or get paid nothing and be unemployed. On the other hand, if a country has a high unemployment rate then employers know that there are many people out of work and looking for jobs so they can afford to pay them a lower wage since there are so many workers currently making $0 due to being unemployed. Said differently, the demand for labor has fallen to a point where the business has the upper hand and can dictate the wage they are willing to pay with no negotiation.
In the end, an increase in wages can only come from an increase in the demand for labor and/or a decrease in the supply of labor. In countries like Singapore with unemployment rates hovering around 1% the average household income (per capita GDP) sits at $61,400! In contract, America's unemployment rate sits around 7.6% with an average household income of $50,700. To create this demand for labor there needs to be economic freedom. Freedom for employers to decide what a fair market wage will be and freedom for workers to decide how much their time is worth. It is impossible for one politician to predict what wage is most efficient for every industry because it will never be the same. The answer is simple, if a business is offering a wage that is too low then no one will work for them but when the business's demand for labor becomes necessary for an increase in their profits the business must & will raise their offered wage, believe it or not, without the government telling them they have to!