An Adolescent Aptitude for Federalism
12/2/2012 12:01:00 AM
If the five stages of grief for losing a loved one are denial, anger, bargaining, depression and acceptance, then the five stages for Republicans who just lost the presidential election must be denial, shock, analysis, depression and blaming fellow party members for being too whatever. The intense debate has begun among party thinkers over how we could possibly have lost two elections in a row to the most radical leftist candidate to ever receive a presidential nomination.
One particular that I believe most conservatives can agree on is the remarkably adolescent aptitude for federalism that American voters have demonstrated in both 2008 and 2012. Those who have directly experienced lost freedoms know the dangerous, corrupting nature of centralized power. But those who have enjoyed the naiveté of inherited liberty rarely appreciate the fragility of unfettered livelihood. A perceptible example of this is the Cuban-American vote in Florida. Exit polls showed that 55% of voters who were born in Cuba voted for Mitt Romney while nearly 60% of their offspring voted for Barack Obama.
Three weeks of postmortem reflection has brought me to the conclusion that the most effective way to ensure the survival of freedom for upcoming generations would be to promote personal savings accounts. The formation of two-hundred-million nest eggs would effectively transform citizen perspectives, notwithstanding the credible rumors that the Obama Administration is eyeballing retirement accounts as part of its wealth redistribution and government finance philosophies.
There naturally exists both a carrot and a stick for encouraging Americans to establish some financial certainty for themselves. The stick is the persistent news reports of impending bankruptcies for both Social Security and Medicare. Every employee with a measurable IQ intuitively understands that the government deductions detailed on their pay stubs are not being managed responsibly.
The carrot is compounding interest over time, the phenomenon that Albert Einstein is said to have referred to as “the most powerful force in the Universe.” Financial author Dave Ramsey recommends a sustained savings regimen of 15% of gross pay. If an entry-level position would garner a $35,150 salary with annual raises averaging 3%, an employee could expect to approach a savings accumulation of approximately one million dollars over the course of their working years (This assumes annual compound interest of at least 3%).
The results are even better when leveraging incentives like 401(k) programs. The effect of delayed gratification for setting aside that 15% of spending cash is significantly reduced by omitting it from the taxable total. An investment of $200 from a $1,352 paycheck may look more like a $130 reduction in the net with a 401(k) plan. And where employer matching programs are available, the amount being invested in savings could be an additional $81 for that same pay period. Employer matching will get the citizen to the million dollar mark several years earlier.
The advisability of beginning a personal savings diet early in life is unmistakable. With the acceleration factor of compounding interest, the final years of investing will yield the largest returns. A citizen who begins to save just five years behind his peers would have to invest far greater amounts to catch up with the early adopters.
It is like the unforgiving realities of drive-time departure and arrival mathematics. I am personally prone to spending every moment of the time budgeted to a task, not wanting to leave for the next appointment until the very last moment. This is not a good practice for arriving on time. I once developed a simple algebraic formula for knowing the necessary speed that I would need to drive, given the distance and time allotted. If I am 15 miles from a meeting and can drive an average of 30 MPH without attracting the attention of a patrol car or running into the vehicle in front of me, I will need a 30 minute driving budget. If I leave five minutes late, I will need to drive an average of 36 MPH. Ten minutes late and I am stress-driving at 45 MPH through the school zone.
Dave Ramsey goes much further with a suite of very entertaining and convincing education programs for high school students. His curriculum, known as Foundations in Personal Finance, ought to be standard fare in every high school. The notion of teaching young Americans to be smart with money carries no intrinsic controversy. Devout liberals may not like the teaching of self-reliance, but they would need to contort a palatable rationale for their objections.
I am concluding that the best, long-term response to our recent election losses would be to develop a culture of financial self-investment. There exists a healthy jealousness with property that has been earned. Savers would naturally develop a distaste for ravenous governments and undisciplined bureaucracies. If the majority of Americans each had a sound lifetime savings plan, voters would be far less gullible to carpetbag-toting politicians.