Entitlement Vs. Empowerment

Are you entitled or empowered? Do you feel you are owed, or do you feel you own something? This simple choice reflects your view of the world. It stands for your self-image. It is seated in Hayek's creative destruction -- hopefully, as in real life, the creative is more valuable than the destructive.

Like a ship at sea, we, as a nation, are today on storm tossed waters. Our choices have become more complex, yet the courses they set are chilling. If we choose to make it, to strive, to fail and to rise again, we are empowered. If we succumb to handouts, food stamps, unemployment checks, disability payments, living at our parents, working part-time or just loafing, we are entitled. Each course is a challenge.

To make your way through the taxes, regulations, markets and under-educated employees that greet your attempt to succeed is to sail against the tide. You had better be a real sailor. To accept handouts is, at least initially, inwardly demeaning. You don't feel right about it. You know you can do more. Yet the cry of the Valkyries -- bills -- is demanding. If the choice is help or homelessness, you really have no choice. Once embarked upon this course, "aides" appear to help you along. The staffers are there to make the transition better for you. They slip the chains ever so gently over your ankles, your wrists: "There, now, that's not so bad, is it?" The ease with which food stamps, unemployment and disability can be acquired today makes it a game, a game designed to make you "win."

The course leads quickly through rough shoals. Late on your mortgage? Was it your fault they gave you a loan you couldn't afford on a property they over appraised, then sold to the highest bidder? The system is corrupt, therefore it owes you. Rough waters here. You are being led through a patch of rock strewn water that leads to disaster -- the falls await. No longer responsible for your own legal actions in signing a document that you yourself pursued, fault now lies with the vendor. You may have two years or more before the bank (or whatever owns your mortgage now) can displace you from your real property. In the meanwhile, get those 98 weeks of unemployment -- the food stamps too -- then apply for disability. The bank will be hard placed to evict a disabled person, eh? Learn the system; beat it at its own rules. Your "educated" kids learn quickly from your behavior. Their $86,000 master's degree in Latin American Alternative Lifestyle Literature should be paid for by the 1 percent, shouldn't it?

In business, the entitlement "ethic" has become a rotting cancer, infecting big business particularly. In France they are called "rentiers." Those who seek to advantage themselves of the perks of a malevolent system. Tax breaks, eminent domain, inside track to politicians, a revolving door between senior management and regulatory boards; these have become the new "rules of the game." Learn to play by the rules to win. It is always about winning. Laws are written. You have access to the Scribner's. They write you into the new law. Presto. New law, new business, new opportunity. You have become entitled to your rights under law. Nice work if you can get it. The regulator examines the books of the small firm struggling to do well and fine it for the slightest infraction -- because he is rewarded for finding these. Meanwhile, the Madoff's and Stanford's sit at your right hand. Their presence is an entitlement. They are there because they paid for the seat at the table. Dare you question them?

In banking, you make and break the rules with abandon. The entitlement ethic is shared by your "investment community" bankers and the regulators who apparently forgot to oversee your behavior. Each views the other as silent co-conspirators in an epic too big to fail. If an investment banking house is too big to fail, then what is the real distinction between it and its regulator? "We have met the enemy and he is us," Pogo said. Regulators and banks are both entitled. It worked in 2008 for America, why not in 2012 for the ECB? Each set of mini-me twins in America and Europe feed one another monetary instruments (bonds) and wash them down with the mother's milk of currency. There is always more currency to print, more taxes to levy, more capital to "share" with the entitled generation.

You see, once the process begins, at your dinner table as you try to make ends meet, it spreads, like cancer. You can't pay the bills, so you apply for aid. The banks and credit companies and utilities and car companies don't get paid on time and they go begging for aid. The bankers do not earn their dividend, so they apply for aid -- by rewriting the laws. Rather than healthy eating, we become capital cannibals. Hayek's destruction overcomes its creative twin. Hyde becomes Jekyll's master.

The logic of government spending having a "wealth multiplier" is impenetrable, unconscionable and wholly immoral. Government revenues come from worker's earnings -- capital workers or physical workers. It is called tax for good reason. It taxes the body politic. It takes away from, rather than contributes to, the economy -- at your dining room table and at the Fed. Entitlement has become the new rule. Forty-eight percent of the U.S. voting public takes from the federal government rather than contributes to it. The "music men" continue to sell the good people a bill of goods. Seventy-six trombones have blown out to $76 trillion in debt -- and growing.

American society seems divided between those who are very successful and everyone else. This is a false dichotomy, promulgated by the divisors. We are all in this together. New York City saw an 80 percent reduction in violent crime rates because people took responsibility. Smart people in small garages create new companies. Governments do not create wealth, they distribute it.

There is wise growth and false growth. Cells naturally divide to grow. So, too, do businesses, governments, regulators and no-profits. It is natural to grow. Excess growth is called cancer: uncontrolled growth, growth without limit, growth in consumption of itself. Cancer kills by massive unchecked growth. We as citizens of The Republic, have the responsibility to dictate powers to government. It does not dictate powers to us, either as individuals or as groups. We define its limits. As powers not granted belong to the states and to the citizens. A very simple concept, well stated in 1787.

Let's review and decide. Move forward into wise application of creative destruction and away from the encroaching beast of government entitlement. Take responsibility.

Carpe Diem!

John Graves, ChFC, CLU, an independent financial adviser and managing partner in The Renaissance Group, LLC, focuses on designing and maintaining custom client portfolios. His new book, "The 7% Solution: You CAN Afford A Comfortable Retirement," empowers readers to take control of their own future and provides a clear direction to make retirement dreams come true. The 7% Solution is available for purchase at Amazon.com, barnesandnoble.com, as well as other online booksellers.