As I reached the top of the steps leading to the slide I surveyed the countryside around me. It was a beautiful mid summer day in Central Connecticut. The trees that covered the hills in front of us were a deep rich green and the lake nestled in the valley below teased us by turning shades of blue, green and turquoise.
We joined some close friends of ours to take our kids to this half amusement/half water park to allow the children to expend some of their never ending supply of energy and to allow the adults to visit together and …..who knows maybe have some fun as well.
We got to the park during the late morning and soon as we put our stuff down on one of the pool chairs the husband of the couple charged ahead toward the attractions. A blunt man with a keen sense of humor, I always enjoy his direct comments.
One of the first attractions we visited was a large cyclical water slide that emptied into a lush wading pool about 30 feet below.
As we made our way slowly up the stairs, my son and I made some small talk with the girl ahead of us while waiting for our turn. Most of the talk was very forgettable but as she approached the platform to take her turn she suddenly turned to us and said, “……And remember if anyone gets hurt it’s the operator’s fault!”
And with that stunning piece of legal advice and assignment of liability, she went screaming down the slide.
Not believing what I just heard, I whipped my head around and looked at my friend’s wife. I gave her a “What the heck was that” type look.
A mysterious woman with an infectious smile, she looked up at me and said incredulously, “You see what they are teaching them!”
As usual, we stop at this point to ask a few questions:
Was this little girl a lawyer’s daughter? Did her parents prepare her for potential future lawsuits by inculcating her with the belief that nothing is ever her fault? Perhaps she has been watching too much late night TV with all those attorney commercials screaming, “Have you been injured, slipped, fell, eaten an apple…etc.”
Of course this little girl’s attitude is not unique. It was just shocking to hear it from someone so young, as the girl couldn’t have been more than 10 years old.
I suppose future historians will debate exactly when the switch took place.
For, when did Americans go from being the most self reliant, independent, and risk taking society on the planet to the current culture of dependency, irresponsibility and an irrational desire to eliminate all risks?
Everywhere you look in public life, from entertainment to politics, and yes even in our favorite subject of economics, the basic messages are drilled into us:
- Get something for nothing
- Its always someone else’s fault
- No one is allowed to lose and everyone is special
But perhaps the most egregious of these society killing attitudes is the first point; getting something for nothing.
For that is what was drilled into the little girl’s head when she made the statement that no matter what happens it’s the operator’s fault. The idea that you can receive massive monetary compensation for injuries that may be the result of your own actions is actually mind boggling.
Many of us have seen the comical labels on bleach that say, “Do not drink” or the warning labels on electric saws that say, “Do not put your hand on the moving blade.” These examples are somewhat funny, but if you’re really into dark humor (like us) then you only have to look at macroeconomics.
Something for nothing is basically at the heart of our current macroeconomic policy. The idea that the government can borrow and spend trillions of dollars (Indeed we have now spent greater than 10% of GDP!) without any consequence is pure folly.
Now for those in the peanut gallery that are slack jawed at this point, we will explain why this is so.
The whole idea of government economic stimulus is that spending by the government creates a multiplier effect and raises overall GDP in excess of the amount spent. So if $1 in spending by the government results in an increase in GDP of $1.5, then the multiplier effect is said to be 1.5.
This theory is like saying a perpetual motion machine is possible….or like saying you can spin straw into gold.
In order to illustrate what we mean, let’s take an example where the multiplier is 1. Say the government takes $1 from citizens via taxation and then spends that $1 in the economy by building a bridge. In order to build this bridge, taxpayers had to forgo investment and/or consumption and instead surrender this dollar to the government.
Therefore, for every dollar the government spends, a corresponding decrease is required in investment, consumption and net exports. In other words the multiplier effect is not 1 it is zero.
To explain how ridiculous a multiplier of 1.5 would be, we quote economist Robert Barro in the Wall Street Journal:
My friends, there is no such thing as a free lunch and you cannot get something for nothing despite what many would have us believe. Borrowing and spending trillions of dollars to try and “stimulate” the economy merely takes money from one area of the economy and gives it to another.
Rather than being the path to salvation, fiscal stimulus is the road to the worst type of hell.
Anyway back to the scene at the top of the slide…
Our turn came and my son and I zoomed down the slide making the Spider Man web slinging motion with our hands the whole way down. After 20 seconds of pure joy we splashed into the pool below.
As we made our way to the edge of the pool, I saw the little girl that was ahead of us in line talking with her mother. Just then my wife and daughter came down the slide behind us and splashed into the pool. Taking my wife aside, I relayed my short conversation with the girl at the top of the slide.
With an annoyed look my wife said, “Fine..fine lets go and get something to eat.” My son chimed in and requested that we go down the slide again, and finally my daughter added she wanted to buy some popcorn.
“So what do I get out of all this?”, I queried my loving family.
“Nothing”, my son replied simply.
Have a great week,
Michael Bechara, CPA
Managing Director
Granite Consulting Group Inc.
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