Psychology Matters

When Bush was in office there was a lot of unhappiness about his administration and the mainstream media did its best to fan that sentiment. However, there was a business friendly attitude in the White House and taxes were lowered. That encouraged investors to take risks and to hire new employees. Unfortunately it got taken to extremes and the bubble burst. However, it did demonstrate that investors will react to government approaches to tax, regulation, and general attitude of government toward successful entrepreneurs. I could never understand how anyone could think a community activist who never held a real job, never ran anything, and who continuously bashed the business community, could possibly be good for business- especially with Nancy Pelosi running Congress. I always felt she was the most dangerous person in America and she has proven that to be true.

I spend a considerable amount of my time talking to investors, lenders, and owner/operators. The psychology now pervasive in the country is reminiscent of the days of Jimmy Carter –only much worse. Carter was not anti business. He was just an incompetent peanut farmer. Obama and Pelosi have created a regime which is filled with people who are truly anti-business, pro labor, anti wealth creation. Elizabeth Warren is the ultimate example of the regulatory zeal which will ultimately harm the economy. The way he appointed her this week is further proof that Obama doesn’t care what is best, he only cares to advance his agenda. That is what happened with Obamacare. This has now deeply impacted how investors are reacting. I have never heard such levels of caution, fear, anger, and uncertainty. It is not that there is not capital, or that there are not many people anxious to do deals. It is that the psychology does not encourage risk taking. The constant attacks by Obama on those of us who worked very hard to achieve the wealth we have created for ourselves and the economy, is deeply offensive. Many of you have a similar story as mine. I started with less than nothing and through years of long hours, hard work, some smarts, and a willingness to take risks, I was able to achieve a very good life. Just as most of you, I earned it all myself. The government gave me nothing. I paid my taxes. I made sacrifices. Now that I have achieved success Obama and Pelosi think I should redistribute my hard earned money to all the people who don’t pay any taxes (47% of families), don’t work long hours, and don’t create jobs for others as you and I have. They seem to not understand that capital gains is the result of taking big risks of potential loss. It is not the result of being a “fat cat”.  If you tax away the rewards of investing to redistribute them to the people who pay no taxes and take government entitlements, then in the end you kill the incentive to take risks.