Demise of Heathkit

[Harvey A. Kader]

Neil Morrison wrote:

> A good starting point to understand the economic climate surrounding the
> decline of Heath is
>
> "America : What Went Wrong?" by Donald L. Barlett, James B. Steele
>
> Here is a review:
> 'Asking the question, "what went wrong," two Pulitzer Prize-winning authors
> present a sweeping critique of the last two decades of American history,
> concluding that short-sighted greed in business and government has
> undermined the American dream.'
>
> and for more information
>
> America : Who Really Pays the Taxes? by Donald L. Barlett, James B. Steele
> America : Who Stole the Dream? by Donald L. Barlett, James B. Steele
> Great American Tax Dodge : by James B. Steele, Donald L. Barlett
>
> These guys are newspaper reporters who have analysed the reality behind the
> political posturing. It's quite an eye opener to read these, and certainly
> explains why you may feel that you are now working harder but earning less
> real money than ever.
>
> It's hard not to come to the conclusion that the founding fathers were far
> wiser than is believed when they put the clause in the constitution that
> prohibited a federal income tax.
>
> Regards,
>
> Neil
>
>

Neil, as easy as it is to point fingers at taxes(federal, state, municipal,
etc), that is NOT the real problem with economics. The real problem is the
combined effects of inflation and compounding.

What I am about to reveal illustrates why the average person ends up behind the
eight ball economically. Imagine a hypothetical self-employed person who owns a
business. Competition is such that for the past ten years gross income(sales)
has been flat(not gone up or down). Assume inflation has averaged 3% each year
over this time period. This means business expenses have gone up 30% over the
ten year period, if the owner kept the same business system in place. So net
income to the owner is DOWN 30%! Now watch this - in addition, real purchasing
power to the owner has DECREASED by 30% over this time period because of
inflation. So, now ten years later, real net income(purchasing power in his
pocket) has gone DOWN by 60% in total!!

For an employee who has NOT had a raise in ten years, his net income(purchasing
power in his pocket) has gone DOWN by 30% due to inflation.

So unless the business owner raises his prices by 6% per year to counter the
effects of inflation on his business expenses, and on his net income he is
kaput. And unless the employee negotiates an increase in wages of 3% per year,
he too is kaput. No you know why the average person can't easily balance his
household budget. ECONOMICS - that is why. Harvey.

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