Blog with MAE Capital

The Election and Real Estate

October 26th, 2016 4:35 PM by Gregg Mower

This topic is a real zinger for most people this year. In the past, it was generally thought that the President is just one of the 3 branches of government covered by a system of checks and balances. Over the last 8 years we have certainly seen otherwise with the continuing uses of the executive order that only a sitting President can do for more personal agenda items than ever before.  As of the date of this article, President Obama has issued 256 executive orders. This is not an outrageous number by comparison to other Presidents over the history of our great country, as Franklin D Roosevelt issued 3,721. However, the orders he has issued, have been more politically motivated than ever before and has pushed right up against the Constitution, such as imposing stricter gun control laws and imposing a higher minimum wage for workers and contractors that work for the Federal Government. These are just a few things that the current administration has imposed for political reasons, not for national security or other immediate actions needed for the times. The worry is, what will a future administration impose on the people of this great land and what freedoms will be lost for political gains. One will also have to look at the Presidential Power to appoint Justices to the US Supreme Court. This could have implications for future generations, as the Supreme Court Justices are appointed for life. We already know of one seat that needs to be filled from the loss of Justice Scalia and with the aging Justices that currently sit on the highest court of the land, there is estimated to be up to 3 more appointments during the next administration. The supreme court is already over 50% leaning in the socialist direction. So, with one party potentially controlling 2 of the 3 branches of Government, the next president will have more control than any other. This could change the course of America. But what about Real Estate you ask? Well, this is probably one area where we will see a huge impact as one candidate wishes to impose more restrictions on lenders and borrowers and one wants to loosen the restrictions up. 

So, let’s break down the basic philosophies of the candidates. Trump comes from a Real Estate empire and knows firsthand of the effects of regulations and controls imposed on the industry by a Government. Clinton, on the other hand, firmly believes that the Government can do a better job of policing the Real Estate Business than a free market could. Clinton believes the Dodd Frank Act., and all the restrictions that it has put on potential homebuyers, is a good thing and should be tightened up even further. Trump, has already said several times he would loosen the restrictions of the regulations imposed on potential Homebuyers and borrowers by re-vamping the Dodd Frank Act to something more reasonable.   The basic philosophy of Trump is that America was built on Capitalism and should stay that way with free markets and less Government Restrictions.  Clinton, on the other hand, believes that the American people are not capable of doing business without the Government telling private industry how they should act and putting laws in place that restricts business and commerce to the point some companies leave this country. 

Now, let’s take a look a Free Markets versus Socialism, something the media refuses to do as they know nothing about the differences. In a Free Market Economy, businesses are free to create and market their products to the consumer without government involvement.  In a Free Market Economy, there is healthy competition between companies offering the same products and services.  This competition creates lower prices as consumers will generally gravitate to the lower cost of a good or service. In a Free Market Economy, companies are incented to create the most efficient and cost-effective way to get their products or services to the market thus creating an incentive to inovate new products to be more efficient. Those companies that can’t adapt quick enough or are too greedy from the top down (paying high wages to their ownership or Presidents) will go out of business and the most efficient companies will service and employ good people with the right education to do their job, again promating education. In a Free Market Economy, if you make a bad business decision you will fail with no government assistance. The incentive is to make good business decisions to stay in business and employ those with free market wages. Free market wages are those wages that a worker will work for in any particular market. Example, if the demand for skilled nurses is high they can command higher wages as the demand for skilled nurses exceeds the supply of skilled nurses, so hospitals will pay more to get the better-skilled nurses. On the other hand, Walmart employees do not generally have to have a high skill level to do this type of work, unless it is the pharmacy or management where it does take a skill to do the job and the wages should reflect that. The unskilled workers in a Free Market Economy would set the wages by the rules of supply of labor to fill those positions.  So, in the Walmart case if the supply of unskilled workers exceeds the demand for them, or more workers applying for fewer jobs,  in a free market economy, the employer would pick those workers that would work for the least pay with the best skills and they would be replaceable if they did not do their job satisfactorily. Then when a worker has earned value in the employer’s eyes by working better than his or her co-workers they then would be rewarded with higher pay and more responsibility. In employment markets where there are fewer workers than jobs, then the wages will have to go up to entice those workers to work for a company.  This is a simple free market economy; companies will go where they can get workers to work for them and workers will go where their skills are needed for the highest pay the can get.  This is where education comes into a free market economy, the higher educated and skilled the workers are, the higher wages they can command so the incentive is to get educated under a free market economy. In a true free market economy, there are no handouts so you are incented to work and get educated to attain a higher lifestyle. In a true free market economy if you do lose your job there would be no unemployment or welfare so families would be incented to help each other thus creating a stronger family unit and a system of friends that would be committed to helping each other while not being forced by some government entity to pay into a system that they may never need. This would also lead to a lower crime and less discrimination as skills would be the only driving force for workers to advance.

In Hillary’s America or a Socialist America things would be controlled by an elite group of Government officials with extraordinary power. In an economy controlled by Socialism, it would be an economy where prices are set by the government as they see fit, allowing for no competition between companies or workers.  Russia has had this in place for the last 100+ plus years and just in the last 10-20 years they have started allowing a freer economy allowing companies to make profits from producing goods and services where in the past all profits were sent to the government for the elite few to distribute. In a socialistic society, there is no incentive to improve yourself with education as your wages would be set by the Government, not by a free market. Therefore, Obama's and Hillary's idea of socialistic health can never work. Example: A doctor must have a least 10 years of higher education to be allowed to practice on their own.  The time it takes to get the education is just part of the equation; they must also pay for that education. If a doctor goes through the time and expense of becoming a Doctor, they should be paid as the market would allow as there is a high demand for the little number of Doctors we have currently. With socialism, we would have even less doctors as there is no incentive to pay for the education and take the time to get the necessary education if there is no monitory reward for advancement over time. With the government telling hospitals what they can pay their employees (i.e. doctors,), doctors have no incentive to work hard or do a good job as they will never be able to advance in their field. In the countries that have tried this it has failed as the doctors, that are good, migrate to America where they could traditionally get higher wages. In Australia, where they have had socialistic health care for decades the Government is now incenting private citizens to move towards a more traditional private health insurance model to improve their health care system to get better health care. Socialistic Health Care causes poor care for patients as health care workers will only do the bare minimum as they have no incentive for advancement in pay or position.  This too will happen in America the more we move to a socialistic health care system. Socialism will create a lower wage system across the board with no incentive for a worker to better themselves or become educated at a higher level. The uneducated will be paid the same as the educated when it comes to jobs with no incentive to obtain a higher education as it will not better their financial position. With wages stagnated in a socialistic system, there will be fewer people able to qualify to buy a home. In a true socialistic economy, there would be no home ownership as the government would control that as well, as seen in Russia.  Socialism gives too much power to to few people not allowing for competition and a stagnation of any economy. The ignorance in society today is people think the government can just print more money to pay everyone the same wages. If this were to happen we would have ramped inflation, high interest rates, job loss, and a possible collapse of America, similar to Germany in the 1930’s. Discrimination would be ramped as employers would only want those workers like them creating a divisive system. So if you are voting for the candidate that wants for a more socialistic government you will actually be voting for discrimination and divisiveness exactly the opposite of a Free Market economy.

I ask the question; what do you want America to look like? Do you want to continue to go down the rabbit hole into socialism where your fundamental freedoms are stripped away by an elite few or would you like to see your freedoms restored and be incented to get an education and get a good job. Would you like to see companies NOT “too big to fail” or would you rather bail out poor decision makers just because an elite few hold stock in those companies? When buying Real Estate, would you like more options to finance it, or do you feel we need more restrictions on lenders and borrowers, these are the fundamental questions you need to ask as you prepare to cast your vote this November. This election is the most important directional choice for America we have ever seen. Don’t vote on looks or attitude vote on Philosophy as that is what is going to move America into the future, you don’t have to like the President you just should like the philosophy and what fundamentally they stand for. Don’t believe the media as they are straight-up wrong, they have not studied economics in any way nor do they report from an economic viewpoint, they are all about the social aspects and for their own profit. What they don’t see is how Socialism will affect even them in the long run. If you work for the government and you waiting for that cushy government retirement and benefits for life ask yourself how it will be paid for, it can’t be paid for if everyone works for the government and if that is the case the dollar has just lost world currency supremacy status and America could become dependent on other countries such as China. All said you lose that cushy retirement in the long run and at a time in your life when you can’t go back to work. People have to wake up and learn about economics and see how things work and not trust your elected officials to do the right things as they will only do what their election funding alleys say to do.  Question the authority of your elected leaders that is what our country was founded on. Remember, why our founders came to America in the first place; to escape the oppressive rule of the Crown and the taxation imposed on them. Remember why the Boston Tea Party happened, that’s right in protest to England’s taxation on the Tea. Then remember what happen shortly after that, the Revolutionary war. History tends to repeat itself as proven time and time again.  We as voters have a huge choice to make and I pray you make the right one for the whole of America, not for the “easy way out” or the popular choice in social media, which could end up being our demise. 



My Favorite Blogs:

Sites That Link to This Blog:

MAE Capital Real Estate and Loan

CA DRE #01913783|NMLS #806170

4940 Pacific Street Suite A
Rocklin, CA 95677