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Morning Commentary

Real Freedoms Fading Fast
By Charles Payne, CEO & Principal Analyst
1/30/2013 6:31 AM

"We finally got the right guys in front of us to lead us. We kept working, and now we're where we want to go. We've got one more."
Frank Gore, running back San Francisco 49ers

Listening to Frank Gore being interviewed after his team had just won the right to play in the Super Bowl, I was struck by a line that he's actually said more than once. In fact, it's hard not to find a champion in any sport that hasn't said their team wanted it more. "Want" is a wonderful thing because it propels us beyond what we think we're capable of and what society says we're capable of. Lots of people dream of making it, but those that want it most more often than not achieve their goal.


In his 1941 State of the Union Speech, Franklin Delano Roosevelt presented the world with his "Four Freedoms." For FDR, these were freedoms that people "everywhere in the world" ought to enjoy.

Freedom of Speech & Expression
Freedom of Worship
Freedom from Want
Freedom from Fear

These four freedoms were the backdrop for his vision of a world where government(s) provided for everything. Of course, the first two freedoms are part of the First Amendment, but it's the other two that are more radical than they would seem.

Freedom from fear would seem self-explanatory, except it was the basis for one-world oversight like the United Nations.

I personally have many misgivings about that, but the "freedom" I find most destructive is that of want.

It sounds like a good idea and made for an American masterpiece when Norman Rockwell painted his vision of it in 1943. In fact, his painting toured the nation during wartime and helped to raise over $130,000,000 for our efforts. But, the irony of this all is that America has moved further away from this painting in part because of the notion there should be freedom from want and all the other implications that come along with it.

Roosevelt warned, "people who are hungry and out of a job are the stuff of which dictatorships are made." An obvious reference to Hitler and Mussolini, but it was poignant in a different way. The direction the nation is moving now, with people being able to legislate larger and larger portions of other people's incomes (and soon all assets), we are entering a different kind of de facto dictatorship. The person that promises to loot the wealth of others has the law of large numbers on his or her side.

The world FDR envisioned was realized with his giant government that also saw the creation of entitlement programs. Sold as social safety nets, they are now the primary source of income for far too many Americans. Why? Freedom from want leads to grandiose promises from government that encourage less self-reliance. Moreover, the economic tab in a world where people actually live long enough to cash in on those promises is going to break the nation one day unless it is fixed sooner rather than later.

In a couple of weeks, President Obama will deliver his State of the Union address and is sure to borrow from FDR's vision of a perfect world where government replaces individual effort and removes individual accountability. The media will cheer, and the era of fairness will hit its stride. Yet, behind the hype is a reality that few will discuss. After decades of creating a social welfare state that was supposed to make life a walk in the park, there is a poverty epidemic, there's a family structure epidemic and an economic time bomb stubbornly moving toward explosion.

That scene Rockwell captured is becoming foreign to families that no longer have time to stick together, even for Thanksgiving dinner. There was a time families stuck together to make it through hard times and enjoy the good ones, always with the same style and grace. Attempting to substitute the shattered nuclear family for the notion the entire nation is one big happy family is a farce. Sure, we become brothers in arms to fight tyranny and clean up after massive storms and disasters.


Moreover, people in poverty are even more fractured and distant from each other than other socioeconomic groups.

Currently, 16% of America lives in poverty. The numbers are higher if you take away things like earned income tax credits, social security and food stamps. So, this means these things work, right? Absolutely not. It simply means more and more people are giving up on what really made the nation great. It is easy to toss in the towel, especially when social programs are marketed as a birthright. It is expensive in many ways - having one's wants covered for gratis.

Those that buy into these programs and accept the thinking that society should absorb their wants are doing more than selling their souls. They are bypassing the American dream and the journey of trying. They may never know the true toll of their choices.


Moreover, the government can't tax and regulate its citizens to pay for all this stuff and have a pro-growth agenda at the same time. No, Mr. President, Medicare, Medicaid and Social Security do not free us up to take risk; they make us slaves to the government and lawmakers controlling the purse strings.


You could say it creates an economic dictatorship that punishes earners while distributing crumbs to non-earners, and in the process crushing real dreams and opportunities for both. The direction of current policies will eventually force one group to give up "want" and another to never know how beautiful it can be.

Today's Market

While this has become a Teflon rally there are signs of strain. The breadth was really tight yesterday for such a big move in the Dow. Moreover, companies aren't very excited, guarded optimism is the best I've seen thus far, but rewarded (HOG, CAT and this morning AMZN all names that would have been hammered in a down market on their earnings releases). This morning there was an increase in stock downgrades but mostly on valuation and mostly from firms that missed big moves in the first place.

So there is a major wind in the sails of the market for sure these days. My biggest concern and I've written and spoke about this several times is America and the war on success. Secondarily Europe isn't out of the woods by any means either. Early morning headlines from the continent include:

> Spain's recession deepening
> Italian energy company Saipem shares off 40%
> German beer sales at record low

And then we got the 4Q GDP numbers for America with its first red result since 2009. (More in GDP in the afternoon update.)



Comments
well done,sir

Janis Hudler on 1/30/2013 12:08:37 PM
Excellent article today Mr Payne. Your views on the market and policy out of Washington are spot on!

JJ on 1/30/2013 1:21:00 PM
 

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