THE GREAT OR NOT-SO-GREAT ECONOMIC WAR - By Charles Payne

Aug. 12, 2013 9:35 AM ET
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Long/Short Equity, Portfolio Strategy

Contributor Since 2009

Wall Street Strategies has been providing independent stock market research since 1991 to individual, retail and institutional clients through a balanced approach to investing and trading. Charles Payne, our founder and chief analyst, is routinely sought after for his stock market, political, and general opinions by several prestigious news organizations. Currently, Mr. Payne is a contributor to the Fox News Network and Fox Business Network. He also hosts his own radio show on KFIAM 640 every Saturday from 2-4pm PST. Mr. Payne recently released his first book entitled Be Smart Act Fast Get Rich. Our all-star analytical team is called first when the media needs to know. We are regularly featured on several well respected finance-oriented radio and television programs such as Fox, CNBC, BNN, WSJ to name a few and widely recognized in the media as a leaders in the analyst community. In addition, Wall Street Strategies is part of Thomson-Reuters Consensus Estimates. Brian Sozzi is an equity research analyst specializing in the softline/hardline goods sectors of the retail industry for Wall Street Strategies Inc. Mr. Sozzi graduated Summa Cum Laude from Dowling College, receiving his Bachelors of Business Administration with a concentration in Finance and Accounting. Routinely sought after as a trusted point of reference for opinions and insight on the global economy and retail sector stock evaluation, Mr. Sozzi is a frequent on air contributor to CNBC, Fox Business Network, and Bloomberg, and is cited regularly by online/print publications that include Forbes, Bloomberg, The Wall Street Journal, Thestreet.com, CBS Marketwatch, Reuters, Seekingalpha, Associated Press, Crain’s NY Business, Fortune, Barron’s, AOL Finance, and the Financial Times. In 2009, Mr. Sozzi became recognized by Starmine as a top-ranked equity research analyst for stocks under coverage in such categories as EPS Estimate Accuracy and Industry Excess Return. Carlos Guillen is an Equity Research Analyst providing coverage of the technology sector for Wall Street Strategies, Inc. Mr. Guillen has had experience working in both the sell side and the buy side. Prior to working as an analyst, he was a Design Engineer for Lambda Electronics. Mr. Guillen holds an M.B.A. from NYU’s Stern School of Business, and he has a B.S. in Electrical Engineering from Manhattan College. David Urani is a research analyst with concentrations on the homebuilding, staffing, medical devices, and logistical services industries. Along with providing institutional clients with up-to-date reports of individual stocks within his industry coverage, David assists the rest of the Wall Street Strategies research desk with timely analysis of vital economic data. A graduate of the A.B. Freeman School of Business at Tulane University, David earned a Bachelor of Science in Management while majoring in finance. With prior training experience running small businesses, he has an eye for key fundamentals that keep Companies running efficiently. David’s insight has been featured in several outside sources, including the Fox Business Network, MarketWatch, and SeekingAlpha. Carlos Guillen is an Equity Research Analyst providing coverage of the technology sector for Wall Street Strategies, Inc. Mr. Guillen has had experience working in both the sell side and the buy side. Prior to working as an analyst, he was a Design Engineer for Lambda Electronics. Mr. Guillen holds an M.B.A. from NYU’s Stern School of Business, and he has a B.S. in Electrical Engineering from Manhattan College.

If any of the provinces of the British empire cannot be made to contribute towards the support of the whole empire, it is surely time that Great Britain should free herself from the expense of defending those provinces in time of war, and of supporting any part of their civil or military establishments in time of peace, and endeavor to accommodate her future views and designs to the real mediocrity of her circumstances.
Adam Smith

Who would have thought the great economic battle of 2013 America would be higher minimum wage. Not just a bump in the minimum wage, but a doubling of that wage in order to create a society of "livable wages" guaranteed by the private sector but mandated by the federal government. Such a "fair" society would move a step close to the expansion of the so-called middle class, elimination of extreme poverty and erosion of individual grandeur. For some, such a country would be Shangri-La for me, it would be a place we could never call America. It would never be a place where brilliance is encouraged through risk, hard work and sacrifice.

The real mediocrity of circumstances in America can be traced in part to historic fate but also to individual lack of effort. One can be born in a ghetto and still make it out of high school and into college. One could be born in the bosom of wealth and find themselves destitute from a series of mistakes. One could be born somewhere in the middle and stay there or climb out on the numerous paths seen and unseen in this country. In the end there is no excuse to be mediocre in America except that it gets you such a free pass from accountability it's a wonder more people don't abandon the tools and roadmap traditionally used to achieve the American dream.

There are forces pushing the narrative that some people are so vulnerable they can't help but eat themselves to death, kill their own neighbors and father offspring with no intention of ever being a parent. Under this umbrella of thinking we are told there should be a different wage scale. Under the umbrella of redistribution of accountability the kid that drops out of high school is owed a debt by the kid that worked her way through college. Under this scenario the employer must take on the fiduciary responsibility of a parent, adjusting pay to accommodate the size of an employee's household, adjusting pay to accommodate an employee's lack of work experience.

The owner must adjust pay of workers that come and go at the expense of his or her own wealth and returns of shareholders that took major economic risk backing a venture that was never guaranteed to work. In such a world mediocrity of circumstances are protected and encouraged at the expense of the private sector which should ultimately be absorbed into the public domain. This is the Great Economic Battle of 2013, higher minimum wage. Even as real wages retreat while part time jobs boom in low paying fields this is where President Obama plans to make his mark. The organizations are in place and have big budgets to launch their war.

Iron Law of Wages

There have been so many economic theories throughout the years they could fill an entire library. The Iron Law of Wages is just one that held that wages would drift to the minimum as long as there were more workers than demand for workers. This might have had more relevance before the Industrial Revolution when masses went to work in higher skilled jobs. There were twists to the idea including the notion of controlling births to influence wages and how it would always be a pendulum. Poor people having fewer children because they couldn't feed them, then thinner populations commanding higher wages and higher birth rates.

In American there are 300 million people yet some still get paid $29,000,000 a year to hit a baseball or knock out a fellow pugilist. That's the dynamic of today's work and wage relationship. These days the poorest among us have the most children which would have never happened outside of farming societies. The iron law of wages is putty in the hands of welfare societies determined to feed all their citizens, as well as protect them and clothe them and house them. Its part of what we call civility born out of belief in God and the right thing. But, there is a serious line that must be drawn when those needing the most help are told to put in the least amount of skin in the game.

The American empire is swaying and will fall if mediocrity is not only richly rewarded but encouraged at the expense of true accomplishment.

This morning I discussed this on Fox & Friends, covering the fact taxpayer money is helping to fund organizations that are anti-business and using Occupy tactics. I will discuss more on Varney & Co this morning. I'll also discuss rumors of a major market crash which I do not believe although a "healthy" pullback is long overdue. The market was lower for the first time last week since June. I actually always like these kinds of weeks where there isn't a lot of scheduled news to test weak sisters and find out where the buy on dips crowd is eager to buy.

On that note there are tons of names I'm eager for subscribers to buy but would rather we get them on sale if we can.

https://www.wstreet.com/user/register.asp?source=3

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