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Free Enterprise System at Risk
Dennis E. Nixon, Mr. South Texas 2010 Remarks
The following remarks were given by Dennis E. Nixon on February 20, 2010 at the annual Mr. South Texas Luncheon hosted by the Washington’s
Birthday Celebration Association in Laredo, Texas. The opening personal remarks have been removed to retain message content.
Our free enterprise system is the freedom
at risk and without the revolt of the people, our way of life as we have known it,
is going to languish and die, just as
surely as the colonies would have lost
their freedom if they had not taken action.
Is armed revolt a choice today? Hardily,
but armed with a ballot, we do have a
choice; which we recently witnessed at
work in Massachusetts. Was the Scott
Brown election a Paul Revere event? I
don’t know — only history will give us
the answer, but it certainly did define the
importance of one vote.
In my view, the two principal parties,
Republican and Democrat alike have
failed the nation. The answer in both
In the 1770’s, shopkeepers, merchants parties has been more government. One
and farmers, led by General Washington, may run at a slightly slower pace than
started a revolution with a tea party. Two the other, but the end result is the same.
hundred and forty years later, small businessmen, merchants and farmers are join- A recent Rasmussen poll showed that
ing the Tea Party to start a revolution among all voters, 45% believe people
against the establishment in Washington. randomly selected from the phone book
It seems the more things change, the more would do a better job than Congress, and
they stay the same.
overall, only 12% say that Congress is
doing a good to excellent job. The botBack then, ―Taxation without Representa- tom line, even with the knowledge of
tion,‖ resulted in the famous Boston Tea these horrible numbers, do the parties or
Party. To make matters worse, the King Congress attempt to improve? This has
of England decreed that his soldiers be resulted in 75% of the people angry or
garrisoned in the homes of the colonists very angry at the government.
without consent or payment to the homeowner. This invasion of the private Benjamin Franklin warned us at the close
homes of the people was just too much, of the Constitutional Convention of
and began the tipping point for the revolt 1787, when he left Independence Hall on
and the Revolutionary War that ensued.
the final day of deliberation, a lady asked
Dr. Franklin, ―Well Doctor, what have
What are the parallels that are apparent we got – a Republic or a Monarchy?‖
today? It is clear that we are witnessing ―A Republic,‖ replied Franklin, ―if you
cracks in the very foundation of this na- can keep it.‖
tion laid down by our founding fathers.
When George Washington had the
The spirit of free enterprise is under at- chance to become king, he turned away
tack through government encroachment and did what was right for his nation. It
and ownership of private companies. Our was not about him, it was about the nafreedom to grow our businesses and cre- tion. What congressional member would
ate jobs is at risk from burdensome regu- make that choice?
lation.
Their choice is an earmark so they can
take those dollars home to sway the
voters to re-elect them claiming great
service to the nation, when in fact, they
are just giving us our own money back,
less about 50% for administration. In
most cases, these earmarks are given in
exchange for the member’s vote.
In the business world, we would call an
earmark a bribe, but in Congress, they
call it business as usual. Look at the
horrible debacle of the current health
care legislation. Individual members
were peeled off one at a time by special
concessions given to them. What a
corrupt process.
We are piling up debt so fast that the
printing presses cannot keep up. The
justification is weak, and the ultimate
result is insolvency and a lower standard of living. We cannot borrow and
spend our way out of this crisis.
The Department of Energy began in
1977 with the sole purpose of making
us less dependent upon foreign energy.
That was supposed to happen in 10
years, and once accomplished, the
agency would close.
Here we are 33 years later, with an annual budget of $26.4 billion and we are
even more dependent on foreign energy
and the agency still exists.
Today, an average government worker
earns $70,000 compared to a private
sector worker, who earns $40,000. In
the FAA alone, there are 1,700 employees who earn over $170,000 annually,
and all these numbers are growing. The
bottom line, government is never reduced.
I work in a highly regulated world, the
financial services industry. I have participated in this industry for 46 years
and the regulatory burden continues to
swallow up our resources with every
new crisis.
► Free Enterprise System at Risk, Dennis E. Nixon
Virtually every crisis has been created
by bad government policy that does not
show up for many years, that magic
decade later, we see the terrible results
of these bad decisions.
Are there bad people in the business
world, absolutely, but the worst business decisions always seem to have a
finality to them — businesses fail; but
bad government decisions rarely do,
they just pass more regulations that
they ineffectively enforce, and when
things go wrong, they blame the private
sector.
In the regulatory world of today, there
is an even greater threat — the lack of
recourse, a day in court so to speak.
The government by means of regulatory fiat has crushed the ability of any
private sector entity to seek redress for
acts of abuse by the government. Just
like the days leading up to the revolution, we are now a nation of regulators
who answer to no one. The Regulator
is now our King.
We have become a mature society. Just
as each of us has seen life’s aging
events change our abilities, the nation
must understand that the maturity of
our society also places limitations on
what we can accomplish.
Growing at high levels is just not possible in a society that has multiplied
many times over several centuries.
When we were a small nation with a
small budget, our mistakes were small
and we could just grow out of the problem; but today, we are trying to grow
trillions. A $13 trillion GDP is not a
number that is going to grow at a rapid
rate, and certainly not facing the head
winds of a government out of touch
with reality and a nation of aging people.
We only need to look across the sea to
Europe to see how tragic this problem
is playing out. Greece, on the verge of
collapsing, is just the tip of the iceberg
and could trigger enormous problems
for the European Union. We must face
the reality of a world in crisis.
Many of you are aware that I have been
an advocate for immigration reform. I
became engaged in this issue because I
saw a lot of abuse and poor management
of the immigration process, but I was also
keenly aware of the need for workers to
keep our nation growing. We are the only
nation in the world that educates the
brightest and the best in our universities,
but refuses to grant them citizenship, instead, sending them home to compete
against us.
How are we, and from where are we, going to grow that $13 trillion GDP number
to provide the revenues necessary to keep
our nation prosperous, if we do not have
workers and consumers?
Most of the folks on Main Street, as well
as Washington, do not have a clue about
the demographic winter that has set itself
upon the world.
Most people still believe the myth of the
population bomb that was first talked
about in the mid 70’s — you remember,
the one where they predicted by the year
2000 the world would be overrun with
people. We would be elbow to elbow.
As a foot note, at the same time, another
group of so called experts said that the
world was entering a global deep freeze
and that the next ice age was about to
occur.
What do we find today?
The myth of the population bomb still
exists, but the deep freeze has turned into
global warming although the world temperature has not grown at all in the last 11
years, and Mother Nature just dropped a
record-breaking snowstorm in Washington. There is an inconvenient rumor circulating that it is not going to stop snowing in Washington until Al Gore yells,
―Uncle.‖
Let’s look at the demographics. The
foundation of any prosperous society is
growth.
Without growth, most economies, businesses and institutions, stagnate and eventually die from the weight of the entity —
costs continue to rise and eventually exhaust the enterprise.
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Very few folks have learned to operate
without growth. I have often commented to our IBC team that if you are
not moving forward, you are moving
backward; a simple truth that most of us
have not done well in confronting.
So back to the demographics — if I told
you that the developed world is dying,
how many of you would agree? The
truth is that the most prosperous economies in the world are all dying. It takes
2.1 births for every female to sustain the
population. The extra point ―one‖ accounts for accidents and disease, etc., so
that the population does not start to die
off. Furthermore, once you fall below
1.7, according to the demographers, you
cannot recover.
Here are the developed regions and nations that are household names we all
know about — European Union 1.5;
which includes such notables as France
1.9, Germany 1.4, Spain 1.3, Switzerland
1.4, and Eastern bloc countries, Russia
1.4, Czech Republic 1.2.
The classic example is Japan, a country
today of 127 million people.
Japan’s fertility rate has fallen to 1.2,
and the harsh reality is 20 percent of the
population is over the age of 65 and by
2050, 36 percent of their population will
be over 65, and the total population will
have declined to 101 million; but that is
the good news. The bad news is no
country in the history of the world has
ever experienced economic prosperity
combined with depopulation.
Japan has closed more than 2,000
schools in the past decade and the prospects are they will continue to close
schools. There are very few children.
Why is Japan in such bad shape? They
stopped having children and they have
failed to allow immigration.
Japan
wanted to keep their society pure, which
has resulted in them turning away almost
all non-Japanese immigrants. It has been
a policy of death.
If you read any financial publication,
they are always talking about how
poorly the Japanese economy has done
► Free Enterprise System at Risk, Dennis E. Nixon
the last several decades. They blame it
on bad policy, but they are only partially
right, it is primarily because the nation is
not growing, its population and the economy only performs well when we have
consumers. Japan is not growing and the
worst part is they are aging. Old people
don’t work and they don’t buy things.
Economic growth, (GDP) in the developed world is 70% driven by consumer
spending!
It is a fact that once an individual
reaches about 50 years of age, they materially change their buying habits. They
basically stop being aggressive consumers and become savers. Japan has one of
the highest savings rates in the world
because the population is old and the
tradition of saving is embedded in the
society making the problem worse.
Japan now has debt exceeding 200% of
its GDP, because they have spent huge
amounts trying to support an economy
that is not really sustainable because the
private sector is not participating.
Someone once said, ―Those who fail to
learn from history are doomed to repeat
it.‖ Let us learn from Japan’s mistakes.
We are on the verge of the same problems facing Europe and Japan. We currently are reproducing at that magic level
of 2.1 and are projected to fall below that
level in 2015. This may accelerate because of the recession. But my immediate concern is the fact that the population
is aging.
We will hit that point this year, yes,
2010, when a large segment of the population will be in the 50 plus category and
will not be as active as consumers.
There are about 82 million baby boomers who have begun to retire which has
been accelerated because of the recession. This watermark is in my view the
beginning of a new era of slower growth,
which is running toward new head winds
by 2015 when we fall below replacement
levels of 2.1 in the general population.
This news may even be worse than the
figures show because Anglos have a
fertility rate of 1.8, Asian Americans are
also at 1.8, and African Americans are at
2.0 – all below the replacement level of
2.1. The only reason we are continuing at
2.1 until 2015 is because the Hispanic
population is growing at 2.9, but they too
do not continue to expand the population
after 2015.
As a footnote for all the immigration fear
mongers, Mexico, currently at 2.3 will see
its population drop to replacement level
by 2030. Worse, our immigration policies are keeping many immigrants out of
the country and the right-wingers seem
hell bent on stopping any immigration.
They are clearly out to lunch.
A society without a growing consumer
base cannot fundamentally grow, which is
the clear example shown in Japan.
In most of the developed world including
the United States, Immigration gives you
a chance at prosperity and survival versus
almost certain death.
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longer. We must make hard decisions
or we will surely be doomed.
I hope my stark message today causes
more of you to get involved. Einstein
said, ―It is not the bad people that we
should fear, it is the good people who
do not speak up.‖
With the demographic winter upon us
and the prospect that we may be entering a new time in the world, we cannot
afford to make many more mistakes.
I leave you with a final quote from
George Washington:
“Government is not reason; it is not
eloquent; it is force. Like fire, it is a
dangerous servant and a fearful master.”
Thank you.
Why is this important to my message of
free enterprise? If our government continues its practices of over-spending, over
-taxing, over-regulating and failing in
everything it does, we will cripple this
nation. Does it mean we will die tomorrow?
No, but it is clear we have reached the
point where we are seeing the death of
common sense in the way we approach
solving our problems.
The sad reality is that most of these bad
government decisions are not known for
at least a decade because the negative
effects take years to unfold.
The future simply becomes dimmer and
dimmer, and we never quite understand
why it is getting so hard to see. But now
we have some real barriers facing us.
2050 is not that far away, in fact, it equals
my time in Laredo.
If we continue to waste years, along with
the over-spending and piling up of debt,
we are going to run out of time just like
Japan. Facing the head winds of the
demographic winter and the prospect of
slower GDP growth, I do not believe we
can just grow out of this problem any
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For questions, comments or more information, please contact Ashley Barth,
Public Affairs, IBC Bank at (210) 5182546 or [email protected].