Archive for the ‘Politics’ Category

Tax structures, the New Nobility, and Social Inequality

November 30, 2012

We’re really going to have to do something about the overall tax structure. None of the approaches put forward by our political leaders will do enough, so I’ve been considering non-standard approaches.  I think this is what is necessary.

I’ve advocated a gross-receipts tax, which forces companies to absorb all the costs of such things as corporate jets and business lunches rather than charge them off to taxpayers. Current tax policy actually reduces efficiency by reducing competition, something that the capitalist economy claims to love but which capitalist companies do all that they can to reduce. I’ve also allowed for deductions from company tax liabilities for salaries and benefits paid directly to American workers, but only if such were available for ALL employees. Anything paid out in bonuses or stock options to executives would not be shielded from tax. And what’s paid to workers, whether in the form of direct salary or bonus or health insurance or company car, would constitute income that would be taxed to individuals. Equally, if it’s investment income or capital gains, that would constitute income to be taxed, whatever the individual tax rate would eventually be.

So long as all income is considered to be taxable, actual tax rates could indeed be lowered. Our current system taxes only a proportion of income from a narrow range of sources, and this turns out to fall heavily on the middle class and the poor while being a shield for the wealthy.  A shield which allows them to acquire and sequester wealth by selecting whichever source of income will reduce their taxable income.  It’s why there was so much effort by Mr Romney to hide his taxable-income information.  It’s the mechanism that allows certain individuals with multimillion dollar incomes to pay little or even NO tax at all.

Inevitably, our current system leads to more and more inequality and reduces social mobility, a major problem for democracies.

It’s led to a USA which has a few, the new nobility who lack only titles to be considered such, and the many, serfs in effect who are slaves to corporate rule. Who do not even have the traditional rights of serfs who were tied to the land; the new enslaved class can be dismissed through layoffs, ‘turfed out’ if it appears that managerial elites might realize a slight gain in profit by doing so. In such a system, the employee who’s worked faithfully for a corporation for 25 or 30 years has no rights and can now be dismissed, to attempt to make a living when they’re in late middle age, no longer able to start over in a new career.

The Constitution was written to protect citizens from the excesses of government.

There is nothing to protect us from the unrestrained greed that has become the hallmark of the new nobility.

A REAL tax overhaul might the first step in that effort. And along with it, government programs that provide more protection for citizens than is currently available from Social Security or Medicare.

A best approach might be to start with a commission that included not only the members of the new nobility but also representation from the middle and lower classes.  Such a commission would look at what’s fair to those lower classes as well as what benefits those elites who have a system that they can exploit differentially to gain ever-greater wealth.  Such a commission would consider where society should go, and would have the best interests of all American citizens at heart.

It would do what Congress was supposed to do, but what Congress has failed to do.  Our system of laws is in large part a listing of failures by past Congresses.  Failures patched here and there, but with ever more failures tacked on top of past failures and patches.

Perhaps it’s time to consider a real rewrite of the Constitution.

I won’t see any of this in my lifetime. But maybe, if we think about it and force our elected officials to represent VOTERS rather than those who bribe them with ‘campaign contributions’, something like this might be possible in your lifetime.

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Toward a Better Tax Structure

November 8, 2012

Written in answer to a friend; political, but not party-political. Instead, it’s economic theory applied to tax structures.
Ruth, I’m not advocating a flat-tax, although that would be much more fair than the system we’ve now got. Cain wasn’t wrong in his overall idea.
But we’ve ended up with a progressive, then regressive, tax system.
I believe that the best system is a corporate tax system that’s lower than what corporations now pay, but based on gross receipts. And I believe that any company doing business in the US should be susceptible to that tax on a proportional basis. If they sell a million dollars worth of goods in the US market, then they should pay the same taxes to the US government that a company doing business in New Mexico pays. I would have one deduction from those gross receipts; money paid directly or indirectly to employees. Any money remaining that goes to building the corporation or increasing its wealth or assets would be taxed as gross receipts. No more jets for executives or 3-martini lunches as ‘deductions’ and ‘business expenses’. Corporations could still DO those things, but not deduct them. These are all ways that corporations/companies reduce competitiveness.
As for what gets paid to individuals: salaries, retirement benefits, health care, perks, all are income. And all income of any kind forms the tax base. Speaking of health care and retirement accounts, they would be paid into a federally-supervised fund. No more of this situation where a corporate raider can come in and take funds that were intended to pay for employee healthcare or retirement because the investor acquired 51% of the company; that’s one of the things that Bain and Romney did. A better approach would be to increase Social Security and Medicare and make them available to all, despite the howls of the wealthy who would have to help pay for it.
Lots of benefits here; no longer would American companies have to support salaries, health care costs, and retirement costs, and then pass all that on to the consumer. Instead, it would be paid into funds that would be protected possibly by Constitutional amendments.
Individuals would be taxed on a progressive basis just as has been the case since our tax system was adopted. Probably at slightly lesser rates for some, more for the wealthiest. They have more to lose, after all, and American society protects their wealth. So it’s appropriate that they pay into society on a commensurate basis. And income is income; no difference from an hourly wage or a dividend from investment. And no more hiding income by calling it ‘health care’ or ‘retirement accounts’.
So how could one accrue wealth in such a system?
No so easily, for sure. But it would be possible. The guaranteed way would be to invest in growing companies. Currently it’s possible for a wealthy person to buy into GE, say, and wind up paying only 10% of dividends. GE has paid NO taxes for several years, despite profits of billions. Apple too hides much of it’s income from taxation by shuffling it around from corporate entity to corporate entity. Bain Capital did that, too, and Romney directed the operation.
But if you invest in a growing company, then the company will pay out taxes on a gross-receipts basis, but the investor won’t pay any taxes at all on this. So that maximum gross receipts tax, say 15 or 20% as a beginning point, is all that would be paid.
One additional point: the neo aristocracy. We’re going to have to tax estates just as Britain found it necessary to do. Otherwise, the Waltons or their equivalent can sequester giant amounts of money and wealth from the system. That money must be returned to circulation if society is to prosper.
Ideas; what do you think of them? You can post replies to jlknapp505@msn.com or find Jack Knapp on Facebook. I welcome dialogue and constructive criticism.

Failures of Capitalism in a Depression

September 27, 2012

I’ve argued before that we’ve really been in a depression for a long time. It could be called a ‘recession’ only because borrowed money artificially supported parts of the economy, but that’s only a short term solution.
Manufacturing jobs have fallen precipitously. Some were offshored, others were eliminated by mechanization of manufacturing. The relentless drive for efficiency also included loss of jobs in offices and in such departments as design and accounting because computers now could do what was formerly done by people. Even cleaning machines reduced the need for janitorial services. Bottom line, fewer humans needed as machines took over. Fewer humans, fewer jobs…and no other jobs to go to. At this point there are jobs, but only for the well educated. And not simply for any college graduate, but only for those with a master’s or higher in business, engineering, science, and math. A degree in liberal arts or humanities simply won’t provide the qualification that employers are looking for.
And only government expenditures, supported by taxes on the wealthy and creation of new money, can reverse the decline. Capitalism won’t do that, and this is the failure of capitalism. Capitalists invest not to take risk, but to receive profit. No guaranteed profit, no expenditure; the more perceived risk, the less likely the chance of investment by capitalism.
Only government can spend without expectation of profit.
An ideal system consists of government (e.g., socialist) development where there’s not enough profit potential for capitalism; capitalism to increase efficiency and extract profit after this initial development.
Control of capitalism to prevent abuse after the opportunity has stabilized. That’s what capitalists hate, the idea that as risk is reduced, they also must restrain their urge to profit.
Monopolies are one way that capitalism reduces risk. Microsoft/Bill Gates understood that. As competition increases, risk also increases, and profit opportunity declines. Industries and companies now actively exploit the political sector to decrease competition by a variety of strategies; tax abatement, even subsidies, other political moves that favor some over others. Pure capitalism doesn’t include those things, but capitalists are quick to involve them to lessen risk while increasing profit.

On Economic Trends: The Disappearing Labor Market

August 21, 2012

We really don’t have a good economic model for what’s happening now. I’ve got my own, but I doubt that I have all the facts. I’ve taken some of the things that Krugman has written about and some that Stiglitz has written (actually Stiglitz quoted ME once; I had published a paper dealing with economics on the International Mensa Forums two years ago), and there are a couple of other economists. But there’s no real consensus.
I’ve come to believe that the root problem is capitalism itself. Let me defend that before you scream too loudly.
Capitalism seeks ever higher profits, ever greater efficiency. That’s what the ‘market’ requires. If efficiency lags, then the capital flows elsewhere; Krugman would agree with this, I think.
What this really means is that human labor is first depressed in value by exporting of jobs, then by the ultimate export, having the jobs done by machine. Even China, home of cheap labor for a generation, is now mechanizing factories.
This puts people out of work. Where do they go?
Historically, when the Industrial Revolution began, they left the land and took jobs in industry, manufacturing goods. When mechanization hit the remaining farms (in the US, as an example), farmworkers left the land and moved to cities and worked in industry again.
But now the industrial jobs are rapidly disappearing. There are service jobs, but they pay little, in most cases not enough to live an independent life.
The few jobs left in manufacturing are increasingly high-tech, many of them involving computer control or robot maintenance and engineering. Not for the uneducated, in other words.
Even construction, long a place for unskilled labor, is changing. Where once half-a-dozen men with shovels and rakes and tampers filled potholes, now three men in a machine do ten times more potholes and do them better.
Force all those former employees to find work in domestic service-industry jobs and all you do is depress labor prices even more.
What to do with our excess labor? I’ve said that it can only be employed in making items for trade, and that will work for a time. What isn’t made for the domestic market can be made for the export market.  But the trend is clear: humans are being forced out of the labor market.  That’s the real economic problem.
And we don’t have any place left for them to go and nothing for them to do.  And no idea among politicians or even economists that this is the early stage of a trend that will only get worse.
There’s a real shortage not of managerial talent or clerical support; that group is overstaffed. The shortage is in engineers and scientists and technologists who can work with the engineers to build their designs. There are jobs for such right now…but colleges aren’t graduating enough of them. Instead, they concentrate on things that may make the student feel good, but without requiring the sheer work that a degree in math or science or engineering entails. Ethnic studies? Even education as a major? Not much work required. As an example, note that many education majors take classes that are deliberately dumbed down; math for education majors, science for education majors, etc. Education departments encourage this; it requires a Dean’s approval to count a MAJOR course toward a degree or teaching field instead of the ‘for education majors’ courses. I know…I did that. I took the full-on biology, physics, and geology courses. I didn’t go beyond second-year physics classes, essentially still elementary level but different, astronomy instead of physics II. At that point the math requirements would have meant dropping other things, biology or geology. And the GI Bill wouldn’t have paid for classes that weren’t required for me to graduate within 4 years, so I went with the broad education approach rather than the concentrated approach that would have led to a physics or math minor.
So economists and universities and politicians aren’t really addressing the trend. Industry is taking the first steps to do this; they’re offering training courses to prep people for unfilled jobs.  This isn’t yet widespread, but I suspect it will grow.  Meantime, some foreign specialists are immigrating to take the jobs that Americans aren’t qualified to do because of lack of education.  China and India and even Japan and Korea are providing the MD’s and the engineers and scientists that our universities aren’t providing.  And, since those divisions are expensive, universities continue to emphasize ethnic studies and gender studies and social studies…cheaper; more grads.
Comments?

Political commentary

August 20, 2012

To me, there’s an issue of character about Romney and also Ryan. Bluntly, I don’t see anything I’d label as character about either. And I’m not at all sure that Romney’s evasions are always legal. Show the records; let investigators dig into them.
Meantime, it may be very satisfying to boot Obama. But what will you replace him with?
What will Romney do? He won’t say. So we’re asked to ‘trust’ a man of no demonstrated character to take principled stands regarding jobs and housing and immigration and education? A man who famously has said he’s not concerned with the poor, that he likes firing people, that he thinks we don’t need cops and firemen and teachers? Who would turn more social programs over to the rapacious healthcare insurance executives and for-profit entities to teach children? To care for old people at the end of life? We’ve see what their objective is: profit. Anything else is secondary. We’ve seen rebates from companies that spend less than 80 of the money they collect on healthcare for people; that, after paying executives tens of millions per year. Trust the man who thinks this is good? A man who led the offshoring of jobs? Who deliberately wrecked companies so he could loot the bones, regardless of the human cost?
No character. No ethic, other than personal profit first. No morality beyond “I’ve got mine!” And no openness from a man who conceals great wealth offshore and who now asks you to trust him.
Obama has made some mistakes by not being bold enough, in my judgment. Romney? He’s going to cost lives and increase national misery by exponential amounts.
It’s discouraging that others refuse to recognize this.

Financialists and the Entitlement Nation

August 1, 2012

“On the campaign trail, Mitt Romney mocks it as “a social welfare state” and an “entitlement nation.” He rails that it smothers entrepreneurs and innovators. And he says it is simply not working. The target of Mr. Romney’s dismissiveness: Europe. And he warns ominously that if the United States is not careful, the country may end up just like it. ”

The above quote is from an article published in the NY Times, Aug 1 2012. It caused me to think about Mitt Romney and what his campaign and his comments have revealed about the man.

Entitlement nation. Mr Romney and his supporters use that term. One contributor complained that President Obama’s policies would ‘take my money and give it to those animals’.
Who is entitled to what?
Three groups, it seems to me, are involved if you’re to understand that view. Much ado was made about President Obama’s comments regarding entrepreneurs, “You didn’t build that.” He should have said, as Elizabeth Warren said, “you didn’t build that alone.” Both understand that there is more to building a company and creating wealth than simply identifying an opportunity, the root of entrepreneurship.
The economy needs all three, the entrepreneurs who see a need and move to provide for that need, and the capitalists and the production workers.
Perhaps that ‘need’ is imaginary, but never mind; advertising will sell us what we don’t really need. At any rate, it’s presumed that the entrepreneur takes the risks and so is entitled to rewards, whatever he/she can milk from the system. That concept gets lip service in the USA.
But the first thing many of these entrepreneurs do is set up a shield to limit their exposure to risk. It’s called a corporation or partnership or LLC. Limited Liability is the name of this game.
Entrepreneurs then seek financing from the third group, who also like limits to any liability (forgotten is the concept of ‘risk capital’; they expect guaranteed income from their money).
With financing, the entrepreneur is now poised to hire workers. Capital and entrepreneurship together cannot produce anything at all. But because workers are presumed to be interchangeable cogs to be slipped into the machine and removed at will, both classes have forgotten that production is at least equal to the other two parts…and production workers cannot milk the system for all that the market will bear. Only they have an upper limit to income.
And that attitude must change. The ‘entitlement’ part of that entitlement nation concept deals with the social support network that production workers need to gain some of the fruits of their labor. And some of the financing for that social support network comes from entrepreneurs and financialists. Both groups resent this in large part.
The American worker is at least as important as the other two parts. Financialists consider it ‘my money’ without regard to how that came to be and are adept at protecting money through political chicanery. The entrepreneur is lauded publicly but the financialists understand that it’s about money; the more you have, the more important you are, and the money is the source of that importance so therefore those who have little money have little importance. Once a company ‘goes public’, i.e. sells shares, the financialists now own what the entrepreneur built. And still at the bottom of all of this is the guys and girls who manufacture cars and steel and roofing and plumbing units and who install and maintain all of it. They are the ones who support the nation, generate the economic activity, and pay much of the taxes, but for some reason, the financialists see no need for them to BENEFIT from those tthings. Hence, ‘entitlements’. Somehow, they view the worker as a parasite unless he’s directly being exploited (and employment exploits; there’s no concept of sharing or equality involved. Employees are expected to produce a profit for employers to pay the entrepreneurs, the management elites after companies become publicly traded, and the financialists who own stock and sit on Boards of Directors).
The separation between groups is becoming greater all the time. The financialists at one time invested in a company and helped to make it profitable, and as it profited so did they; wealth was created. International finance in the 1970’s consisted of about 90% risk capital invested in development and creation of wealth, 10% speculation (gambling). That’s now reversed, according to Noam Chomsky; 10% is invested in development, 90% gambling. The gamblers, financialists, no longer involve themselves in creation of wealth so that their profits have some justification. It doesn’t matter; profits spend, regardless of how they are acquired.
And somehow the gamblers see everyone else as unimportant in their view of society.
Mitt Romney is the poster child for this view.
Understanding this may help you understand why he holds the opinions he does, and says and does the things that he does.

A Simplified Tax Plan

July 27, 2012

Fix the tax laws, Congress. That should be job one. Do that, then with the additional income, put people to work. Infrastructure needs investment, and it’s easy to make it domestic-only. American firms, American workers, no outsourcing or offshoring.
Dump all of the tax laws, all the thousands of pages, in favor of a revised tax on businesses and individuals. Instead of 39% (only the simple-minded ever pay that), reduce it to, say, 15%…but make that a gross-receipts tax. And tax anyone doing business in America by requiring merchants selling foreign-produced goods to collect the tax.
Real competition; no more deductions for the jet the executives use or their cars or spectacular salaries and bonuses or golden parachutes or business lunches. Loopholes only allow creative accountants to hide anticompetitive measures that protect big business. Compete, GE, and Caterpillar and Big Oil and Big Pharma and Big Agriculture, or go under.
And for income taxes, a small tax for the poor, a bigger one for middle class people, a larger one for the wealthiest…and no loopholes. If it’s money, it’s income. All loopholes were put in because of bribes paid to congresscritters; throw them out. This is necessary because not everyone is a stockholder, hence subject to the effect of the ‘business taxes’.
It’s not that 9-9-9 nonsense. But it would work.
For anyone hiding assets offshore, put in a real penalty: say, 150% of the hidden assets. Pay part of that to people who report the hidden assets. And any American company doing business offshore, require that they bring those profits home within a year. For Google and similar who establish ‘Home offices’ overseas, consider them foreign companies and establish a tax basis for them; say, 25%, which is about the average collected by foreign governments. But keep the gross-receipts standard. And watch them move back home quickly. In most cases, it only means acknowledging that the home office was always in America; only a tax shelter was ever overseas.
But no loopholes. For any exceptions to tax law, require that a separate bill be introduced in the House and passed by 70% of the Senate. Sixty-five percent? OK; but make it a separate law that every legislator must vote on and the vote must be public.
See how easy that is? It increases participation, increases competitiveness, streamlines business, puts everyone in the game of government;.
And if I can think of this, why can’t Congress?

Noblesse Oblige

July 19, 2012

This is a concept that’s gone missing in our modern world. But I think the idea is important and we should consider what its absence has cost us.
Robert Heinlein understood what this is. In To Sail Beyond the Sunset, Dr Johnson says, “Does your common man understand chivalry? Noblesse oblige? Aristocratic rules of conduct? Personal responsibility for the welfare of the state?” And in Glory Road, “Noblesse oblige is an emotion felt only by the truly noble.”
But it’s an ancient concept, this idea of responsibility that goes with privilege.
Homer wrote of it in The Iliad. Honore de Balzac, William Faulkner, so many others have written of it.
Some grasp the concept even if they don’t articulate it. When they finish work, a tool is cleaned and any necessary maintenance done before it is put away. It’s responsibility at the most basic level.
Horsemen know of it. It’s a poor horseman who doesn’t care for his horse when he’s finished riding. And it’s also selfish; next time, that horse might well be sore or lame or simply unwilling to cooperate.
Heads of families, tribal leaders, understand. They accept responsibility for the welfare of their people.
Military officers and noncommissioned officers know of it. Not all, but those who are privileged to command people, from the sergeant leading a squad or section to the general officer commanding an army, they’ve been indoctrinated in the concept from the first day they assumed a position of leadership. Care for your troops. If there’s no shelter, you the leader should be there sharing the hardship. When you’re in the field, the troops eat first. The day you’re offered mashed potato sandwiches because that’s all that’s left, or perhaps nothing when even that is gone, you understand. I was a sergeant and got the mashed potatoes; the lieutenants got a slice of bread each.
Henry Ford understood. He deliberately paid his workers well because, as he said, he wanted them to be able to afford one of his cars.
Our business leaders now don’t understand the concept. The Walton family owns Walmart and Sam’s, and they’re among the richest people in the world. Their annual income collectively is in the billions. Their workers are barely above minimum wage…if that. Apple doesn’t understand the concept; their CEO gets a salary that, with stock options, is in the hundreds of millions; the Apple salespeople and the ones who operate the Genius Bar are again, paid very poorly.
The managerial elites don’t understand the concept. They use free-trade agreements to offshore jobs. In effect, they force American workers to compete directly with the most poorly paid workers in the world.
The world has a visceral understanding of the concept. Around the world, you find unrest because people understand that the game is rigged, that there will be winners but that the part of the common man is to be exploited, the loser every time.
That was acceptable once, at least to a degree. Nobles, royalty, were expected to take the field in war. They might not share all the hardships, but they shared the danger. The British royal family still does this; princes serve, and they even go to war. In America, our ‘new nobility’ rarely serves in the armed forces. In Dick Cheney’s words, they “have other priorities.”
Even the American electorate has in large part lost the concept. So many simply rely on a bumper sticker or a talking point from a TV personality. They recognize no responsibility to learn, to attempt to see past the slick façade. They accept no responsibility to help the less fortunate.
A few of us haven’t forgotten. You’ll see us, the political activists, the demonstrators, the Occupy people, and in other places you’ll see the Indignados and the Arab Spring and perhaps a Chinese demonstrator burning himself alive. Even the common man often understands, where the New Nobility has forgotten, if indeed they ever learned of this at the elite schools they attended.
Our political leaders don’t understand the concept. They don’t use Social Security as their primary retirement system or Medicare as their health care. They accept no responsibility for the voters who elected them.
Instead, they recognize only their own profit.
Before any action is taken, their first consideration is “Will this help me get reelected?” Included in this is the pandering to lobbyists who come provided with fistfuls of cash, some of it in the form of campaign contributions, a thin disguise at best. And some of it is hidden among favors done but not admitted to and occasionally even as direct bribes. It happens; we all know of it. Duke Cunningham is serving a prison term because of it…but he was not the only one.
Their second consideration is akin to the first: will this help the party, which by extension asks will the party later help me get reelected?
If there’s a third consideration, for the public who elected them, it’s well hidden. Consider this worst-ever Congress; they made no effort to hide their intention, not to govern for the well-being of the nation but to act in such a mannas to deny Mr Obama a second term. And the American public elected them. We should not be surprised that they’ve done just as they promised to do.
And now the Republican Party is represented by Mitt Romney. He has no concept of noblesse oblige.
He has the arrogance of the New Nobility, but not the requisite sense of responsibility.
He famously declared that he paid only those taxes that the law required, and not a penny more.
We now find that he may well have paid less. We don’t know. He has not yet released a single complete tax return, despite the law requiring that.
He’s not concerned with the poor; he said that. He also continued by reminding us of the safety net. He failed to mention that he intends to do all he can to destroy that. We don’t need things like teachers and firemen and cops, said My Romney. More correctly, HE doesn’t need those things. And feels no responsibility for helping to provide them to you.
Mitt Romney doesn’t understand the concept of noblesse oblige.

Caveat Emptor

June 28, 2012

I read an article in this morning’s NY Times that suggested the housing crisis might be over, and that housing might now begin to recover. That article inspired the following:

I disagree with the content of this article. I think this is a temporary rise that will be overwhelmed as phase two of the foreclosures kicks in.
Banks are just as predatory as they were before; a temporary reprieve came to pass while they got their paperwork in order and shrugged off the criminal robosigning of foreclosure papers. But they’re now poised to resume the foreclosures because the jobs market still hasn’t recovered. Affecting this is the continuing layoffs of public sector employees that the private labor market simply can’t absorb. A few promising trends are visible; some manufacturers are returning the offshored jobs to the US. But only a few, not enough to reinvigorate the shrunken middle class. The trend is toward fewer homeowners, more renters/leasers of property owned by the wealthier people.
Families that were movin’ on up began movin’ on down; and that hasn’t stopped. So foreclosures will continue, and pressure on the home market will increase as foreclosed properties once again begin to become common.
Something to consider: if Republicans gain power, the banksters that have been paying them will continue to receive favorable treatment. But if the Democrats get in, the consumer might get a break, for a while. But don’t count on much from Democrats; all are politicians, and ideology is trumped by cash. After a settling out, banksters will switch to buying Democrats and the evil process will continue.
Unless we get a determined group of politicians who insist on change, nothing much is going to occur.
People need to become aware that government isn’t your friend; only you can ultimately protect yourself. Social Security under Republicans will push toward ‘privatization’, or in other words the money will go to the stock market.
We can trust market traders, right? So when they get all that retirement-fund money, they’ll take care of citizens, won’t they?
NO politician can be counted on to care for ordinary people. They only interact with us in any meaningful way when they begin running for office. And even then, they soon begin delivering rehearsed speeches with no opportunity for discussion; it’s all one-way, not true communication at all.
The next generation needs to adopt the old slogan: Caveat emptor, buyer beware. And add to it, voter beware. Educate yourself. Take back politics from those who sold it and those who bought it.
Middle class housing is going. Middle class expectation of a good education is going. Upward mobility is fast disappearing. The American Dream is dying, turning into a nightmare, as the middle class lifestyle that was the strength of a nation is slowly being destroyed. Our ‘leaders’ give us platitudes instead of leadership, empty referrals to a time when the nation was strong instead of action to restore that strength. And no real leadership from either party.
Caveat emptor.

A Critique of Both Presidential Candidates, and a Suggested Tax Solution

June 22, 2012

There’s a point behind some of Romney’s criticism.
While Obama had Congressional power, he worked to get the Affordable Health Care Act passed. That took much of his political capital. Attempting to also get immigration reform, education reform, any number of other issues addressed, would simply have meant that nothing got passed, given the obstructionist aims of Republicans.
But Obama allowed Congress to work through most of this without risking his own political status. This is not the action of a strong president.
He also didn’t risk that status by attempting to address any other hot-button issue such as immigration reform.
That weakness or unwillingness is now coming around. He’s been a weak president. Put into context, that’s understandable. He’s the first Black president. A serious mistake can set back 70 years of progress in a nation that has had a history of enslavement of Blacks and oppression of minorities in general. For a lot of the Republican base, Mr Obama’s skin color trumps all of the other issues. Racism is not an issue that Republicans address; there’s a reason for that. Put simply, Republicans can count on the racist vote.
Not that I think Romney is an improvement over Obama. The policies he apparently favors, as much as any outsider can determine his real opinions regarding education, budget, the safety net, and the economy, are a disaster in the making.
He would ‘encourage private enterprise.’ I hope he has a better idea than his predecessor in the Republican Party. Encouragement then was to simply shovel enormous amounts of public money to financial firms, who were then suitably ‘encouraged’ to sit on some of that money as a cushion for future losses, skim off some of it as shareholder dividends and executive bonuses, and use some of it to acquire competitors. Supposedly, they were to loan the money in the hope that this would stimulate the economy; not being fools, they used it in ways that seemed most profitable to themselves.
That, BTW, is how you encourage industry: you decide what you want them to do, and via a carrot-stick approach (tax breaks, tax penalties) you encourage them to do that. They’re in it for the money, after all; so use that to encourage them to act in the national interest.
A Value-Added Tax, to replace the current corporate tax system, works. Say you dump the tax rate that only the foolish pay and the savvy avoid; replace it with a VAT, but suspend a portion of that tax for any product produced domestically using domestic labor. No loopholes. Set this at a nominal 15% (vice the current rate, the one that Apple and GE and Big Oil doesn’t pay), and put in a mechanism that automatically raises or lowers this depending on our international balance-of-trade. Work to keep trade within a narrow range, + or – 1% of balance for example. Trade will still happen, but not based on cost; instead, it would be based on quality. Better quality always wins out in international trade.  Nations that want to sell us goods and services would thereby be encouraged to purchase our goods and services or see that VAT rise.
In this way, everyone who has access to the US market pays for that, and those who bring goods in as imports will pay more than those who produce goods domestically.  Want to export a lot of goods to us, then buy our domestically produced goods.  If you don’t want to buy from us, then don’t plan to sell to us.  Balance of trade can easily be determined quarterly; indeed, such information is currently published in The Economist.  And the automatic adjustment mechanism (needed to take the matter out of the hands of a Congress that is far too easily bought by special interests) can take effect as soon as this information is obtained, certainly within the following quarter.
What about planning on the part of managers who might want reassurance of tax rates before they produce goods?  So long as those goods are produced domestically, the manufacturers can be sure their products won’t be undercut in price by imports.
Simple. And it encourages domestic companies to act in the national interest, not their own financial interest. That’s the kind of ‘encouragement’ that they understand.