Leadership Needed

Recently, I have made an effort to get more involved in political activities. This is a hard thing for me to do for a couple of reasons. First off, I am not an overtly social person in that I enjoy good conversation and the free exchange of ideas but have no interest in being bombarded with media minute facts from people who have already decided what they want to believe and are simply trying to find facts to justify it. Experience has shown me that it takes a great deal of patience to talk to someone like this and slowly but surely point out that they are missing some of the key points necessary to make informed decisions. In the instances where an actual discussion takes place I find this is almost always the outcome. In instances where someone is more interested in talking than listening it is not. As my dad used to say, some people are permanently stuck on Transmit and have no receiving function.

Second, what I value more than anything else is an open mind. In other words, every ideological bent that is deeply ingrained is more of a hindrance to understanding than a help. For this reason I believe that political parties are universally populated by people with less than an open mind to start with. I would also suggest that the more entrenched or active one becomes in a political party the more narrow and set in stone their views tend to become. While I realize this is not a universal truism it is a good gage with which to start basically knowing what to expect.
As anyone who has read my blog probably already knows, I am not a conservative by any stretch of anyone’s imagination. The readily apparent Republican bias for large corporate interests and right wing social issues is enough to make me sure I am not a Republican. My dilemma seems to be that I am equally unsure that I am a Democrat. The adage that you are “either with us, or against us” make work well when describing sporting events but it is a remarkably useless tool when trying to convince someone that they should adapt your views. Through my recent blogs and contacts that I have made in local political circles I have started to receive more and more email from Democratic Party sources. I suppose that anyone who reads my views on my blog or in fact talks to me in person can soon realize that I am opposed to most of the Republican Party platform as it exists now. However, it does not necessarily follow that I am in favor of that of the Democratic Party.


As a student of American history I am well aware of the vagaries of political parties and the platforms they have periodically put forth to support their position. The problem as I see it right now is that there is only one party in power. I would describe that party as the Corporate Interest party and from what I can tell it is holding all the cards right now which is exactly why we have swung so far to the right in this country. This party, which I believe started with Ronald Reagan, has steadily gained control over most of our political institutions in the last 30 years. It is rather ingenious that this party which actually only represents the wealthiest Americans in this country has also managed to convince much of the voting populace for the last 30 years that they have THEIR best interests in mind when they actually have done everything possible adopt legislation that effectively destroys the middle class. It is a classic bait and switch operation whereby they bring out the old standards of social programs that are perceived as thorns in the side of the working class every election without actually even addressing these programs once they are elected. A good example is the Tea Party which in my view is a bunch of well meaning middle class Americans who are mislead, misinformed, citizens who equate their home budget with the budget of the largest and most complicated economic system the world has ever seen. They are also absolutely convinced of their correctness; to the point of being zealously opposed to hearing facts that tend to point out their error. These people are actually being used by some of the wealthiest people in this country to get in office so that they can further advance their own narrow economic goals which can best be defined as “give me more money”.

Unfortunately, this Corporate Interest Party is also heavily invested in the Democratic Party as well. After all it was a Clinton led program that de-regulated the banking interests in this country and opened the floodgates to the recent economic disaster. Many of the top Democrats in Congress right now were a party to that particularly unfortunate piece of legislation, both in its formulation and adoption. It also seems that this is the most effective branch of the Democratic Party if one looks at the actual programs that get through Congress even in recent years when the Democratic Party has controlled Congress.


I believe there is a good reason for this. Outside of the Corporate Interest branch of the Democratic Party there presently is no core constituency that supports anything. A large segment of the Democratic Party today is composed of lots of special interest groups that have one main agenda that necessarily conflicts with those of the Republican Party. The problem is that all of these fringe groups have no common ground that they can agree amongst themselves to support. Effectively the Democratic Party has devolved into a combination of the same Corporate Interest groups that dominate the Republican Party and an array of special interest groups who only have in common their dislike of the Republican Party’s platform. This makes it impossible for them to govern effectively if they do happen to get into office because they immediately start arguing amongst themselves about issues that they didn’t agree on to start with. This leaves the only really effective arm of the Democratic Party the Corporate Interest branch of the party. In essence Corporate Interest wins no matter which party wins an election in this country.


In recent discussions with people within the Democratic Party it seems that the matter of raising money for the party is the main focus of much of their activity. While I realize this is one key to effectively combating Republican efforts along the same vein I am unconvinced that this is the issue Democrats should be focusing on. In my view, the Democratic Party needs new leadership. Running in opposition to Republican actions is not enough. Reacting to Republican actions is not enough. The Democratic Party needs a plan of action that is both detailed and comprehensive as to how to address the problems we have in this country. Unemployment, a stagnant economy, rising health care costs, and the deficit issue are all interrelated and we need to figure out how to deal with these issues. Effective leadership would propose solutions. The American public is starting to realize we have problems but they do not have leadership as to how to deal with them because most of these problems have been caused by a government that is bought and paid for by the Corporate Interests that are causing the problems and that group is deeply imbedded in both parties.


We need to restructure the tax codes to incentivize investment in industries that create jobs. As long as financial markets are the most lucrative way to make money that is where the wealth of this country will be invested whether it creates jobs or not. Republicans like to talk about “job creators” as a euphemism for the wealthiest Americans when the present reality is that profit maximization is most effective in markets that do not create jobs. Why not make them put their money where their mouth is and base the tax rate on employment opportunity? In other words, if you create jobs you get a break on your taxes. If you ship jobs overseas you pay a higher tax rate. The reality of the situation we find ourselves in is that most of America’s large corporations are making record profits while at the same time reducing jobs. The reason is simple. Under present conditions and existing tax codes investment in financial markets that do not create jobs is the most effective means of making more money. Until we change that fact the economy is not going to get better because we need to put people to work to get the economy going.


Instead of falling back on the idea of simply taxing the rich to increase revenue why aren’t Democrats explaining what they are going to do with the revenue. Americans know we need to change the way we do business in this country; they are simply waiting on someone to explain a viable way to do it. The basic flaw in the Reagan revolution was the destruction of our manufacturing base in favor of a service economy. Without the support of a good base of manufacturing jobs service industries are impossible to operate because they depend on people having money to spend to be profitable.


The next thing we have to do is to balance our trade deficit situation with China. China has been subsidizing their manufacturing industry for years by manipulating and artificially holding the value of their currency down and constructing trade barriers to our products. The source of our inability to effectively counter these policies can be traced to the fact that the same Corporate Interests who are controlling all facets of our government depend on money from China to invest in the same financial markets that caused the latest collapse to begin with. Not only do these interests refuse to allow government regulation of these markets they do not want to in any way upset the people who are helping finance the whole thing; the Chinese. If the main goal of American business is to maximize profits then we should just continue along the path we are on. However, we must take note of where that path leads; to ever higher unemployment in this country which means more widespread suffering amongst the middle class AND the inevitable increase of our deficit. Let no one fool you, the only way to cut social programs in this country presently is to quit paying the medical costs of the unemployed and cut back on programs that presently allow them to survive on the lower rungs of subsistence.


These are the kind of ideas that are needed to get us out of the situation we find ourselves in presently. Electing more representatives of the Corporate Interests in this country will not do anything to solve the problems and I am unwilling to invest time or money in ANY party that is devoid of actual solutions to the problem. We cannot logically expect the portion of the population who are profiting the most from the present situation to be the ones to change it. The fact is that it is not in business leader’s interest to change a situation wherein they are seeing record profits every year. There is a very disturbing tendency in both parties to insist upon electing business leaders as our government representatives. Conventional wisdom suggests these are the people best suited to bring us out of our current situation. I can think of no more erroneous and fundamentally flawed assumption than this. Business leaders who run Corporate Interests have been controlling our government since Reagan and we are now seeing the fruits of their labor; an ever growing destruction of the middle class combined with the redistribution of wealth into the pockets of these same leaders and their allies who are the wealthiest 1% of the nation. This is a truism that we once understood in this country. After the Great Depression there was a backlash against these same people for the destruction they had caused by their greed. This backlash led directly to policies that saw the great economic boom that put our country in the lead in the world economy. Allow me to quote from Adam Smith and his “Wealth of Nations” that is widely considered the first complete description of Capitalist theory as he describes this same Corporate Interest:


Merchants and master manufacturers are, in this order, the two classes of people who commonly employ the largest capitals, and who by their wealth draw to themselves the greatest share of public consideration. As during their whole lives they are engaged in plans and projects, they have frequently more acuteness of understanding than the greater part of country gentlemen. As their thoughts, however, are commonly exercised rather about the interest of their own particular branch of business, than about that of society, their judgment, even when given the greatest candor (which it has not been upon every occasion) is much more to be depended upon with regard to the former of those two objects than with regard to the latter. Their superiority over the country gentlemen is not so much in the knowledge of the public interest, as in their better knowledge of their own interest than he has of his. It is by superior knowledge of their own interest that they have frequently imposed upon his generosity, and persuaded him to give up both his own interest of that of the public, from a very simple but honest conviction that their interest, and not his, was the interest of the public. The interest of the dealers, however, in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public. To widen the market and to narrow the competition is always the interest of the dealers. To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow citizens. The proposal of any new law or regulation of commerce which comes from this order ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.


Try and keep that in mind the next time you hear a Republican or a Democrat describing their fitness for public office by boasting about their business background.

Observations Concerning Governments and Taxation

In this country today we have some serious problems with deficits. Anyone who takes the time to look into the situation soon understands that this is a problem that has consistently grown since the Reagan revolution. After the national deficit had basically stabilized since the early 1940’s Reagan’s Administration managed to double the deficit in just eight years. The vast mobilization of armed forces that the United States won WWII with temporarily doubled the deficit but it was quickly paid back down shortly afterwards. Reagan and his policies managed to double the deficit during peacetime with the added legacy that the policies he espoused have directly led to the fact that we still have not managed to get it back under control in the thirty years since.

Governments, unlike personal budgets have regularly and routinely run budget deficits since the beginnings of organized governments in Sumeria some 4000 years ago. The reason for this is very simple. Revenue for governments can come only from taxation and taxation is based upon last year’s expense so there is always a time delay in the reaction of taxation to expenditure. While this is a little alien to the way the most people understand budgeting on a personal level, it is inherent in government expenditure. It is only in recent modern history that methodologies for predicting expenditure have come into common usage for governments and the success rate of these methods is not exactly stellar as governments are frequently faced with situations that require immediate response. We must always remember that any government’s ability to raise revenue is not immediate; it is always lagging behind the need to make expenditures. Modern budgeting methods are predictive modeling attempts at seeing future need and setting money aside accordingly. Barring a discovery of omniscient future sight governmental budgeting will always be at best a very inexact science.

From the very beginnings of organized governments it has been necessary to match revenues (money coming in) with expenditures (money going out). While there is an inherent delay in this process it is still necessary to adjust expenditures and revenues accordingly. While most everyone understands this process from their own efforts to balance their household budgets the public at large in this country today seems unnaturally predisposed to seeing only one side of the budgeting method of our country; expenditures. In a nation as large as ours with as many different obligations as we have it is inevitable that we will disagree on the relative importance of expenditures. Largely these disagreements center on regional interests but they are often further divided based upon our individual status in the economic hierarchy. Farmers in Iowa consider government agricultural subsidies to be of prime importance while government workers in Alabama who work on government facilities are much more likely to favor government investment in military research and development. This discussion can go on ad infinitum without respite, the point being that part of belonging to such a diverse country is an inherent disagreement on priorities. While this diversity is a weakness when it comes to budgeting it is in many other ways the source of our greatest strength as a nation.

Let’s look at some history of governments and taxation to better understand the problem. There is a large push in this country today to do away with big government; to go back towards smaller government and more of a pure capitalist system. Virtually everyone seems to believe this is the path we need to take to recover our economic strength and upgrade our standard of living. Unfortunately for the proponents of this theory, history seems to teach us just the opposite. The advents of organized governments throughout history have directly corresponded with marked advancement in civilization. The Sumerian city states were the first organized governments and marked the beginnings of advancement in cultivation techniques that allowed the growth of populations that had never before been seen on this planet. It is the combined efforts of groups of people and the resultant division of labor that has led to all advancement in living conditions since the beginning of recorded history, not the individualistic efforts of the strongest amongst us. The pooling of labor resources and revenue resources led to large irrigation projects that simply could not have occurred by individual effort. The source of this combined effort, whether in labor or capital was taxation. Each individual by contributing his part in the group effort advanced his own standard of living infinitely quicker than he could have in isolation. This is the root source of all government, the bonding of individual effort for the common good.

Government provides stability. Stability is necessary for advancement. Without government, people are forced to fend for themselves spending large proportions of their time defending their gains from becoming plunder for others. Division of labor collapses and efficiency collapses along with it. Even a cursory glimpse of the history of civilization proves the indivisibility of these two concepts; progress and government. The larger and more effective the government the greater the progress and the higher the standard of living for its citizens; there is an undeniable and direct correlation.

Sumerian civilization with its localized city state governments was closely followed by Greek civilization with its larger city state governments. Each led to rapid advancements in agriculture, science, and business practices that led directly to rapid advancements in standards of living for its citizens. Along with these governments came taxation which also directly corresponded to this advancement. It was the advances in taxation policies which gave the governments the labor and capital they needed to protect and advance this standard of living, allowing it to further advance.

Roman civilization featured even larger governments with further refined systems of taxation that led to stronger central government and more rapid advancement in standards of living for its citizens. With the collapse of Rome and the drift of European civilization towards feudalism and this system's inherent individualism we had the advent of the dark ages which saw standards of living regress and scientific knowledge collapse. It was the inherent inability of governments to centralize power that led directly to these problems and the resultant drop in standards of living all across the western world.

As western national governments began to re-emerge and consolidate power we saw the return of economic advancement and a corresponding steady increase in the standard of living for their citizens. Larger, more centralized governments subsidize economic prosperity by providing security for their citizens and allowing ever greater divisions of labor which in turn lead to higher efficiency. In short, the strength of central governments and their ability to raise revenue for the common good have always directly corresponded to increases in standards of living. Smaller, less centralized governments have always had just the opposite effect throughout the history of the civilized world.

This leads to the United States and our own history of economic growth compared to governmental strength. The United States, even though it possessed the greatest abundance of natural resources of any one nation, was basically a third world power economically and militarily until the consolidation of power in our central government began to take place. Our economic prosperity is directly correlated to the size and strength of our central government and this has held true throughout our nation’s history. For the same reasons that western civilizations advance has always been tied to the strength of government, the explosion of economic power that the United States experienced happened along with the growth of the central government and the resultant revenue increases that came with it.

The United States financed much of the world’s economic recovery after WWII through the ability to raise revenue. The growth of our national educational system, our national road system, our national electrical power system, and virtually every other economic engine that led to our world leadership in both standard of living and economic capacity are all directly related to the strength of our national government and its ability to raise revenue and disburse it for the common good. Individuals didn’t build the road systems, they didn’t build the schools, they didn’t subsidize the space exploration that led to most of the technologies that have so rapidly advanced our standard of living in this country. The central government with its vast ability to raise revenue for the common good did. Individual companies didn’t bring the cost of food down to its lowest relative level the world has ever seen, the central government with its subsidies of crops did.

Americans once understand this concept. No one likes paying taxes but it is a necessity to finance government and government of the people, by the people, is the guarantee that makes the whole system work. The idea that our government, the one we elect and control, is somehow an evil thirsty beast that must be slain so that we can inherit economic prowess is directly in conflict with the truths that our own history conveys. We have been sold a bill of goods by a small wealthy minority in this country who believe they should have the benefits this national system allows them without paying the costs associated with maintaining it.

Adam Smith, in his “Wealth of Nations”, which is widely espoused as the founding tome of capitalist theory addresses the idea of taxation as follows:

The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state. The expence of government to the individuals of a great nation is like the expence of management to the joint tenants of a great estate, who are all obliged to contribute in proportion to their respective interests in the estate. In the observation or neglect of this maxim consists what is called the equality or inequality of taxation.

This is exactly why we as a people voted in a progressive income tax in 1916. The people of this nation well understood the idea that those who prosper greater under the protection of the government are most responsible for paying its costs. The top tax brackets in this country were historically in the 70-90% range previous to Ronald Reagan. Since he was a product of some very wealthy patrons it is only natural that he would attempt to advance their interests but it is literally amazing to me that the general public fails to make the obvious connection between the drastic cuttings of this tax rate with the immediate rise of the deficit. The theory that cutting taxes on the wealthiest Americans and Corporations would lead to economic growth has been tried for the last thirty years and we find ourselves in the same kind of depression that this kind of fiscal irresponsibility netted us in 1929. George Bush Senior was right, it is "Voodoo Economics".

If cutting taxes on the wealthiest Americans leads to economic prosperity we should be in the biggest economic boom this country has ever seen right now because we have been doing it for 30 years now. What we have actually seen is the distinct degradation of every facet of our national economic infrastructure along with a drastic redistribution of the wealth of this country from the middle class to the wealthiest one percent of Americans. The tax burden has shifted dramatically to the middle class while the wealthiest Americans get relief. We have the highest deficits ever seen along with the lowest tax burdens for those that prosper most under the umbrella of protection our government affords.

Government finance is always an adjustment between revenue and expenditure. We cannot solve the problems we have by attacking only one of the two basic levers that control our system. The only way we will regain our economic strength is to return to the proper balance between what is earned under the protection of the government and what is owed in its support and that means raising the tax rate on those who prosper most.