The new President is entering office with a mountain of foreign and domestic problems that would tackle the wisdom of Salomon. A series of bad decisions over the last two administrations have led us into a mess in the middle east, a resurgent and expansionist Russia, a nuclear North Korea, a China that is growing more and more aggressive, and Iran that is on it's way to becoming nuclear. We seem to have made the wrong decision in most cases on the foreign front. We invaded Iraq and destabilized the middle east for, as it turned out, no good reason. Then, when we had taken on the job of nation building in that country, we elected a new President and promptly pulled out and left a vacuum that radical elements were quick to fill.
Syria is nothing but a mess with Russia and Iran now the leading figures in that area. The new President really has no good options opened to him. We stood by while Russia and Iran created a mammoth refugee problem and kept a brutal dictator in power.
China has weaponized islands, some of them man made, in territory that isn't theirs and seem to setting up the conditions where they will claim sovereignty. This really effects the trade of our allies and impacts on our desire to keep the seas open for free trade. They recently captured an American drone that was mapping the ocean floor in clearly international waters. Now they are rattling their sabres over the situation concerning Taiwan. Again, no good options are open when the other guy gets belligerent short of force.
Russia has moved in and captured the Crimea, taking it from the Ukraine, who didn't have the power to oppose them. Still doesn't. Following that they have moved troops and equipment into eastern Ukraine and are making moves to annex that territory into Russia. And what did we do? Nothing, except wring our hands. We refuse to equip the Ukraine with the means for them to defend their territory because it might offend Russia. What does our new President do now. No good options.
Iran signed an agreement with the west to restrain their nuclear program for lifting of sanctions. With that went the release of billions of dollars to Iran. The sanctions are supposed to be re-instated if Iran didn't adhere to the conditions of the agreement. Guess what? They have already broken some of the conditions. What was done about it? Nothing. Our allies have too much of stake in selling arms to Iran to make them angry. So, nothing gets done. What does the new President do? No good options.
North Korea has developed the nuclear bomb and is far along in development of a missile that could reach the United States. They already can threaten our allies in the Pacific. North Korea is being run by a psycho that doesn't like us or any of our friends. What's our options now? None that are good.
On the home front the new President is faced with real problems in trying to get the economy moving again. The goal is creation of REAL jobs that pay wages sufficient for a family to live on. But, a number of factors stand in his way. The manufacturing jobs that used to provide those kinds of benefits have either escaped the high labor and regulatory costs in the United States by fleeing to foreign lands or have been automated. Robots now do what people were once paid good money to accomplish. He has mentioned raising the tariffs on foreign produced products to level the playing field. Another thing he has mentioned is a punitive "tax" on goods manufactured by American Companies in foreign lands. I have no idea how will get any of these proposals through the congress. Most economists seem to thing they are very bad ideas. What is needed will not have an immediate impact. In fact, lowering taxes and significantly reducing regulations may not pay off until this Presidents first four years are up. I pity the uproar when he can't deliver the jobs that he promised in the rust belt in a short time.
He will also face the problems of a massive public debt, Social Security that is really already broke, and other entitlement programs that are sopping the nations wealth.
In addition we have a significant balance of trade deficit that is growing to unstainable level.
I pity the poor guy who moves into the White House and has to face the world that he has inherited.
Friday, December 16, 2016
Monday, December 12, 2016
Capitalism and Socialism, a discussion.
First, let's differentiate among the three basic economic models,
Capitalism, Socialism and Communism. Most people lump Socialism and
Communism as being synonymous, but Karl Marx would beg to differ.
True Communism, as defined by Marx, is an expansion of the commune approach to a national economic model whereby everything is shared, i.e " from each according to their ability and to each according to their need". There is no need for money in this system as everybody is selfless and contributes to society for the good of the whole. (Lots of luck with that). Because some nation adopts the name of Communist, doesn't make them one by Marx and Engels definition. Marx envisioned that mankind would go through an evolution, socially, and true communism would be achieved. He also believed that communism was inevitable, but we would have to go through a phase which he called, "The Dictatorship of the Proletariat".
Communist states such as China, the USSR, and others are really Socialist states run by dictators.What distinguishes the Communism we know and Socialism, is that Communism is a political position and Communist nations work to expand their influence into a world wide Communist state by any means necessary. Socialism, taken by itself, is strictly an economic model.
Socialism is the model where the government either owns or directly controls the principle means of production. Most all services, including medical, are owned by the government, or at least controlled by government, and it's practitioners are paid directly by the government. Central planners decide on the needs of the population and shift resources as needed. In general, private ownership and control of small businesses and even small farms are allowed but, are regulated by the government. It is the system that college students in the liberal arts, their college professors and way too many public school teachers, think is the correct and proper form of government. It espouses that all of societies ills are caused by evil capitalists who prey upon the working class and only government control of the economy can provide the benefits they so richly deserve.
It is a sirens song to the uninitiated. Everybody lives a life of comfort and free of nagging problems: lots of free stuff. A warm fuzzy safety blanket is wrapped around the whole population. You are taken care of from cradle to grave. What could be better than that? A socialist system, in concept, provides benefits such as free medical care, paid retirement, free education through a university for those qualified and other perks, whether they are done well or not. There is no such thing as a private enterprise labor union, as that would be in conflict with the central planners.There is no unemployment in a socialist system as every one is given a job, whether there is a need or not. In the ideal system, for instance, one parent is paid to take care of a child, because that is defined as a job.There is no competition among producers of goods in this system, which by the way, is one it's biggest weaknesses.
This economic system was tried by several large countries, with disastrous results. This system, by it's very nature, demands a tight control over the economy and therefore it's citizens. The government will decide where labor is needed, what is being produced and wages and other benefits of the workers. The prices of goods and services are also controlled by a central committee. The task of overseeing a vast economy results in a huge bureaucracy.
Socialism fails for a number of reasons, but mainly because human being are charged with running it. And, guess what, human beings are prone to get stupid, greedy, lazy, power hungry, and some of the other sins that hamstring a government and it's economy. Anyone who has ever come into conflict with a government bureaucracy can appreciate that a system that depends on the planning and control by a bureaucracy, will be a failure. Bureaucracies always degenerate into self sustaining organizations whose main goal is to expand their control and maintain their positions. If you think that the American bureaucracy is bad, image what a socialist economy would end up looking like.The EPA will never be satisfied that the environment is healthy enough. The endangered species folks will always find another species that needs their protection, be it a rat, butterfly, insect or something else. Each Bureaucracy will find a reason for their slice of the public pie to be continued and even to expand. Their primary goal will be to stay in business.
In a Socialist system there really is no motivation to succeed, except within the party structure. The resources to support the population within such a system is never large nor diverse enough to meet all the demands. Goods that are produced in this system are usually inferior, because the workers have no real motivation to be productive. Workers are hired where there is no need and can not be fired. Quotas for production are set and managers must meet them or face the consequences. Ergo, incomplete and inferior products are rushed out the door in order meet those quotas. In general the Socialist nations never export any consumer goods. The products just don't match up to the quality of goods produced by the capitalists.
They don't draw talent from other countries, as there is no motivation for top talent to enter such a system. (Except, of course, at the point of a gun as was done to the German scientists after WWII). And, there is no competition to spur improvements in currently produced products or the development of new ones. An old Soviet workers saying "The pretend to pay me so I'll pretend to work" is emblematic of the attitude among the working class. A black market typically thrives in this type of system, as it is the only way to get some products that people want and even need; paradoxically from the Capitalist countries.
Attempts at socialism has always been based on a central committee that exercises dictatorial power. China, the USSR, and Cuba are examples of the attempts to embrace a socialist system. Some South American countries have flirted with it with disastrous results. There really is no other way that the system can work. But, economic reality finally set in for China and Russia and they had to greatly modify their systems in order to survive. They still have an essential dictatorship, but they allow a limited free market to exist. They have adopted a form of Capitalism as their economic model. China and Russia have a lot of millionaires today and a middle class of professionals. They, especially China, have stepped up their technology of war making and now surpass the United States in space capable warfare. And, at least, match the west in Cyber warfare. That makes China and Russia an ever growing threat to the west and the democracies.
Capitalism is simply the model whereby the means of production and services are owned and managed by private capital. That can be a single individual or a group of investors having a small group of selected people perform the management function. There are many variations on this economic model, with government regulations and taxes interfering with the free trade of goods, services, and intellectual properties to a lesser of greater degree, but the essential theme of private ownership of the means of production holds.
Of all the economic systems that have imposed on, or adopted by it's citizens, the one that generates the greatest wealth and national prosperity is the system of free market capitalism.. It produces the greatest exploitation of any national resources available, encourages the growth of new business and generates more, and higher paying jobs than any other system of economics. It produces the most advanced medical treatment by the best and most highly trained doctors. It generates the greatest breakthroughs in medicine, drugs, and basic science. And why is that? In the grosses terms--GREED. The engine that drives capitalism is the desire and pursuit of profit and higher incomes in critical professions. This system encourages that pursuit.
It's the magnet that draws the best researchers in medicine and science. It encourages and rewards achievement. It's the reason that companies are formed and are expanded. It's the reason investors risk their own money to finance the start of a new business or to expand a current one. They hope for profit on their investment. It drives pharmaceutical companies to invest millions and even billions of dollars in the research of new drugs. It encourages the brightest minds to pursue higher education in all kinds of fields, because the rewards are great. Every advanced country in the world today has embraced some form of capitalism as it's basic economic system. The United States leads the way in free market capitalism.
A free market will also produce a ever improving product in fields where the free market exists. Look at the performance and reliability of the automobile today compared to just a few years ago. Competition has driven the auto makers to constantly fight for market share and have forced them to invest billions of dollars into improving reliability and performance for their product. This is true for all kinds of products. Of course it means that the organizations that can't keep up fall by the wayside. Remember the Hudson, Nash and Packard Motor Companies. That's what happens in a free market if you can't compete. Think of the TV of today as opposed to the CRT based systems. In fact, where the free market exists there has been a wave of improvements in all products. The freer the market, i.e. the less government regulation, the greater the incidence of entrepreneurship. In addition, of course, new products have been introduced. Think about the personal computer, a product that likely would never have come about within a socialist system. After all, no one except the Apple founders saw any need for such a device. We have cell phones, fresh fruit and vegetables in the winter, the internet, social media and a mountain of other things available to us that we take for granted, because individuals conceived of the idea and invested their money and time to make it happen. It has been proven over and over that the free market is the best judge of what is needed and wanted by the population and is the best system for adjusting to that need.
But: as one of our Presidents, I think it was Harding, who said "the only problem with Capitalism is Capitalists". When you think about it, all the depressions and recessions we have experienced, have been directly caused by out of control speculation in some critical market, driven by the desire to make a profit in that segment of the market. The stock market crash of 1929/1932, the housing bubble, driven by investment banks and loose credit requirements of the mortgage companies, are prime examples of what can happen.
And, unregulated capitalism will not remain a "free" very long. Look at the history of our own country. Before Teddy Roosevelt came along, trusts and cartels abounded. When a company gets large enough, or originates some product or service, it will take steps to block any competitor it see's that might threaten it's dominance of it's market. There are many ways that can be achieved, not the least of which is to buy up the competition. Look what happened to Westinghouse when the Edison Company, with the backing of the J. P. Morgan banking empire, forced the sale of all the patents it held on alternating current devices and formed General Electric. Westinghouse just didn't have the resources to fight the banking empire. Of course legislators can be "bought" to support the monopolies. Most of you don't remember the Tucker automobile. It was an innovative concept that pushed into new ideas of what a car could do. But, the big three, with their "bought" Senators got the government involved, held numerous hearings concerning a private enterprise and essentially killed the automaker and his concept. The big three didn't want the competition and had it squashed. And, if the market is controlled by just a few large corporations a little price fixing is not unheard of.
Industrialists will work to increase their profit and if left unchecked many actions they take will be unethical, even illegal. When the labor market, which after all is just a product, is driven only by supply and demand factors, and certain segments create a supply of labor that far exceeds the demand, labor can and will be exploited. Companies will get rid of it's waste products the cheapest way it can in order to maximize profit. Rivers are polluted as waste products are dumped. Workers are injured, or even killed, because safety measures are expensive. The water supply is tainted, even poisoned, because there is no effort to control the contamination of the soil and subterranean water supplies. It's too expensive. All these things have happened in the past. Some of them were actually illegal, but far the most part they were not forbidden under the current laws at the time. Of course, these type of actions are not limited to capitalists.
Enter government. Here we have a dichotomy. To maintain a free market, government interference is actually necessary. Only the government has the power to prevent the establishment of monopolies and trusts, to monitor and prevent companies from merging and buying up competitors in an effort to control the market, and to prevent price fixing among the principle players within a given segment of the market. I.e. to keep the market free.
Government,on the other hand, is the principle player in maintaining some monopolies that would fail if not for the governments support by law and by regulations. Some of those monopolies are generally desired and beneficial to most of the public. As an example, the Medical profession is pretty much controlled by government by the severe restriction on who can practice in that field. The practice of law is restricted in the same way. Your utilities enjoy a monopoly on the products they deliver, protected by Government. Patents are registered with the government and the force of the government protects competition for a period of 17 years. This only a couple of examples, there are many government protected monopolies. Some are not questioned by the public at large, but many are purely political in nature.
But, government regulators have a tendency to believe that regulations are an end in themselves, and they often produce regulations that inhibit the free market and business in general, especially small business. They have a history of turning out new regulations by the volumes every day. Those regulations are the greatest impediment to the establishment and growth of business, especially small business. Each bureaucracy feels it has a mandate to accomplish some task and they bull their way though to that end, no matter the consequences to the economy, or even to another bureaus agenda. Big business has the resources and capabilities to cope with the mound of regulations at a huge cost, but small business is simply overwhelmed. The only reason that Apple and Uber, for instance, got off the ground and running, was that the regulators hadn't caught up to them when they were launched.
While a free market system opens the door for the achievers, by it's very nature it leaves a certain segment of the population out of the flow for a number of reasons. This can be as the result of exporting the manufacturing of goods to a foreign country or, of late, the introduction of robotics to replace the human worker. In either case the worker now has no place to market whatever skills they have.This situation is not going to change. Even if you could bring back all the manufacturing that has been exported to foreign lands, only the labor intensive processes, which usually carry low wages, will supply significant jobs. Manufacturing opens up new jobs, but not in the old areas. The new jobs, that pay well, will require training, and a lot of it.
Look at the auto industry. Detroit has laid off thousands of auto workers, but there are more American cars being built today than ever. Robotics are here to stay and will become more intrusive in the future.There really is no place for the worker, whose skills have been bypassed by the advancement of technology. He/she retrains to fit into the new market, or goes on welfare.
New fields have been opened and those who have acquired the necessary skills to move into them make out like bandits, but those who haven't just sit around and wonder what happened. The advance of technology has made the STEM occupations well paid and the workers in high demand.The capitalist system is very dynamic. Change is constant and sometimes rapid. Of course it has made billionaires out of people who are are involved in the financial markets. It will always produce a market where almost all the wealth is concentrated in a very few people. Lately that has become a significant political issue as the wealth gap has become greater than any time in recent history.
If one looks at the history of the United States there has always been about 10 to 15 percent of the population, at least, that live on the edge of minimum subsistence. That usually means that there is always a subset of people who have not, or can not, achieve the skills necessary to compete in the society at that time. That number grows and shrinks, depending on the conditions at the time. But, it's always there. And, the free market system allows no aid for the under achievers.
Thus, the growth of government instituted welfare programs that purport to help those who get caught in the advance of technology, or other factors, beyond their knowledge. Many people talk of the welfare state as being tied to Socialism, but it really is a product of the capitalist system and is financed by taxes drawn from the achievers. After all the ideal Socialist system has everybody working or being paid for some service to the state. But, welfare is a yoke that ties the recipient to the government. It stifles the desire to get ahead, to achieve, to work. Once welfare starts it has tied a portion of the population into never ending servitude to the welfare handouts that proceed through generations.
The people are demanding and getting many of the perks of Socialism in a Capitalist system. Especially in Europe. In a lot of developed countries medical services are essentially or completely free to the consumer. Canada has a one payer system whereas England has a government run medical system where the professionals are employees of the government. The universities are free, but it takes a bit to qualify for entry. They enjoy extended paternity leave, government paid vacations and various perks that smack of socialism. The price they pay for these types of perks are high tax rates on all it's citizens. In some countries as high as 80% of their income ends up going to taxes.
That seems to be the direction that the United States is headed. We have Social Security, Medicare, Medical, all Socialist ideas. One administration after another seems to be trying to tackle the problem of medical care, mostly unsuccessfully. Obamacare is the latest attempt. College tuition has become so expensive that students are graduating with student loans so large they will be paying on them for years. Many economists blame the huge rise in tuition on government sponsored loans. In effect the government is paying the tuition and the student is stuck with paying it back. Given this fountain of available money the colleges just keep raising their fees and paying themselves more. If you haven't noticed the increase in medical expenses over the last few decades, you haven't been paying attention. Here again government financed insurance has opened up a gold mine to the medical profession and they are mining it. And the beat goes on.
True Communism, as defined by Marx, is an expansion of the commune approach to a national economic model whereby everything is shared, i.e " from each according to their ability and to each according to their need". There is no need for money in this system as everybody is selfless and contributes to society for the good of the whole. (Lots of luck with that). Because some nation adopts the name of Communist, doesn't make them one by Marx and Engels definition. Marx envisioned that mankind would go through an evolution, socially, and true communism would be achieved. He also believed that communism was inevitable, but we would have to go through a phase which he called, "The Dictatorship of the Proletariat".
Communist states such as China, the USSR, and others are really Socialist states run by dictators.What distinguishes the Communism we know and Socialism, is that Communism is a political position and Communist nations work to expand their influence into a world wide Communist state by any means necessary. Socialism, taken by itself, is strictly an economic model.
Socialism is the model where the government either owns or directly controls the principle means of production. Most all services, including medical, are owned by the government, or at least controlled by government, and it's practitioners are paid directly by the government. Central planners decide on the needs of the population and shift resources as needed. In general, private ownership and control of small businesses and even small farms are allowed but, are regulated by the government. It is the system that college students in the liberal arts, their college professors and way too many public school teachers, think is the correct and proper form of government. It espouses that all of societies ills are caused by evil capitalists who prey upon the working class and only government control of the economy can provide the benefits they so richly deserve.
It is a sirens song to the uninitiated. Everybody lives a life of comfort and free of nagging problems: lots of free stuff. A warm fuzzy safety blanket is wrapped around the whole population. You are taken care of from cradle to grave. What could be better than that? A socialist system, in concept, provides benefits such as free medical care, paid retirement, free education through a university for those qualified and other perks, whether they are done well or not. There is no such thing as a private enterprise labor union, as that would be in conflict with the central planners.There is no unemployment in a socialist system as every one is given a job, whether there is a need or not. In the ideal system, for instance, one parent is paid to take care of a child, because that is defined as a job.There is no competition among producers of goods in this system, which by the way, is one it's biggest weaknesses.
This economic system was tried by several large countries, with disastrous results. This system, by it's very nature, demands a tight control over the economy and therefore it's citizens. The government will decide where labor is needed, what is being produced and wages and other benefits of the workers. The prices of goods and services are also controlled by a central committee. The task of overseeing a vast economy results in a huge bureaucracy.
Socialism fails for a number of reasons, but mainly because human being are charged with running it. And, guess what, human beings are prone to get stupid, greedy, lazy, power hungry, and some of the other sins that hamstring a government and it's economy. Anyone who has ever come into conflict with a government bureaucracy can appreciate that a system that depends on the planning and control by a bureaucracy, will be a failure. Bureaucracies always degenerate into self sustaining organizations whose main goal is to expand their control and maintain their positions. If you think that the American bureaucracy is bad, image what a socialist economy would end up looking like.The EPA will never be satisfied that the environment is healthy enough. The endangered species folks will always find another species that needs their protection, be it a rat, butterfly, insect or something else. Each Bureaucracy will find a reason for their slice of the public pie to be continued and even to expand. Their primary goal will be to stay in business.
In a Socialist system there really is no motivation to succeed, except within the party structure. The resources to support the population within such a system is never large nor diverse enough to meet all the demands. Goods that are produced in this system are usually inferior, because the workers have no real motivation to be productive. Workers are hired where there is no need and can not be fired. Quotas for production are set and managers must meet them or face the consequences. Ergo, incomplete and inferior products are rushed out the door in order meet those quotas. In general the Socialist nations never export any consumer goods. The products just don't match up to the quality of goods produced by the capitalists.
They don't draw talent from other countries, as there is no motivation for top talent to enter such a system. (Except, of course, at the point of a gun as was done to the German scientists after WWII). And, there is no competition to spur improvements in currently produced products or the development of new ones. An old Soviet workers saying "The pretend to pay me so I'll pretend to work" is emblematic of the attitude among the working class. A black market typically thrives in this type of system, as it is the only way to get some products that people want and even need; paradoxically from the Capitalist countries.
Attempts at socialism has always been based on a central committee that exercises dictatorial power. China, the USSR, and Cuba are examples of the attempts to embrace a socialist system. Some South American countries have flirted with it with disastrous results. There really is no other way that the system can work. But, economic reality finally set in for China and Russia and they had to greatly modify their systems in order to survive. They still have an essential dictatorship, but they allow a limited free market to exist. They have adopted a form of Capitalism as their economic model. China and Russia have a lot of millionaires today and a middle class of professionals. They, especially China, have stepped up their technology of war making and now surpass the United States in space capable warfare. And, at least, match the west in Cyber warfare. That makes China and Russia an ever growing threat to the west and the democracies.
Capitalism is simply the model whereby the means of production and services are owned and managed by private capital. That can be a single individual or a group of investors having a small group of selected people perform the management function. There are many variations on this economic model, with government regulations and taxes interfering with the free trade of goods, services, and intellectual properties to a lesser of greater degree, but the essential theme of private ownership of the means of production holds.
Of all the economic systems that have imposed on, or adopted by it's citizens, the one that generates the greatest wealth and national prosperity is the system of free market capitalism.. It produces the greatest exploitation of any national resources available, encourages the growth of new business and generates more, and higher paying jobs than any other system of economics. It produces the most advanced medical treatment by the best and most highly trained doctors. It generates the greatest breakthroughs in medicine, drugs, and basic science. And why is that? In the grosses terms--GREED. The engine that drives capitalism is the desire and pursuit of profit and higher incomes in critical professions. This system encourages that pursuit.
It's the magnet that draws the best researchers in medicine and science. It encourages and rewards achievement. It's the reason that companies are formed and are expanded. It's the reason investors risk their own money to finance the start of a new business or to expand a current one. They hope for profit on their investment. It drives pharmaceutical companies to invest millions and even billions of dollars in the research of new drugs. It encourages the brightest minds to pursue higher education in all kinds of fields, because the rewards are great. Every advanced country in the world today has embraced some form of capitalism as it's basic economic system. The United States leads the way in free market capitalism.
A free market will also produce a ever improving product in fields where the free market exists. Look at the performance and reliability of the automobile today compared to just a few years ago. Competition has driven the auto makers to constantly fight for market share and have forced them to invest billions of dollars into improving reliability and performance for their product. This is true for all kinds of products. Of course it means that the organizations that can't keep up fall by the wayside. Remember the Hudson, Nash and Packard Motor Companies. That's what happens in a free market if you can't compete. Think of the TV of today as opposed to the CRT based systems. In fact, where the free market exists there has been a wave of improvements in all products. The freer the market, i.e. the less government regulation, the greater the incidence of entrepreneurship. In addition, of course, new products have been introduced. Think about the personal computer, a product that likely would never have come about within a socialist system. After all, no one except the Apple founders saw any need for such a device. We have cell phones, fresh fruit and vegetables in the winter, the internet, social media and a mountain of other things available to us that we take for granted, because individuals conceived of the idea and invested their money and time to make it happen. It has been proven over and over that the free market is the best judge of what is needed and wanted by the population and is the best system for adjusting to that need.
But: as one of our Presidents, I think it was Harding, who said "the only problem with Capitalism is Capitalists". When you think about it, all the depressions and recessions we have experienced, have been directly caused by out of control speculation in some critical market, driven by the desire to make a profit in that segment of the market. The stock market crash of 1929/1932, the housing bubble, driven by investment banks and loose credit requirements of the mortgage companies, are prime examples of what can happen.
And, unregulated capitalism will not remain a "free" very long. Look at the history of our own country. Before Teddy Roosevelt came along, trusts and cartels abounded. When a company gets large enough, or originates some product or service, it will take steps to block any competitor it see's that might threaten it's dominance of it's market. There are many ways that can be achieved, not the least of which is to buy up the competition. Look what happened to Westinghouse when the Edison Company, with the backing of the J. P. Morgan banking empire, forced the sale of all the patents it held on alternating current devices and formed General Electric. Westinghouse just didn't have the resources to fight the banking empire. Of course legislators can be "bought" to support the monopolies. Most of you don't remember the Tucker automobile. It was an innovative concept that pushed into new ideas of what a car could do. But, the big three, with their "bought" Senators got the government involved, held numerous hearings concerning a private enterprise and essentially killed the automaker and his concept. The big three didn't want the competition and had it squashed. And, if the market is controlled by just a few large corporations a little price fixing is not unheard of.
Industrialists will work to increase their profit and if left unchecked many actions they take will be unethical, even illegal. When the labor market, which after all is just a product, is driven only by supply and demand factors, and certain segments create a supply of labor that far exceeds the demand, labor can and will be exploited. Companies will get rid of it's waste products the cheapest way it can in order to maximize profit. Rivers are polluted as waste products are dumped. Workers are injured, or even killed, because safety measures are expensive. The water supply is tainted, even poisoned, because there is no effort to control the contamination of the soil and subterranean water supplies. It's too expensive. All these things have happened in the past. Some of them were actually illegal, but far the most part they were not forbidden under the current laws at the time. Of course, these type of actions are not limited to capitalists.
Enter government. Here we have a dichotomy. To maintain a free market, government interference is actually necessary. Only the government has the power to prevent the establishment of monopolies and trusts, to monitor and prevent companies from merging and buying up competitors in an effort to control the market, and to prevent price fixing among the principle players within a given segment of the market. I.e. to keep the market free.
Government,on the other hand, is the principle player in maintaining some monopolies that would fail if not for the governments support by law and by regulations. Some of those monopolies are generally desired and beneficial to most of the public. As an example, the Medical profession is pretty much controlled by government by the severe restriction on who can practice in that field. The practice of law is restricted in the same way. Your utilities enjoy a monopoly on the products they deliver, protected by Government. Patents are registered with the government and the force of the government protects competition for a period of 17 years. This only a couple of examples, there are many government protected monopolies. Some are not questioned by the public at large, but many are purely political in nature.
But, government regulators have a tendency to believe that regulations are an end in themselves, and they often produce regulations that inhibit the free market and business in general, especially small business. They have a history of turning out new regulations by the volumes every day. Those regulations are the greatest impediment to the establishment and growth of business, especially small business. Each bureaucracy feels it has a mandate to accomplish some task and they bull their way though to that end, no matter the consequences to the economy, or even to another bureaus agenda. Big business has the resources and capabilities to cope with the mound of regulations at a huge cost, but small business is simply overwhelmed. The only reason that Apple and Uber, for instance, got off the ground and running, was that the regulators hadn't caught up to them when they were launched.
While a free market system opens the door for the achievers, by it's very nature it leaves a certain segment of the population out of the flow for a number of reasons. This can be as the result of exporting the manufacturing of goods to a foreign country or, of late, the introduction of robotics to replace the human worker. In either case the worker now has no place to market whatever skills they have.This situation is not going to change. Even if you could bring back all the manufacturing that has been exported to foreign lands, only the labor intensive processes, which usually carry low wages, will supply significant jobs. Manufacturing opens up new jobs, but not in the old areas. The new jobs, that pay well, will require training, and a lot of it.
Look at the auto industry. Detroit has laid off thousands of auto workers, but there are more American cars being built today than ever. Robotics are here to stay and will become more intrusive in the future.There really is no place for the worker, whose skills have been bypassed by the advancement of technology. He/she retrains to fit into the new market, or goes on welfare.
New fields have been opened and those who have acquired the necessary skills to move into them make out like bandits, but those who haven't just sit around and wonder what happened. The advance of technology has made the STEM occupations well paid and the workers in high demand.The capitalist system is very dynamic. Change is constant and sometimes rapid. Of course it has made billionaires out of people who are are involved in the financial markets. It will always produce a market where almost all the wealth is concentrated in a very few people. Lately that has become a significant political issue as the wealth gap has become greater than any time in recent history.
If one looks at the history of the United States there has always been about 10 to 15 percent of the population, at least, that live on the edge of minimum subsistence. That usually means that there is always a subset of people who have not, or can not, achieve the skills necessary to compete in the society at that time. That number grows and shrinks, depending on the conditions at the time. But, it's always there. And, the free market system allows no aid for the under achievers.
Thus, the growth of government instituted welfare programs that purport to help those who get caught in the advance of technology, or other factors, beyond their knowledge. Many people talk of the welfare state as being tied to Socialism, but it really is a product of the capitalist system and is financed by taxes drawn from the achievers. After all the ideal Socialist system has everybody working or being paid for some service to the state. But, welfare is a yoke that ties the recipient to the government. It stifles the desire to get ahead, to achieve, to work. Once welfare starts it has tied a portion of the population into never ending servitude to the welfare handouts that proceed through generations.
The people are demanding and getting many of the perks of Socialism in a Capitalist system. Especially in Europe. In a lot of developed countries medical services are essentially or completely free to the consumer. Canada has a one payer system whereas England has a government run medical system where the professionals are employees of the government. The universities are free, but it takes a bit to qualify for entry. They enjoy extended paternity leave, government paid vacations and various perks that smack of socialism. The price they pay for these types of perks are high tax rates on all it's citizens. In some countries as high as 80% of their income ends up going to taxes.
That seems to be the direction that the United States is headed. We have Social Security, Medicare, Medical, all Socialist ideas. One administration after another seems to be trying to tackle the problem of medical care, mostly unsuccessfully. Obamacare is the latest attempt. College tuition has become so expensive that students are graduating with student loans so large they will be paying on them for years. Many economists blame the huge rise in tuition on government sponsored loans. In effect the government is paying the tuition and the student is stuck with paying it back. Given this fountain of available money the colleges just keep raising their fees and paying themselves more. If you haven't noticed the increase in medical expenses over the last few decades, you haven't been paying attention. Here again government financed insurance has opened up a gold mine to the medical profession and they are mining it. And the beat goes on.
Tuesday, April 19, 2016
Political Parties are Private Organizations
The Donald is back at again, crying over the fact that the rules governing the Colorado method of selecting delegates to the Republic National Convention is rigged against him and that the powers in the party are trying to "steal" the nomination from him. That seems to be his common complaint when something doesn't go his way. The rules for the selection of delegates were well known before he ever entered the race and certainly before the delegate selection. The fact that he didn't know the rules, or knowing them didn't do the necessary work to put together the forces in that state to do better job is his fault.
As far as stealing the nomination from him; you can't steal something from someone if they don't own it. And he doesn't own the parties nomination for President. No one owns it until they gain the necessary majority of the delegate votes as specified by the rules as laid down by the party before this race ever began. Can the party change the rules? Of course they can. If they see it to their advantage to do so, they might very well just change something.
For instance a rule in place at the moment would prevent anyone but Trump and Cruz from securing the nomination. When the rules committee meets, they may delete that rule, for obvious reasons.
Let's be clear. Political parties are private organizations. They can select their candidates any way they want to. There is no constitutional right for the voters have any say in that selection at all. If the party wishes to hold primary voting to help in selection of that candidate that's up to the party. If they choose to select their delegates to the national convention by a caucus method, that's a choice the state party can make. If they wish to select their candidate in the proverbial smoke filled room, they can. The party can set up any rules they want to in order to present the candidate that they think has the best chance to win the election. They can even stack the convention by use of Super Delegates, as the Democrats have in order influence the outcome of the convention.
Those facts seems to be lost in the vitriol surrounding this years run for the White House. Some of the candidates understand the rules and are using that knowledge to put together an organization that can take advantage of them. Others are living in ignorance and crying foul when the results don't go their way.
Even some of the media, especially on the Fox News Channel seem to be ignorant of some of the facts and are joining in the chorus lamenting what that see as the voters will being thwarted. How they came to that position isn't clear to me, but some of the commentators seem to have some idea that there is some "right" involved with the candidate showing up at the convention with the plurality of the delegates. They seem to have the opinion that denying that candidate the nomination would be "stealing" nomination.
In any event, this a great year for the media and political junkies, but a sad year for the Republicans. In a year where capturing the White House, with a congressional majority, was a slam dunk, The Donald has entered the fray and literally torn the party apart. I don't know whether the party can salvage anything at the convention, but whatever happens it might not be enough.
As far as stealing the nomination from him; you can't steal something from someone if they don't own it. And he doesn't own the parties nomination for President. No one owns it until they gain the necessary majority of the delegate votes as specified by the rules as laid down by the party before this race ever began. Can the party change the rules? Of course they can. If they see it to their advantage to do so, they might very well just change something.
For instance a rule in place at the moment would prevent anyone but Trump and Cruz from securing the nomination. When the rules committee meets, they may delete that rule, for obvious reasons.
Let's be clear. Political parties are private organizations. They can select their candidates any way they want to. There is no constitutional right for the voters have any say in that selection at all. If the party wishes to hold primary voting to help in selection of that candidate that's up to the party. If they choose to select their delegates to the national convention by a caucus method, that's a choice the state party can make. If they wish to select their candidate in the proverbial smoke filled room, they can. The party can set up any rules they want to in order to present the candidate that they think has the best chance to win the election. They can even stack the convention by use of Super Delegates, as the Democrats have in order influence the outcome of the convention.
Those facts seems to be lost in the vitriol surrounding this years run for the White House. Some of the candidates understand the rules and are using that knowledge to put together an organization that can take advantage of them. Others are living in ignorance and crying foul when the results don't go their way.
Even some of the media, especially on the Fox News Channel seem to be ignorant of some of the facts and are joining in the chorus lamenting what that see as the voters will being thwarted. How they came to that position isn't clear to me, but some of the commentators seem to have some idea that there is some "right" involved with the candidate showing up at the convention with the plurality of the delegates. They seem to have the opinion that denying that candidate the nomination would be "stealing" nomination.
In any event, this a great year for the media and political junkies, but a sad year for the Republicans. In a year where capturing the White House, with a congressional majority, was a slam dunk, The Donald has entered the fray and literally torn the party apart. I don't know whether the party can salvage anything at the convention, but whatever happens it might not be enough.
Friday, March 18, 2016
I see a disaster coming
Hillary Clinton or Donald Trump - two highly flawed candidates for the office of President of the United States, the most powerful office in the world.
Hillary has been part of and instrumental in the course in foreign affairs and agreements reached during Obama's reign. She has shown time and again that she really has no clue about the real world and what's happening. Her primary concern seems to be about her and protecting her position in the governing body. She put together a health plan during her husband's administration that even the Democrats couldn't swallow. When the incident in Benghazi blew up, she lied like a sailor to cover the state departments culpability in the whole affair. She had a private server installed in her own residence so that her e-mails would not be open to inspection by any government agency and proceeded to perform government classified activities on that unprotected server. Then she continued her lies when caught, stalled and erased thousands of e-mails from the server before the FBI could get their hands on it. Her story is that the documents that she received and transmitted at the time where not marked as classified. That's about the lamest excuse any public figure, especially the Secretary of State, can use to avoid prosecution for handling of classified data. She's supposed to know what's classified. On top of that, a former member of her staff has said that she directed that the classification markings on some documents be deleted before being transmitted.
Donald has tapped into a couple of sensitive issues for the blue collar workers and has exploited those issues to win a large lead in delegates to the convention. The problem he has now, is that he has left a trail of blood behind him. Personal insults levied at any and all of his opponents that dared to really challenge him. Now that he needs the party to unite behind him he has alienated everybody in sight. He didn't have to do that. His message was obviously resonating with enough voters to produce that lead. He didn't have to get personal with the other candidates. He managed to open his mouth and and say politically incorrect things that are often perceived to be an insult women, Hispanics and other minorities along the way. He probably was just being Trump, with no skill in playing the political game. The people who have known him for years say emphatically that he is none of those things. But, he has generated a prolific amount of potential sound bites for Hillary's campaign in the general election. Reality means very little in the political area, perception is everything. He is not going to do well among that group come November. And, without at least 25 to 30 percent of that group, you don't win.
A lot of key Republicans (the establishment),are frankly dubious about his ability to win in November. So what is the party to do? They see themselves losing the White House in an election that should have been a slam dunk. Even the local dog catcher could beat Hillary. They're afraid that Donald will take the party down with him and they might lose control of congress. As a result there is a lot of effort to force this primary into a open convention, where they feel that they may be able to field a better candidate. They look at the polls, break down the demographics, and see no way the Trump can win. Of course those same polls show that the next likely candidate, Cruz, can't win either. Unfortunately the polls show that the candidates that could win have been driven out of the race.
To set both Trump and Cruz aside at the convention would raise a storm within the party. A lot of their supporters would just stay home. There really is no way out of this conundrum. The only thing the party should hope for is that Donald will surprise every body again, just as he has throughout this whole campaign. In the beginning he was so incorrect in his statements all the pundits wrote him off. But, look what happened.
At this point Trump doesn't have the nomination wrapped. He's really the only one with a chance of doing so. Cruz may get close and challenge at the convention. Especially with the well funded and massive campaign being waged by the Republican establishment geared on stopping Trump from gaining the nomination on the first ballot. I think it would be best for the party if Trump did sew up the nomination before the convention. The last thing the party needs at this point is a floor fight over the nominee.
The question in November will be which candidate is the most disliked. Both have a large unfavorable rating.
We'll see how it plays out. For political junkies, this is a joyous time.
Hillary has been part of and instrumental in the course in foreign affairs and agreements reached during Obama's reign. She has shown time and again that she really has no clue about the real world and what's happening. Her primary concern seems to be about her and protecting her position in the governing body. She put together a health plan during her husband's administration that even the Democrats couldn't swallow. When the incident in Benghazi blew up, she lied like a sailor to cover the state departments culpability in the whole affair. She had a private server installed in her own residence so that her e-mails would not be open to inspection by any government agency and proceeded to perform government classified activities on that unprotected server. Then she continued her lies when caught, stalled and erased thousands of e-mails from the server before the FBI could get their hands on it. Her story is that the documents that she received and transmitted at the time where not marked as classified. That's about the lamest excuse any public figure, especially the Secretary of State, can use to avoid prosecution for handling of classified data. She's supposed to know what's classified. On top of that, a former member of her staff has said that she directed that the classification markings on some documents be deleted before being transmitted.
Donald has tapped into a couple of sensitive issues for the blue collar workers and has exploited those issues to win a large lead in delegates to the convention. The problem he has now, is that he has left a trail of blood behind him. Personal insults levied at any and all of his opponents that dared to really challenge him. Now that he needs the party to unite behind him he has alienated everybody in sight. He didn't have to do that. His message was obviously resonating with enough voters to produce that lead. He didn't have to get personal with the other candidates. He managed to open his mouth and and say politically incorrect things that are often perceived to be an insult women, Hispanics and other minorities along the way. He probably was just being Trump, with no skill in playing the political game. The people who have known him for years say emphatically that he is none of those things. But, he has generated a prolific amount of potential sound bites for Hillary's campaign in the general election. Reality means very little in the political area, perception is everything. He is not going to do well among that group come November. And, without at least 25 to 30 percent of that group, you don't win.
A lot of key Republicans (the establishment),are frankly dubious about his ability to win in November. So what is the party to do? They see themselves losing the White House in an election that should have been a slam dunk. Even the local dog catcher could beat Hillary. They're afraid that Donald will take the party down with him and they might lose control of congress. As a result there is a lot of effort to force this primary into a open convention, where they feel that they may be able to field a better candidate. They look at the polls, break down the demographics, and see no way the Trump can win. Of course those same polls show that the next likely candidate, Cruz, can't win either. Unfortunately the polls show that the candidates that could win have been driven out of the race.
To set both Trump and Cruz aside at the convention would raise a storm within the party. A lot of their supporters would just stay home. There really is no way out of this conundrum. The only thing the party should hope for is that Donald will surprise every body again, just as he has throughout this whole campaign. In the beginning he was so incorrect in his statements all the pundits wrote him off. But, look what happened.
At this point Trump doesn't have the nomination wrapped. He's really the only one with a chance of doing so. Cruz may get close and challenge at the convention. Especially with the well funded and massive campaign being waged by the Republican establishment geared on stopping Trump from gaining the nomination on the first ballot. I think it would be best for the party if Trump did sew up the nomination before the convention. The last thing the party needs at this point is a floor fight over the nominee.
The question in November will be which candidate is the most disliked. Both have a large unfavorable rating.
We'll see how it plays out. For political junkies, this is a joyous time.
Monday, March 14, 2016
The new attack on free speech
Ever since the adoption of the first 10 amendments to the Constitution of the United States, the first amendment has been under attack. Especially the right of the citizen to gather in groups and to hear speakers expressing views contrary to those held by another faction.
Down through the years one group or another has been trying to shut down meetings and rallies, by disruptive tactics, to which it didn't want people exposed. In the 19th and through the late 20th century it was the political far right for the most part. The KKK, for a brief period the American Nazi party, the big manufacturers who attempted suppression of the labor movement, the enemies of civil rights and similar organizations that attempted to disrupt, intimidate and harass any speaker and their listeners who tried to hold a meeting, or a rally in support of reform. They tried to suppress any demonstration of citizens that were campaigning for equality of races and/or gender or better working conditions. They attempted and were frighteningly successful, at least for awhile. in disrupting rallies and demonstrations for a position on critical human rights issues that contradicted their preconceived notions, prejudices and greed. The crusaders persevered however, and with the backing of the government with legislation was able to gain many, if not most, of their objectives.
Now, however, a new dynamic has entered the political arena. It is the left wing, the so called liberals, that are the biggest impediment to free speech in America today. These are the same groups, that at one time, where the recipients of bully boy tactics attempting suppress their drive for a change of the status quo.
The evidence is everywhere. The disruption at a Donald Trump rally just the other day in Chicago is just one example, but there are many. They want to make sure the no one is exposed to political positions that they don't agree with. They did not choose a peaceful demonstration outside the hall where Trump was to speak, but rather, infiltrated the hall and disrupted the meeting, causing enough violence and threat of violence that the meeting had to be cancelled. Of course Donald Trump's problem is- He turns on his mouth before he engages his brain. So, he is far from being politically correct. But, he has the right to be so. Most speakers caught in the same position as Trump, with demonstrators trying to disrupt his or her meeting, might have thought the same things that he said out loud. But, most politicians know that those types of pronouncements are not politically correct and would have handled it differently. Of course in Trumps case, the motivation may be more than just disagreement for some of his "speech before thinking pronouncements" and may have the objective of keeping him from getting the nomination.
Conservative speakers who don't toe the liberal orthodoxy are shouted down and even banned from campuses. A former National Security Advisor and Secretary of State, Condolleezza Rice, was asked by a major university to withdraw from a commencement address because the left leaning students threatened to disrupt it and didn't want to hear what she might say. This was a woman who was instrumental in American foreign policy for almost eight years, who was also a recognized expert in that field before she ever became part of the administration. She was a person who had something to say and should have been allowed to say it. This is far from the only example. This is happening at the same time socialist professors and speakers, a completely failed system every place it's been tried, are welcomed with open arms. In many colleges and universities across this country, conservative talk is labeled as "Hate Speech" and is not to be allowed.
The university is supposed to be the citadel of discourse and ideas discussed freely. They should be the greatest defenders of the right of the students to express their thoughts and to have free and open discussions on all points of view. The student should be exposed to, and asked to dissect, the positions of the right and the left of the political spectrum. However, the left is not willing to engage the people that they disagree with in civil discourse, but rather use the tactics that were used by the fascists in Germany and Italy prior to WWII and despots around the globe. The left employs these tactics to make sure ideas that are counter to their positions would not be heard. That's probably because in a civilized debate their position would be shown to be full of fairy dust.
Some people in the organized, and it was clearly organized, disruption at the Trump political rally were carrying signs that equated Trump with Hitler. Of course that comparison is ludicrous, and is used extensively by left wing groups that don't like the political views of another. When you think about it, it is the crowd that is using the methods of fascists, not the scheduled speaker.
The liberal media immediately blamed the near riot on Trump. That the disruptive people were exercising their constitutional right in staging the interruption and breaking up the political rally. Frankly that argument holds no water at all. The group with different beliefs have a perfect right to hold rallies and demonstrations supporting their own views, with out disruption from any other group, but they don't have the right to infringe on another person, or groups, in an effort to prevent them from their right of free speech. Bernie Sanders has the right to spout socialism at organized rally's and should be able to do so without organized hostile crowds trying to prevent him from giving his point of view. As should Hillary. Martin Luther King had a right to organize and lead the famous marches for which he is famous without violence and threat of violence dogging his every move.
As a side thought, I wonder what the media would say if a right wing group attempted the disruption of a Sanders or Clinton political rally to the point it had to be cancelled. I'm sure that the group that staged the protest would have been labeled with unflattering names.
I believe it was Hamilton who said, "I might not agree with what you're saying, but I will defend to the death your right to say it"
Down through the years one group or another has been trying to shut down meetings and rallies, by disruptive tactics, to which it didn't want people exposed. In the 19th and through the late 20th century it was the political far right for the most part. The KKK, for a brief period the American Nazi party, the big manufacturers who attempted suppression of the labor movement, the enemies of civil rights and similar organizations that attempted to disrupt, intimidate and harass any speaker and their listeners who tried to hold a meeting, or a rally in support of reform. They tried to suppress any demonstration of citizens that were campaigning for equality of races and/or gender or better working conditions. They attempted and were frighteningly successful, at least for awhile. in disrupting rallies and demonstrations for a position on critical human rights issues that contradicted their preconceived notions, prejudices and greed. The crusaders persevered however, and with the backing of the government with legislation was able to gain many, if not most, of their objectives.
Now, however, a new dynamic has entered the political arena. It is the left wing, the so called liberals, that are the biggest impediment to free speech in America today. These are the same groups, that at one time, where the recipients of bully boy tactics attempting suppress their drive for a change of the status quo.
The evidence is everywhere. The disruption at a Donald Trump rally just the other day in Chicago is just one example, but there are many. They want to make sure the no one is exposed to political positions that they don't agree with. They did not choose a peaceful demonstration outside the hall where Trump was to speak, but rather, infiltrated the hall and disrupted the meeting, causing enough violence and threat of violence that the meeting had to be cancelled. Of course Donald Trump's problem is- He turns on his mouth before he engages his brain. So, he is far from being politically correct. But, he has the right to be so. Most speakers caught in the same position as Trump, with demonstrators trying to disrupt his or her meeting, might have thought the same things that he said out loud. But, most politicians know that those types of pronouncements are not politically correct and would have handled it differently. Of course in Trumps case, the motivation may be more than just disagreement for some of his "speech before thinking pronouncements" and may have the objective of keeping him from getting the nomination.
Conservative speakers who don't toe the liberal orthodoxy are shouted down and even banned from campuses. A former National Security Advisor and Secretary of State, Condolleezza Rice, was asked by a major university to withdraw from a commencement address because the left leaning students threatened to disrupt it and didn't want to hear what she might say. This was a woman who was instrumental in American foreign policy for almost eight years, who was also a recognized expert in that field before she ever became part of the administration. She was a person who had something to say and should have been allowed to say it. This is far from the only example. This is happening at the same time socialist professors and speakers, a completely failed system every place it's been tried, are welcomed with open arms. In many colleges and universities across this country, conservative talk is labeled as "Hate Speech" and is not to be allowed.
The university is supposed to be the citadel of discourse and ideas discussed freely. They should be the greatest defenders of the right of the students to express their thoughts and to have free and open discussions on all points of view. The student should be exposed to, and asked to dissect, the positions of the right and the left of the political spectrum. However, the left is not willing to engage the people that they disagree with in civil discourse, but rather use the tactics that were used by the fascists in Germany and Italy prior to WWII and despots around the globe. The left employs these tactics to make sure ideas that are counter to their positions would not be heard. That's probably because in a civilized debate their position would be shown to be full of fairy dust.
Some people in the organized, and it was clearly organized, disruption at the Trump political rally were carrying signs that equated Trump with Hitler. Of course that comparison is ludicrous, and is used extensively by left wing groups that don't like the political views of another. When you think about it, it is the crowd that is using the methods of fascists, not the scheduled speaker.
The liberal media immediately blamed the near riot on Trump. That the disruptive people were exercising their constitutional right in staging the interruption and breaking up the political rally. Frankly that argument holds no water at all. The group with different beliefs have a perfect right to hold rallies and demonstrations supporting their own views, with out disruption from any other group, but they don't have the right to infringe on another person, or groups, in an effort to prevent them from their right of free speech. Bernie Sanders has the right to spout socialism at organized rally's and should be able to do so without organized hostile crowds trying to prevent him from giving his point of view. As should Hillary. Martin Luther King had a right to organize and lead the famous marches for which he is famous without violence and threat of violence dogging his every move.
As a side thought, I wonder what the media would say if a right wing group attempted the disruption of a Sanders or Clinton political rally to the point it had to be cancelled. I'm sure that the group that staged the protest would have been labeled with unflattering names.
I believe it was Hamilton who said, "I might not agree with what you're saying, but I will defend to the death your right to say it"
Tuesday, March 1, 2016
The American Retreat
When you look at the history of American actions, or lack thereof, over the last few years, you can't come to any conclusion other than America is retreating from the world stage. We don't seem to have the will it takes to do the things that must be done to maintain our external and internal security.
Right after WWII we drew down our armed forces and put ourselves into a vulnerable position, thinking that our possession of the atomic bomb would deter any aggressor form threatening us. That turned out to be a short lived advantage as Russia was able to steal almost our atomic secrets and build their own bomb.
Then came Korea. A war we weren't expecting and not ready to fight. In that war , in the end, we had to settle for a stalemate because were unwilling to do the things that had to be done to achieve victory. That would have required that we stand up to the Chinese, something we were not willing to do.
Vietnam was next on the list. A war we should have and could have won, but were again unwilling to make the steps necessary to win. A war that dragged on and on to become America's longest war, being led by a bunch of people in Washington who had no idea what the hell they were doing. This was a war that could have been won decisively within a couple of years with a tenth of the body count that did occur, but our leaders were afraid and unwilling to commit the military to the task. The body bags piled up with the military hampered by decisions made in Washington that were driven by uncertain leaders. The era of instant communications had arrived and that allowed and encouraged the Washington brain trust, who had no military experience of any kind, to micromanage the war, as opposed to WWII where the goal was spelled out by the President but the execution was left to the professionals in the military.
The press, given free reign in Vietnam, as opposed the WWII, told a story that was one sided and definitely not favorable to the Americans fighting in that war. All the public ever saw was the sensational pictures that sold newspapers or ads on TV. It has been speculated, and probably true, that if the American press had been given the same freedom in WWII they were given in Vietnam, they would have withdrawn support for the war after the battle for Tarawa.
The American public was unwilling to back the effort necessary and the politician's reacted accordingly. We lost that one big time and left in full retreat and with our tail between our legs. The casualties and the waste of resources was all for nothing. Vietnam was one of the most shameful events in American history. We entered a war we were not committed to win, with no long term objectives fully in mind.
Then we had the Iran situation arise, where members of the American embassy were taken hostage after the invasion of American territory by the Iranians. By any definition that was a act of war against America. So, how did we react? We protested and wrung our hands. I can guess what would have happened if such an act had occurred under a number of other administrations. American armed forces would have been mobilized and Iran would have either had to release our people of face the consequences. At one time foreign governments did not mess with Americans-the consequences were too dire.
We did have a brief 12 year reprieve from a meek position under Reagan and George H. W. Bush.
Reagan stood up to aggression against our allies and the threat from the powerful Soviet Union. Reagan faced the Soviets and dared them to expand their empire. There is no doubt the Soviets yearned for the annexing of all of Europe into the Soviet Bloc. A strong U S military, rebuilt under Reagan, along with our allies, challenged that desire and finally contributed heavily to the fall of the Soviet Union and the liberation of a number of countries formally held hostage by the Soviets. At that time our allies viewed the United States as being trustworthy and would stand by them in case of trouble. That trust no longer exists.
George H. W. Bush put together a force and expelled the Iraqis from Kuwait after they invaded. But, he didn't pursue the defeated Iraqi army into Iraq and take on the problem of Nation Building, which would surely happen if he did. Again we stood up for our friends, this time in the middle east.
Why we invaded Iraq is still a mystery to me. George W. Bush was assured by the CIA and DIA that Sadam Hussein was building weapons of mass destruction, but then so was Iran and North Korea. I suppose the reasoning was two fold. He felt that his father had not finished the job when he chose not to pursue the Iraqi forces and perceived that Iraq would be a threat to the Middle East if he succeeded. I'm sure that he nor his closest advisors ever considered the fact that if we overthrew the Iraqi regime we would inherent the long term problem of nation building. The President and his advisors were badly mislead on the mood in Iraq and probable consequences of deposing Hussein and his army, which what was keeping the country pacified.
We were overjoyed when we invaded and defeated the Iraqi army so decisively but, we were not really prepared for the reality of what would happen afterward.
George W. did recognized, a little late perhaps, the reality of the Iraqi occupation and increased troop strength in what's been called the surge. That worked. But, Obama proceeded to dismantle the occupation forces and encouraged the spread of insurrection in the area. Most of problems in the middle east now can be traced back to America's actions. First we destabilized the situation in the area and then we pulled back, leaving a highly volatile mess behind.
Now the US is faced with problems on the world stage with a President that is unwilling, unable, or naïve enough to face up to our growing list of enemies and their aggressive actions.
In the South China Sea on a speck of land, disputed by several countries, far from the borders of China, the Chinese have placed surface to air missiles and fighter planes. The facilities now function as a forward base for the Chinese military in a challenge to the US naval dominance of the Pacific Rim. And what do we do? Nothing.
We have supported Syrian rebels in their fight to throw off the dictatorship Bashar-al-Assad regime. The rebels were making significant gains in their fight against the government and looked close to overthrowing the regime. But, the Russians have entered the fray with significant air power and have propped up dictatorship. This war has sent a flood of refugees fleeing the war and is swamping neighboring countries and Europe by their numbers. At the same time there is a large ISIL force in Syria trying to expand their caliphate. We have provided limited air support to the troops fighting ISIL on the ground, but have not challenged the Russians at all in their very active support of Bashar-al-Assad. All we have done is wring our hands and tried to negotiate something with the Russians.
The Russians invaded and annexed the Crimea, taking it from the Ukraine by force. We wrong our hands but did nothing. Not even providing the arms to the Ukraine so that they had a chance against the armored Russian invaders. That bit of history has been almost forgotten with the sweep of other events.
The Russians then effectively split the Ukraine into two separate provinces. The eastern part of Ukraine being completely under Russian control. And what do we do? Nothing. We refuse to even supply defensive weapons to aid them in defense of their country.
Iran has repeatedly violated UN banes with a shopping spree for military weapons, development of a nuclear bomb and development and testing of ballistic missiles. They have acquired the S-300 anti-aircraft batteries from Russia and is negotiating another 8 billion dollar arms deal with them. What did we do? We pulled back after an agreement that clearly has no teeth and released100 billion dollars to them.
The United States is retreat all over the world, while China is advancing their dominance over the Asian rim, Russia is exerting her influence and domination over eastern Europe and Iran. along with Russia, are already in a position to dominate the middle east.
We still have the most powerful military in the world. But, I guess their purpose is to march in parades and do flyovers at football games. We certainly are not using our military might as a factor in the events that are taking place. If your enemy knows you won't interfere in their actions, then there is not restraint on what they can do.
And what does our President concentrate on? Climate change, Cuba and Gitmo.
Right after WWII we drew down our armed forces and put ourselves into a vulnerable position, thinking that our possession of the atomic bomb would deter any aggressor form threatening us. That turned out to be a short lived advantage as Russia was able to steal almost our atomic secrets and build their own bomb.
Then came Korea. A war we weren't expecting and not ready to fight. In that war , in the end, we had to settle for a stalemate because were unwilling to do the things that had to be done to achieve victory. That would have required that we stand up to the Chinese, something we were not willing to do.
Vietnam was next on the list. A war we should have and could have won, but were again unwilling to make the steps necessary to win. A war that dragged on and on to become America's longest war, being led by a bunch of people in Washington who had no idea what the hell they were doing. This was a war that could have been won decisively within a couple of years with a tenth of the body count that did occur, but our leaders were afraid and unwilling to commit the military to the task. The body bags piled up with the military hampered by decisions made in Washington that were driven by uncertain leaders. The era of instant communications had arrived and that allowed and encouraged the Washington brain trust, who had no military experience of any kind, to micromanage the war, as opposed to WWII where the goal was spelled out by the President but the execution was left to the professionals in the military.
The press, given free reign in Vietnam, as opposed the WWII, told a story that was one sided and definitely not favorable to the Americans fighting in that war. All the public ever saw was the sensational pictures that sold newspapers or ads on TV. It has been speculated, and probably true, that if the American press had been given the same freedom in WWII they were given in Vietnam, they would have withdrawn support for the war after the battle for Tarawa.
The American public was unwilling to back the effort necessary and the politician's reacted accordingly. We lost that one big time and left in full retreat and with our tail between our legs. The casualties and the waste of resources was all for nothing. Vietnam was one of the most shameful events in American history. We entered a war we were not committed to win, with no long term objectives fully in mind.
Then we had the Iran situation arise, where members of the American embassy were taken hostage after the invasion of American territory by the Iranians. By any definition that was a act of war against America. So, how did we react? We protested and wrung our hands. I can guess what would have happened if such an act had occurred under a number of other administrations. American armed forces would have been mobilized and Iran would have either had to release our people of face the consequences. At one time foreign governments did not mess with Americans-the consequences were too dire.
We did have a brief 12 year reprieve from a meek position under Reagan and George H. W. Bush.
Reagan stood up to aggression against our allies and the threat from the powerful Soviet Union. Reagan faced the Soviets and dared them to expand their empire. There is no doubt the Soviets yearned for the annexing of all of Europe into the Soviet Bloc. A strong U S military, rebuilt under Reagan, along with our allies, challenged that desire and finally contributed heavily to the fall of the Soviet Union and the liberation of a number of countries formally held hostage by the Soviets. At that time our allies viewed the United States as being trustworthy and would stand by them in case of trouble. That trust no longer exists.
George H. W. Bush put together a force and expelled the Iraqis from Kuwait after they invaded. But, he didn't pursue the defeated Iraqi army into Iraq and take on the problem of Nation Building, which would surely happen if he did. Again we stood up for our friends, this time in the middle east.
Why we invaded Iraq is still a mystery to me. George W. Bush was assured by the CIA and DIA that Sadam Hussein was building weapons of mass destruction, but then so was Iran and North Korea. I suppose the reasoning was two fold. He felt that his father had not finished the job when he chose not to pursue the Iraqi forces and perceived that Iraq would be a threat to the Middle East if he succeeded. I'm sure that he nor his closest advisors ever considered the fact that if we overthrew the Iraqi regime we would inherent the long term problem of nation building. The President and his advisors were badly mislead on the mood in Iraq and probable consequences of deposing Hussein and his army, which what was keeping the country pacified.
We were overjoyed when we invaded and defeated the Iraqi army so decisively but, we were not really prepared for the reality of what would happen afterward.
George W. did recognized, a little late perhaps, the reality of the Iraqi occupation and increased troop strength in what's been called the surge. That worked. But, Obama proceeded to dismantle the occupation forces and encouraged the spread of insurrection in the area. Most of problems in the middle east now can be traced back to America's actions. First we destabilized the situation in the area and then we pulled back, leaving a highly volatile mess behind.
Now the US is faced with problems on the world stage with a President that is unwilling, unable, or naïve enough to face up to our growing list of enemies and their aggressive actions.
In the South China Sea on a speck of land, disputed by several countries, far from the borders of China, the Chinese have placed surface to air missiles and fighter planes. The facilities now function as a forward base for the Chinese military in a challenge to the US naval dominance of the Pacific Rim. And what do we do? Nothing.
We have supported Syrian rebels in their fight to throw off the dictatorship Bashar-al-Assad regime. The rebels were making significant gains in their fight against the government and looked close to overthrowing the regime. But, the Russians have entered the fray with significant air power and have propped up dictatorship. This war has sent a flood of refugees fleeing the war and is swamping neighboring countries and Europe by their numbers. At the same time there is a large ISIL force in Syria trying to expand their caliphate. We have provided limited air support to the troops fighting ISIL on the ground, but have not challenged the Russians at all in their very active support of Bashar-al-Assad. All we have done is wring our hands and tried to negotiate something with the Russians.
The Russians invaded and annexed the Crimea, taking it from the Ukraine by force. We wrong our hands but did nothing. Not even providing the arms to the Ukraine so that they had a chance against the armored Russian invaders. That bit of history has been almost forgotten with the sweep of other events.
The Russians then effectively split the Ukraine into two separate provinces. The eastern part of Ukraine being completely under Russian control. And what do we do? Nothing. We refuse to even supply defensive weapons to aid them in defense of their country.
Iran has repeatedly violated UN banes with a shopping spree for military weapons, development of a nuclear bomb and development and testing of ballistic missiles. They have acquired the S-300 anti-aircraft batteries from Russia and is negotiating another 8 billion dollar arms deal with them. What did we do? We pulled back after an agreement that clearly has no teeth and released100 billion dollars to them.
The United States is retreat all over the world, while China is advancing their dominance over the Asian rim, Russia is exerting her influence and domination over eastern Europe and Iran. along with Russia, are already in a position to dominate the middle east.
We still have the most powerful military in the world. But, I guess their purpose is to march in parades and do flyovers at football games. We certainly are not using our military might as a factor in the events that are taking place. If your enemy knows you won't interfere in their actions, then there is not restraint on what they can do.
And what does our President concentrate on? Climate change, Cuba and Gitmo.
Thursday, February 25, 2016
The New American Revolution
There is a revolution occurring in this country that is evident from the trends that we see in the current race for the White House. And, I don't mean Donald Trump. The revolution is taking place in the young, as evidenced by their support for Bernie Saunders. He is preaching what they want to hear.
I don't think he has much of a chance to unseat Hillary as the Democrats nominee for the Presidential race, but the trend is evident. The young want a security blanket wrapped around them and they're going to get it. Probably not this time, but just wait a few years.
The millenniums are growing older and they are starting to get involved in the political process. Where, before they didn't have a significant impact, their voice will be heard in the future. Some of the Socialist sentiment will wane with time, but not enough of it to sidetrack the basic thrust. They have been raised at home and educated in the liberal public schools and colleges to expect that some one should provide them with security and that the government should step in a solve all their problems.
One payer medical plans, heavily subsidized college admissions, high minimum wages, liberal work rules, such as extended maternity leave and other perks that this generation is demanding will happen. The trend is there now and I don't see any reversal coming. Think about what has happened since the great depression of the 30's. The nation has adopted more and more security blanket programs that resulted in greater and greater government involvement in the everyday lives of the people. Social Security, Medicare, Medicaid, food stamps, the involvement of the federal government in education and a host of other "entitlements" and regulations dreamed up by a mostly Democratic congress and President.
They will attempt to pay for all of this by "taxing the rich" and try to even the playing field for American workers by enacting high tariffs on imports. The problem is, they don't review history to see what those kind of policies have produced in the past. They should read about the counterproductive steps that were taken during the great depression to get an idea of history should be teaching us.
The trend might be, and probably will be, interrupted temporarily by the election of a conservative. But, that will only be a hitch in the general trend.
It is true that the economic picture is dire, to say the least, for the young people entering the job market today, even those who graduated from college. The global market has resulted in huge loss of the middle class jobs that are the backbone of the thriving economy. We are living in dynamic economic times. The industries and job skills that were pertinent one day might very well be obsolete the next. So, instead of our public schools and colleges teaching the skills that are marketable in this global economy, they are spouting a philosophy that encourages the growth of government and the increased involvement in the lives and businesses of the citizens.
I think the future of the American economy will look more and more like what we see in Europe. There are a host of academics who see that as a good thing. And, they have influenced a whole generation of students to think along the same lines. The future will see that social programs will consume more of the federal budget than ever. It is projected that in 15 to 20 years the social programs and interest on the federal debt will take over 85% of the budget, leaving the balance for all other programs such as defense and infrastructure development and maintenance.
The millenniums and their children will have to face the rising debt that is accumulating. The federal debt now stands at 19 trillion dollars, that's TRILLION. But, as Dr. Ben Carson points out, if you take into account unfunded obligations of the government such as government pensions and retirees health benefits, the actual national debt is closer the 200 trillion dollars. I don't know how the millenniums can have all, or even some, of the things they're demonstrating for without throwing the country into bankruptcy. In fact, it seems to me, we've already reached, if not passed, a critical point and have to cut back somehow. And, I'm not sure there is a way out of this spiral of ever growing debt. I don't think the folks in Washington have the desire or even the ability to really tackle it.
I don't think he has much of a chance to unseat Hillary as the Democrats nominee for the Presidential race, but the trend is evident. The young want a security blanket wrapped around them and they're going to get it. Probably not this time, but just wait a few years.
The millenniums are growing older and they are starting to get involved in the political process. Where, before they didn't have a significant impact, their voice will be heard in the future. Some of the Socialist sentiment will wane with time, but not enough of it to sidetrack the basic thrust. They have been raised at home and educated in the liberal public schools and colleges to expect that some one should provide them with security and that the government should step in a solve all their problems.
One payer medical plans, heavily subsidized college admissions, high minimum wages, liberal work rules, such as extended maternity leave and other perks that this generation is demanding will happen. The trend is there now and I don't see any reversal coming. Think about what has happened since the great depression of the 30's. The nation has adopted more and more security blanket programs that resulted in greater and greater government involvement in the everyday lives of the people. Social Security, Medicare, Medicaid, food stamps, the involvement of the federal government in education and a host of other "entitlements" and regulations dreamed up by a mostly Democratic congress and President.
They will attempt to pay for all of this by "taxing the rich" and try to even the playing field for American workers by enacting high tariffs on imports. The problem is, they don't review history to see what those kind of policies have produced in the past. They should read about the counterproductive steps that were taken during the great depression to get an idea of history should be teaching us.
The trend might be, and probably will be, interrupted temporarily by the election of a conservative. But, that will only be a hitch in the general trend.
It is true that the economic picture is dire, to say the least, for the young people entering the job market today, even those who graduated from college. The global market has resulted in huge loss of the middle class jobs that are the backbone of the thriving economy. We are living in dynamic economic times. The industries and job skills that were pertinent one day might very well be obsolete the next. So, instead of our public schools and colleges teaching the skills that are marketable in this global economy, they are spouting a philosophy that encourages the growth of government and the increased involvement in the lives and businesses of the citizens.
I think the future of the American economy will look more and more like what we see in Europe. There are a host of academics who see that as a good thing. And, they have influenced a whole generation of students to think along the same lines. The future will see that social programs will consume more of the federal budget than ever. It is projected that in 15 to 20 years the social programs and interest on the federal debt will take over 85% of the budget, leaving the balance for all other programs such as defense and infrastructure development and maintenance.
The millenniums and their children will have to face the rising debt that is accumulating. The federal debt now stands at 19 trillion dollars, that's TRILLION. But, as Dr. Ben Carson points out, if you take into account unfunded obligations of the government such as government pensions and retirees health benefits, the actual national debt is closer the 200 trillion dollars. I don't know how the millenniums can have all, or even some, of the things they're demonstrating for without throwing the country into bankruptcy. In fact, it seems to me, we've already reached, if not passed, a critical point and have to cut back somehow. And, I'm not sure there is a way out of this spiral of ever growing debt. I don't think the folks in Washington have the desire or even the ability to really tackle it.
Sunday, February 14, 2016
Flat Taxes and other Thoughts
Some thoughts on the flat tax:
It occurred to me, after reviewing some of the arguments for and against the true flat tax as espoused by most of the candidates that believe in it, is the idea that the gross income of individuals, as reported on W2 and/or 1099 forms, and corporations, as reported on their yearly financial reports, would pay a flat tax on income with no other deductions. One of the benefits of such a tax system would be the almost complete elimination of the IRS into the lives of individuals and simplify the preparation of taxes for everyone. Not much in the way of calculations are required for the IRS.
For the individual, because the are no deductions, taxes could be withheld from their pay, or other types of income reported on the 1099 forms and they would have no paperwork to file at all. Corporations could pay their taxes each quarter based on their quarterly financial statements as reported publicly for the SEC. Capitol gains would not be taxed nor need to be reported. Of course that will be a tax break for the upper 1% as they derive a great portion of their income from capital gains and dividends as shown in Figure 1. The chart doesn't differentiate between capital gains and dividends, but I would guess that most of the income is from dividends. Eliminating the capital Gains tax would have some impact on federal revenue, depending on the year. Capital Gains generate an average of 5.2 percent of the governments income, though that can swing wildly, as it has in the past, where it varied from 2 percent in 1957 to 12.8 percent in 1986.
Figure 1
The holes in such a system, of course, are a lot like the problems facing the tax man today. Quite a bit of earnings are "off the books" and not reported. That's especially true for one man businesses ran by an individual whose income is not reported on any form the government can get their hands on. Having no employees, or only day workers paid off in cash with no reporting, they will continue to fall through the cracks. I'm not sure what can be done about that with any system. A larger problem for the tax man has not changed. Privately held businesses, not matter how big, don't have to submit financial reports for the public and have no motivation to show good earnings. If fact, just the opposite - they have to pay taxes on the net income. They have every reason to hide income. The owners of such businesses routinely purchase items for their personal use and charge them to the business. Cars, major household appliances, vacations masking as business trips, etc. are some of the common dodges that are used to enrich the owner(s) and avoid paying personal income tax on profits. In some type of businesses the owner is paid in cash and does not report the income. Such practices allow them to take less in reported salaries, also avoiding the tax man. Any one who thinks the IRS is going away because of the flat tax is sadly mistaken.
For publicly held incorporated businesses, the SEC on one hand and the stock holders on the other, would not look kindly to corporations hiding their income. It's not to their advantage to report low earnings for a period of time.
To try to envision what that means in terms of what the true flat tax should be in this case is kind of iffy. I suppose the best measure of what the tax base for such a system would be is the Gross Domestic Income, which is in the neighborhood of 18 trillion dollars. I'm not sure, but it seems that GDI does not include income from capital gains. The Figure 2 shows how GDI and GDP are calculated. They end up being virtually the same.
Figure 2
I'm assuming that the flat tax applies only to corporate and personal incomes, with the other taxes remaining roughly the same.
The distribution of revenue to the federal government from all sources for 2014 is shown in Figure 3.
.
Figure 3
It is clear that the largest contributors to the federal coffers are the income tax and the payroll tax, which is mainly Medicare and Social Security, and is likely to remain about the same. Income taxes, corporate and individual, make up 57% percent of the total federal income in 2014
Considering that the budget is somewhere around 4 trillion dollars, a tax would have to produce about 2.8 trillion dollars in revenue. Payroll taxes, which include Medicaid and Social Security, have their own withholding rates separate from income tax rates. The flat tax rate then would have to be set at about 16%. That would constitute a decrease in taxes for all the large corporations and highly paid individuals. The maximum tax rate for corporations today is 35%.
So what is the tradeoffs of the flat tax?
On the plus side, the filing of income taxes for both individuals and corporations would become much simpler. Indeed, for the individual, they could be completed on a post card.
The much lower tax rate on dividends and highly paid individuals, the argument goes, would liberate funds for investing in new products and industries as well expansion of current businesses, thus creating many new jobs. Something we desperately need. However, just how valid is that argument. Just how much of the additional wealth will be plowed back into the economy in such a way as to create the kind of jobs we need. Will it induce them to buy more stuff, which creates demand for products? Considering that the tax break would only benefit the top 20% of taxpayers, in fact a little over 80% goes to the top 1%, that's not too likely. After all, they're already wealthy enough to afford pretty much everything they want. I suspect a lot of it will go back into stocks and bonds which have no effect on the desirable outcome. For instance, if stock in Apple is bought with that extra cash, the effect might be to drive up Apple's share price. That will not create a single job at Apple. The things that will create jobs at Apple are selling more IPads or other Apple products. Same can be said for any other manufacturing company. Only investment in start-up companies or expansion of present companies will have the desired effect. I suspect that the immediate effect of a lower tax rate on the wealthy would be for the Rich to get Richer---which doesn't mean that the poor get poorer. Of course, you have the counter argument that money is mobile. A lower tax rate among the wealthy will encourage the money to stay home and not flee to a foreign country. That is an important consideration. It would encourage investment in industrial expansion and new enterprises because the lower tax rate wouldn't punish success.
The lower tax rate on corporations would make the American made products more competitive in the global market. That would create jobs as companies ramped up production to meet larger world demand for American products.
The proponents also state that not taxing capitol gains would provide a stimulus for investing and the creation of jobs with the growth of industry. This also would also have the effect of making American industry more competitive on the global market. That's not clear.
Figure 4 depicts the change in the GDP as correlated to the maximum capital gains tax
Figure 4
There really doesn't seem to be a hard correlation of the growth in the GDP and the maximum capital gains tax. But, what the chart does indicate is that a high capital gains tax is not good for the economy as shown in the mid seventies and then again in the late 80's to mid 90's. It can be noted that through the 50's until 1970 a maximum rate of 25% was matched by a wildly fluctuating changes in the growth of the GDP, but on average remained roughly the same. The subsequent lowering of the capital gains taxes starting in 2000 did not result in any noticeable growth in the GDP, in fact it followed the tax rate down where it bottomed out during the recent recession at virtually zero growth.
Privately owned businesses would not get that benefit of a simpler tax return, as they still would have to file their returns pretty much the same as they do now. The only change is the tax rate would be that same for all levels of income.
However, there is a lot of reasons for incorporating a business, even if all the "stock" is held by one individual, family or investment firm. Have you noticed that your dentist is probably incorporated.
The biggest argument advanced against such a system is the fact that the lower and even middle classes will have to pay more taxes than they do now and the upper classes would pay less. In fact, the lower 50% of earners would now have to pay taxes, where before they paid none or very little. This also applies to smaller corporations that make less in profits than the big guys. Also, the congress would not be able to encourage individuals and corporations to invest in their pet projects, such an investment in solar energy, ethanol or climate change initiatives, by offering a tax break or tax incentives to participants. Not so sure that isn't a plus. Of course a mountain of tax breaks and incentives is one of the reasons there is such a large tax code. It's also why large corporations with million of dollars in net income have avoided, at times, paying any taxes at all. The hard part would be to keep congress from doing that anyway, flat tax or not. Congress seems to always find ways to fund their pet projects.
To even the playing field for the lower wage earners a modified flat tax has been forwarded where a small number of deductions are allowed for the individual. Perhaps mortgage interest rates, charity, and dependents. None for corporations. That would help the lower earning taxpayers but, result in some increase in the tax rate for higher income brackets. Not much, I would think. After all, the bottom 50% pay very little of the governments revenue anyway in our present system. This keeps the taxes on the lower earning individual at zero or near it but, keeps the corporate taxes, which now range from 15% to 35%, at around 16%. Good and bad for corporations, depending on their earning.
Another thought not directly related to the flat tax:
The Federal spending in 2014 is shown in Figure 5. If you refer to the distribution of tax revenue in Figure 3, to no ones surprise we spent more than we took in. And it's only got worse since.
Figure 5
What is striking is that the expenses that are nominally covered by the payroll taxes make up 48% of the total budget while the taxes to support these programs only make up a about than 34%. The rest is funded from the income and corporate taxes.
To give an idea of how the distribution of tax revenue has progressed over the last few years, the following is offered in Figure 6. It is disturbing to look at how payroll tax revenue have grown with respect to all other tax sources.
Figure 6
Income tax revenue has remained rather steady for the period shown, while corporate taxes have fallen and payroll taxes have continued to rise. Spending in 2014 devoured 48% of the total federal revenue and it's still climbing. The baby boomers are entering the door for receiving Social Security and Medicare benefits in great numbers. And, their life span is much longer than their predecessors. The Ponzi scheme called Social Security is in trouble. The pyramid that is basis for the Social Security program is becoming inverted.
If that isn't a clear message that congress had better attack the problem presented by the currently entitled social programs, I don't know what will.
It occurred to me, after reviewing some of the arguments for and against the true flat tax as espoused by most of the candidates that believe in it, is the idea that the gross income of individuals, as reported on W2 and/or 1099 forms, and corporations, as reported on their yearly financial reports, would pay a flat tax on income with no other deductions. One of the benefits of such a tax system would be the almost complete elimination of the IRS into the lives of individuals and simplify the preparation of taxes for everyone. Not much in the way of calculations are required for the IRS.
For the individual, because the are no deductions, taxes could be withheld from their pay, or other types of income reported on the 1099 forms and they would have no paperwork to file at all. Corporations could pay their taxes each quarter based on their quarterly financial statements as reported publicly for the SEC. Capitol gains would not be taxed nor need to be reported. Of course that will be a tax break for the upper 1% as they derive a great portion of their income from capital gains and dividends as shown in Figure 1. The chart doesn't differentiate between capital gains and dividends, but I would guess that most of the income is from dividends. Eliminating the capital Gains tax would have some impact on federal revenue, depending on the year. Capital Gains generate an average of 5.2 percent of the governments income, though that can swing wildly, as it has in the past, where it varied from 2 percent in 1957 to 12.8 percent in 1986.
The holes in such a system, of course, are a lot like the problems facing the tax man today. Quite a bit of earnings are "off the books" and not reported. That's especially true for one man businesses ran by an individual whose income is not reported on any form the government can get their hands on. Having no employees, or only day workers paid off in cash with no reporting, they will continue to fall through the cracks. I'm not sure what can be done about that with any system. A larger problem for the tax man has not changed. Privately held businesses, not matter how big, don't have to submit financial reports for the public and have no motivation to show good earnings. If fact, just the opposite - they have to pay taxes on the net income. They have every reason to hide income. The owners of such businesses routinely purchase items for their personal use and charge them to the business. Cars, major household appliances, vacations masking as business trips, etc. are some of the common dodges that are used to enrich the owner(s) and avoid paying personal income tax on profits. In some type of businesses the owner is paid in cash and does not report the income. Such practices allow them to take less in reported salaries, also avoiding the tax man. Any one who thinks the IRS is going away because of the flat tax is sadly mistaken.
For publicly held incorporated businesses, the SEC on one hand and the stock holders on the other, would not look kindly to corporations hiding their income. It's not to their advantage to report low earnings for a period of time.
To try to envision what that means in terms of what the true flat tax should be in this case is kind of iffy. I suppose the best measure of what the tax base for such a system would be is the Gross Domestic Income, which is in the neighborhood of 18 trillion dollars. I'm not sure, but it seems that GDI does not include income from capital gains. The Figure 2 shows how GDI and GDP are calculated. They end up being virtually the same.
I'm assuming that the flat tax applies only to corporate and personal incomes, with the other taxes remaining roughly the same.
The distribution of revenue to the federal government from all sources for 2014 is shown in Figure 3.
.
Figure 3
It is clear that the largest contributors to the federal coffers are the income tax and the payroll tax, which is mainly Medicare and Social Security, and is likely to remain about the same. Income taxes, corporate and individual, make up 57% percent of the total federal income in 2014
Considering that the budget is somewhere around 4 trillion dollars, a tax would have to produce about 2.8 trillion dollars in revenue. Payroll taxes, which include Medicaid and Social Security, have their own withholding rates separate from income tax rates. The flat tax rate then would have to be set at about 16%. That would constitute a decrease in taxes for all the large corporations and highly paid individuals. The maximum tax rate for corporations today is 35%.
So what is the tradeoffs of the flat tax?
On the plus side, the filing of income taxes for both individuals and corporations would become much simpler. Indeed, for the individual, they could be completed on a post card.
The much lower tax rate on dividends and highly paid individuals, the argument goes, would liberate funds for investing in new products and industries as well expansion of current businesses, thus creating many new jobs. Something we desperately need. However, just how valid is that argument. Just how much of the additional wealth will be plowed back into the economy in such a way as to create the kind of jobs we need. Will it induce them to buy more stuff, which creates demand for products? Considering that the tax break would only benefit the top 20% of taxpayers, in fact a little over 80% goes to the top 1%, that's not too likely. After all, they're already wealthy enough to afford pretty much everything they want. I suspect a lot of it will go back into stocks and bonds which have no effect on the desirable outcome. For instance, if stock in Apple is bought with that extra cash, the effect might be to drive up Apple's share price. That will not create a single job at Apple. The things that will create jobs at Apple are selling more IPads or other Apple products. Same can be said for any other manufacturing company. Only investment in start-up companies or expansion of present companies will have the desired effect. I suspect that the immediate effect of a lower tax rate on the wealthy would be for the Rich to get Richer---which doesn't mean that the poor get poorer. Of course, you have the counter argument that money is mobile. A lower tax rate among the wealthy will encourage the money to stay home and not flee to a foreign country. That is an important consideration. It would encourage investment in industrial expansion and new enterprises because the lower tax rate wouldn't punish success.
The lower tax rate on corporations would make the American made products more competitive in the global market. That would create jobs as companies ramped up production to meet larger world demand for American products.
The proponents also state that not taxing capitol gains would provide a stimulus for investing and the creation of jobs with the growth of industry. This also would also have the effect of making American industry more competitive on the global market. That's not clear.
Figure 4 depicts the change in the GDP as correlated to the maximum capital gains tax
Figure 4
There really doesn't seem to be a hard correlation of the growth in the GDP and the maximum capital gains tax. But, what the chart does indicate is that a high capital gains tax is not good for the economy as shown in the mid seventies and then again in the late 80's to mid 90's. It can be noted that through the 50's until 1970 a maximum rate of 25% was matched by a wildly fluctuating changes in the growth of the GDP, but on average remained roughly the same. The subsequent lowering of the capital gains taxes starting in 2000 did not result in any noticeable growth in the GDP, in fact it followed the tax rate down where it bottomed out during the recent recession at virtually zero growth.
Privately owned businesses would not get that benefit of a simpler tax return, as they still would have to file their returns pretty much the same as they do now. The only change is the tax rate would be that same for all levels of income.
However, there is a lot of reasons for incorporating a business, even if all the "stock" is held by one individual, family or investment firm. Have you noticed that your dentist is probably incorporated.
The biggest argument advanced against such a system is the fact that the lower and even middle classes will have to pay more taxes than they do now and the upper classes would pay less. In fact, the lower 50% of earners would now have to pay taxes, where before they paid none or very little. This also applies to smaller corporations that make less in profits than the big guys. Also, the congress would not be able to encourage individuals and corporations to invest in their pet projects, such an investment in solar energy, ethanol or climate change initiatives, by offering a tax break or tax incentives to participants. Not so sure that isn't a plus. Of course a mountain of tax breaks and incentives is one of the reasons there is such a large tax code. It's also why large corporations with million of dollars in net income have avoided, at times, paying any taxes at all. The hard part would be to keep congress from doing that anyway, flat tax or not. Congress seems to always find ways to fund their pet projects.
To even the playing field for the lower wage earners a modified flat tax has been forwarded where a small number of deductions are allowed for the individual. Perhaps mortgage interest rates, charity, and dependents. None for corporations. That would help the lower earning taxpayers but, result in some increase in the tax rate for higher income brackets. Not much, I would think. After all, the bottom 50% pay very little of the governments revenue anyway in our present system. This keeps the taxes on the lower earning individual at zero or near it but, keeps the corporate taxes, which now range from 15% to 35%, at around 16%. Good and bad for corporations, depending on their earning.
Another thought not directly related to the flat tax:
The Federal spending in 2014 is shown in Figure 5. If you refer to the distribution of tax revenue in Figure 3, to no ones surprise we spent more than we took in. And it's only got worse since.
Figure 5
What is striking is that the expenses that are nominally covered by the payroll taxes make up 48% of the total budget while the taxes to support these programs only make up a about than 34%. The rest is funded from the income and corporate taxes.
To give an idea of how the distribution of tax revenue has progressed over the last few years, the following is offered in Figure 6. It is disturbing to look at how payroll tax revenue have grown with respect to all other tax sources.
Income tax revenue has remained rather steady for the period shown, while corporate taxes have fallen and payroll taxes have continued to rise. Spending in 2014 devoured 48% of the total federal revenue and it's still climbing. The baby boomers are entering the door for receiving Social Security and Medicare benefits in great numbers. And, their life span is much longer than their predecessors. The Ponzi scheme called Social Security is in trouble. The pyramid that is basis for the Social Security program is becoming inverted.
If that isn't a clear message that congress had better attack the problem presented by the currently entitled social programs, I don't know what will.
Friday, February 12, 2016
The Democrats Debate in Wisconsin
I watched the Democrats debate in Wisconsin between Hillary and Bernie. I came to several conclusions.
The very fact of the debate shows that the DNC is now concerned with the Bernie Saunders rise in the poles and his crushing win in NH. Originally the Clinton forces wanted few debates. She had an overwhelming lead in the poles and there was no reason for her to confront her rivals for the nomination. Hillary is their choice and they will do everything they can to get her elected. Now we have four more debates scheduled.
It is clear that the Clinton machine was in full swing. The audience for the debate, which was held at the University, was heavily populated with Hillary supporters. Considering that the debate was held on a college campus, where Bernie has his greatest support, you would expect a different setting. But the Clinton organization marshaled their forces and the faithful were there in spades.
Hillary is a good debater. She has her facts and figures at her finger tips and can recall them at will. Her experience on that type of platform serves her well.
She clearly out shown Bernie on foreign affairs. She quoted all the agreements she negotiated for Obama and was well aware of the world situation, especially in the middle east. Her term as Secretary of State served her well in this arena.
Bernie seems to have the better of her on the domestic front, especially on those economic issues so close to the left wing of the party. Free health care, free college, forgiving student debt were all received well with the audience.
The moderators avoided asking the really tough questions that are at the heart of the opposition against Hillary. But, the format, because there were only two on the stage, allowed a much deeper and expansive description of the candidates position on their policies in response to the questions that were asked.
It is clear the Hillary has tied herself to the Obama legacy. She is proud of the nuclear agreement she negotiated with Iran, will defend the Affordable Care Act even against Bernie's universal , one payer system. She is in agreement with Obama's actions in the middle east and would likely do more of the same.
The very fact of the debate shows that the DNC is now concerned with the Bernie Saunders rise in the poles and his crushing win in NH. Originally the Clinton forces wanted few debates. She had an overwhelming lead in the poles and there was no reason for her to confront her rivals for the nomination. Hillary is their choice and they will do everything they can to get her elected. Now we have four more debates scheduled.
It is clear that the Clinton machine was in full swing. The audience for the debate, which was held at the University, was heavily populated with Hillary supporters. Considering that the debate was held on a college campus, where Bernie has his greatest support, you would expect a different setting. But the Clinton organization marshaled their forces and the faithful were there in spades.
Hillary is a good debater. She has her facts and figures at her finger tips and can recall them at will. Her experience on that type of platform serves her well.
She clearly out shown Bernie on foreign affairs. She quoted all the agreements she negotiated for Obama and was well aware of the world situation, especially in the middle east. Her term as Secretary of State served her well in this arena.
Bernie seems to have the better of her on the domestic front, especially on those economic issues so close to the left wing of the party. Free health care, free college, forgiving student debt were all received well with the audience.
The moderators avoided asking the really tough questions that are at the heart of the opposition against Hillary. But, the format, because there were only two on the stage, allowed a much deeper and expansive description of the candidates position on their policies in response to the questions that were asked.
It is clear the Hillary has tied herself to the Obama legacy. She is proud of the nuclear agreement she negotiated with Iran, will defend the Affordable Care Act even against Bernie's universal , one payer system. She is in agreement with Obama's actions in the middle east and would likely do more of the same.
Sunday, January 31, 2016
The GOP and the Trumpless debate
Being the great prognosticator that I am, I felt it was my duty to give my impression of the latest round of GOP debates hosted by Fox, without the Donald.
First off, for some reason, it seemed that all the other candidates got significantly more time on the air that was allowed in the previous debates. Most of them took advantage of it and made a better case for themselves than they had previously.
In my opinion, the winners of this debate were the Governors. I think all of them got to express their vision with a little more vigor than I had seen previously. I thought the biggest winner among the Governors was Bush. I really don't think it's going to help him in any immediate way, but if he can keep this more forceful tone and demeanor for the rest of the way, it's possible that he could become a factor in this race. He certainly has the war chest for a long run.
The Senators are all burdened with the same set of problems. They all have a voting record where they have had to compromise to some extent in order get something else they wanted. Or, perhaps they have actually changed their minds. And, those votes and positions are being used to attack the other. Cruz and Rubio where at odds all evening, throwing each others voting records at each other like hand grenades. It seems that the contest is to see who is the most conservative. Cruz probably wins that battle.
Rubio's current stand on immigration is a little to the left of the other Senators so he hurts in that arena with the very conservative voter. However, I think his position will play much better in the general election.
To me Donald Trump is an enigma, as he seems to be for all the political pundits. He makes statements he can't possibly backup, does a complete switch on positions he held earlier, seems to insult everybody in sight, and still is on top of all the polls. All the experts are waiting for the shine to rub off, resulting in his fading in the polls, with one of the other candidates, probably Rubio, ascending. Bill O'Reilly interviewed Trump on his show. Trump's main retort on so many of the difficult questions was a restatement of how he's ahead in the polls. The Republican establishment is afraid that he will carry this momentum on through the nomination process and end up as the Republican candidate, and he'll bring the GOP crashing around down around him in the general. Not a groundless fear I'm afraid.
But, the Donald has dumbfounded all the political experts to this point, so who knows. He certainly packs in the crowds wherever he speaks. He's like a magnet for the people who really feel that we're loosing our countries honor, standing and core values. He certainly has taped into those feelings. But, the big city folks, especially cities like NY and SF don't seem to share that feeling. But, the Republicans are not likely to carry the big northeaster states anyway, so I'm not sure it matters. Of course California is a lost cause as far as the Republicans are concerned in the general election. Those states are dominated by the big city votes and makes the more conservative inland populace irrelevant. With his in your face style and his put down of the establishment in Washington, he just might find his way into the White House.
First off, for some reason, it seemed that all the other candidates got significantly more time on the air that was allowed in the previous debates. Most of them took advantage of it and made a better case for themselves than they had previously.
In my opinion, the winners of this debate were the Governors. I think all of them got to express their vision with a little more vigor than I had seen previously. I thought the biggest winner among the Governors was Bush. I really don't think it's going to help him in any immediate way, but if he can keep this more forceful tone and demeanor for the rest of the way, it's possible that he could become a factor in this race. He certainly has the war chest for a long run.
The Senators are all burdened with the same set of problems. They all have a voting record where they have had to compromise to some extent in order get something else they wanted. Or, perhaps they have actually changed their minds. And, those votes and positions are being used to attack the other. Cruz and Rubio where at odds all evening, throwing each others voting records at each other like hand grenades. It seems that the contest is to see who is the most conservative. Cruz probably wins that battle.
Rubio's current stand on immigration is a little to the left of the other Senators so he hurts in that arena with the very conservative voter. However, I think his position will play much better in the general election.
To me Donald Trump is an enigma, as he seems to be for all the political pundits. He makes statements he can't possibly backup, does a complete switch on positions he held earlier, seems to insult everybody in sight, and still is on top of all the polls. All the experts are waiting for the shine to rub off, resulting in his fading in the polls, with one of the other candidates, probably Rubio, ascending. Bill O'Reilly interviewed Trump on his show. Trump's main retort on so many of the difficult questions was a restatement of how he's ahead in the polls. The Republican establishment is afraid that he will carry this momentum on through the nomination process and end up as the Republican candidate, and he'll bring the GOP crashing around down around him in the general. Not a groundless fear I'm afraid.
But, the Donald has dumbfounded all the political experts to this point, so who knows. He certainly packs in the crowds wherever he speaks. He's like a magnet for the people who really feel that we're loosing our countries honor, standing and core values. He certainly has taped into those feelings. But, the big city folks, especially cities like NY and SF don't seem to share that feeling. But, the Republicans are not likely to carry the big northeaster states anyway, so I'm not sure it matters. Of course California is a lost cause as far as the Republicans are concerned in the general election. Those states are dominated by the big city votes and makes the more conservative inland populace irrelevant. With his in your face style and his put down of the establishment in Washington, he just might find his way into the White House.
Saturday, January 23, 2016
Health Care in the United States
A subject that has been kicked around for some time and has a few attempts at doing something about, resulting in the mess that is known as Obama Care, which made the matter worse instead of better. I think it's time to look at the issue again.
To start with we should look at what's really happening in the American health care system, as opposed to what we might fool ourselves into believing. Our health care system is a mess. We have the most expensive health care system among the advanced nations of the world, with the lowest life expectancy, the highest infant mortality rate and some of the longest waiting times to see a physician. We spend almost twice as much on a per capita basis on health care the our next most expensive neighbor, Canada. We spend almost twice as much, as a percent of GDP, than France, Canada and Germany. Even though most other countries have a form of universal health care, the US spends more government revenue for health care than any of them, even though the government's share of the total costs is the least.
The World Health Organization compared the medical care across various nations and produced some disturbing results.
Other evaluations have been made by other organizations and the results are similar to the WHO. The United States is 37th in the rankings in health care for most of the world, the lowest of all the North American and European major nations.
A partial listing of the health care rankings by the WHO show the results of that ranking
While the rest of the world is seeing a rise in the cost of health care, the US is really out of control
A recent study by the Commonwealth Fund didn't exactly coincide with the WHO's findings, but both studies indicated the poor plight of the US healthcare system.
They pick and choose what data to emphasize to make the universal health care systems look inferior. But, they don't bother to compare the US system to the countries of Europe,the UK, Japan, Australia or other advance nations of the world. One of the selected data points they like to trot out is the wait times to see a doctor. But, as the data shows, the US is ranked fifth for that category by the Commonwealth Fund study. They love Canada with it's longer wait times and they publicized that fact as an example of what "Socialized Medicine" will bring, but that isn't representative of what you see in the UK or other European health systems. Of course anything that smacks of socialism is an anathema to a conservative, who believes that the free market is much better at curing ills. That is true where a free market exists, but when you think about it, the medical industry is not working in a free market. It is highly controlled industry by anyone's definition. They say that some unnamed bureaucracy in Washington will be making our medical decisions for us if we adopt a government run universal health system. But, the fact remains, unless you are very rich, an unnamed bureaucracy runs your medical decisions now through the allowable procedures dictated by the insurance companies. Of course if you're on Medicare or any of the other government programs, the decisions are already being made by a government bureaucracy. Only the very wealthy can take advantage of a pseudo free market for their health care because they are generally self insured. They can go anywhere and get any treatment they desire. Not so for the great unwashed masses.
They like to portray the government bureaucracies as a bunch of know nothing government appointees to create a greater fear factor, but in fact they are the same type of experts in each of the medical fields that the insurance companies employ, only without the profit motive.
The price we pay for patented prescription drugs is mind boggling . A lot of this is the governments doing: it often takes over a Billion Dollars to bring a new drug to market. The FDA is so afraid that a drug might turn out to have harmful side effects that they demand extraordinary measures be taken before it is approved for the American consumer. Another important factor is something the many European countries take advantage of that we don't. They have tremendous power to negotiate drug prices because they can act for their whole country, while our position is fragmented, thus losing that bargaining position. I know of no other product that is free to set their own prices without competition, that has the property of being needed by the consumer. The drug companies have a total monopoly on their own drugs as long as they are protected by a patent. It is very cheap to manufacture and distribute drugs, so the price they can sell the drug can be low and still turn a profit. To some extent the US is subsidizing the prescription drug market for most of the world. The drug companies can sell to Canada cheaper and make a profit and depend on charging enough to the American consumer to cover the R&D costs, as well as boost the profit margin.
We have some things to look proud about. The US leads the world in medical innovations. Since 1951, 76 Americans have either been awarded, either as individuals or shared, the Nobel Prize for Medicine. That is more awards than all other nations combined. Of course a lot of these awards were to scientists that weren't native born Americans. This reflects the wealth that America is able to expend on research facilities and grants as much as any thing else which brings research scientists to our shores. The next most was awarded to researchers in the United Kingdom with 19.
We can boast of some of the greatest medical centers in the world, and if you have access to them and you have the necessary financial position, you can match or exceed the medical treatment you can receive any place else. Of course some of our top medical professionals pick and choose which insurance plans they will take, and, in fact some don't take any at all. It's cash only.
Something to think about.
To start with we should look at what's really happening in the American health care system, as opposed to what we might fool ourselves into believing. Our health care system is a mess. We have the most expensive health care system among the advanced nations of the world, with the lowest life expectancy, the highest infant mortality rate and some of the longest waiting times to see a physician. We spend almost twice as much on a per capita basis on health care the our next most expensive neighbor, Canada. We spend almost twice as much, as a percent of GDP, than France, Canada and Germany. Even though most other countries have a form of universal health care, the US spends more government revenue for health care than any of them, even though the government's share of the total costs is the least.
The World Health Organization compared the medical care across various nations and produced some disturbing results.
A partial listing of the health care rankings by the WHO show the results of that ranking
One good measure of a health cares effectiveness is the rate of infant mortality. Where once the US was not the worst in that category, over time the other nations studied showed that we a lagging behind the advanced nations in that respect.
The problem is even worse when one looks at the growth rate for medical costs over the last 40 years of so.
While the rest of the world is seeing a rise in the cost of health care, the US is really out of control
A recent study by the Commonwealth Fund didn't exactly coincide with the WHO's findings, but both studies indicated the poor plight of the US healthcare system.
It might be useful to break the above chart down for specific parameters.
It seems that the UK is doing something right, but Canada, with it's single pay system, is ranked only slightly better than the US in both studies. So a single payer system alone doesn't guarantee success. Perhaps we should look at what the UK does that makes it such a success.
To start with there is not a single health system in the UK. Each of the countries comprising the UK has it's own publicly funded healthcare system.
To start with there is not a single health system in the UK. Each of the countries comprising the UK has it's own publicly funded healthcare system.
But they have a lot of similarities. They are all have government funded universal healthcare. What the conservatives call Socialized Medicine, with just some twists. They all seem to have sprung from the major healthcare overhaul that occurred in 1948 with the birth of the NHS, and modified since then with the last reorganization occurring in England in 2013. The other countries in the UK have also performed changes in their systems over roughly the same time period. It should also be noted the most of the medical systems in the rest of the advanced nations include prescription drug coverage, at least to some extent.
The biggest opponents to the US adopting any form of healthcare as practiced in the UK, the western European nations, or most of the advanced nations of the world, is the insurance industry. They have a fully paid PR staff and a horde of lobbyists dedicated to demeaning the UK's NHS and any other government funded system. They generate tons of propaganda toward that end. Obama Care is an example of just how powerful the insurance industry is. It resulted in a windfall for them. They pick and choose what data to emphasize to make the universal health care systems look inferior. But, they don't bother to compare the US system to the countries of Europe,the UK, Japan, Australia or other advance nations of the world. One of the selected data points they like to trot out is the wait times to see a doctor. But, as the data shows, the US is ranked fifth for that category by the Commonwealth Fund study. They love Canada with it's longer wait times and they publicized that fact as an example of what "Socialized Medicine" will bring, but that isn't representative of what you see in the UK or other European health systems. Of course anything that smacks of socialism is an anathema to a conservative, who believes that the free market is much better at curing ills. That is true where a free market exists, but when you think about it, the medical industry is not working in a free market. It is highly controlled industry by anyone's definition. They say that some unnamed bureaucracy in Washington will be making our medical decisions for us if we adopt a government run universal health system. But, the fact remains, unless you are very rich, an unnamed bureaucracy runs your medical decisions now through the allowable procedures dictated by the insurance companies. Of course if you're on Medicare or any of the other government programs, the decisions are already being made by a government bureaucracy. Only the very wealthy can take advantage of a pseudo free market for their health care because they are generally self insured. They can go anywhere and get any treatment they desire. Not so for the great unwashed masses.
They like to portray the government bureaucracies as a bunch of know nothing government appointees to create a greater fear factor, but in fact they are the same type of experts in each of the medical fields that the insurance companies employ, only without the profit motive.
The price we pay for patented prescription drugs is mind boggling . A lot of this is the governments doing: it often takes over a Billion Dollars to bring a new drug to market. The FDA is so afraid that a drug might turn out to have harmful side effects that they demand extraordinary measures be taken before it is approved for the American consumer. Another important factor is something the many European countries take advantage of that we don't. They have tremendous power to negotiate drug prices because they can act for their whole country, while our position is fragmented, thus losing that bargaining position. I know of no other product that is free to set their own prices without competition, that has the property of being needed by the consumer. The drug companies have a total monopoly on their own drugs as long as they are protected by a patent. It is very cheap to manufacture and distribute drugs, so the price they can sell the drug can be low and still turn a profit. To some extent the US is subsidizing the prescription drug market for most of the world. The drug companies can sell to Canada cheaper and make a profit and depend on charging enough to the American consumer to cover the R&D costs, as well as boost the profit margin.
We have some things to look proud about. The US leads the world in medical innovations. Since 1951, 76 Americans have either been awarded, either as individuals or shared, the Nobel Prize for Medicine. That is more awards than all other nations combined. Of course a lot of these awards were to scientists that weren't native born Americans. This reflects the wealth that America is able to expend on research facilities and grants as much as any thing else which brings research scientists to our shores. The next most was awarded to researchers in the United Kingdom with 19.
We can boast of some of the greatest medical centers in the world, and if you have access to them and you have the necessary financial position, you can match or exceed the medical treatment you can receive any place else. Of course some of our top medical professionals pick and choose which insurance plans they will take, and, in fact some don't take any at all. It's cash only.
Something to think about.
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