Saturday, February 25, 2006

American Stasis

We have reached the point in the United States where institutions and government apparatus are frozen from making any major changes which would correct the many problems facing us. The two-party system has put the power in the hands of wealthy benefactors who finance the campaigns of politicians, allowing them to become wealthy in office, and providing them with high paying jobs as lobbyists once they retire from office. Lawmakers seek office not to do the people’s business but to advance their own interests at the expense of the people by gerrymandering districts and writing laws that sustain the current system of patronage.

The result of this stasis is the increasing control of the country by international corporations and an investor class who see the opportunity to solidify their control of the population and world commerce through the financing of government. Borders become less secure, both for investment and the transit of labor and goods across them. The obsession with growth, laissez faire markets and consumption to increase wealth overwhelms the constitutional goals of promoting the general welfare and providing a level playing field for citizens to prosper. The growth, in turn, promotes investment from abroad and borrowing at home which puts the country ever deeper into debt to foreign countries. The urge to consume drives an ever increasing dependence on low cost foreign products and energy sources, financed by loans from the same foreign countries reaping the profits from the sale of their products. As the cycle deepens wealth is concentrated more and more in the hands of a few who have the advantage of being born into wealth or comfortable circumstances that facilitate their prosperity or rise to it.

The stasis arises primarily from the necessity to satisfy existing corporate and group interests at the expense of the general interest. Any proposals for significant change are met with an onslaught of lobbying from all the existing interests that are affected. Whether it is health care reform, pension reform, tax reform, or reform to update the provisions of our two hundred year old constitution that doesn’t address many modern day problems, the result is the same. Only small incremental changes are possible and are usually followed by more small incremental changes in the opposite direction to redress lost advantages of interest groups.

Where will it all lead? Chances are that sooner or later, the chickens will come home to roost. The inability to address problems and the ever increasing debt will inevitably lead to worse conditions for the average American and a loss of their buying power. As American buying power diminishes and foreign buying power increases international corporations will no longer see a need to be headquartered in the United States or produce here. At that point we will become just another previously prosperous country among many.

How can we avoid this fate? The only hope seems to be a change in values from valuing growth and consumption to valuing national unity and a concern for our fellow Americans. This will necessarily mean a lower standard of living for the wealthy, a higher standard of living for the middle and lower classes, and probably a somewhat lower standard of living over all. But, it will make for less anxiety about our future and that of our children and grandchildren and an increase in general satisfaction and happiness at the expense of fewer material goods.

Friday, February 03, 2006

A Kinder, Gentler Nation

Over the past couple hundred years our nation has become a divided, complicated place to live. The hodge-podge of tax laws, government subsidies, citizens jockeying for advantage, lobbyists buying influence, and congress critters feathering their nest and solidifying their power gives one that hopeless feeling that the country is on the decline and we no longer are in charge of our own destiny. It’s time to simplify the mess, at least to some degree. I offer here just a few suggestions that, if adopted together would make our lives a little easier, although they don’t come close to solving all our problems, national and international. They mainly address our economic morass, where we see the middle class disappearing as some us prosper and others sink deeper into despair and consternation over how we’re going to make ends meet and leave our offspring a better world. So I give you a few steps we can take to simplify and reduce the size of government and allow all citizens more participation in our prosperity.

1) Replace the minimum wage with a living wage. (Don’t stop reading now. You’ll see how this works later.)

2) Eliminate all tax deductions, exemptions, and credits and adopt a uniform progressive set of personal income tax rates on all forms of income above the living wage. Combine all current taxes on income (e. g. income, Social Security, Medicare, and disability taxes) into this one single tax. (A one page tax return for only those making more than the living wage.)

3) Eliminate the corporate income tax, corporate sponsored healthcare, and corporate retirement plans. (See my proposal for health care below.) This will make corporations more competitive both at home and abroad. Corporations don’t pay any net taxes. They just pass them on in the cost of their products. Corporate taxation is one of the main reasons corporate lobbying exists, to create a favorable tax and regulatory environment.

4) Pay retirees and the disabled a living wage consistent with their circumstances. Since many retirees own their own homes and have reduced transportation, education, and childcare needs their living wage will be lower than for working people.

5) Handle unemployment by making the able-bodied unemployed available to work on existing time-insensitive infrastructure and research projects at the living wage. As unemployment waxes and wanes, adjust completion dates of these projects to accommodate the available unemployed workforce. Since these jobs will always be limited to the living wage, they will represent a ready supply of labor available for private enterprise as long as they can pay them the living wage or more.

These proposals, if implemented together, will essentially eliminate all current forms of government welfare and reduce the size of the tax collection bureaucracy dramatically. Government activities will be limited to administering the program, regulatory functions, national defense, and financing major infrastructure and research projects. The increased cost of labor to corporations will be offset by the elimination of corporate taxes, pensions, and healthcare.

We are paying for all these things now in a way that encourages lobbying, cheating, favoritism, and political infighting. Our corporations are saddled with social responsibilities that increase the price of their products and keep them from making decisions on the basis of good business practice. Why not have a system that encourages work, makes workers feel secure that their basic needs are met, and which frees business to increase output and productivity?

A reasonable way to handle healthcare.

Implement at national health insurance system that is basically Medicare with health savings accounts. Health savings accounts are a good idea because they put the buying power for primary care in the hands of health care users, encouraging them to make wise medical decisions, and they make insurance affordable because it is used only to cover catastrophic care. The only problem with the existing proposals is funding the HSAs for lower income people.

There would be no increase in federal bureaucracy for such a program because the Medicare system is already in place. With everyone having the same coverage it would be easier to structure the program to live within available revenue and eliminate waste for heroic care, without political infighting from competing interests. Special risks could be put out to bid with private insurance companies.

Purchasing power is thus divided between a single payer for the catastrophic insurance portion, and users, for the primary care portion. This gives real leverage in reducing health care costs. If people are allowed to keep the unused portion of their HSAs for their retirement, they will be induced to keep their primary care costs down by not running to the doctor every time they get a runny nose.

Such a program necessarily involves redistribution of costs to higher income and healthier people. The nature of all insurance programs is the redistribution of costs from those who suffer losses to those who don’t.