Last night, during the Oscar telecast, Barbra Streisand said that while it was nice that this year was the "Year of the Woman", in which they celebrated women in film, she looked forward to the day when such tributes would not be necessary because women would be such a part of Hollywood's power structure that they would not be judged by their gender but by their ability and contributions to the industry.
The same can be said of racial equality. We should all look forward to the day when affirmative action programs are not necessary because all people will be judged upon their abilities and contributions rather than their skin color. The question becomes, how will we know when we are there?
The answer lies in part in what we hope to achieve with affirmative action. Some believe it should be used as a guarantee against on-going racial injustice. In other words as a means of ensuring fairness from this day forward. With that I can agree. There is no room for discrimination based on race. Others feel it should be used to make up for the injustices of the past, to make up for lost time. This is a bit more problematical in that it ex post facto penalizes some who have committed no crime and rewards some who have suffered no injustice. Even more difficult to accept are the arguments for lowering standards to assure that minorities are proportionally represented in all areas of society.
While a noble cause, the latter sets back the day when the ultimate goal of true color blindness can be achieved by breeding resentment not only among whites who feel they have been unfairly denied in the name of racial equality, but also among those minority members who have succeeded upon their own merits but are viewed as succeeding instead due to preferential policies.
Yes, government intervention has been necessary to wipe out institutionalized discrimination, but government can never make one learn, teach one morals, or instill independence. That is the individual's responsibility. We must all look at ourselves for the inner moral fiber to be successful members of society.
I do not intend to paint with a broad brush, as if all members of the minority are waiting for a government hand- out, or lacking personal will or morality. Nor do I claim that no one has benefited from government programs in the manner intended. However, if the detrimental societal impact of government programs outweigh the benefits, then we need to review these programs and overhaul them (eliminate them if necessary) to assure the greatest societal good.
It is essential that questioning any of these programs does not constitute racism in and of itself. Certainly, there are those who favor ridding ourselves of these programs for racist reasons, but that does not mean that all, or even most of, those favoring elimination or curtailment do so for anything less than hopes for a better tomorrow for all.
3/30/1993
Why the Middle Sways Left and Right
On both the left and right sides of the political spectrum there are basically solid blocks of voters who are not going to be swayed one way or another. These probably represent about 20% of the electorate on either side. In the middle are maybe 60% of the voters who are the key to victory and are wooed with similar enticements, but different scapegoats.
The left views the poor as noble victims and the rich as unjust pillagers of the national wealth. They like to point out the unfairness of the wealth amassed through manipulation of markets and exploitation of the masses. They woo the middle by promising to reclaim this wealth as the rightful property of the middle class.
The right views the rich as inspiring creators of wealth whose riches are their reward for ingenuity, entrepreneurship and risk taking. They view the poor as leaches on society who prefer to sit at home living off the generosity of those who work for a living. The middle class is led to believe that everyone on government assistance is taking money out of their pockets, a practice which could be eliminated if the programs were eliminated, forcing the poor to find jobs.
In the end, the success of the sales job regarding these positions (in no small measure dependent upon the skill of the salesperson) determines the outcome of national elections. As it is, the middle class does produce the vast bulk of our national wealth, though how much would be possible without the risk-takers is subject to debate. They sit in the middle and watch the tug-of-war between the upper and lower classes. As they watch their tax dollars go into the seemingly bottomless pit of social programs, with little evidence of effectiveness, they begin to lean to the right. As they begin to see the creation of wealth and the attendant statistics showing that one group of people appears to be benefiting disproportionately, they will shift to the left.
In essence we have seen the shift to left with the election of Bill Clinton, though it must be noted that he was elected by promising to be a "new" Democrat, one who leaned much further to the right than his predecessors. As it is, if he turns out to be more liberal than advertised the swing back to the right could be accelerated, since it appears that a degree of conservatism in government is the preferred direction of the people.
The left views the poor as noble victims and the rich as unjust pillagers of the national wealth. They like to point out the unfairness of the wealth amassed through manipulation of markets and exploitation of the masses. They woo the middle by promising to reclaim this wealth as the rightful property of the middle class.
The right views the rich as inspiring creators of wealth whose riches are their reward for ingenuity, entrepreneurship and risk taking. They view the poor as leaches on society who prefer to sit at home living off the generosity of those who work for a living. The middle class is led to believe that everyone on government assistance is taking money out of their pockets, a practice which could be eliminated if the programs were eliminated, forcing the poor to find jobs.
In the end, the success of the sales job regarding these positions (in no small measure dependent upon the skill of the salesperson) determines the outcome of national elections. As it is, the middle class does produce the vast bulk of our national wealth, though how much would be possible without the risk-takers is subject to debate. They sit in the middle and watch the tug-of-war between the upper and lower classes. As they watch their tax dollars go into the seemingly bottomless pit of social programs, with little evidence of effectiveness, they begin to lean to the right. As they begin to see the creation of wealth and the attendant statistics showing that one group of people appears to be benefiting disproportionately, they will shift to the left.
In essence we have seen the shift to left with the election of Bill Clinton, though it must be noted that he was elected by promising to be a "new" Democrat, one who leaned much further to the right than his predecessors. As it is, if he turns out to be more liberal than advertised the swing back to the right could be accelerated, since it appears that a degree of conservatism in government is the preferred direction of the people.
3/29/1993
More Money Not Always the Solution
Whenever we are faced with a societal problem, the first solution suggested is more government spending (or investment as some prefer). Often the problems are blamed on insufficient or reduced government funding. Is more money the answer?
There is probably not a business, family or individual that does not believe that extra money would go a long way toward alleviating their difficulties, yet they cannot simply will it by decree, as can the government. Instead they must be resourceful in addressing their individual problems. This often leads to much more successful, sometimes breathtaking solutions.
For example, would GM be better off if they had easy access to billions of additional funds each year? Or, would they instead be more likely to be wasteful and slow in addressing the root causes of their deficiencies if they were not faced with financial ruin? Instead we require them to find ways to stop their losses through prudence and problem solving. This does not mean that money is not spent solving the problem, but it does mean that the dwindling dollars available for righting the situation must be more wisely allocated.
The government, however, does not force itself through this ritual. Instead of reallocating money, it simply adds to that which is already spent. As bureaucracies grow constituencies are created that provide a reason in and of themselves for their survival. As Bill Clinton aptly noted, every dollar spent by the government goes in some fashion into someone’s paycheck. While said altruistically, this demonstrates the self-perpetuating nature of government programs.
To assure wise investment and sound returns, we must find way to require accountability for results, rather than budgeting ability. Until we are able to do this we are doomed to inefficient spending and a dilution of our national wealth.
There is probably not a business, family or individual that does not believe that extra money would go a long way toward alleviating their difficulties, yet they cannot simply will it by decree, as can the government. Instead they must be resourceful in addressing their individual problems. This often leads to much more successful, sometimes breathtaking solutions.
For example, would GM be better off if they had easy access to billions of additional funds each year? Or, would they instead be more likely to be wasteful and slow in addressing the root causes of their deficiencies if they were not faced with financial ruin? Instead we require them to find ways to stop their losses through prudence and problem solving. This does not mean that money is not spent solving the problem, but it does mean that the dwindling dollars available for righting the situation must be more wisely allocated.
The government, however, does not force itself through this ritual. Instead of reallocating money, it simply adds to that which is already spent. As bureaucracies grow constituencies are created that provide a reason in and of themselves for their survival. As Bill Clinton aptly noted, every dollar spent by the government goes in some fashion into someone’s paycheck. While said altruistically, this demonstrates the self-perpetuating nature of government programs.
To assure wise investment and sound returns, we must find way to require accountability for results, rather than budgeting ability. Until we are able to do this we are doomed to inefficient spending and a dilution of our national wealth.
3/26/1993
Don't Confuse Compassion for Open-mindedness
There is a tendency to consider oneself open-minded if one believes in liberal causes. This is probably because one who believes in liberal causes considers themselves willing to make sacrifices for the good of others, which may be construed as being open-minded. This, however, is faulty logic.
Suppose a parent has a child who has a bone marrow deficiency which leaves the child's immune system seriously weakened. The child's doctors suggest several forms of treatment, ranging from immune stimulating therapy such as interferon to bone marrow transplants with the parents acting as donors. The parents are willing to do anything to save their child's life and therefore consider all options. After researching all possible avenues, they decide upon the immune therapy since this is determined to be least traumatic for the child while providing a good chance at recovery. This would be considered an informed, "open-minded" decision.
On the other hand, suppose the parent decided that the best way to help their child was to make the ultimate sacrifice of making a marrow donation, even if the doctors suggested this might not be the best course of treatment. Despite the doctor's urging the parents are convinced that they must take this step to assure their child's survival. The parents may consider themselves open-minded because only a supposedly open-minded person would consider making such a sacrifice. However, they are mistaking loving, caring and concern with objectivity, and in the process may be endangering the very life they hope to save.
The same may be true of any political belief, especially liberal ones, because they often are derived from the heart rather than logic. There is absolutely nothing wrong with caring and compassion unless they get in the way of objective reasoning, in which case more harm than good may be the result. It is interesting that pilots who find themselves in a tailspin are taught that letting go of the wheel may be the best way to let the plane regain control of itself. Likewise, it may be true that removing the governments hand from the wheel of control in our lives may be the best remedy as well. It is an option that needs to be considered as openly as any other.
Suppose a parent has a child who has a bone marrow deficiency which leaves the child's immune system seriously weakened. The child's doctors suggest several forms of treatment, ranging from immune stimulating therapy such as interferon to bone marrow transplants with the parents acting as donors. The parents are willing to do anything to save their child's life and therefore consider all options. After researching all possible avenues, they decide upon the immune therapy since this is determined to be least traumatic for the child while providing a good chance at recovery. This would be considered an informed, "open-minded" decision.
On the other hand, suppose the parent decided that the best way to help their child was to make the ultimate sacrifice of making a marrow donation, even if the doctors suggested this might not be the best course of treatment. Despite the doctor's urging the parents are convinced that they must take this step to assure their child's survival. The parents may consider themselves open-minded because only a supposedly open-minded person would consider making such a sacrifice. However, they are mistaking loving, caring and concern with objectivity, and in the process may be endangering the very life they hope to save.
The same may be true of any political belief, especially liberal ones, because they often are derived from the heart rather than logic. There is absolutely nothing wrong with caring and compassion unless they get in the way of objective reasoning, in which case more harm than good may be the result. It is interesting that pilots who find themselves in a tailspin are taught that letting go of the wheel may be the best way to let the plane regain control of itself. Likewise, it may be true that removing the governments hand from the wheel of control in our lives may be the best remedy as well. It is an option that needs to be considered as openly as any other.
3/23/1993
Why the President Should Fear the Press
In defending Bill Clinton's avoidance of formal press conferences thus far in his presidency, Jeff Greenfield claims it does not matter because the press has already determined that the president's proposals will not reduce the deficit as much as he claims, will hit the middle class harder than he claims, and does not attack "government as usual" as he claims.
This assumes that the public, 1) reads and listens to everything the media reports, and 2) that the public believes the media as much as it believes the President of the United States. For better or for worse this is simply not true. Many people do not read the paper, or go no further than Sports, Entertainment and headlines. For all the media would like to believe that they are the purveyors of truth, it matters little if their words go unnoticed.
Bill Clinton is wise to avoid formal press conferences because he does not want knowledgeable, pointed questions regarding the weaknesses and contradictions in his plan. He knows that nothing would damage his credibility more than sound bites showing him on the defensive about specific proposals. This tactic may be best for his plan's passage, but not necessarily best for democracy.
This assumes that the public, 1) reads and listens to everything the media reports, and 2) that the public believes the media as much as it believes the President of the United States. For better or for worse this is simply not true. Many people do not read the paper, or go no further than Sports, Entertainment and headlines. For all the media would like to believe that they are the purveyors of truth, it matters little if their words go unnoticed.
Bill Clinton is wise to avoid formal press conferences because he does not want knowledgeable, pointed questions regarding the weaknesses and contradictions in his plan. He knows that nothing would damage his credibility more than sound bites showing him on the defensive about specific proposals. This tactic may be best for his plan's passage, but not necessarily best for democracy.
3/22/1993
Causation or Merely Correlation?
Many look to the eighties as the time of American decline, but if we look at it, our moral decline began in the sixties, followed by declines in our economic standing. We also saw increased violence, illegitimate births, drug use, unemployment and declining productivity.
Given our propensity to assign causality to certain events, what could be the blame for the above. Many would blame the Great Society programs which institutionalized poverty and government dependence, while providing disincentives to work. Others would blame the Vietnam war which divided the country and caused many children of the post World War II baby boom generation to shun the institutions held dear by their parents. Others would blame the drug culture, or racial injustice. Many would blame a confluence of all these.
I, however, place the blame squarely on the shoulders of the Surgeon General and his 1964 report on the dangers of cigarette smoking. Is it coincidence that stress began to build, some of which vented itself in student protests and urban riots? Or that the divorce rate began to rise dramatically as spouses no longer could take solace in a peaceful smoke, but instead had to face each other without the pleasure of guilt-free nicotine? What was the impact on productivity as employees trying to kick the habit began making errors because of the concentration impairment from nicotine withdrawal. Could the dramatic increase in out -of-wedlock births be due to the substitution of sex for cigarettes as the preferred statement of the passage into adulthood? Seeking a substitute for nicotine, could some have turned to more serious drugs, leading to a life of crime to support these new habits?
As can be seen, all of our problems are tied directly to the guilt, frustration and stress caused by smoking and the on-going attempts to quit. Cigarettes are the answer to all of our problems. Encourage everyone to light up, send congress home and all will be fine. Of course, maybe the answer lies in higher energy taxes. Maybe I should think all this through a little better. I'll get back to you.
Given our propensity to assign causality to certain events, what could be the blame for the above. Many would blame the Great Society programs which institutionalized poverty and government dependence, while providing disincentives to work. Others would blame the Vietnam war which divided the country and caused many children of the post World War II baby boom generation to shun the institutions held dear by their parents. Others would blame the drug culture, or racial injustice. Many would blame a confluence of all these.
I, however, place the blame squarely on the shoulders of the Surgeon General and his 1964 report on the dangers of cigarette smoking. Is it coincidence that stress began to build, some of which vented itself in student protests and urban riots? Or that the divorce rate began to rise dramatically as spouses no longer could take solace in a peaceful smoke, but instead had to face each other without the pleasure of guilt-free nicotine? What was the impact on productivity as employees trying to kick the habit began making errors because of the concentration impairment from nicotine withdrawal. Could the dramatic increase in out -of-wedlock births be due to the substitution of sex for cigarettes as the preferred statement of the passage into adulthood? Seeking a substitute for nicotine, could some have turned to more serious drugs, leading to a life of crime to support these new habits?
As can be seen, all of our problems are tied directly to the guilt, frustration and stress caused by smoking and the on-going attempts to quit. Cigarettes are the answer to all of our problems. Encourage everyone to light up, send congress home and all will be fine. Of course, maybe the answer lies in higher energy taxes. Maybe I should think all this through a little better. I'll get back to you.
3/15/1993
If We're Really Serious About the Deficit
Despite the belief that we are about to take courageous steps to cut our budget deficits, it really is simply business as usual. Consider that the steps called for include significantly higher taxes on the wealthy, higher taxes on corporations, higher taxes on social security benfits (cynically refered to as budget cuts) and a broad based energy tax that will affect virtually everyone. The budget cuts consist almost entirely of reduced defense spending. If we are serious about cutting spending, let us consider the following:
After all of this is accomplished, cut the administrative budgets of all departments 25% across the board. I assure you that the government can cut this and not move any slower than it does now. President Clinton may consider line item veto's of certain obvious pork projects. The U.S. constitution states that the president must approve all bills and resolutions of the Congress for them to become law. Test it in the Supreme Court. If the projects are wisely chosen, even if the Supreme Court rejects this ploy, congress' hand may be forced to reconsider the line item veto. Consider their options in such a case: Fight to retain obvious and politically foolish pork, back down or change the law. The outcome would be interesting.
All in all, we are facing certain increases in taxes and what appears to be net increases in spending. This certainly does not appear to be new or different. the only "change" I can discern is that the tax and spend policies of Carter, Mondale and Dukakis are now being sold by a highly polished and charismatic salesman. I hope we are not being sold down the river.
- Eliminate the Department of Education - 30,000 bureaucrats in Washington are never going to be the answer to our education problems, especially since effective education is managed locally.
- Roll the Department of Veterans Affairs into Health and Human Services. Creation of the DVA was strictly a political stroke to veterans from George Bush.
- Combine the Departments of Energy and the Interior into a single Department of Natural Resources.
- Eliminate the separate air wings of the Navy, Army and Marines; or eliminate the Air Force as a separate branch of the military.
- Eliminate all tobacco subsidies.
- Eliminate most farm subsidies. It is foolish to pay farmers not to produce, then turn around and provide food stamps to the poor to pay for food at government subsidized higher prices.
- Eliminate the Space Station and Super Colliding Super Conductor.
- Eliminate the National Endowment for the Arts and the national Endowment for the Humanities. Both are nice to have, but cannot be justified in times of budgetary crisis.
After all of this is accomplished, cut the administrative budgets of all departments 25% across the board. I assure you that the government can cut this and not move any slower than it does now. President Clinton may consider line item veto's of certain obvious pork projects. The U.S. constitution states that the president must approve all bills and resolutions of the Congress for them to become law. Test it in the Supreme Court. If the projects are wisely chosen, even if the Supreme Court rejects this ploy, congress' hand may be forced to reconsider the line item veto. Consider their options in such a case: Fight to retain obvious and politically foolish pork, back down or change the law. The outcome would be interesting.
All in all, we are facing certain increases in taxes and what appears to be net increases in spending. This certainly does not appear to be new or different. the only "change" I can discern is that the tax and spend policies of Carter, Mondale and Dukakis are now being sold by a highly polished and charismatic salesman. I hope we are not being sold down the river.
2/21/1993
Bill Clinton's Risky Budget Plan
Like many Americans, I was quite impressed with President Clinton's proposals in his State of the Union speech. Reducing the deficit is crucial to our long-term economic health. Yet careful reading of the text of his address, put into context with his overall belief in the ability of government to solve all of our woes, lead me to believe that this program in its final form will do much more harm than good, especially to the middle class he purports to help.
In fact, the middle class will end up bearing the brunt of the financial cost of the new taxes as the cost of goods and services rise to offset the higher energy costs. In addition to the estimated direct cost of $17 monthly, a typical family with take home pay of $500 per week would see additional indirect costs of about $20 per month for every 1% increase in the inflation rate. If inflation exceeds 10% as it did in the late seventies, this program could wind up costing the average middle class family in excess of $1,500 annually.
On the spending side, only $5 billion of Mr. Clinton's $73 billion in annual spending cuts are scheduled for the first two years of his plan. I doubt that we will ever see these cuts. Beyond that he has called for $30 billion in short- term stimulus, $27 billion to increase the Earned Income Credit over five years, $13.8 billion for Head Start and $3.6 billion for the Women, Infants and Children program, not to mention his yet to be unveiled health care plan.
Mr. Clinton's proposals are bold, but I am afraid misguided. Instead of real deficit reduction, we will see increased spending and risky tax increases. Instead of a growing economy, the only things likely to grow are government, taxes, prices and eventually unemployment lines. If we are truly concerned about reducing the deficit and fixing our economy, the public should demand spending cuts first, taxes later.
In fact, the middle class will end up bearing the brunt of the financial cost of the new taxes as the cost of goods and services rise to offset the higher energy costs. In addition to the estimated direct cost of $17 monthly, a typical family with take home pay of $500 per week would see additional indirect costs of about $20 per month for every 1% increase in the inflation rate. If inflation exceeds 10% as it did in the late seventies, this program could wind up costing the average middle class family in excess of $1,500 annually.
On the spending side, only $5 billion of Mr. Clinton's $73 billion in annual spending cuts are scheduled for the first two years of his plan. I doubt that we will ever see these cuts. Beyond that he has called for $30 billion in short- term stimulus, $27 billion to increase the Earned Income Credit over five years, $13.8 billion for Head Start and $3.6 billion for the Women, Infants and Children program, not to mention his yet to be unveiled health care plan.
Mr. Clinton's proposals are bold, but I am afraid misguided. Instead of real deficit reduction, we will see increased spending and risky tax increases. Instead of a growing economy, the only things likely to grow are government, taxes, prices and eventually unemployment lines. If we are truly concerned about reducing the deficit and fixing our economy, the public should demand spending cuts first, taxes later.
7/27/1992
A Flat Tax Can Be Both Fair and Progressive
There are three reasons we should consider a flat tax:
1) It is simple - How much time have you spent filling out your Social Security returns? None. Why? Because it is a simple flat tax.
2) It doesn't require significant collection efforts. Sales taxes require a fair amount of paperwork by the collector (i.e. retailer) to report and remit. Plus, depending on what is exempted, it could be very complicated and prone to abuse and fraud.
3) It can be as fair or progressive as we want it to be. Consider these two scenarios.
A 10% tax on everything over $25,000:
A person making $25,000 or less would pay no tax
A person making $50,000 would pay $2,500 (10% of $25,000) or 5% of their total pay.
A person making $100,000 would pay $7,500 or 7.5%
A person making $1,000,000 would pay $97,500 or 9.75%
A 20% tax on everything over $50,000:
A person making $50,000 or less pays nothing.
A person making $100,000 pays $10,000 or 10%
A person making $1,000,000 pays $190,000 or 19%
As you can see, we can set the rate and the exempted amount wherever we would want to get the effective rate desired for various income levels. In example 2 above, the person making $1,000,000 makes ten times the person making $100,000, but pays 19 times more in taxes. Still, he pays no more on each incremental dollar than anyone else. It achieves both progressivity and fairness.
1) It is simple - How much time have you spent filling out your Social Security returns? None. Why? Because it is a simple flat tax.
2) It doesn't require significant collection efforts. Sales taxes require a fair amount of paperwork by the collector (i.e. retailer) to report and remit. Plus, depending on what is exempted, it could be very complicated and prone to abuse and fraud.
3) It can be as fair or progressive as we want it to be. Consider these two scenarios.
A 10% tax on everything over $25,000:
A person making $25,000 or less would pay no tax
A person making $50,000 would pay $2,500 (10% of $25,000) or 5% of their total pay.
A person making $100,000 would pay $7,500 or 7.5%
A person making $1,000,000 would pay $97,500 or 9.75%
A 20% tax on everything over $50,000:
A person making $50,000 or less pays nothing.
A person making $100,000 pays $10,000 or 10%
A person making $1,000,000 pays $190,000 or 19%
As you can see, we can set the rate and the exempted amount wherever we would want to get the effective rate desired for various income levels. In example 2 above, the person making $1,000,000 makes ten times the person making $100,000, but pays 19 times more in taxes. Still, he pays no more on each incremental dollar than anyone else. It achieves both progressivity and fairness.
7/21/1992
Good Intentions, Not Such Good Outcomes
With the recent outcry for change in this country, I have been contemplating some of the change that has been called for in recent years. This has included elimination of tax shelters for the wealthy, increased taxes (including luxury taxes) to reduce the deficit, an increase in the minimum wage, extended unemployment benefits, reductions in military spending, a new civil rights bill, anti-discrimination laws to protect Americans with disabilities and more stringent laws to protect workers and the environment.
Interestingly, each of these proposals, representing a liberal or populist point of view, were enacted. Now we find ourselves in a protracted recession, yet we believe the solution to these problems is to follow the Democrats further down the primrose path of populist policies.
Consider the effects that some of the policies above have had on our economy. The elimination of tax shelters, one of the great populist policies of the past decade, led to a tremendous drop in real estate investment. In turn prices fell, greatly excacerbating the S&L mess. The luxury tax on cars and boats led to mass layoffs in those industries. The reduction in military spending, while promising to be beneficial in the long run as production switches to wealth creating industries, has in the short term displaced thousands of workers. The civil rights bill and to an even geater degree the Americans with Disabilies Act, while certainly necessary, will hamper our global competitveness as businesses try to absorb the economic impact of these laws.
The Clean Air Act and efforts by OSHA to protect workers are also placing increased burdens on business at a time when they can least afford it. A perfect example is a requirement by OSHA that drycleaners meet stingent exposure limits for solvent vapors within their operations. The deadline, which is rapidly approaching, will require many operators to make major investments in new equipment to meet the new guidelines. Most of those affected are older family operations. Rather than making the investment, many are choosing to retire. Unfortunately, because of the increased regulation, the value of their businesses are next to nothing. As a result the nest egg they were counting on for retirement has been wiped out, forcing them to live on social security and putting a further drag on our social services. And this represents just an infinitismal portion of our vast economy.
As for the minimum wage, we can never raise it enough to provide more than a subsistence wage. Whenever it is raised significantly, employment will eventually drop and prices will rise, making the new wage no better than the old one. The answer is to provide the education, motivation and training so that our work force can excel in higher value added, hence higher wage, employment. We can then let the truly low wage, low value jobs migrate overseas.
Much is made of the unfairness of a system where many become wealthy while others cannot find employment. Yet wealth and employment are inextricably linked. Put in an unusual way, if each employee generates an annual profit of $1,000 for his employer, would you rather the employer earn $5,000 or $500,000 each year. In one case you have five employees, in the other five hundred. Rather than look at the employment however, we look at the profit and consider it unfair. In turn, we look to tax the profit, taking it from productive investment and placing it in he government's trust, one of the least productive investments we can make. The end result is less private employment and more government dependence.
This country has great problems, but we have even greater potential. By providing education, motivation and hope to our underprivileged we can eliminate the scourge of drugs and crime in our communities. Each time a person is
turned from a government dependant to a productive member of society, our spending needs drop and our revenue increases. Outside of education, the government cannot encourage this effectively. Government cannot make a poor person wealthy, nor even comfortable.
Interestingly, each of these proposals, representing a liberal or populist point of view, were enacted. Now we find ourselves in a protracted recession, yet we believe the solution to these problems is to follow the Democrats further down the primrose path of populist policies.
Consider the effects that some of the policies above have had on our economy. The elimination of tax shelters, one of the great populist policies of the past decade, led to a tremendous drop in real estate investment. In turn prices fell, greatly excacerbating the S&L mess. The luxury tax on cars and boats led to mass layoffs in those industries. The reduction in military spending, while promising to be beneficial in the long run as production switches to wealth creating industries, has in the short term displaced thousands of workers. The civil rights bill and to an even geater degree the Americans with Disabilies Act, while certainly necessary, will hamper our global competitveness as businesses try to absorb the economic impact of these laws.
The Clean Air Act and efforts by OSHA to protect workers are also placing increased burdens on business at a time when they can least afford it. A perfect example is a requirement by OSHA that drycleaners meet stingent exposure limits for solvent vapors within their operations. The deadline, which is rapidly approaching, will require many operators to make major investments in new equipment to meet the new guidelines. Most of those affected are older family operations. Rather than making the investment, many are choosing to retire. Unfortunately, because of the increased regulation, the value of their businesses are next to nothing. As a result the nest egg they were counting on for retirement has been wiped out, forcing them to live on social security and putting a further drag on our social services. And this represents just an infinitismal portion of our vast economy.
As for the minimum wage, we can never raise it enough to provide more than a subsistence wage. Whenever it is raised significantly, employment will eventually drop and prices will rise, making the new wage no better than the old one. The answer is to provide the education, motivation and training so that our work force can excel in higher value added, hence higher wage, employment. We can then let the truly low wage, low value jobs migrate overseas.
Much is made of the unfairness of a system where many become wealthy while others cannot find employment. Yet wealth and employment are inextricably linked. Put in an unusual way, if each employee generates an annual profit of $1,000 for his employer, would you rather the employer earn $5,000 or $500,000 each year. In one case you have five employees, in the other five hundred. Rather than look at the employment however, we look at the profit and consider it unfair. In turn, we look to tax the profit, taking it from productive investment and placing it in he government's trust, one of the least productive investments we can make. The end result is less private employment and more government dependence.
This country has great problems, but we have even greater potential. By providing education, motivation and hope to our underprivileged we can eliminate the scourge of drugs and crime in our communities. Each time a person is
turned from a government dependant to a productive member of society, our spending needs drop and our revenue increases. Outside of education, the government cannot encourage this effectively. Government cannot make a poor person wealthy, nor even comfortable.
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