America! Is it too late?

“Should it really matter if some other country is richer and more militarily powerful? Who cares if some other country has economic supremacy as long as your country is prosperous and can manage its own internal affairs. For example the countries of Denmark, Sweden and Norway, each economically advanced, seem to have no qualms about who rules the world as long as they are left alone to be prosperous and peaceful, though their attitude might well change were whoever held the purse strings to start to curb their freedoms and encroach upon their way of life. But until that happens, whether the global financier is China, Russia or America seems, for them, largely irrelevant.” How the West Was Lost Dambisa Moyo

America is losing it and it will take drastic action for us to get back on course. Why has this happened?

  • We forgot, never learned, how to compete. 
  • Consumption 
  • We allowed our government to fail 
  • We put ourselves in too much debt and became over leveraged. 
  • We mortgaged the future. 
  • Education has taken a back seat and thus, so has our future.
Failing to Compete:  We were spoiled by the greatest generation. They won World War II and there was no competition standing after that horrific event. As a result we indeed did prosper;  however, we did not learn to compete globally because there was no one to compete against.

Consumption: We learned how to consume and became addicted to it. We consumed for the sake of consuming without paying attention to the economic progress that was being made by the rest of the world. Eventually we began to distribute our wealth to the rest of the world by our addiction to consumption.

Government Failure: Our Politicians, who in fact are us, also got intoxicated with consumption. They failed to look out for the general welfare of the Union. They have allowed the free markets’ power to create wealth and goods to be destroyed by oligopolies. Our representatives failed to create and enforce rules that would guarantee the freedom of “free markets”. Instead, these oligopolies have bought off our representatives as a result of their addiction to consumption.

Further the politicians bought off many voters by allowing the creation of expensive pension plans, both private and public, that are not totally funded. This shoe has yet to drop.

Over Leveraged:  We borrowed money from future generations and have no plans in place to pay them back. We have not used the money to invest; but rather, we used it it to feed our addition to consumption. The sub prime crisis brought it to a head, but the problem has existed for some time. The problem is further exasperated by the enormous amount of unfunded and hidden costs of future pension benefits that we are obligated to fund.

We are Squandering our Education System: When you have an addiction,  education is neglected. Our education system use to be the best in the world. We are slipping and parts of society do not look at dollars spent on education as an investment. Instead, it is looked at as something that limits our ability to consume even more.

To solve these problems, we must take drastic action; sooner rather than later. I don’t think we have the will to do it. Do You?

    Romney: Show me The Taxes

    Update: September 21, 2011 Today Mitt Romney released his 2011 tax returns and a letter from his accountants summarizing his taxes back to 1990. I have two comments related to this,

    1. Mr. Romney did not take the full deduction that he was entitled to for his charitable deductions in 2010. If he did, his effective tax rate would have been under 10% instead of near 13%. Further, he can in the future file an amended return and get a further refund from the IRS.
    2. The summary of his income taxes going back to 1990 is no substitute for disclosing the returns. Remember, it his his accountants that prepared the summary and secondly all the details of these returns were not released. This is no way to build trust. 

    It is appalling that we are less than 60 days from a presidential election and we only have seen one year of Romney’s tax returns and the country is OK with that. Do we take our politics seriously.

    If a young person applies for a student loan he must supply more than one years worth of income documentation. If the Obama administration gives out a grant to promote clean energy without reviewing financial records over several years there would be a months worth of congressional hearings.

    I really don’t expect anything new will be found by the release of his returns for at least 5 years; it will verify that Mr. Romney is very wealthy, he used every legal means possible to protect his income and he was generous in giving to charity.

    My problem is with the public not taking their right to vote seriously and not requesting he release his returns…. More

    Adjust Taxes on Wealthy!

    We need a temporary fix to our tax code and a major change to our “capitalistic” economic system that is currently broken.
    In the long run, the issue is not how to tax the rich. It is about fixing capitalism and free markets If capitalism was fixed, we would have a more even distribution of income and tax revenues would come from a wider base of our population.

    Fixing our free market system takes time. It took us thirty years to break it and it will not be fixed overnight. Our President needs to continue to mimic Teddy Roosevelt. He needs to enforce anti-trust laws, enact a “to big to exist” law against financial institutions and reform rules governing credit rating agencies, To get this done, we will need to amend the constitution to ban corporate and unions from making campaign contributions. Right now they own our politicians.
    All of this takes time and we have run out of time. As a result, we need to amend our tax code in a manner that enables us to receive more money from the wealthy. This is reasonable and fair. To a great extent it is the wealthy who has benefited the most from the destruction of capitalism including our free markets.. 

    Why Not Stimulate?

    If you believe in America’s future, we should stimulate.

    The purpose of a stimulus is not to create permanent jobs. Its purpose is to increase the demand for goods and services produced by the private sector, which results in the private sector hiring more permanent workers  so they can fill the new demand from the market. Once the stimulus kicks in, the cycle of creating permanent jobs continues as demand continues to expand..
    The problem is the nation must go deeper in debt to fund the stimulus and the average American has been “burned” by his debt load and he is in no mood to increase his debt burden, personal or national. For the past 20 years, the average American lived beyond his means. He maxed out his credit cards and used his home equity loan as a piggy bank to consume way more than he was earning. When the housing bubble burst, he not only was unable to use his home equity line to maintain his life style, but his net worth dropped as a result of a 40% decline in the value of his home.This is also why the stimulus should be significantly funded by those who benefited the most from our recent excesses – The super wealthy.
    Many Americans looked at the equity in their home as a nest egg for retirement and their children’s education. This was wiped out. Who can blame them for being adverse to more debt, whether personal or national? He has experienced first hand what can happen by excessive borrowing.

    To further complicate the problem, to get back to the employment levels of 2006-2007 we must match the demand for goods and services that was present during the period when everyone was maximizing their debt. This cannot, should not and will not happen. This demand must be made up by concentrating on increasing our exports to growing countries such as China, India and Brazil.
    A stimulus can help. The question is do we believe in America. Can we overcome the problems that we all helped create? Yes, much of the blame can be placed on our leaders. We should have never invaded Iraq. When we went into Afghanistan we should have taken austerity measures, including raising taxes, to pay for the war. Our government failed to properly regulate Wall Street, banking and the rating agencies that all heavily contributed to the housing bubble and sub-prime loan debacle.
    If you believe, we should be upgrading and building infrastructure. Competition from the rest of the world demands it. Without it, we cannot compete. Now is the time to do it; interest rates are low and there is an excess supply of labor.
    If you believe, we must invest in education. Competition from the rest of the world demands it.
    If you believe, we must invest in research and development. We cannot compete with the low labor rates of developing countries. To offset this, we must be the leaders in the development of new ideas, inventions and processes. We then must do a better job of protecting what we create.
    If you believe in America, we also need to amend the constitution outlawing campaign contributions from corporations and unions. They cannot vote for our elected officals. Why should they be able to buy votes.
    If you believe in America we also must demand our elected offical enforce anti-trust laws. We have lost our “Free Markets” to oligoplolies and monopolies.  This must change if free markets are to work.

    Can we afford it? Can we afford not to do it?

    The Director of the Congressional Budget Office, Douglas W, Elmendorf, recently said,
    “There is no inherent contradiction between using fiscal policy to support the economy today and imposing fiscal restraint several years from now.”

    Obama Falling In Polls | Why?

    Obama promised change. Action speaks louder than words!.
    • He promised health care reform and let Washington fight over the issue for a year before he got into the fray. He did nothing to reduce the control of the industry by the oligopoly that runs it and he did not sell it to the public. The result is a low approval rating and wide frustration over the plan.
    • He rescued the banks and wall street, which he needed to do, but never aggressively prosecuted anyone at the major institutions causing the problems.
    • He has allowed the banks to remain too big to fail and never enforced anti-trust laws against them.
    • He gave the senior executives of wall street firms and mega-banks a tongue lashing; then attended a fund raising dinner for his reelection with the same executives putting up $40,000 each.

    • He replaced his Chief of Staff with a senior mega-bank executive who previously oversaw the political lobbying efforts at one of the financial institution that contributed to the financial crisis.
    • He praised small business for being the engine to create jobs and appointed the CEO of one of the largest multinational companies, General Electric, to head a committee to develop a plan to create jobs. The committee has done nothing of substance and the multinational company paid little taxes last year.
    • He caved into a hostage taking Republican Congress on the repeal of the Bush tax cuts and on the debt ceiling crisis. The result is we have no plan for creating jobs while investing in the future of America and a Super Committee has been formed to address our debt problems.The Super Committee is destined to fail unless a pre agreed to plan is implemented.
    That is why his approval ratings have dropped. Obama needs to walk-the-walk; not just talk-the-talk Things will not change in Washington until there is campaign reform brought about by amending the constitution. We need more than a change in leadership. In fact, if the republican candidate emerges from the current group of front runners, Obama should be reelected. He will be the lesser of the evils.