Be prepared for Barack Obama to pull out what he believes will be his ace in the hole sometime this summer or fall when he will argue that the stock market has done much better since he became president. He was inaugurated on January 20, 2009, and the Standard and Poor's 500 Index did bottom at 667 seven weeks later. To a very large segment of the voting public he would seem to have a point. But as one who spent 33 years managing stock portfolios for mutual funds and pension funds, I would not be one to give Obama the credit for that occurrence. In fact, I would argue the reason the market plunged as far as it did from October, 2008, to March of 2009 was because of Barack Obama.
Basic investment management textbooks teach those who pursue a career in professional money management that the stock market is what is known as a discounting mechanism. That means it discounts the future, traditionally anticipating the economic and market environment nine to eighteen months out. In other words, the market today reflects what aggregate investor expectations are for corporate operating conditions approximately a year ahead.
Following the Bush tax cuts of 2001, the stock market as represented by the Standard and Poor's 500 Index of large company stocks doubled over the five years from the summer of 2002 through the fall of 2007, peaking in October at 1565. From October 2007 into September 2008 the market underwent a typical consolidation following an extended advance, dropping nearly 20% as the bull market aged and details of the magnitude of the housing bubble, related mortgage debt derivatives activities and their impact on the financial system began to become known. Then the proverbial shit hit the fan. The Bush administration decided it was necessary to rescue Fannie Mae and Freddie Mac, Lehman went bankrupt and the Fed bailed out AIG. Reasonable people can disagree on who bears the burden for what happened next, but over the next seven months the market plunged another 46%, finally bottoming in March of 2009 at 667 for a total decline of 57% from the October 2007 peak, the worst stock market collapse since the 1930's.
I know that some folks would contend otherwise, particularly those with a vested interest in getting bailed out from their high risk speculation gone bad, but in my mind there is no question that the Bush Administration's response to the financial system's liquidity crisis was the wrong thing to do. There was no need for bailouts. Financial institutions that suffered trading losses should have suffered the consequences. Bankruptcy laws are on the books to deal with the situation, and the failed banks should have been reorganized and operated by the FDIC as stipulated by law. Few depositors would have lost any money, but greedy speculators in high risk fixed income securities and derivatives would have suffered the substantial losses they should have sustained for making irresponsible bets.
But I would argue that wasn't the primary reason for the stock market debacle. In September of 2008 the presidential election polls swung sharply in favor of Barack Obama over John McCain following months of a near dead heat. The stock market promptly accelerated its plunge when it became clear Obama was going to win the election. This was a man who had very little experience legislating or managing anything. He had no noticeable accomplishments other than winning elections. He rose meteorically through the most corrupt political system in America. He associated with many questionable and contemptible personalities over the years, and he had the most liberal voting record in Congress when he actually did take the time to show up to vote. Plus, he certainly had a vested interest in making the financial system turmoil look worse than it really was so he could claim credit for an eventual 'miraculous' recovery from the brink of epic disaster. Unfortunately, we will never truly know what would have happened without the bailouts.
Furthermore, during his campaign Obama had made many promises that scared the hell out of businessmen and investors. He said he was going to raise taxes by letting the Bush tax cuts expire. He said he would institute Universal Health Care, driving up costs of insurance for both consumers and businesses. He promised to enact windfall profit taxes on oil companies. He vowed to pass the Employer Free Choice Act, an ironic euphemism for legislation to make it easier for productivity killing labor unions to force unionization of business enterprises. In essence, he promised to mandate into government policy the dominant themes of the Democratic Party - environmentalism, income redistribution, more government support programs and stronger regulation of commerce and industry.
Once he was elected he proceeded to pursue implementation of those promises while undertaking an exponential expansion of the questionable financial system bailouts. Under Obama the US government became much more involved in the private sector of the economy than ever before with the help of Democratic Party control of both houses of Congress. They ignored public opinion and enacted Universal Health Care. They engineered a take-over of General Motors accompanied by abrogation of legal contracts to give more power and ownership interest to labor unions. And they created new regulatory agencies and hundreds of new rules and regulations to bog down and straightjacket private enterprise.
As I said at the beginning, the stock market is a discounting mechanism, anticipating the economic and market environment approximately a year into the future. Sure enough, the two years ending in December 2009 saw corporate earnings for the Index of large companies drop 31%. For smaller companies the decline was worse - 35% for the mid-size companies and 60% for the Small Cap Index. The market anticipated the environment quite well. Today, March 2012, the large company index has recovered to 1365, only 8% above the level of September 2008 when the second stage of the market decline began and still down 13% from the peak in 2007. This poor performance relative to other recoveries can be attributed to the anti-capitalist policies Obama has pursued since his election which have resulted in the slowest economic recovery since the 1930's, the only other time these big government policies and extensive interference in private enterprise have been conducted. They didn't work then and they are not working now. Official unemployment is still in the neighborhood of 8%, with actual unemployment much higher counting those who have stopped looking for work, and economic growth remains below average.
Obama will certainly argue that he saved the American economy from the incompetence of George Bush and that he now has the economy back on track and moving up. That is more misleading propaganda. His policies are responsible for keeping economic growth well below what it should be. All he has truly done is doom us to painfully sub-standard growth, high unemployment and progress killing stagflation into the foreseeable future. That is the credit he deserves.
All that still leaves one question unanswered. Why is the stock market going up despite the growing concerns of market strategists about valuations and falling earnings estimates? I would argue there are several reasons. One is that you can't keep capitalism down for long no matter how hard you try. Business is improving slowly because people cannot postpone their need for a new car, new clothes or a new computer forever. Pent-up demand is being unleashed. Another reason is that the Fed's unprecedented easy money policies, keeping interest rates historically low by buying up nearly all of the new government debt being issued to fund massive deficit spending, is causing some of the money being created to leak into equities. And of course, the stock market could be enjoying a boost from the anticipation of an end to the four year nightmare of Obama in the Oval Office.
Perhaps the most powerful and sustainable reason the market is in an uptrend is due to what one might call the pendulum effect. Financial markets over time swing back and forth between asset classes, just like a pendulum. Over the last decade fixed income investments have grown as the investment of choice for institutional investors, the folks who dominate the markets. So much money has gone out of stocks and into bonds, collateralized debt obligations and their derivatives over the last several years that the total size of the stock market has shrunk considerably. For example, IPO's (Initial Public Offerings) in the United States have declined to around 100 a year from 360 a decade ago, and listings on American stock exchanges have dropped to under 5000 from 8,800 fifteen years ago. The pendulum has swung so far to fixed income that bonds are now in a speculative bubble while stocks have been ignored.
When the fixed income and derivatives bubble collapses, the rush out of those asset classes back into stocks could fuel a bull market of substantial proportions. It won't necessarily be about the economy, corporate earnings or market valuation. It will be about supply and demand. We are just at the beginning of the pendulum beginning to swing back towards the equilibrium and on up the other side. As interest rates start to rise investors won't be able to get out of bonds fast enough. Bonds have been in a bull market for 30 years. The pendulum swinging back into stocks may not last that long or provide the 15% annualized annual returns stocks achieved during the 18 years from 1982 through 2000, but the gains should be more than satisfactory.
Finally, Barack Obama is proving that in order to become a successful politician one must master the ethically and morally dubious arts of self-righteous condemnation, artificial indignation, sanctimonious condescension, character assassination, contrived passion and choreographed press conferences, all while taking credit for the good things that you had nothing to do with and proclaiming oneself a virtuous steward for the public good. In other words, one must have the ability to convince folks of things that aren't true - to take credit when credit is not due and deny responsibility when it is. Barack Obama may be the best we have ever seen at that game.
Wednesday, February 29, 2012
Tuesday, February 28, 2012
Why Not The Best?
Why not the best and the brightest?
America is fast approaching perhaps the most important election crossroads of its 236 year existence. Will we remain the world's beacon of liberty and the engine of global prosperity or will we sink into the doldrums of apathy and dependence, or even worse, the abyss of oppression and destitution. It is time to elect real leaders instead of settling for the best of poor choices. Mitt Romney, Rick Santorum, Newt Gingrich and Ron Paul each have excessive baggage that is likely to prove fatal in the general election unless Barack Obama does something really stupid. It is time for Republicans to reboot and offer candidates with proven ability, integrity and substance to the voters. Now would be as good a time as any to start replacing the professional politicians who dominate our nation's government.
David Petraeus is an experienced, recognized leader with a long term record of success in the world's most challenging and vitally important arena's. No one in America has an impressive resume' as he does. He has shown all Americans that he is an intelligent, hard-working, decisive, strong patriot who is in love with his country, not himself. Thomas Sowell has been rendering wise, rational, pragmatic opinions on social and economic policies for nearly four decades. O.K., he is 81 years old, which rather than being a liability means to me he has seen it all. He would be the perfect choice to be responsible for giving enlightened advice to a chief executive who knows how to get things done.
Neither of these men have displayed the desire to run for the top political offices in the country, which in my opinion is a huge plus factor. Anyone who really wants the presidency so badly as to run the gauntlet of a political campaign is on a power trip, and probably should be among the last people on earth to have the job. I think it is time to appeal to General Petraeus and Mr. Sowell to lead the Republican ticket to get America back on track to regain the principles and policies established by our founders that made America great.
Of course neither man might want the job. Who could blame them? But there have to be other men and women in America whose experience, qualifications and character would make them much better choices than the ones we have. We must find them. With people such as a David Petraeus in the White House and a Thomas Sowell as Vice-President, we would have an excellent chance of restoring our country to its traditional greatness and leave a United States of America to our children and grandchildren that continues a legacy of freedom and economic strength instead of a ruined hulk of once what was.
Wednesday, January 25, 2012
State of the Union?
No one asked for it, but here it is anyway - my take on the president's state of his re-election speech disguised as the State of the Union address.
The president said he wanted to address America's growing income gap. Doesn't everybody? The problem is that the gap effecting most Americans exists primarily between the private sector and government employees. The secret is now out that public sector employees have higher incomes, significantly better benefits and more job security than those who work in private enterprise. Personally, I don't think the president plans on closing the gap by cutting or even restraining the growth in government employees compensation packages.
The president said he wants to restore an economy where everyone enjoys prosperity, not just a few. Really! What a concept! I guess he thinks he is the only person in America with that objective. Be that as it may, he unfortunately believes socialism, income redistribution and placing shackles on free enterprise is the way to do that. Apparently he has little knowledge of history. He additionally said he wants an economic system where everyone plays by the same rules, again as if that is a singular desire on his part alone. He then proceeds to announce new programs and subsidized benefits available only to targeted interest groups. So much for everyone playing by the same rules.
In America we have always envied those who have more than we do. We haven't hated them. Until now. For generations immigrants came to America because they knew capitalism and free markets offered them the opportunity to build better lives for themselves and their families through hard work. Until now. That has been the change produced by our current president and his political party.
An American making $343,000 a year qualifies to be in the top one percent of earners, and $36,000 a year to qualify as a member of the middle class. Globally those numbers are $34,000 and $1,225 a year, respectively, as reported by CNN. This staggering difference in relative affluence was not created by socialist economic and political policies. It was created by capitalism and free enterprise.
The president always says he is willing to compromise and work with Republicans. Unfortunately, his idea of compromise is for Republicans to bend over while he shoves his agenda up their ass. But of course claiming this false willingness to compromise certainly goes down well with the fawning 'words speak louder than actions' crowd who worship every cliche he reads off his teleprompter.
Regarding specific issues, the president wants to eliminate all oil and gas subsidies. That prompts the question, what oil and gas subsidies? Does he mean the depreciation and amortization allowances on capital expenditures and intangible assets available to every business in America? Wouldn't denying those allowances to oil and gas companies be a contradiction of his equal playing field objectives? Or is he talking about depletion allowances for natural resources, without which there would be little incentive to spend money exploring for new reserves? Wouldn't that contradict and impede his stated goals of achieving energy independence for America? Gee, I don't know, maybe he doesn't let those kind of details bother him. After all, they don't seem to bother the folks who vote for him.
Another subject is national security, which he claims to be in favor of. That is good to know. The president announced he will cut the number of troops in the Army and focus on drones and small special operations units to defend against our adversaries. That is a good idea given the nature of the immediate threats we face today. In fact, that strategy is what my book "The Paladin Principle" is all about. But cutting vital next generation weapons systems is a very bad idea. Potential opponents are always improving their capabilities, so it is imperative that we always stay a step or two ahead. Over his three years in office Obama has cancelled vital programs such as the F-22 Air Superiority Strealth Fighter, and made substantial cuts in others such as the F-35 Joint Strike Fighter, our ballistic missile defense shield, and the CGX Next Generation Cruiser - all programs geared towards protecting the country from the more sophisticated threats we may encounter in the future.
Yes, high tech weapons do reduce the need for ground troops. But today's weapons of mass destruction can destroy whole cities and eliminate massive numbers of military personnel in an instant. In order to prevent that from happening to our cities and our soldiers our super weapons must be better than our opponents super weapons. We do not get to choose where our next threat will come from. If it comes from non-government sponsored terrorist organizations or Middle Eastern nations who are not as strong as they think they are we will most likely prevail. But if it comes from an increasingly belligerent world power, then we will be the ones who are defenseless. Perhaps the president thinks we can just whip advanced weapons systems out whenever we might need them in response to aggressive moves by the Russians, the Chinese, the Iranians or the North Koreans. But that is not a plan to provide for the common defense. That is a plan for extinction.
And then of course there are taxes. He wants everybody to pay their fair share. Again he appears to believe that is a concept no one else has thought of. Or maybe his inspiration is that he gets to decide what is fair. Contrary to his rhetoric, there is a majority of people on both sides of the ideological spectrum that agree America needs serious tax reform. But the president is not advocating tax reform. He just wants to raise tax rates on his definition of the wealthy. Not that I object to that, but it is kind of like using a child's sand shovel to dig the Panama Canal. There aren't enough rich people to make a dent in bringing down the nuclear bomb of a budget deficit he has created over the last three years. Furthermore, is it really fair for 50% of Americans to pay no income taxes at all while 10% bear 70% of the load?
It is past time to blow up the current tax system and start all over. There are lots of good ideas floating around about a tax system that truly is more fair for every American, and doesn't rely on just raising income tax rates on the rich and, if the Democrats were honest, the middle class. A flat tax, a value added tax, maybe even a wealth tax should be considered. For starters there should be the elimination of all tax preferences, which are nothing more than unfair subsidies benefitting special interest groups. Real fairness will be difficult to achieve without upsetting a lot of folks who have grown accustomed to their cherished credits and deductions. But if we are talking about real reform, that is the place to start.
The president continues to blame all of America's woes on George Bush and the Republicans in Congress, conveniently ignoring the fact his party controlled both houses of Congress his first two years and the Senate last year. He is trying to convince the nation that our economic sluggishness couldn't possibly be due to his enlightened vision of progressive leadership. Fortunately for him, capitalism has an inherent propensity to generate growth even when shackled with the burdens of unnecessary regulations and restraints. But too many of those restraints keep the economy from growing at a rate strong enough to maintain a society's standard of living. That is where this president's leadership now has us trapped. But of course he will never admit his ideology does not work.
Perhaps one of the biggest problems we face today as a nation is that the majority of voters do not understand economics. They seem to believe left wing politicians' bullshit that the government will provide for them by taking money from those who have more of it, as if that is fair. Another major problem is that elections are nothing more than popularity contests, not a rational process of learning about and electing qualified, knowledgeable, capable leaders. That is why every so often we end up with unqualified, dishonest egomaniacs who promise unattainable, fantasyland Utopias. A government run by deceitful, corrupt socialists and their like-minded supporters results in a self-righteous aristocracy dominating a moribund society that cannot produce enough to sustain itself.
It is almost expected these days that politicians are dishonest, devious and corrupt. Our president takes these undesirable attributes to new levels. He has been president for more than three years, but everything bad is always someone else's fault. He tries to tell us our problems couldn't possibly be caused by the discredited anti-growth Keynesian economic and illogical socialist policies he resurrected from the trash dump of history. But the fact is that no country's economic and social problems have ever been solved by printing money, redistributing income and adding to already bloated government bureaucracies.
If Republicans were smart they would agree with Obama's stated objectives, and then strongly argue why their solutions would provide more success in meeting those objectives. All the rational arguments are in their favor. But they probably won't. Republicans have never been good at public relations. In fact they are currently engaging in exercises that may achieve nothing but self-destruction. Sometimes you almost think they want to lose. It would almost be humorous if the stakes weren't so critical to the future of our country.
The president said he wanted to address America's growing income gap. Doesn't everybody? The problem is that the gap effecting most Americans exists primarily between the private sector and government employees. The secret is now out that public sector employees have higher incomes, significantly better benefits and more job security than those who work in private enterprise. Personally, I don't think the president plans on closing the gap by cutting or even restraining the growth in government employees compensation packages.
The president said he wants to restore an economy where everyone enjoys prosperity, not just a few. Really! What a concept! I guess he thinks he is the only person in America with that objective. Be that as it may, he unfortunately believes socialism, income redistribution and placing shackles on free enterprise is the way to do that. Apparently he has little knowledge of history. He additionally said he wants an economic system where everyone plays by the same rules, again as if that is a singular desire on his part alone. He then proceeds to announce new programs and subsidized benefits available only to targeted interest groups. So much for everyone playing by the same rules.
In America we have always envied those who have more than we do. We haven't hated them. Until now. For generations immigrants came to America because they knew capitalism and free markets offered them the opportunity to build better lives for themselves and their families through hard work. Until now. That has been the change produced by our current president and his political party.
An American making $343,000 a year qualifies to be in the top one percent of earners, and $36,000 a year to qualify as a member of the middle class. Globally those numbers are $34,000 and $1,225 a year, respectively, as reported by CNN. This staggering difference in relative affluence was not created by socialist economic and political policies. It was created by capitalism and free enterprise.
The president always says he is willing to compromise and work with Republicans. Unfortunately, his idea of compromise is for Republicans to bend over while he shoves his agenda up their ass. But of course claiming this false willingness to compromise certainly goes down well with the fawning 'words speak louder than actions' crowd who worship every cliche he reads off his teleprompter.
Regarding specific issues, the president wants to eliminate all oil and gas subsidies. That prompts the question, what oil and gas subsidies? Does he mean the depreciation and amortization allowances on capital expenditures and intangible assets available to every business in America? Wouldn't denying those allowances to oil and gas companies be a contradiction of his equal playing field objectives? Or is he talking about depletion allowances for natural resources, without which there would be little incentive to spend money exploring for new reserves? Wouldn't that contradict and impede his stated goals of achieving energy independence for America? Gee, I don't know, maybe he doesn't let those kind of details bother him. After all, they don't seem to bother the folks who vote for him.
Another subject is national security, which he claims to be in favor of. That is good to know. The president announced he will cut the number of troops in the Army and focus on drones and small special operations units to defend against our adversaries. That is a good idea given the nature of the immediate threats we face today. In fact, that strategy is what my book "The Paladin Principle" is all about. But cutting vital next generation weapons systems is a very bad idea. Potential opponents are always improving their capabilities, so it is imperative that we always stay a step or two ahead. Over his three years in office Obama has cancelled vital programs such as the F-22 Air Superiority Strealth Fighter, and made substantial cuts in others such as the F-35 Joint Strike Fighter, our ballistic missile defense shield, and the CGX Next Generation Cruiser - all programs geared towards protecting the country from the more sophisticated threats we may encounter in the future.
Yes, high tech weapons do reduce the need for ground troops. But today's weapons of mass destruction can destroy whole cities and eliminate massive numbers of military personnel in an instant. In order to prevent that from happening to our cities and our soldiers our super weapons must be better than our opponents super weapons. We do not get to choose where our next threat will come from. If it comes from non-government sponsored terrorist organizations or Middle Eastern nations who are not as strong as they think they are we will most likely prevail. But if it comes from an increasingly belligerent world power, then we will be the ones who are defenseless. Perhaps the president thinks we can just whip advanced weapons systems out whenever we might need them in response to aggressive moves by the Russians, the Chinese, the Iranians or the North Koreans. But that is not a plan to provide for the common defense. That is a plan for extinction.
And then of course there are taxes. He wants everybody to pay their fair share. Again he appears to believe that is a concept no one else has thought of. Or maybe his inspiration is that he gets to decide what is fair. Contrary to his rhetoric, there is a majority of people on both sides of the ideological spectrum that agree America needs serious tax reform. But the president is not advocating tax reform. He just wants to raise tax rates on his definition of the wealthy. Not that I object to that, but it is kind of like using a child's sand shovel to dig the Panama Canal. There aren't enough rich people to make a dent in bringing down the nuclear bomb of a budget deficit he has created over the last three years. Furthermore, is it really fair for 50% of Americans to pay no income taxes at all while 10% bear 70% of the load?
It is past time to blow up the current tax system and start all over. There are lots of good ideas floating around about a tax system that truly is more fair for every American, and doesn't rely on just raising income tax rates on the rich and, if the Democrats were honest, the middle class. A flat tax, a value added tax, maybe even a wealth tax should be considered. For starters there should be the elimination of all tax preferences, which are nothing more than unfair subsidies benefitting special interest groups. Real fairness will be difficult to achieve without upsetting a lot of folks who have grown accustomed to their cherished credits and deductions. But if we are talking about real reform, that is the place to start.
The president continues to blame all of America's woes on George Bush and the Republicans in Congress, conveniently ignoring the fact his party controlled both houses of Congress his first two years and the Senate last year. He is trying to convince the nation that our economic sluggishness couldn't possibly be due to his enlightened vision of progressive leadership. Fortunately for him, capitalism has an inherent propensity to generate growth even when shackled with the burdens of unnecessary regulations and restraints. But too many of those restraints keep the economy from growing at a rate strong enough to maintain a society's standard of living. That is where this president's leadership now has us trapped. But of course he will never admit his ideology does not work.
Perhaps one of the biggest problems we face today as a nation is that the majority of voters do not understand economics. They seem to believe left wing politicians' bullshit that the government will provide for them by taking money from those who have more of it, as if that is fair. Another major problem is that elections are nothing more than popularity contests, not a rational process of learning about and electing qualified, knowledgeable, capable leaders. That is why every so often we end up with unqualified, dishonest egomaniacs who promise unattainable, fantasyland Utopias. A government run by deceitful, corrupt socialists and their like-minded supporters results in a self-righteous aristocracy dominating a moribund society that cannot produce enough to sustain itself.
It is almost expected these days that politicians are dishonest, devious and corrupt. Our president takes these undesirable attributes to new levels. He has been president for more than three years, but everything bad is always someone else's fault. He tries to tell us our problems couldn't possibly be caused by the discredited anti-growth Keynesian economic and illogical socialist policies he resurrected from the trash dump of history. But the fact is that no country's economic and social problems have ever been solved by printing money, redistributing income and adding to already bloated government bureaucracies.
If Republicans were smart they would agree with Obama's stated objectives, and then strongly argue why their solutions would provide more success in meeting those objectives. All the rational arguments are in their favor. But they probably won't. Republicans have never been good at public relations. In fact they are currently engaging in exercises that may achieve nothing but self-destruction. Sometimes you almost think they want to lose. It would almost be humorous if the stakes weren't so critical to the future of our country.
Tuesday, January 17, 2012
A Golden Opportunity
Apparently Mitt Romney will be the Republican candidate for president next fall. Consequently, it was inevitable that his career as head of a private equity firm would become an issue he would have to deal with as he runs for president. Over the last two decades many of these deal-makers have grown fabulously wealthy by acquiring struggling companies and restructuring them in order to improve their value and sell them for a profit. In the process many jobs were lost. Of course many jobs were also created if the firms were eventually successful. But some have used the loss of any jobs as an indictment of capitalism, and it is far better the debate regarding capitalism and private equity comes to the forefront now rather than next fall. Barack Obama will certainly press the issue hard in attempting to demonize his opponent, but at least now it will be out in the open and hopefully the arguments well known.
Many folks regard private equity investors as the epitome of the kind of rapacious bandits that represent the unrestrained greed and reckless behavior that has destroyed the global financial system and brought the Western economies to their knees. That is a bit of a stretch, since private equity firms generally did not indulge in the leveraged trading orgy of collateralized mortgage obligations and credit default swaps carried on by the too big to fail banking institutions at the epicenter of the financial collapse.
But the critics do have a few legitimate arguments. Some private equity firms are guilty of buying struggling companies solely for the purpose of leveraging them up with debt, paying themselves huge dividends from the borrowed money that oftentimes exceeded their investment (providing an instant profit), arbitrarily laying off large numbers of people to reduce expenses, then selling the over-leveraged carcass off to go bankrupt a couple years down the road. That is called looting and it is inexcusable, irresponsible and immoral. It should also have been illegal. The private equity executives that engaged in this behavior should be in jail and required to forfeit all of their earnings from the activity.
However, not all private equity firms operated in this despicable fashion. Private equity, when conducted in a responsible manner, may be the purest form of capitalism and one of the most beneficial when companies that would have gone bankrupt without outside intervention and restructuring manage to regain profitability and grow. Instead of everyone losing their job, the company can retain a significant portion of its people while replacing those at the top with more effective managers. The company may even become a substantial new job generator as profitable operations resume. To date I have seen no credible evidence that Bain and Company pursued the looting strategy rather than the objective of corporate regeneration for the benefit of all. If evidence that I am mistaken comes to light, then Romney is toast, as he should be.
Unfortunately, it appears that many Republicans are not doing the Party a favor by disparaging capitalism and accusing Romney in particular, and private equity investors in general, of plundering and pillaging. Either they do not really understand capitalism or they are political opportunists who desire to tap into the voters concern over the unfortunate growth of income inequality in America. In order to combat these perceptions, Romney must produce a verifiable report that proves Bain and Company did not engage in looting and that the firm was responsible for creating far more jobs than were lost by their investment and restructuring operations. If he doesn't, Obama will tear him to pieces with this issue next fall.
Certainly income inequality and Wall Street excess needs to be rationally addressed and reversed, but the redistribution of income policies of the current administration will not get it done. There ain't enough rich folks for that to succeed. 'Tax the rich, feed the poor til there are no rich no more' may have been a great line in an early 70's counterculture song (Alvin Lee, Ten Years After, 1971), but it is not a viable long term policy. Europe is the living proof. Only the economic growth generating attributes inherent in capitalism have the potential ability to raise living standards for all rather than for a privileged few.
Actually, all of this creates a tremendous, and critical, opportunity for Mitt Romney and our country. Romney must make a strong case for the job creation and abundant affluence that has been the legacy of capitalism in America versus the inevitable decline of living standards resulting from government control of the economy. Again, the ace in the hole for making this case is Europe. Unfortunately, with nearly half of Americans today receiving more from the government than they pay in, the majority of voters may not be listening. Something for nothing always appeals to people, particularly when it is legitimized by society. That has to change.
Democracy made America free. Capitalism made it great. Like it or not, Mitt Romney has perhaps been chosen by fate to be the man to lead America back from the precipice, to restore the United States back to its basic principles of individual liberty, equal opportunity, impartial justice, limited government and free enterprise. To regenerate an industrious work ethic in Americans we must be able to gain rewards from our efforts. That message must be eloquently and convincingly delivered. It would help if Romney would lose his patrician mannerisms as quickly as Obama acquired his. Regardless, Mitt Romney may be our last chance. He may not be up to it. Let's pray that he is.
Many folks regard private equity investors as the epitome of the kind of rapacious bandits that represent the unrestrained greed and reckless behavior that has destroyed the global financial system and brought the Western economies to their knees. That is a bit of a stretch, since private equity firms generally did not indulge in the leveraged trading orgy of collateralized mortgage obligations and credit default swaps carried on by the too big to fail banking institutions at the epicenter of the financial collapse.
But the critics do have a few legitimate arguments. Some private equity firms are guilty of buying struggling companies solely for the purpose of leveraging them up with debt, paying themselves huge dividends from the borrowed money that oftentimes exceeded their investment (providing an instant profit), arbitrarily laying off large numbers of people to reduce expenses, then selling the over-leveraged carcass off to go bankrupt a couple years down the road. That is called looting and it is inexcusable, irresponsible and immoral. It should also have been illegal. The private equity executives that engaged in this behavior should be in jail and required to forfeit all of their earnings from the activity.
However, not all private equity firms operated in this despicable fashion. Private equity, when conducted in a responsible manner, may be the purest form of capitalism and one of the most beneficial when companies that would have gone bankrupt without outside intervention and restructuring manage to regain profitability and grow. Instead of everyone losing their job, the company can retain a significant portion of its people while replacing those at the top with more effective managers. The company may even become a substantial new job generator as profitable operations resume. To date I have seen no credible evidence that Bain and Company pursued the looting strategy rather than the objective of corporate regeneration for the benefit of all. If evidence that I am mistaken comes to light, then Romney is toast, as he should be.
Unfortunately, it appears that many Republicans are not doing the Party a favor by disparaging capitalism and accusing Romney in particular, and private equity investors in general, of plundering and pillaging. Either they do not really understand capitalism or they are political opportunists who desire to tap into the voters concern over the unfortunate growth of income inequality in America. In order to combat these perceptions, Romney must produce a verifiable report that proves Bain and Company did not engage in looting and that the firm was responsible for creating far more jobs than were lost by their investment and restructuring operations. If he doesn't, Obama will tear him to pieces with this issue next fall.
Certainly income inequality and Wall Street excess needs to be rationally addressed and reversed, but the redistribution of income policies of the current administration will not get it done. There ain't enough rich folks for that to succeed. 'Tax the rich, feed the poor til there are no rich no more' may have been a great line in an early 70's counterculture song (Alvin Lee, Ten Years After, 1971), but it is not a viable long term policy. Europe is the living proof. Only the economic growth generating attributes inherent in capitalism have the potential ability to raise living standards for all rather than for a privileged few.
Actually, all of this creates a tremendous, and critical, opportunity for Mitt Romney and our country. Romney must make a strong case for the job creation and abundant affluence that has been the legacy of capitalism in America versus the inevitable decline of living standards resulting from government control of the economy. Again, the ace in the hole for making this case is Europe. Unfortunately, with nearly half of Americans today receiving more from the government than they pay in, the majority of voters may not be listening. Something for nothing always appeals to people, particularly when it is legitimized by society. That has to change.
Democracy made America free. Capitalism made it great. Like it or not, Mitt Romney has perhaps been chosen by fate to be the man to lead America back from the precipice, to restore the United States back to its basic principles of individual liberty, equal opportunity, impartial justice, limited government and free enterprise. To regenerate an industrious work ethic in Americans we must be able to gain rewards from our efforts. That message must be eloquently and convincingly delivered. It would help if Romney would lose his patrician mannerisms as quickly as Obama acquired his. Regardless, Mitt Romney may be our last chance. He may not be up to it. Let's pray that he is.
Friday, October 07, 2011
The Audacity of Blaming Everyone Else
Republicans really suck at public relations. Americans are protesting on Wall Street and at Federal Reserve Banks around the country about the weak economy, high unemployment, and the huge disparity in wealth distribution. Republicans would be better off supporting these protests rather than criticizing them. The protests are justified.
Wall Streeters and executives at the big banks are guilty of stuffing obscene amounts of money in their own pockets while destroying the financial markets. They did this by mindlessly leveraging trades of pointless debt based derivatives and collateralized debt obligations backed by worthless mortgages rather than performing their real duties of providing capital to growth generating private enterprise.
The Federal Reserve and Treasury Department is guilty of bailing out bankers and bondholders (the wealthy) with low interest rates and more borrowed money at the expense of wiping out shareholders of stocks, which formed the basis of most retirement funds and middle class investments. The real question is why have this president and the financial authorities forgotten (or ignored) the fact that capitalism is based on equity ownership, not debt? And how could they expect consumers to spend money when they have destroyed their life savings?
But what I really don't understand is why people are not protesting the other guilty party of the economic quagmire we find ourselves in. There should be protests in front of the White House, the Capitol Building, the U.S. Treasury and Fannie Mae headquarters as well since this president, this Congress and the financial regulatory agencies encouraged the high risk behavior in the first place and subsequently have done nothing but make the situation worse. Could this be Comrade B.O.'s expertise as a community organizer at work? Are these protests being organized by the Demo-rats to deflect blame from themselves? After all, that is the only thing they are good at.
Demo-rats love to feed and exploit the misconception that all rich people are Republicans. If that is true, then how does Obama attract substantially more campaign contributions than the Republicans do? According to the Center for Responsive Politics based on analysis of Federal Election Commission data, individuals working in finance, insurance and real estate markets were among Obama's largest campaign contributors. And executives from Goldman Sachs were his biggest backers. Obama talks tough about Wall Street and then bails them out. They laugh all the way to the bank while B.O. remains comfortably seated in the oval office. Talk is cheap, and when it comes from left wing politicians it is usually a lie to deceive and mislead the voting public.
Furthermore, governors of the Federal Reserve Bank are appointed by the president. The Chairman of the Fed, Ben Bernanke, was first nominated by George Bush. He was then renominated by Obama in 2009 and confirmed by the Senate, which happens to be controlled by Demo-rats. It all makes you wonder how stupid Americans can be to always blame our economic troubles on the Republicans.
As usual Obama is demaguoging and chastising straw men he creates to demonize conservatives. It is typical Obama. His policies kill millions of American jobs and he blames everyone else. It is quite clear that Obama and his politburo believe the only real jobs are government jobs. Look at his "jobs bill", which is designed to fund almost exclusively more public sector jobs for public labor union employees.
Kinky Friedman recently said that Charlie Sheen would be a better president than the current imposter in the White House. He is right. Charlie Sheen would be drunk, stoned and partying all the time. He would do no damage at all to our economy because doing nothing is better than pursuing the wrong policies as our current president does.
Wall Streeters and executives at the big banks are guilty of stuffing obscene amounts of money in their own pockets while destroying the financial markets. They did this by mindlessly leveraging trades of pointless debt based derivatives and collateralized debt obligations backed by worthless mortgages rather than performing their real duties of providing capital to growth generating private enterprise.
The Federal Reserve and Treasury Department is guilty of bailing out bankers and bondholders (the wealthy) with low interest rates and more borrowed money at the expense of wiping out shareholders of stocks, which formed the basis of most retirement funds and middle class investments. The real question is why have this president and the financial authorities forgotten (or ignored) the fact that capitalism is based on equity ownership, not debt? And how could they expect consumers to spend money when they have destroyed their life savings?
But what I really don't understand is why people are not protesting the other guilty party of the economic quagmire we find ourselves in. There should be protests in front of the White House, the Capitol Building, the U.S. Treasury and Fannie Mae headquarters as well since this president, this Congress and the financial regulatory agencies encouraged the high risk behavior in the first place and subsequently have done nothing but make the situation worse. Could this be Comrade B.O.'s expertise as a community organizer at work? Are these protests being organized by the Demo-rats to deflect blame from themselves? After all, that is the only thing they are good at.
Demo-rats love to feed and exploit the misconception that all rich people are Republicans. If that is true, then how does Obama attract substantially more campaign contributions than the Republicans do? According to the Center for Responsive Politics based on analysis of Federal Election Commission data, individuals working in finance, insurance and real estate markets were among Obama's largest campaign contributors. And executives from Goldman Sachs were his biggest backers. Obama talks tough about Wall Street and then bails them out. They laugh all the way to the bank while B.O. remains comfortably seated in the oval office. Talk is cheap, and when it comes from left wing politicians it is usually a lie to deceive and mislead the voting public.
Furthermore, governors of the Federal Reserve Bank are appointed by the president. The Chairman of the Fed, Ben Bernanke, was first nominated by George Bush. He was then renominated by Obama in 2009 and confirmed by the Senate, which happens to be controlled by Demo-rats. It all makes you wonder how stupid Americans can be to always blame our economic troubles on the Republicans.
As usual Obama is demaguoging and chastising straw men he creates to demonize conservatives. It is typical Obama. His policies kill millions of American jobs and he blames everyone else. It is quite clear that Obama and his politburo believe the only real jobs are government jobs. Look at his "jobs bill", which is designed to fund almost exclusively more public sector jobs for public labor union employees.
Kinky Friedman recently said that Charlie Sheen would be a better president than the current imposter in the White House. He is right. Charlie Sheen would be drunk, stoned and partying all the time. He would do no damage at all to our economy because doing nothing is better than pursuing the wrong policies as our current president does.
Monday, August 08, 2011
The End of Capitalism?
Is capitalism over in America? The markets seem to think so. And one can make a pretty strong argument that it is. Personally, I was shocked by the headlines in today's Wall Street Journal following the U.S. government debt downgrade. Evidently nearly every market player wants the government and the Fed to again come to the rescue. There is no understanding among those who should understand that that is the problem, not the solution.
We no longer have an economy based on capitalism, where private investors invest in and participate in the profits of the organizations engaged in the production and distribution of products and services. The economy is now based on an entirely new concept - leveraged debt mania. For nearly a decade the debt markets and their derivative byproducts have been where the action is, and they have become testosterone filled high-risk crap games and juvenile games of chicken to see who bails first. And when the gamblers lose they expect the Fed to bail them out. Consequently, the debt markets have grown to dwarf the equity markets over that time.
The financial market is now a debt-drugged junkie, addicted to government debt. But trading debt and its derivatives is not capitalism. After all, what do collateralized debt obligations and credit default swaps, which insure against the default of debt that should never have been issued in the first place, have to do with capitalism? All that CDO's and derivatives do is encourage traders to take on too much risk in investment vehicles that have nothing to do with the private ownership of commercial and industrial enterprises.
The Wall Street institutions, meaning all the big banks, brokers and money managers, no longer serve their traditional functions. They used to be the financial intermediaries that provided for the efficient allocation of capital between investors and corporations in the marketplace. Now they are the marketplace. They have become too big to fail creators and traders of junk debt and ambiguous derivatives, demanding that the Federal Reserve keep interest rates near zero to facilitate their high-risk activities. Who does that help? How can private investors provide capital to business to create jobs and expand when they earn nothing on their savings?
Capitalism is the private ownership of the common stocks of corporate enterprises, small closely held businesses and partnership interests. It has nothing to do with collateralized debt obligations, credit default swaps or other debt derived contrivances created by Wall Street to generate fees and commissions. All of the innovative companies that grew over time to power American economic growth started by issuing stock to investors who took the risk in order to profit if the company became successful. Equity ownership is capitalism, and it is now only a small part of the financial markets in the U.S.A.
America today has a debt problem. That debt is downgraded and investors are dealing with the problem by selling stocks and buying more of the debt. Is that rational? After all, what makes more sense -
#1. Investing in the stock of a reasonably valued quality company with negligible debt, consistently strong profit margins, market leading products with a secure dividend yielding 3 to 4% and little chance of future insolvency, or
#2. A note or bond yielding less than 3% from an issuer with 536 polarized bosses that can do nothing to prevent it from becoming insolvent.
Apparently, either capitalism is dead or we are living in the twilight zone, a time warp or an alternate parallel universe. In today's market investors are choosing #2.
We no longer have an economy based on capitalism, where private investors invest in and participate in the profits of the organizations engaged in the production and distribution of products and services. The economy is now based on an entirely new concept - leveraged debt mania. For nearly a decade the debt markets and their derivative byproducts have been where the action is, and they have become testosterone filled high-risk crap games and juvenile games of chicken to see who bails first. And when the gamblers lose they expect the Fed to bail them out. Consequently, the debt markets have grown to dwarf the equity markets over that time.
The financial market is now a debt-drugged junkie, addicted to government debt. But trading debt and its derivatives is not capitalism. After all, what do collateralized debt obligations and credit default swaps, which insure against the default of debt that should never have been issued in the first place, have to do with capitalism? All that CDO's and derivatives do is encourage traders to take on too much risk in investment vehicles that have nothing to do with the private ownership of commercial and industrial enterprises.
The Wall Street institutions, meaning all the big banks, brokers and money managers, no longer serve their traditional functions. They used to be the financial intermediaries that provided for the efficient allocation of capital between investors and corporations in the marketplace. Now they are the marketplace. They have become too big to fail creators and traders of junk debt and ambiguous derivatives, demanding that the Federal Reserve keep interest rates near zero to facilitate their high-risk activities. Who does that help? How can private investors provide capital to business to create jobs and expand when they earn nothing on their savings?
Capitalism is the private ownership of the common stocks of corporate enterprises, small closely held businesses and partnership interests. It has nothing to do with collateralized debt obligations, credit default swaps or other debt derived contrivances created by Wall Street to generate fees and commissions. All of the innovative companies that grew over time to power American economic growth started by issuing stock to investors who took the risk in order to profit if the company became successful. Equity ownership is capitalism, and it is now only a small part of the financial markets in the U.S.A.
America today has a debt problem. That debt is downgraded and investors are dealing with the problem by selling stocks and buying more of the debt. Is that rational? After all, what makes more sense -
#1. Investing in the stock of a reasonably valued quality company with negligible debt, consistently strong profit margins, market leading products with a secure dividend yielding 3 to 4% and little chance of future insolvency, or
#2. A note or bond yielding less than 3% from an issuer with 536 polarized bosses that can do nothing to prevent it from becoming insolvent.
Apparently, either capitalism is dead or we are living in the twilight zone, a time warp or an alternate parallel universe. In today's market investors are choosing #2.
Wednesday, April 27, 2011
Uncharted Territory
An Associated Press article today based on census figures reported that in 2010 the number of American women with advanced college degrees passed the number of men. Today, among adults 25 and older, 10.6 million women have master's degrees or higher versus 10.5 million men. Women passed men in number of bachelor's degrees more than a decade ago, with 20.1 million women and 18.7 million men now holding bachelor's degrees. Women now make up 50% of the work force, with an unemployment rate more than a percent lower than men. Women complain they don't make as much money as men, but that is no longer true in urban areas for those under the age of 30. The over-all average for women is lower because they have not been in the executive offices as long as men, but that won't be the case much longer.
Face it, fella's, it's over. We lost and now we are doomed. I suggest investing in sperm banks and dildo manufacturers. Male children today are good for nothing but cannon fodder. We are useless, and our days are probably numbered.
America has just undergone the most significant social change in human history and it is flying under the radar. How did it happen? Are men just stupid and lazy and addicted to video games, as it appears many women seem to think. Did men do this to themselves, or did public policy and intentional social engineering encourage this feminization of America?
Apparently everyone in America except white heterosexual men is classified as a minority in today's politically correct culture. Is it possible that affirmative action, elementary and secondary school curriculums, college admission standards, scholarships and grants favored the so-called minorities, particularly women? Did this same politically correct attitude influence post-graduate job opportunities by favoring women and non-whites? I'm just asking.
What does it all mean? Is it good or bad for America's future? Who the hell knows? But it will have consequences. Many women throughout the world have risen to the top of their governments and their professions, and have done an admirable job of leadership, especially those with balls like Margaret Thatcher, Golda Meir and evidently today's Angela Merkel of Germany. But I know of no country where they are the most educated and control the majority of politically powerful positions, which seems to be where we are headed. And if it occurred sometime in the past it must not have lasted very long. I wonder if there is a reason for that? Again, just asking?
Face it, fella's, it's over. We lost and now we are doomed. I suggest investing in sperm banks and dildo manufacturers. Male children today are good for nothing but cannon fodder. We are useless, and our days are probably numbered.
America has just undergone the most significant social change in human history and it is flying under the radar. How did it happen? Are men just stupid and lazy and addicted to video games, as it appears many women seem to think. Did men do this to themselves, or did public policy and intentional social engineering encourage this feminization of America?
Apparently everyone in America except white heterosexual men is classified as a minority in today's politically correct culture. Is it possible that affirmative action, elementary and secondary school curriculums, college admission standards, scholarships and grants favored the so-called minorities, particularly women? Did this same politically correct attitude influence post-graduate job opportunities by favoring women and non-whites? I'm just asking.
What does it all mean? Is it good or bad for America's future? Who the hell knows? But it will have consequences. Many women throughout the world have risen to the top of their governments and their professions, and have done an admirable job of leadership, especially those with balls like Margaret Thatcher, Golda Meir and evidently today's Angela Merkel of Germany. But I know of no country where they are the most educated and control the majority of politically powerful positions, which seems to be where we are headed. And if it occurred sometime in the past it must not have lasted very long. I wonder if there is a reason for that? Again, just asking?
Thursday, March 31, 2011
Capitalism With A Conscience
It should be clear to any serious student of economics that socialism doesn't work. Of course every society and economic system has intelligent and energetic people who rise to the top of industry, commerce and politics. But the opportunities in a socialist system to do so are very limited. For the vast majority the lack of incentives for extra effort stifles creativity, innovation, productivity and work ethic, inevitably resulting in economic stagnation. Unfortunately, a moribund economy is typically accompanied by political oppression as government assumes the allocation and rationing of scarce resources, and many politicians seem to like it that way.
But it is also becoming apparent that capitalism has its shortcomings as well in a modern technology and service oriented economy. The pursuit of wealth in a wide-open marketplace has regrettably led to unhealthy levels of income inequality with vast chasms between the haves and the have nots. Capitalism's success in generating new technology and operating efficiencies has created rising structural unemployment as this technology replaces labor in the production and distribution process. The problem is that capitalism has been too successful. It has allowed Americans to reach a far higher standard of living with fewer people involved in making it happen.
Consequently, like it or not, we will have to maintain a safety net far into the future for the unlucky among us cast adrift by capitalism's success. Certainly the support systems must be designed to encourage work, not sustain welfare. How to structure that safety net to provide adequate support while discouraging permanent unemployment and encouraging the displaced to actively seek meaningful work is another issue altogether, and a subject for another day.
In addition to structural unemployment, another consequence of capitalism is that the prospect of the enormous rewards it offers has encouraged business executives, particularly those in the financial industry, to incur extraordinary risks that result in catastrophic economic and financial disasters when the high risk activities inevitably implode. The problem is not that we need to mandate more regulations and create more federal oversight agencies to restrain our free market system. We already have in place rules, laws and regulatory authorities designed to maintain a fair and healthy business environment. The problem is that the regulatory authorities have not done their jobs of enforcing the rules and regulations. Wall Street could not have engaged in the mindless creation of excessive debt leverage in the financial system if the regulators had been paying attention and not allowed those they were supposed to regulate do anything they want.
What can be done to restore our system of capitalism to its intended purpose of prudently generating economic growth for the benefit of all members of society rather than just those at the top of the wealth pyramid? The most obvious first step would be for the regulatory agencies that already exist to enforce their regulations rather than maintain their incestuous relationships with those they regulate. Another would be to ensure that those making imprudent high risk bets with borrowed money suffer the consequences of their reckless activities instead of bailing them out with taxpayer money. But there are more.
One partial solution that would deter excessive risk taking and diminish the enormous wealth gap between the haves and the have nots would be to impose higher taxes on the super-incomes. The standard argument goes that raising taxes on the rich is against the principles of capitalism and free markets, taking away the incentives to invest, innovate and generate economic growth. Personally, I don't believe that is true if the higher tax rates are implemented starting with incomes of over one million dollars a year.
Conservatives, of which I am one when it comes to economic issues, rightfully argue that the top percentiles of income earners already pay the majority of taxes in the United States and therefore are already over-taxed. Furthermore, taxing the rich at higher rates would do very little to help reduce our outrageous budget deficit. That may be true, but it is irrelevant. To me this is more of a social issue to defuse the unhealthy polarization that exists in America than it is a balancing the budget issue, although it certainly wouldn't hurt that goal either. After all, the superwealthy are the only people in America that have excess income. Who else can afford to pay higher taxes?
Also implicit in the argument that taxes should not be raised on super-incomes is the assertion that they have earned this money by adding value to the economy and society by creating jobs and producing goods and services that consumers want. Some of them certainly do. But many of them don't. Top management arguments that they have to pay top dollar to acquire or maintain executive 'talent' is a bunch of crap, and they know it. It is just a convenient excuse to ratchet up their own pay. After all, these are the same geniuses that bring us financial meltdowns and corporate disasters, i.e., the Enron's, Worldcom's, AIG's, Countrywide Financial's and Fannie Mae's. It is not that tough to make money in a strong economic expansion. But when the economy and markets weaken, many of those geniuses are fired to bring in the next genius at even higher pay. It doesn't take exceptional 'talent' to play that game.
Lots of people on Wall Street and the corner offices of law firms get mega-rich through activities that not only do not add value but are destructive to our economy and society. Trading leveraged derivatives of high risk debt of barely solvent borrowers that implode at the slightest hint of economic slowdown does not benefit anyone but the traders. Fraudulent product liability, malpractice, workmen's comp and personal injury lawsuits sap the life out of private enterprise, causing businesses to close and jobs to be lost. Hucksters selling useless garbage and worthless investments over the phone or through internet scams swindle the public out of billions of dollars. These people should be punished, not rewarded. Raising taxes on the country's parasites may not end their damaging pursuits, but limiting their reward may impart some justice.
Maybe we should ask ourselves what the underlying objectives of capitalism truly are. Is the goal of capitalism to build wealth any way possible, even if it becomes concentrated in the hands of the few at the expense of the many? Or is it to generate wealth that benefits all by stimulating growth in the aggregate standard of living? I would argue the answer to that question is to reward those who add value to the economy by working to create and produce goods and services that cultivate sustainable economic growth. If that is the purpose, then why should those playing high risk financial games with borrowed money, games that are peripheral to the production of goods and services, be rewarded with outrageous pay packages when the game is hot and be bailed out by the rest of us when the crap finally hits the fan. They do not add value, they destroy it for everyone but themselves.
One way to prevent the lucrative for a few but calamitous for many speculative, hazardous and totally unnecessary securities transactions is to tax them heavily, and tax the money that is borrowed to speculate in them. Credit default swaps and other creative securities encourage reckless and irresponsible risk taking that serves no useful purpose other than to make big financial players superwealthy before they collapse and cause untold misery to the general public that pays the price. Tax them heavily and the players may decide they are not worth it.
I would also argue that the road to wealth in a capitalist economy should be based more on investing in the common stock of business enterprises than outrageous cash compensation packages awarded for short term performance. Bonuses should be paid in stock, not cash, to give employees more incentive to continue to work hard in improving the company's value over the long term. In fact, CEO's who are awarded the seven and eight figure pay packages are actually incentivized to maximize short term performance at the expense of the longer term, a course of action that is usually destructive to the future of the company, its employees and shareholders. Those types of compensation packages need to be restructured.
In addition to tax increases on the super income earners and high risk, superfluous financial transactions, there is much more that can be done to restructure the tax system that would benefit our capitalist system. Reducing or even eliminating corporate taxes would allow American companies to be more competitive in global markets and allow more money to flow through to investors to spend or re-invest. Simplifying individual taxes with fewer tax rates and the elimination of all preferences (deductions, credits, loopholes), including the home mortgage deduction, would increase fairness for all taxpayers and improve compliance. It would also encourage productive and efficient capital allocation throughout the economy by allowing free markets and competition to stimulate consumer spending rather than using government tax based policies to funnel money to politically favored economic activities and social programs.
Out of control government spending and massive budget deficits are critical issues America faces that must be addressed. But a potentially bigger one is the vast disparity between those at the top of the economic pyramid and those at the base. I have never seen any proof that compensation packages for top corporate executives of 250 or more times the lowest paid employee encourages or is responsible for any company's superiority in creating innovation, efficiency or productivity. There is no proof that pay packages of only 50x would reduce those measures of performance. Creativity and outstanding individual contributions would still be rewarded, and could be enhanced with awards of stock to increase an employees incentive to help the company grow, encourage team effort and produce personal satisfaction.
There is certainly nothing wrong with a goal of creating personal wealth. That is still the American dream, and America is still the best place on earth to find the opportunities to succeed. But gaining wealth should be earned by adding value to society. Working hard to get an education and creating products or providing services that people want and need should be rewarded. Those opportunities and rewards still exist and many prosperous and worthy people take advantage of them. The entrepreneurial, innovative and diligent will always endeavor to implement their ideas and succeed at their chosen vocation, regardless of whether that last dollar is taxed at a higher marginal rate.
An enlightened management team that significantly narrows the gap between the highest and lowest paid employees might find that such a policy would improve morale, generate loyalty and create a more cohesive, cooperative environment that would enhance corporate objectives. Why would any CEO or top executive want to make 250 times more than their co-workers for any reason other than to selfishly satisfy their ego. If some of them think its just all about the money, then maybe they do not really have the company's interests at heart.
One good definition of Capitalism is an economic system based on private ownership of the means of production and distribution of goods and services, characterized by a free competitive market and motivation of profit. That works best when everyone is working together for the benefit of the company. Perhaps a leveling of the gap between compensation at the top and the bottom, enhanced with awards of company stock for the most productive, would create such a stimulating environment. The best sports teams are usually those where the players all like and support each other, and help each other maximize their strengths and minimize their weaknesses. They all know who the stars are and the stars know they need their teammates. Why would it be any different in a corporate environment.
The problems America faces have moved beyond minor adjustments to current policies. It is time to consider major changes to our capitalist economic structure. We cannot just sit on our butts and ignore the math, nor ignore the warning signs and blindly drive down the road to ruin. There has to be more to our capitalist society than greed and egomania. Government leaders who reward the reckless and irrational while punishing the prudent destroy the fundamental fabric of a free society. Taxes can be raised on the ultra high incomes without extinguishing the obvious benefits of capitalism and free enterprise. Incentives to innovate and produce can be maintained while narrowing the income disparities that are growing ever wider.
The haves cannot ignore the have nots forever. Sooner or later, unless these disparities are addressed, we may end up like the rebellious revolutionaries in other parts of the world that are tired of putting up with the avarice and self-indulgence of the rich and powerful. If we really want this great country to continue to endure with freedom and justice for all, then perhaps we all need to show a little less self-interest and a lot more compassion for our fellow citizens.
But it is also becoming apparent that capitalism has its shortcomings as well in a modern technology and service oriented economy. The pursuit of wealth in a wide-open marketplace has regrettably led to unhealthy levels of income inequality with vast chasms between the haves and the have nots. Capitalism's success in generating new technology and operating efficiencies has created rising structural unemployment as this technology replaces labor in the production and distribution process. The problem is that capitalism has been too successful. It has allowed Americans to reach a far higher standard of living with fewer people involved in making it happen.
Consequently, like it or not, we will have to maintain a safety net far into the future for the unlucky among us cast adrift by capitalism's success. Certainly the support systems must be designed to encourage work, not sustain welfare. How to structure that safety net to provide adequate support while discouraging permanent unemployment and encouraging the displaced to actively seek meaningful work is another issue altogether, and a subject for another day.
In addition to structural unemployment, another consequence of capitalism is that the prospect of the enormous rewards it offers has encouraged business executives, particularly those in the financial industry, to incur extraordinary risks that result in catastrophic economic and financial disasters when the high risk activities inevitably implode. The problem is not that we need to mandate more regulations and create more federal oversight agencies to restrain our free market system. We already have in place rules, laws and regulatory authorities designed to maintain a fair and healthy business environment. The problem is that the regulatory authorities have not done their jobs of enforcing the rules and regulations. Wall Street could not have engaged in the mindless creation of excessive debt leverage in the financial system if the regulators had been paying attention and not allowed those they were supposed to regulate do anything they want.
What can be done to restore our system of capitalism to its intended purpose of prudently generating economic growth for the benefit of all members of society rather than just those at the top of the wealth pyramid? The most obvious first step would be for the regulatory agencies that already exist to enforce their regulations rather than maintain their incestuous relationships with those they regulate. Another would be to ensure that those making imprudent high risk bets with borrowed money suffer the consequences of their reckless activities instead of bailing them out with taxpayer money. But there are more.
One partial solution that would deter excessive risk taking and diminish the enormous wealth gap between the haves and the have nots would be to impose higher taxes on the super-incomes. The standard argument goes that raising taxes on the rich is against the principles of capitalism and free markets, taking away the incentives to invest, innovate and generate economic growth. Personally, I don't believe that is true if the higher tax rates are implemented starting with incomes of over one million dollars a year.
Conservatives, of which I am one when it comes to economic issues, rightfully argue that the top percentiles of income earners already pay the majority of taxes in the United States and therefore are already over-taxed. Furthermore, taxing the rich at higher rates would do very little to help reduce our outrageous budget deficit. That may be true, but it is irrelevant. To me this is more of a social issue to defuse the unhealthy polarization that exists in America than it is a balancing the budget issue, although it certainly wouldn't hurt that goal either. After all, the superwealthy are the only people in America that have excess income. Who else can afford to pay higher taxes?
Also implicit in the argument that taxes should not be raised on super-incomes is the assertion that they have earned this money by adding value to the economy and society by creating jobs and producing goods and services that consumers want. Some of them certainly do. But many of them don't. Top management arguments that they have to pay top dollar to acquire or maintain executive 'talent' is a bunch of crap, and they know it. It is just a convenient excuse to ratchet up their own pay. After all, these are the same geniuses that bring us financial meltdowns and corporate disasters, i.e., the Enron's, Worldcom's, AIG's, Countrywide Financial's and Fannie Mae's. It is not that tough to make money in a strong economic expansion. But when the economy and markets weaken, many of those geniuses are fired to bring in the next genius at even higher pay. It doesn't take exceptional 'talent' to play that game.
Lots of people on Wall Street and the corner offices of law firms get mega-rich through activities that not only do not add value but are destructive to our economy and society. Trading leveraged derivatives of high risk debt of barely solvent borrowers that implode at the slightest hint of economic slowdown does not benefit anyone but the traders. Fraudulent product liability, malpractice, workmen's comp and personal injury lawsuits sap the life out of private enterprise, causing businesses to close and jobs to be lost. Hucksters selling useless garbage and worthless investments over the phone or through internet scams swindle the public out of billions of dollars. These people should be punished, not rewarded. Raising taxes on the country's parasites may not end their damaging pursuits, but limiting their reward may impart some justice.
Maybe we should ask ourselves what the underlying objectives of capitalism truly are. Is the goal of capitalism to build wealth any way possible, even if it becomes concentrated in the hands of the few at the expense of the many? Or is it to generate wealth that benefits all by stimulating growth in the aggregate standard of living? I would argue the answer to that question is to reward those who add value to the economy by working to create and produce goods and services that cultivate sustainable economic growth. If that is the purpose, then why should those playing high risk financial games with borrowed money, games that are peripheral to the production of goods and services, be rewarded with outrageous pay packages when the game is hot and be bailed out by the rest of us when the crap finally hits the fan. They do not add value, they destroy it for everyone but themselves.
One way to prevent the lucrative for a few but calamitous for many speculative, hazardous and totally unnecessary securities transactions is to tax them heavily, and tax the money that is borrowed to speculate in them. Credit default swaps and other creative securities encourage reckless and irresponsible risk taking that serves no useful purpose other than to make big financial players superwealthy before they collapse and cause untold misery to the general public that pays the price. Tax them heavily and the players may decide they are not worth it.
I would also argue that the road to wealth in a capitalist economy should be based more on investing in the common stock of business enterprises than outrageous cash compensation packages awarded for short term performance. Bonuses should be paid in stock, not cash, to give employees more incentive to continue to work hard in improving the company's value over the long term. In fact, CEO's who are awarded the seven and eight figure pay packages are actually incentivized to maximize short term performance at the expense of the longer term, a course of action that is usually destructive to the future of the company, its employees and shareholders. Those types of compensation packages need to be restructured.
In addition to tax increases on the super income earners and high risk, superfluous financial transactions, there is much more that can be done to restructure the tax system that would benefit our capitalist system. Reducing or even eliminating corporate taxes would allow American companies to be more competitive in global markets and allow more money to flow through to investors to spend or re-invest. Simplifying individual taxes with fewer tax rates and the elimination of all preferences (deductions, credits, loopholes), including the home mortgage deduction, would increase fairness for all taxpayers and improve compliance. It would also encourage productive and efficient capital allocation throughout the economy by allowing free markets and competition to stimulate consumer spending rather than using government tax based policies to funnel money to politically favored economic activities and social programs.
Out of control government spending and massive budget deficits are critical issues America faces that must be addressed. But a potentially bigger one is the vast disparity between those at the top of the economic pyramid and those at the base. I have never seen any proof that compensation packages for top corporate executives of 250 or more times the lowest paid employee encourages or is responsible for any company's superiority in creating innovation, efficiency or productivity. There is no proof that pay packages of only 50x would reduce those measures of performance. Creativity and outstanding individual contributions would still be rewarded, and could be enhanced with awards of stock to increase an employees incentive to help the company grow, encourage team effort and produce personal satisfaction.
There is certainly nothing wrong with a goal of creating personal wealth. That is still the American dream, and America is still the best place on earth to find the opportunities to succeed. But gaining wealth should be earned by adding value to society. Working hard to get an education and creating products or providing services that people want and need should be rewarded. Those opportunities and rewards still exist and many prosperous and worthy people take advantage of them. The entrepreneurial, innovative and diligent will always endeavor to implement their ideas and succeed at their chosen vocation, regardless of whether that last dollar is taxed at a higher marginal rate.
An enlightened management team that significantly narrows the gap between the highest and lowest paid employees might find that such a policy would improve morale, generate loyalty and create a more cohesive, cooperative environment that would enhance corporate objectives. Why would any CEO or top executive want to make 250 times more than their co-workers for any reason other than to selfishly satisfy their ego. If some of them think its just all about the money, then maybe they do not really have the company's interests at heart.
One good definition of Capitalism is an economic system based on private ownership of the means of production and distribution of goods and services, characterized by a free competitive market and motivation of profit. That works best when everyone is working together for the benefit of the company. Perhaps a leveling of the gap between compensation at the top and the bottom, enhanced with awards of company stock for the most productive, would create such a stimulating environment. The best sports teams are usually those where the players all like and support each other, and help each other maximize their strengths and minimize their weaknesses. They all know who the stars are and the stars know they need their teammates. Why would it be any different in a corporate environment.
The problems America faces have moved beyond minor adjustments to current policies. It is time to consider major changes to our capitalist economic structure. We cannot just sit on our butts and ignore the math, nor ignore the warning signs and blindly drive down the road to ruin. There has to be more to our capitalist society than greed and egomania. Government leaders who reward the reckless and irrational while punishing the prudent destroy the fundamental fabric of a free society. Taxes can be raised on the ultra high incomes without extinguishing the obvious benefits of capitalism and free enterprise. Incentives to innovate and produce can be maintained while narrowing the income disparities that are growing ever wider.
The haves cannot ignore the have nots forever. Sooner or later, unless these disparities are addressed, we may end up like the rebellious revolutionaries in other parts of the world that are tired of putting up with the avarice and self-indulgence of the rich and powerful. If we really want this great country to continue to endure with freedom and justice for all, then perhaps we all need to show a little less self-interest and a lot more compassion for our fellow citizens.
Tuesday, October 19, 2010
Zombies
It seems to me that today's economic environment in the United States has all the characteristics of a zombie. It isn't dead, but it isn't alive either. It is flatlining. And it is likely to stay that way for awhile.
Much the same can be said about Democrats. It is election time again and they always restore to life the same old dead strategy - everything wrong with the world was caused by Republicans. Revising history is again front and center in this year's political campaigns. With the usual assistance from the self-righteous psychopaths of the mainstream mass media, Democrats from the president on down blame the current economic doldrums on George Bush and the Republicans.
Certainly the Republicans deserve a good portion of the blame. When they controlled Congress they forgot why they were elected and spent too much money the government didn't have. That was undeniably contemptible and they deserved to have their butts kicked in 2006. But anyone who thought Democrats would spend less or reduce the size of government will have to plead temporary insanity.
Regardless, lets review the primary reasons the economy is in the commode.
1. Why did the economy roll over into a recession?
Answer - Because of the collapse of the financial markets and resultant disappearance of bank lending.
2. Why did the financial markets collapse?
Answer - The mortgage market grew out of control stimulated by the Democrats support of Fannie Mae and Freddie Mac and their political mandate to give home mortgages to people who couldn't possibly repay.
3. Who tried to impose restraint on Fannie and Freddie?
Answer - The Republicans in Congress, primarily with the Federal Housing Enterprise Regulatory Reform Act of 2006, Senate Bill 190 sponsored by Charles Hagel, John McCain, Elizabeth Dole and John Sununu - all Republicans. The Democrats in the Senate unanimously rejected it. Many other attempts were made by Republicans, including George W. Bush, to draw attention to and restrain the out of control mortgage lending of the quasi-federal agencies, but the Democrats continually blocked any action.
4. What was the result of the unrestrained explosion of high risk mortgage lending?
Answer - Massive growth of toxic subprime mortgages, prompting Wall Street to do its thing, which was to package these toxic loans into high risk securities to sell to pension funds and other investors. From there they developed highly leveraged derivatives of these securities to trade among themselves along with credit default swaps to play both sides of the trade, all resulting in unprecedented risk and inevitable implosion.
The current economic environment was manufactured in Washington by Democrats and escalated exponentially by Wall Street, whose big players support both sides of the political spectrum. And both Washington and Wall Street were bailed out. In fact, the Democrats in Washington even had the audacity to name the Financial Reform Bill of 2010 after the two biggest contributors to the debacle, Barney Frank and Chris Dodd.
Every political party or ideological movement has its share of crackpots, morons, corrupt sleazeballs and arrogant, insufferable assholes. It is just that the Democrats have more than their share. More hypocrites, too. It is interesting that so many of those so-called liberals (or socialists, progressives, Democrats, whatever) in positions of power who advocate equality of outcomes through government programs are already part of the affluent elite who have no intention whatsoever of giving anything up themselves.
Much the same can be said about Democrats. It is election time again and they always restore to life the same old dead strategy - everything wrong with the world was caused by Republicans. Revising history is again front and center in this year's political campaigns. With the usual assistance from the self-righteous psychopaths of the mainstream mass media, Democrats from the president on down blame the current economic doldrums on George Bush and the Republicans.
Certainly the Republicans deserve a good portion of the blame. When they controlled Congress they forgot why they were elected and spent too much money the government didn't have. That was undeniably contemptible and they deserved to have their butts kicked in 2006. But anyone who thought Democrats would spend less or reduce the size of government will have to plead temporary insanity.
Regardless, lets review the primary reasons the economy is in the commode.
1. Why did the economy roll over into a recession?
Answer - Because of the collapse of the financial markets and resultant disappearance of bank lending.
2. Why did the financial markets collapse?
Answer - The mortgage market grew out of control stimulated by the Democrats support of Fannie Mae and Freddie Mac and their political mandate to give home mortgages to people who couldn't possibly repay.
3. Who tried to impose restraint on Fannie and Freddie?
Answer - The Republicans in Congress, primarily with the Federal Housing Enterprise Regulatory Reform Act of 2006, Senate Bill 190 sponsored by Charles Hagel, John McCain, Elizabeth Dole and John Sununu - all Republicans. The Democrats in the Senate unanimously rejected it. Many other attempts were made by Republicans, including George W. Bush, to draw attention to and restrain the out of control mortgage lending of the quasi-federal agencies, but the Democrats continually blocked any action.
4. What was the result of the unrestrained explosion of high risk mortgage lending?
Answer - Massive growth of toxic subprime mortgages, prompting Wall Street to do its thing, which was to package these toxic loans into high risk securities to sell to pension funds and other investors. From there they developed highly leveraged derivatives of these securities to trade among themselves along with credit default swaps to play both sides of the trade, all resulting in unprecedented risk and inevitable implosion.
The current economic environment was manufactured in Washington by Democrats and escalated exponentially by Wall Street, whose big players support both sides of the political spectrum. And both Washington and Wall Street were bailed out. In fact, the Democrats in Washington even had the audacity to name the Financial Reform Bill of 2010 after the two biggest contributors to the debacle, Barney Frank and Chris Dodd.
Every political party or ideological movement has its share of crackpots, morons, corrupt sleazeballs and arrogant, insufferable assholes. It is just that the Democrats have more than their share. More hypocrites, too. It is interesting that so many of those so-called liberals (or socialists, progressives, Democrats, whatever) in positions of power who advocate equality of outcomes through government programs are already part of the affluent elite who have no intention whatsoever of giving anything up themselves.
Wednesday, September 08, 2010
The Corruption Of The Golden Rule
As the mid-term elections approach our president is shoving the gas pedal to the floor to convince voters the Democrats are doing something about the economy. Just after Labor Day he proposed spending $50 billion in 2011 on infrastructure projects such as highways, railways, airports and a new air navigation system. This is what should have been done on a larger scale two years ago as America's infrastructure certainly does need upgrading. And it would put people to work productively. But it is too little too late.
At the same time Obama proposed legislation to allow immediate 100% tax write-offs in 2011 for business investments on new plant and equipment, projected to cut business taxes by $200 billion. He also proposed to extend $100 billion in tax credits for business spending on research and development. But what the American economy needs is for consumers to start spending, not just business. American companies have lots of money to spend, and capital spending has been one of the few sources of growth in the last year. If consumers don't start consuming there is no reason for businesses to continue to spend money on production capacity that will not be used.
Of course Obama's latest proposals are on top of the misguided, ineffective three trillion dollars already spent to bail out the financial and housing industries and stimulate the economy. These initiatives were precisely the wrong things to do. Most folks forget the U.S. stock market dropped 20% from its peak in October 2007 to September 2008, a not unusual reaction to a deteriorating economy. In early September 2008 the federal government announced plans to use taxpayer money to bail out FNMA and AIG. Over the next six months, accompanied by a multitude of more bailout and stimulus billions, the market plunged 45% for a total decline of 56% from the 2007 high. In my humble opinion, the announcement of government bailouts and stimulus programs accelerated the decline and made it much worse than it would have been.
And what did all this government spending accomplish? Basically, it destroyed the non-financial private sector of the American economy while saving the fortunes of Wall Street financiers. The most interesting aspect of all this is that it was a bi-partisan effort. Democrats controlled Congress at the time, but federal regulators started the bailouts under George Bush and then exponentially escalated them under Barack Obama. The government poured gasoline on the fire. One can only assume that the leading decision makers of both parties are either totally clueless or grossly corrupt. Given that they created massive amounts of new debt for American taxpayers to pay off in order to bail out the mega-rich guys who were responsible for the debacle leads one to conclude the latter.
The wealthy folks at the top of the financial food chain had been making ever riskier, ever more reckless, ever more financially irresponsible trades with other people's money for years, making billions of dollars for themselves in the process. They were doing deals buying junk bonds, junk mortgages and junk companies to package together, leverage up and sell to those responsible for the conservative oversight of working Americans' retirement assets. Perhaps most destructive of all, they were trading esoteric, unintelligible derivative securities that no one understood. And they were doing it all with massive amounts of borrowed money to exponentially multiply their return on the minimal amount of their own money invested. Regulators were either asleep at the wheel or partners in the insanity. On top of that you had chairmen of congressional oversight committees encouraging government agencies to fuel and facilitate the escalating catastrophe (see Fannie Mae and Freddie Mac).
Despite what the perps now say, most experienced investors knew that a debacle was coming and avoided the toxic garbage these guys were trading back and forth among their elite club of co-conspirators. Inevitably, in 2008 the crap hit the fan as the economy slowed. That was to be expected, and prudent investors figured to weather the market downturn as they had done countless times before. And finally the gluttonous, over-leveraged nine and ten figure net worth geniuses playing the securities of mass destruction games would suffer the consequences of their mindless greed. Wrong!!!
Instead, the architects of disaster who made billions buying and selling worthless paper get bailed out by their bought and paid for congressional and regulatory friends in Washington, DC. Rather than suffering the consequences they come out whole. Has anyone ever explained why the government committed $180 billion to AIG so Goldman Sachs could recover 100% of their exposure to worthless credit default swaps underwritten by AIG. Obviously, if you are a top dog at any of the elite banking, insurance or money management institutions you are untouchable and can get away with anything you want. The Golden Rule is alive and well in America. "Those who have the gold make the rules", and they have the gold.
The Beltway Bandits in Washington clearly dance on strings pulled by the privileged few at the "too big to fail" financial institutions. We knew that our government does not represent the American people. But we just found out how little they care about us. Politicians' only loyalty is to the mega-rich folks who keep them in office. And I am sorry to have to inform the liberals, but it ain't just the Republicans. Only the totally clueless and certifiably brain dead could believe the Democrats' bullshit about standing up for the common man.
One of the reasons I quit managing money in 2004 after 33 years in the business was because the markets no longer functioned for traditional investors. The markets became dominated by giant banks and trading firms playing video games with extraordinary amounts of money, pocketing outrageous commissions and fees in the process. And they weren't too worried because if the market finally did tank they had a network of Ivy League fraternity brothers, former and future business partners, high society social connections as well as golfing and yachting buddies in charge at the important agencies in Washington that would look after their interests. Let the individual investors and pension funds take the hit. A few scapegoats would be offered and some minimal fines might have to be paid, but nothing serious for those at the top of the pyramid.
In my professional career I naively believed that those who did their jobs diligently, conscientously and prudently would come out ahead in the end. I believed those who were responsible for managing other people's money had a fiduciary duty to invest the life savings and retirement funds conservatively with a primary goal of capital preservation. I believed the careless, reckless and greedy would eventually suffer the consequences of their imprudence. But I was wrong. I never imagined that a bunch of avaricious, self-centered assholes would come along and screw up capitalism by acting irresponsibly destructive while collecting millions of dollars, and then get bailed out by our government. That just ain't right. One can only conclude that the government of the United States can be bought, making it as corrupt as any third world dictatorship on the planet. We have some very serious problems.
At the same time Obama proposed legislation to allow immediate 100% tax write-offs in 2011 for business investments on new plant and equipment, projected to cut business taxes by $200 billion. He also proposed to extend $100 billion in tax credits for business spending on research and development. But what the American economy needs is for consumers to start spending, not just business. American companies have lots of money to spend, and capital spending has been one of the few sources of growth in the last year. If consumers don't start consuming there is no reason for businesses to continue to spend money on production capacity that will not be used.
Of course Obama's latest proposals are on top of the misguided, ineffective three trillion dollars already spent to bail out the financial and housing industries and stimulate the economy. These initiatives were precisely the wrong things to do. Most folks forget the U.S. stock market dropped 20% from its peak in October 2007 to September 2008, a not unusual reaction to a deteriorating economy. In early September 2008 the federal government announced plans to use taxpayer money to bail out FNMA and AIG. Over the next six months, accompanied by a multitude of more bailout and stimulus billions, the market plunged 45% for a total decline of 56% from the 2007 high. In my humble opinion, the announcement of government bailouts and stimulus programs accelerated the decline and made it much worse than it would have been.
And what did all this government spending accomplish? Basically, it destroyed the non-financial private sector of the American economy while saving the fortunes of Wall Street financiers. The most interesting aspect of all this is that it was a bi-partisan effort. Democrats controlled Congress at the time, but federal regulators started the bailouts under George Bush and then exponentially escalated them under Barack Obama. The government poured gasoline on the fire. One can only assume that the leading decision makers of both parties are either totally clueless or grossly corrupt. Given that they created massive amounts of new debt for American taxpayers to pay off in order to bail out the mega-rich guys who were responsible for the debacle leads one to conclude the latter.
The wealthy folks at the top of the financial food chain had been making ever riskier, ever more reckless, ever more financially irresponsible trades with other people's money for years, making billions of dollars for themselves in the process. They were doing deals buying junk bonds, junk mortgages and junk companies to package together, leverage up and sell to those responsible for the conservative oversight of working Americans' retirement assets. Perhaps most destructive of all, they were trading esoteric, unintelligible derivative securities that no one understood. And they were doing it all with massive amounts of borrowed money to exponentially multiply their return on the minimal amount of their own money invested. Regulators were either asleep at the wheel or partners in the insanity. On top of that you had chairmen of congressional oversight committees encouraging government agencies to fuel and facilitate the escalating catastrophe (see Fannie Mae and Freddie Mac).
Despite what the perps now say, most experienced investors knew that a debacle was coming and avoided the toxic garbage these guys were trading back and forth among their elite club of co-conspirators. Inevitably, in 2008 the crap hit the fan as the economy slowed. That was to be expected, and prudent investors figured to weather the market downturn as they had done countless times before. And finally the gluttonous, over-leveraged nine and ten figure net worth geniuses playing the securities of mass destruction games would suffer the consequences of their mindless greed. Wrong!!!
Instead, the architects of disaster who made billions buying and selling worthless paper get bailed out by their bought and paid for congressional and regulatory friends in Washington, DC. Rather than suffering the consequences they come out whole. Has anyone ever explained why the government committed $180 billion to AIG so Goldman Sachs could recover 100% of their exposure to worthless credit default swaps underwritten by AIG. Obviously, if you are a top dog at any of the elite banking, insurance or money management institutions you are untouchable and can get away with anything you want. The Golden Rule is alive and well in America. "Those who have the gold make the rules", and they have the gold.
The Beltway Bandits in Washington clearly dance on strings pulled by the privileged few at the "too big to fail" financial institutions. We knew that our government does not represent the American people. But we just found out how little they care about us. Politicians' only loyalty is to the mega-rich folks who keep them in office. And I am sorry to have to inform the liberals, but it ain't just the Republicans. Only the totally clueless and certifiably brain dead could believe the Democrats' bullshit about standing up for the common man.
One of the reasons I quit managing money in 2004 after 33 years in the business was because the markets no longer functioned for traditional investors. The markets became dominated by giant banks and trading firms playing video games with extraordinary amounts of money, pocketing outrageous commissions and fees in the process. And they weren't too worried because if the market finally did tank they had a network of Ivy League fraternity brothers, former and future business partners, high society social connections as well as golfing and yachting buddies in charge at the important agencies in Washington that would look after their interests. Let the individual investors and pension funds take the hit. A few scapegoats would be offered and some minimal fines might have to be paid, but nothing serious for those at the top of the pyramid.
In my professional career I naively believed that those who did their jobs diligently, conscientously and prudently would come out ahead in the end. I believed those who were responsible for managing other people's money had a fiduciary duty to invest the life savings and retirement funds conservatively with a primary goal of capital preservation. I believed the careless, reckless and greedy would eventually suffer the consequences of their imprudence. But I was wrong. I never imagined that a bunch of avaricious, self-centered assholes would come along and screw up capitalism by acting irresponsibly destructive while collecting millions of dollars, and then get bailed out by our government. That just ain't right. One can only conclude that the government of the United States can be bought, making it as corrupt as any third world dictatorship on the planet. We have some very serious problems.
Tuesday, July 13, 2010
What Hath Obama Wrought?
In less than two years Comrade Obama and his compliant congressional politburo have turned America upside down. Income redistribution. Government intrusion into the free markets. Massive new government spending programs. Ignoring public opinion to pass legislation the people don't want. Government policies today are the opposite of what made this country great. King Barack and his enablers are rapidly dismantling our whole way of life.
The United States is now burdened with -
1. A communist dictatorship form of government. Is that characterization over the top? They rammed health care reform down our throats. They took over the financial industry. They reward labor unions and punish corporate shareholders. They eliminate thousands of jobs to please their Greenie supporters by shutting down the offshore oil industry. They brazenly do anything they want. That is not democracy. It is a socialist, redistributive economic system and entrenched welfare state that preserves and enhances the wealth and power of those at the top while confiscating the property and rights of the middle class.
2. Amoral injustice, as the prudent and responsible are punished while the imprudent and irresponsible are bailed out and rewarded. Case in point: the mega-rich partners of Goldman Sachs, who maintain an incestuous relationship with the Treasury Department, Federal Reserve and other government regulators, receive 100% payoff on their high risk, speculative credit default swap investments purchased from AIG. The rest of us eat our losses on our more conservative traditional investments and watch our retirement savings disappear.
3. Unilateral disarmament that is rendering America defenseless against global threats. The suicidal START Treaty, evisceration of our ballistic missile defense systems, and cancellation of our most advanced weapons systems are prime evidence.
4. A destructive cultural revolution combining open door immigration and multi-culturalism that is destroying traditional American ethics and mores. This has created a vast underclass of illegal immigrants that don't assimilate into our society as immigrants traditionally have done. Yet they freely use our educational, health care and other support systems without paying for them.
5. The decline of private enterprise and free markets as government imposes more regulation and controls on finance, commerce and industry. Government industrial engineering results in increased inefficiencies, misallocation of capital and production of goods and services that lack demand. Worst of all, it diminishes incentive based creativity, innovation and entrepreneurial energy that stimulates productivity and growth.
6. An economic system based on debt rather than equity ownership, with financial markets dominated by large institutions using high risk leverage and rapid fire, computer based trading of baskets of mortgages, treasury debt and artificial derivative securities instead of investing in shares of real companies producing real products. That is not capitalism. It is gambling. An economic system based on gambling is a house of cards waiting to fall.
7. Foreign policies that alienate our traditional friends and appease our enemies, including protectionist trade policies that kill private sector jobs while rewarding the politically powerful labor unions.
8. Deteriorating K-12 educational system that turns out illiterate graduates with few skills who become dependent on government support.
9. Major media organizations and universities that indoctrinate the younger generations with the concept America is the source of evil in the world, ignoring the profound deeds of creativity, productivity, progress, inspiration, global assistance and defense of freedom and democracy that comprises our true historical legacy.
10. Unprecedented monetary expansion and massive government debt explosion exposing our country to hyperinflation and economic collapse.
Although Ayatollah Obama did not start some of these trends, he certainly has accelerated them. Unless these policies are reversed soon, America faces at best a future outlook of -
1. Bankruptcy of our national, state and local governments.
2. Permanent higher income tax rates plus imposition of an ever increasing Value Added Tax on consumption. These taxes will kill our traditional prosperity by ensuring prolonged economic weakness and producing sustained high unemployment.
3. Polarization of society between the growing number dependent on government support and the diminishing number of providers, leading to civil chaos.
4. Loss of global leadership and declining standards of living relative to other countries. America is on the road to becoming an economic has been at best, and potentially a third world country.
5. Gradual loss of liberty, justice, and democracy as the collective agenda of the politically correct redistributionists and environmentalists trump free choice and dictate how we live our lives.
6. Potential military defeat at the hands of a foreign adversary, resulting in the loss of American independence and sovereignty.
The American public must wake up to this reality before it is too late. Our freedom, prosperity and security are at risk. We are in the process of destroying America's future. These trends must be stopped or we will become nothing more than a footnote in the future history of the world.
The United States is now burdened with -
1. A communist dictatorship form of government. Is that characterization over the top? They rammed health care reform down our throats. They took over the financial industry. They reward labor unions and punish corporate shareholders. They eliminate thousands of jobs to please their Greenie supporters by shutting down the offshore oil industry. They brazenly do anything they want. That is not democracy. It is a socialist, redistributive economic system and entrenched welfare state that preserves and enhances the wealth and power of those at the top while confiscating the property and rights of the middle class.
2. Amoral injustice, as the prudent and responsible are punished while the imprudent and irresponsible are bailed out and rewarded. Case in point: the mega-rich partners of Goldman Sachs, who maintain an incestuous relationship with the Treasury Department, Federal Reserve and other government regulators, receive 100% payoff on their high risk, speculative credit default swap investments purchased from AIG. The rest of us eat our losses on our more conservative traditional investments and watch our retirement savings disappear.
3. Unilateral disarmament that is rendering America defenseless against global threats. The suicidal START Treaty, evisceration of our ballistic missile defense systems, and cancellation of our most advanced weapons systems are prime evidence.
4. A destructive cultural revolution combining open door immigration and multi-culturalism that is destroying traditional American ethics and mores. This has created a vast underclass of illegal immigrants that don't assimilate into our society as immigrants traditionally have done. Yet they freely use our educational, health care and other support systems without paying for them.
5. The decline of private enterprise and free markets as government imposes more regulation and controls on finance, commerce and industry. Government industrial engineering results in increased inefficiencies, misallocation of capital and production of goods and services that lack demand. Worst of all, it diminishes incentive based creativity, innovation and entrepreneurial energy that stimulates productivity and growth.
6. An economic system based on debt rather than equity ownership, with financial markets dominated by large institutions using high risk leverage and rapid fire, computer based trading of baskets of mortgages, treasury debt and artificial derivative securities instead of investing in shares of real companies producing real products. That is not capitalism. It is gambling. An economic system based on gambling is a house of cards waiting to fall.
7. Foreign policies that alienate our traditional friends and appease our enemies, including protectionist trade policies that kill private sector jobs while rewarding the politically powerful labor unions.
8. Deteriorating K-12 educational system that turns out illiterate graduates with few skills who become dependent on government support.
9. Major media organizations and universities that indoctrinate the younger generations with the concept America is the source of evil in the world, ignoring the profound deeds of creativity, productivity, progress, inspiration, global assistance and defense of freedom and democracy that comprises our true historical legacy.
10. Unprecedented monetary expansion and massive government debt explosion exposing our country to hyperinflation and economic collapse.
Although Ayatollah Obama did not start some of these trends, he certainly has accelerated them. Unless these policies are reversed soon, America faces at best a future outlook of -
1. Bankruptcy of our national, state and local governments.
2. Permanent higher income tax rates plus imposition of an ever increasing Value Added Tax on consumption. These taxes will kill our traditional prosperity by ensuring prolonged economic weakness and producing sustained high unemployment.
3. Polarization of society between the growing number dependent on government support and the diminishing number of providers, leading to civil chaos.
4. Loss of global leadership and declining standards of living relative to other countries. America is on the road to becoming an economic has been at best, and potentially a third world country.
5. Gradual loss of liberty, justice, and democracy as the collective agenda of the politically correct redistributionists and environmentalists trump free choice and dictate how we live our lives.
6. Potential military defeat at the hands of a foreign adversary, resulting in the loss of American independence and sovereignty.
The American public must wake up to this reality before it is too late. Our freedom, prosperity and security are at risk. We are in the process of destroying America's future. These trends must be stopped or we will become nothing more than a footnote in the future history of the world.
Sunday, January 10, 2010
The New Kleptocracy
Several months ago the news media reported that GM Financial Services petitioned King Barack's Pay Czar for the authority to pay their 25 top employees an average of $3 million this year. Bank of America proposed a $7 million average for its top guys, and Citicorp wanted an average of $10 million. It was also reported that it took less than a year after receiving government bailout funds for Goldman Sachs to hike the average base salary for its employees back up to over $600,000 annually. That wasn't for the top 25, that was the average for all employees, before any bonuses. Welcome to the Twilight Zone.
Most people probably know that the only thing these privileged folks really have to pay for are their homes. Automobiles, travel, entertainment, club memberships, expensive food and drinks are typically covered by their companies (i.e., shareholders) as business expenses. Obviously, those who played the highly lucrative but high risk games that resulted in the biggest loss of jobs in 70 years, foreclosures on thousands of homes and the meltdown of the value of personal savings and pension funds are not having to suffer too much.
The big financial institutions say they need to pay mega-million dollar compensation packages to their executives to attract and keep talent. But can any of them explain what these executives do, what they accomplish and what talents they have that require the outrageous compensation packages? Not rationally. And what kind of product do these people produce that benefits society? None. In fact, the products they play their games with eventually lead to economic disaster. We have already seen it happen once. Basically, in the financial services industry, these overpaid bloodsuckers are those who kissed the most butts, flung the most bullshit or took the most risks with other peoples money to reach the top of the pyramid. That kind of talent America cannot afford at any price.
Now we read in the first month of 2010 that banks have already re-engaged in lending to hedge funds and private equity firms back to levels not seen since prior to the financial market collapse, with leverage ratios of the borrowers again expanding to imprudent percentages. Meanwhile, the banks are ignoring the borrowing needs of American businesses that produce real goods and services that generate economic growth. If that doesn't make you throw up, then you must be employed by Goldman Sachs.
To reiterate, the bailed out banks are supposed to be making loans to commercial and industrial enterprises to get the economy moving again. Instead they are providing money to the same jerks to do the same shit that caused the meltdown in the first place. And all these moneychangers do with the money is use the borrowed money to buy derivatives (artificial pieces of paper) based on government and agency debt, including packages of underwater mortgage backed securities, to magnify the returns on their miniscule amount of invested money. The government continues to issue the massive amounts of new debt because it needs the money to pay for its unprecedented spending spree. The banks and big money managers are accomodating them because they know they will be rescued by the federal government (i.e., taxpayers) if the loans go bad, and because their regulatory overseers encourage them to. That is the result of the newly established precedent of bailouts.
The financial system is supposed to exist to facilitate the efficient functioning of economic activity - trade, commerce, industrial production, innovation and the provision of valuable services. The financial system in America today does not do that. Right now it is an exclusive, closed game played by greedy, mega-rich financial industry larcenists and associated federal regulatory co-conspirators creating more wealth for themselves while ignoring and restraining the productive sectors that are the foundation of real economic activity.
Economists tell us an economic recovery is underway. I suppose it is if you work in the financial or government sector, where most of the economists are employed. But so far it appears the mega-wealthy get wealthier and public employees do just fine while the real economy remains in the toilet bowl. It makes you wonder if everyone in Washington and on Wall Street is a crook. The truth is they are stealing from taxpaying Americans, and they belong in jail. In capitalism there is no such thing as bailouts, 'too big to fail' or government directed allocation of capital. Consequently, America is no longer a capitalist country that benefits all. America has now become a kleptocracy that benefits a privileged few.
Most people probably know that the only thing these privileged folks really have to pay for are their homes. Automobiles, travel, entertainment, club memberships, expensive food and drinks are typically covered by their companies (i.e., shareholders) as business expenses. Obviously, those who played the highly lucrative but high risk games that resulted in the biggest loss of jobs in 70 years, foreclosures on thousands of homes and the meltdown of the value of personal savings and pension funds are not having to suffer too much.
The big financial institutions say they need to pay mega-million dollar compensation packages to their executives to attract and keep talent. But can any of them explain what these executives do, what they accomplish and what talents they have that require the outrageous compensation packages? Not rationally. And what kind of product do these people produce that benefits society? None. In fact, the products they play their games with eventually lead to economic disaster. We have already seen it happen once. Basically, in the financial services industry, these overpaid bloodsuckers are those who kissed the most butts, flung the most bullshit or took the most risks with other peoples money to reach the top of the pyramid. That kind of talent America cannot afford at any price.
Now we read in the first month of 2010 that banks have already re-engaged in lending to hedge funds and private equity firms back to levels not seen since prior to the financial market collapse, with leverage ratios of the borrowers again expanding to imprudent percentages. Meanwhile, the banks are ignoring the borrowing needs of American businesses that produce real goods and services that generate economic growth. If that doesn't make you throw up, then you must be employed by Goldman Sachs.
To reiterate, the bailed out banks are supposed to be making loans to commercial and industrial enterprises to get the economy moving again. Instead they are providing money to the same jerks to do the same shit that caused the meltdown in the first place. And all these moneychangers do with the money is use the borrowed money to buy derivatives (artificial pieces of paper) based on government and agency debt, including packages of underwater mortgage backed securities, to magnify the returns on their miniscule amount of invested money. The government continues to issue the massive amounts of new debt because it needs the money to pay for its unprecedented spending spree. The banks and big money managers are accomodating them because they know they will be rescued by the federal government (i.e., taxpayers) if the loans go bad, and because their regulatory overseers encourage them to. That is the result of the newly established precedent of bailouts.
The financial system is supposed to exist to facilitate the efficient functioning of economic activity - trade, commerce, industrial production, innovation and the provision of valuable services. The financial system in America today does not do that. Right now it is an exclusive, closed game played by greedy, mega-rich financial industry larcenists and associated federal regulatory co-conspirators creating more wealth for themselves while ignoring and restraining the productive sectors that are the foundation of real economic activity.
Economists tell us an economic recovery is underway. I suppose it is if you work in the financial or government sector, where most of the economists are employed. But so far it appears the mega-wealthy get wealthier and public employees do just fine while the real economy remains in the toilet bowl. It makes you wonder if everyone in Washington and on Wall Street is a crook. The truth is they are stealing from taxpaying Americans, and they belong in jail. In capitalism there is no such thing as bailouts, 'too big to fail' or government directed allocation of capital. Consequently, America is no longer a capitalist country that benefits all. America has now become a kleptocracy that benefits a privileged few.
Thursday, October 15, 2009
Liberty, Justice and Capitalism, RIP?
This essay is adapted from The Legacy, an action oriented novel I am in the process of writing that is based on current world events
In the context of politics, differences of opinion are generally a good thing. Freedom of speech and the ability to discuss ideas and opinions among ourselves is why the Free World has led the development of modern, prosperous societies. Rational discussion and debate is necessary for decision makers to arrive at optimal solutions to the issues that challenge them. Closing our minds to alternative courses of action because of blind faith in a particular ideology, a specific cause or a charismatic leader often leads to disaster, as we have seen many times throughout history.
I am politically independent. I prefer to consider myself an American who supports leaders that actively work to maintain the founding principles that produced the greatest country in the history of the world, whether they be Republican, Democrat, Libertarian or Martian. I believe that government should exist solely to ensure justice, protect individual rights, preserve freedom, and create an environment that allows private enterprise to flourish. In other words, to establish justice, insure domestic tranquility and provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity. Most of us should remember those words from the preamble to the Constitution.
Unfortunately, the United States of America is currently undergoing radical, unprecedented changes in our culture, our economic system and our philosophy of government. Democracy, freedom and capitalism in America are under attack, and the issues Americans face are a real threat to our way of life and long term survival. These issues must be discussed openly and constructively among our citizens and political leaders, because in the not too distant future we may end up with a country that is much different than the one we inherited from our forefathers. If we continue to blindly pursue our present course we are likely to evolve into a polarized, violent, economically stagnant society with limited liberties and minimal ability to defend ourselves from foreign adversaries.
Nearly all of us have been blessed to live and work in a Western society and enjoy the good fortune of individual freedom and the opportunities created by free markets. That is because the founding fathers of this great nation conceived a constitution that for over 220 years has allowed us to live free, pursue our personal interests, and participate in selecting our political leaders.
Freedom for Americans has meant the right to engage in the occupation of our choice in free and open markets, and to be compensated well enough to enjoy the lifestyle we choose. Capitalism has allowed the innovative and entrepreneurial among us to generate standards of living for all that were incomprehensible just a few generations ago.
But despite the unprecedented prosperity and freedom we have achieved in America, many people in our society don't seem to acknowledge or appreciate it. It seems that many among us believe our country is an evil and imperialistic bully, controlled by greedy businessmen intent on destroying the environment and exploiting the world's resources. Others are convinced we have become an immoral, decadent society that must be purified and taken back from the control of contemptible, Godless perverts. Somehow we evolved into an America that has become angry, hateful and intolerant of those who do not agree with us.
This polarization of society is like a deadly virus that threatens the future of our country. The individual rights challenged authoritarians on the right and the common sense challenged socialists on the left have no respect for differences of opinion, and are both completely convinced they are one hundred percent right while those who disagree are uneducated idiots or vile, conspiratorial pawns of some special interest group. Actually, both are right. The other side is the problem.
Unfortunately, even though the extreme elements are a minority within their respective political parties they are the most influential because they scream the loudest and are the most committed. And the leaders and elected representatives of each party often tend to come from their radical activist wings. Once elected, these extremists have a much bigger soapbox from which to polarize the country further, and they do. Politicians today do not use their status to reconcile Americans and promote unity, but use these differences to create even more animosity in our culture in order to solidify their power.
The continued expansion of the welfare state has resulted in open warfare between those who are beneficiaries of government entitlements and those who pay for them. The two opposing forces are nearing equilibrium, and those who pay for it all are not happy about government confiscating their hard earned dollars to redistribute to others. The rise of the victim mentality and the outrageous transfer of money to them from those who have victimized no one has resulted in escalating partisan animosity.
There is no question that the United States, through the economic growth engine of capitalism, has achieved a remarkably high standard of living. At the same time we have created a disparity of wealth and income among our citizens that needs to be addressed. In a society of abundance there is no legitimate reason for those at the bottom to be left out. If future economic growth has to be marginally sacrificed through higher taxes on the wealthy in order to provide support for the disadvantaged, disabled and dispossessed, then a society of advanced affluence can certainly afford it.
But in order to actually accomplish the objective of providing assistance to the unfortunate, the resources of our country need to be spent wisely, not thrown away to some favored interest group, politically correct crusade, or government program that never produces results. The preamble to the Constitution says the government should promote the general welfare, not supply it. The best way to do that is by supporting capitalism, open markets and equal opportunity, not redistribution of income. In order to maintain the ability to generate the resources that provide for public assistance, government should never cripple the engine of economic growth by interfering in private enterprise.
The last election in the United States resulted in monumental change to our culture and economic system. The winners campaigned on a slogan of change, as many challengers often do. Obviously they did not use the word as an empty political slogan. They produced more change in their first months in office than ever seen before in American history. But is this the kind of change Americans who voted for them expected? Enough time has now passed for those who voted for the new leaders to ask themselves if the new administration and legislature really represent their views and opinions?
For example, regarding capitalism, does anyone really believe that government can allocate investment capital more effectively and operate commercial and industrial organizations more efficiently than private enterprise? Does anyone believe the productive members of our economy will remain motivated to produce more goods and services and that government revenues will increase if taxes are raised, despite strong historical evidence to the contrary? Do some believe that American workers should be bullied into joining a corrupt, autocratic, competitiveness killing labor union, and then be required to contribute a portion of their earnings to overpay its leaders? By their actions to date, this administration and Congress does.
Is it justice for all if the government bails out the billionaires and mega-millionaires responsible for the financial meltdown from their stupid investment gambles with middle class taxpayers money while unemployment rises to double digits? Does anyone actually believe in leaving our children with the burden of insurmountable debts by creating even more social programs that never accomplish their objectives? Do some people really think multiculturalism is helping to assimilate immigrants into American society, and do they support illegals unlimited access to education and health care paid for by legal citizens? Our current leaders obviously do.
Are our liberties and individual rights being infringed upon when our government dictates that Americans should be forced to drive small death traps and be required to freeze or melt in the dark rather than develop new supplies of energy that might inconvenience some polar bear or caribou? Do we really think we must not use scientific analysis to challenge the environmentalist theocrats who are 100% certain humans are the cause of global warming and are mandating that we drastically change our lifestyles, even though a generation ago the same folks were frightening the public about global cooling? Should talk shows with political viewpoints opposing the policies of the government in power be shut down and silenced? Those are policies our current leaders support.
And perhaps most logic defying of all, do the majority of Americans really think America is an evil and imperialistic country that should apologize to the rest of the world for our behavior despite providing the economic engine generating global prosperity and twice saving the world from mass murderers and unspeakable tyranny? Do some people actually think negotiating with terrorists whose religious duty is to eliminate us from the face of the earth will make the bad men go away? Or that interrogation techniques such as waterboarding that resulted in saving American lives from planned terrorist attacks is the moral equivalent of cutting off heads and setting off car bombs that kill dozens of innocent women and children? Does anyone truly believe eliminating cutting edge defense programs is a good idea in the face of increasing global threats? How about negotiating arms control treaties with strategic opponents where we concede everything and the other side gives up nothing?
It is one thing to oppose participation in wars in Iraq or Afghanistan based on differences of opinion over the actual identity of those who attacked us, or questions about the propriety of attempting to force democracy on sovereign countries. It is another thing entirely to ignore responding to those who are responsible for the deaths of thousands of Americans on our own soil, and to unilaterally disarm our military based on naive or outright false understanding of global relationships, ignorance of world history or a dangerously optimistic concept of the nature of man. That is suicidal lunacy.
These are all actions taken or policies advocated by the folks now running the American government. The actions and policies all violate the fundamental principles of liberty, individual rights, security, justice and limited government as embodied in the U.S. Constitution. Are such radical policy changes really what Americans wanted when they voted in the last election?
Traditionally, the majority of Americans have been in general agreement regarding our basic principles. I would like to think they still are. But who today represents those who believe in limited government, capitalism and free markets, individual freedom, personal responsibility, impartial justice, reward based on merit, punishment for wrongdoing, and a strong defense to protect us against foreign adversaries and terrorist organizations who want to dominate or exterminate us? The answer is no one. No such party exists any longer in America. Based on their performance while they controlled Congress, the Republicans did not stand for many of those ideals either. The principles that formed the foundation of our country are now nothing more than buzzwords used by corrupt politicians to get elected and then ignored.
The solution provided by the Constitution for Americans to remedy misrepresentation by politicians is to throw the bastards out at election time. At the presidential level, we often do. Unfortunately, it seems that every new president proclaims he was overwhelmingly elected with a mandate to immediately employ his policies. In 2008, only 62% of eligible voters in the United States voted. Our new president won 53% of the vote. That means less than one out of every three Americans who could have voted actually did vote for the new administration. Despite that fact, the new president is totally ignoring the two-thirds of Americans who don't necessarily agree with his agenda, as if they don't exist, and implementing his policies with no discussion and no compromise.
And what about Congress, where the true power lies? Do the majority of American citizens have a vote in selecting these legislators? Basically, the Senate Majority Leader, the Speaker of the House, and the Chairmen of the Congressional Committees run this country. In the senate there are sixteen standing committees, four special committees and four joint committees. Arguably, only four or five of these committees really have any significant impact on the average American. The House of Representatives has 25 committees, with only five or six of major importance.
How many of us actually voted for these dozen or so congressional leaders that rule over the two houses of Congress and control these committees? I will tell you. The last time he was up for reelection, less than 500,000 people voted for the Senate Majority Leader, and no one outside his home state of Nevada unless ACORN had something to do with it. That is less than one-half of one percent of Americans who voted nationally, and less than one-quarter of one percent of eligible voters in the United States.
205,000 people in her home state of California voted for the Speaker of the House, or 0.16% of voters and 0.10% of eligible voters. 203,000 voters in Massachussetts elected the Chairman of the House Financial Services Committee, arguably the one man most responsible for the collapse of the sub-prime mortgage market and global financial crisis that erupted in 2008. Each of these folks have been in Congress more than twenty years, and they control our lives as they see fit.
In effect, about a dozen people in Congress plus the President determine the policies of our government. They are typically career politicians, and today they are all members of the same political party. Yes, the Republicans held the presidency and both houses of Congress less than five years ago, but they did not have the inclination or the audacity to completely overhaul America's cultural foundation and economic system. But when one party controls the government and is willing to ignore the constitution and the general public to radically change two hundred and thirty years of unprecedented progress and social tradition, then society and the nation's culture is fundamentally transformed. With negligible opposition, such a government can violate laws with impunity, particularly when they appoint like minded judges to the judicial system. And they can reward their supporters and disenfranchise their opponents to maintain control.
This couldn't happen in America, could it? Unfortunately, it is happening in America. The sanctity of the law of contracts is viewed by many as the foundation of the American legal system. But the new administration apparently doesn't think so. The financial system bail-outs and nationalizations as well as the General Motors and Chrysler government directed rescues involved wholesale violations of legal contracts. Bankruptcy laws and established banking system procedures are the legally prescribed methods providing for remedies of non-fulfillment of contracts, and they have worked quite well throughout our nation's history. But this government chose not to use them. Their actions indicate they do not respect the law or the rights of American citizens, principles that form the very foundation of the Constitution.
In the United States of America, the public tends to credit or blame the president for implementing government policies that affect us. But he cannot execute those policies without the permission of Congress. It is Congress that makes the laws. It is Congress that controls federal spending. It is Congress that declares war. Presidential appointees and Supreme Court Justices must be approved by the Senate. The point that we all need to understand is that how we vote for Congress is just as important as who we vote for president.
As we know, there are standard stereotypes attached to each political camp. Democrats are identified as supporting big government, redistribution of income, high taxes, maintenance of a minimal national defense, central government mandated economic policies, more public assistance for the disadvantaged, and, shall we say, 'new' moral standards. I seriously doubt if everyone who voted for the Democratic Party candidate in the last election supports every one of those positions. Does the Democratic Party really represent those who were just voting against the other guy?
Republicans supposedly support limited government, low tax rates, a strong defense, private enterprise, and traditional moral standards. But that often hasn't been the case when they were in charge. Some Republican legislators hypocritically displayed questionable personal moral standards despite proclaiming their ethical purity. And the majority of them seem to like spending the public's money and using the tax code to conduct industrial and financial engineering as much as the Democrats. I would bet money that many folks who voted for Republicans were not too impressed with their performance while in office, either.
Half a century ago the two political parties had their differences but generally seemed to be on the same page regarding the relationship between government and private enterprise. Unfortunately, society has now degenerated into separate camps where conservatives seem to think that everyone in government is a corrupt, totalitarian socialist while those in private enterprise are all honest, hard-working capitalists. Contrarily, liberals are convinced that all those involved in private enterprise are selfish, greedy crooks while everyone in government is an altruistic, compassionate angel.
I am compelled to ask why the self-assured activists on either side always believe their opponents have evil ulterior motives, as if they alone have a monopoly on compassion, righteousness and good intentions. Isn't it plausible that people on both sides have similar objectives but just disagree on the course of action to achieve them? Wouldn't the probability of mutual objectives being accomplished be higher if each side would now and then shut up and listen to the other? Demonization of political adversaries is a poor substitute for rational debate, and is a sign of supporting policies that lack real substance or viable solutions. It is past time for Americans to start acting like adults and realize the other side is not evil or ignorant, and begin to understand that legitimate differences of opinion in political discourse do exist.
But we are a long way from that understanding now? This government that is radically changing our economic structure and the lifestyle of future generations was elected because the last government did not do its job either. We now have a political system where neither party displays any sense of responsibility. They spend their time promising everything they know they have no intention of delivering and denigrating their opponents in order to accomplish their one objective of getting re-elected. We end up with career politicians who establish dynasties that preclude the election of citizen legislators as intended by our country's founders, and they ignore the real issues that confront the country. Their primary objective is to buy our votes with our own money. They proclaim their policies will greatly benefit the American people, but are sure not to apply those policies to themselves. They cannot possibly represent the American people in a responsible manner.
In 1776 we rebelled against a tyrant who demanded taxation without representation. Today, nearly half the voters pay no taxes or are beneficiaries of government programs. This segment of our population now has representation without taxation, a very good deal for them indeed. Meanwhile, those who pay the freight have returned to the status of taxation without representation. That is an untenable situation.
When a very small number of politicians who wield the most power in government become entrenched in their positions for long periods of time, we no longer have a democracy. We have an oligarchy, run by a politburo. And when a president is elected who is either in complete agreement with the Congressional leaders' agenda, too weak to over-ride them or too busy promoting himself to get involved, then there is no functional system of checks and balances. The ruling politburo does anything it damn well pleases.
How did we regress to the point where our freedoms, rights and prosperity are threatened by internal forces. In my personal opinion there are two primary factors that allowed this transformation to take place. One is the dysfunctional nature of our current two party system of politics.
It is clear the United States did not transform its political and economic system overnight. It took gradually increasing intellectual arrogance and cumulative failures of competence, integrity and moral courage over time by members of both dominant political parties. The fact is that Americans in general are compassionate and willing to provide assistance to those who genuinely need it, but they are not in favor of the government spending money beyond its means. Never-the-less, over the years' government expenditures continued to grow for expanding entitlements, new social programs, new bureaucracies and the unnecessary earmarks thrown in by most congressmen to provide goodies to their benefactors.
By its very nature, politics always involves corruption. It involves money, and it involves favoritism. Powerful people always attract folks willing to provide enticement and indulgences in order to gain influence on decisions that affect their interests. Special interest lobbying firms have grown to immense proportions, and their ability to influence legislation has become enormous. The interaction between lobbyists and legislative staffs is often the determining factor in legislative decisions, irregardless of the will of the American people.
American International Group, or AIG as they have become notoriously known, General Motors, Bear Stearns, Lehman Brothers and even Fannie Mae and Freddie Mac had some of the largest lobbying organizations in existence. It is not surprising that these enterprises were at the heart of the economic and financial meltdown. In fact, one has to question why quasi-governmental entities such as Fannie Mae and Freddie Mac were even engaged in spending millions of dollars to lobby Congress.
Given the money involved and the way political campaigns are conducted today, it is difficult to attract honest, qualified people to run for public office. With a vast number of interest groups to deal with and each offering campaign backing for legislative favors, a candidate who is not willing to compromise his integrity or principles has little chance of winning. Only the candidate that satisfies the most powerful and wealthy lobbyists has a chance. Unfortunately, there are many candidates who are willing to do anything to gain the power and the limelight, and they will sell their souls to the special interest groups. This results in government for the benefit of those who provide the cash. Money talks, and the average citizen is ignored.
Furthermore, incumbency strongly favors the office holder in local elections. Public office has become a full time career. The incumbent has strong advantages in name recognition and funding support from their supporting interest groups and national party organizations. They also have access to their public relations and advertising professionals, who are experienced at designing winning campaigns. Once a congressman is in office, they are tough to get rid of.
In order to make their tenure permanent, politicians have adopted the strategy of totally destroying their opponents through character assassination and bogus indictments for alleged misdeeds. They conduct politically partisan witch hunts against their opposition whenever they assume power, as if nothing the other party did in office was ever right. The timing of the allegations is often used to deflect public attention away from serious misdeeds of senior members of their own party. Politics has become personal combat, with the primary strategy of demonizing and criminalizing opponents. Politicians who contrive the most creative lies about their opponents win elections. Experience, track records and actual accomplishments have become irrelevant.
In the rare occasions politicians and top bureaucrats do lose an election or influential government office, they seldom retire or return home to resume their prior careers. They are hired by Wall Street investment houses, Ivy League academic institutions, or Washington "think tanks" for lucrative salaries to bide their time until their party returns to power and they rotate back into government. Consequently, very little new blood or new ideas ever make it to positions of influence in our nations leadership.
The Founders strived to create a government that served the people, not one that evolved into a giant black hole that sucks the life out of its citizens. Today, following years of spending money that it doesn't have and putting Americans in debt beyond our capacity to repay, America revolves around Washington, D.C. The U.S. Bureau of Economic Analysis reports the average compensation for federal employees is now more than double the average in the private sector. Seven of the ten richest counties in America surround Washington, D.C. Is that indicative of a government that serves the people, or one that exploits them?
There has to be a better way to ensure that Americans elect leaders who are honest, diligent, competent, and focused on working for the people who elect them, not themselves and their lobbyist benefactors. The United States, in order to return to the country our founders envisioned and our predecessors created, must have a federal legislature and administration that represents the American people rather than the vocal lunatic fringes of our society, wealthy benefactors and politically connected special interest lobbyists. We need leadership that is socially compassionate, fiscally prudent, worldly wise and administratively competent. Our current leaders are none of those. They are not even socially compassionate as they proclaim since they have no empathy for the vast middle class that comprises the majority of Americans, fuels the American economic engine and pays the taxes that government lives on. It may be an old cliche, but money is the root of this evil. Changes need to be made in the election process and limits placed on terms in office.
The second factor leading to the polarization of American society is the bias and misinformation produced by the various providers of information to the public. It is unfortunate that people cannot believe anything they read anymore. Depending on the source, one gets a completely different understanding of issues that should be straight-forward. This includes issues such as whether a health care bill contains certain clauses or it doesn't, whether methods of interrogation produced information that saved lives or it didn't, and even whether polls indicate a majority support a particular issue or they don't. Obviously, one or both sides are playing fast and loose with the facts and the truth in order to convey the message they want. People are going to believe the side they are pre-disposed to believe. News reporting has become so slanted and biased it has become useless.
The traditional sources of communication and information - newspapers, magazines, radio and television news programs, and particularly opinion oriented books and movies - have always displayed a certain bias depending on the political leanings of the producer. Realistically, complete objectivity is probably an unattainable goal. But bias has become so prevalent in the mass media that Americans have developed adversarial positions on the issues they are unable to compromise.
Many may strongly disagree, but it is really undeniable that the so-called mainstream media is biased toward the liberal agenda. It is on public record that journalists overwhelmingly vote for Democrats, the party that markets itself as the one with human compassion even though the reality of that contention is debatable. Perhaps there is a reason journalists try to identify themselves with compassion. Those who make a career of journalism often tend to be the altruistic types who want to expose the suffering and misery of the poor and the hungry, or root out corruption wherever it may be found. They are often on the front lines of the wars and conflicts and witness first hand the brutality and senselessness. The world needs these stories to be reported.
But perhaps journalists sometimes are too close to the story, which may limit their objectivity and ability to see the big picture. Socially speaking, what if there are limits on what government can do to assist the poor or feed the hungry? What if the best course of action for the less fortunate would be to put limits or stipulations on government assistance and strongly encourage them to become more self-sufficient? What if throwing money at the social problems really only ends up making them worse? What if we embark on uncertain quests to solve problems we are certain exist but end up creating even more damaging unintended consequences?
Regarding national security, what if we never did anything to assist those persecuted and terrorized by genocidal dictators? What if we didn't build and maintain the capacity to defend ourselves against foreign adversaries? What happens if we don't pursue terrorists who are committed to killing Americans? These are questions journalists need to consider before berating those who may believe in a different approach to solving the world's problems.
But journalists refuse to believe they are biased in reporting the news. They ask the accusers to provide evidence. That is not too difficult, since the evidence hides in plain sight. It is in the adverbs, adjectives, suggestive phrases and unsubstantiated innuendoes. It is in the routinely used descriptive terms that are either praiseworthy or derogatory in order to paint the picture the journalist wants. The evidence is also in the customary 'authoritative' statements declared as truth or fact without providing any proof, or assertions that cannot be proven or disproven. If 'sources' are quoted, they are typically only from one side of the story rather than from multiple sources that may provide more fair and balanced information. Journalists may not even do this intentionally. It may be just a product of their ingrained mindset.
The controversy over National Security Agency monitoring of telephone calls and emails in order to identify terrorist cells and potential plots to attack Americans is another prime example of media bias. When this happened under the Republican administration the mainstream media and various civil rights groups went ballistic and claimed it was illegal violations of citizens rights to privacy. But when it continued under the current Democrat administration, the news organization spun it by reporting it was believed to be unintentional and that steps had been taken to correct the situation, without offering any proof that they had. One administration is automatically labeled as violators of civil rights while the other is summarily excused. Is that balanced reporting?
Many editors, publishers and producers will admit their product is opinionated. They say that is what the public wants. Maybe they are right. A reader can buy either the New York Times or the Wall Street Journal and know what kind of slant to the news he is getting. The expectation of opinions must be why so-called newsmagazines such as Time carry feature articles by unelected and uncredentialed writers that arrogantly second guess elected Republican officials by questioning or ridiculing their decisions, as if the world would be a better place if the writer was in charge. It also explains why they have the audacity to publish a cover story by a staff reporter that tells us all how a president can fix the economy, which assumes the writer is an expert on subjects that are extremely complicated and consume the full time of thousands of highly educated professionals whose viewpoints and opinions differ greatly. Most of Time's articles suggest the solution to all of America's problems would be simple if only Republicans would disappear.
Do editors and producers have the right to make their own editorial decisions when reporting a story? Certainly. Do they have the right to intentionally mislead and create false representations? Unfortunately, yes. Is that ethical and responsible journalism? Certainly not. Americans have had enough of journalists' telling them what to believe and what to think. They are tired of the arrogance, condescension and pretensions of intellectual superiority. Americans want real, honest, unbiased news so they can educate themselves and form their own opinions. They know they are not getting it from the mainstream media. That is why newspapers are shutting down across the country and broadcast media is losing its audience.
The entertainment industry is another source of propaganda indoctrinating the American public with the liberal agenda. So-called documentaries 'exposing' scheming Republicans marketed as factual contain few grains of truth. Over-promoted films depict American businessmen and intelligence operatives as evil villains. Industry ceremonies award prizes to those productions that are the most politically correct.
For example, our current president won a Grammy in 2008 for Best Spoken Word Album for a recording of his book 'The Audacity of Hope: Reclaiming the American Dream.' The year before the award was given to Jimmy Carter, the one-term Democrat president of the late 70's. The year before that the award was again given to our current president, and the year before that to Bill Clinton, the previous Democrat in the oval office. In 2004 it was given to truth-challenged, manure-flinging clown Al Franken for a completely unintelligible and fictional bashing of Republicans labeled 'A Fair and Balanced Look at the Right'. I am not making this up. Look it up yourself. Perhaps a better name for the self-righteous, self-indulgent orgy of an awards ceremony would be 'The Audacity of the Entertainment Industry'.
You often hear from the Democrats, and consequently the media, how America has alienated people in other countries around the world. Although there is certainly room to dispute that, particularly in view of the fact that immigrants keep showing up at our door, it would be a wonder if foreigners had not lost some respect for us. Foreign news organizations, particularly in the Middle East, report nothing but slanted and outright false information that paints the U.S. as a mean and evil monster. Unfortunately, our own media does the same thing. There is often little difference between the New York Times and al-Jazeera.
We now live in a world where deeds no longer speak louder than words. Deeds are ignored while words are used to deceive, mislead, misrepresent, misinform and lie. They are used this way to vilify, demonize, denigrate and defame those who do not agree with the politically correct viewpoint. The result is dangerous polarization of society.
Earlier I mentioned I am politically independent, neither a Republican nor a Democrat. One could ask if I am supposedly independent of either party, why have I spent most of this essay bashing the Democrats. Good question. The answer is because Democrats are the ones who dominate the mainstream media, therefore the ones responsible for the majority of the biased, misleading, often fabricated information that is disseminated to the public.
Democrats are the ones who initiated the strategy of legal harassment against their opponents - generating indictments of members of the opposite party's staffs for just doing their jobs, and filing numerous bogus ethics complaints against their challengers, including vice-presidential candidates, to bog them down in legal proceedings and raise unsubstantiated questions about their character.
The Democrats are the ones who cried political partisanship when Gorge W. Bush dismissed seven U.S. Attorneys, who by law serve at the pleasure of the President, while completely ignoring the fact that Bill Clinton fired all 93 U.S. Attorneys at the beginning of his first term. They are the ones that escalate non-events into major scandals and turn routine actions of government into criminal behavior. They intentionally create negative character assassinations out of nothing. No administration in history has had to withstand the degree of unsubstantiated, unwarranted and untruthful accusations of transgressions and misconduct as the last Republican one. This political character assassination is what has polarized the country.
It is the Democrats who belittle the average American citizens who gather at town hall meetings to register their concern and exercise their political voices that the Democrats do not want to hear. The Democrats declared war with no ethical limits or rules. And because they started it, they are responsible for the backlash of the out of control reactionary invective that now consumes the internet, where the public has turned its attention to get the information they can't get from the mainstream media.
The internet, with its emails, blogs, twitters and whatever other forms of communication derive from it, has the capacity to be the most instructive and enlightening source of communication ever created. Unfortunately, it has also proved to be one of the most destructive. There has been a generational change in the way people obtain information. The younger generation does not watch television news or read newspapers. They get their information from the internet, much of it from extremely one-sided blogs that are filled with fabricated, misleading and false claims. This is happening not only in the United States, but around the world. These blogs are the madrassahs' of Western Civilization, filled with hate and venom for those with opposing opinions. Reasonable and rational debate has been replaced with intolerant, unaccountable personal opinion.
The internet has arguably become the primary accelerator of polarization in America. Blogs have overtaken the traditional sources of information from newspaper reporters and editorials, television talking heads and radio talk shows. Unfortunately, they are becoming even more vitriolic and socially destabilizing. The internet gives the bitter, hate-filled, uninformed members of our society a forum, and it is easy for the like-minded to tune them in, dividing the citizens of the country further into fanatical opposing camps.
Despite the widespread hate-mongering, it is still possible the eventual impact of the internet will prove to be positive. It allows information about important issues to be disseminated more widely among the public, often informing people who would otherwise not take the time to learn anything about the issues. It can serve to offset the money and influence of the powerful special interest groups as the public becomes more aware of public policies and their effect. Over time the misinformation and lies generated by both opposing sides can become exposed and diminished, hopefully leading to better understanding and rational compromise. But we are a long way from that now.
At the present time, dysfunctional government, divisive journalism and internet driven sectarianism is driving a wedge between various segments of American society. The country is no longer a vibrant, ambitious, progressive, ethnic assimilating frontier society of enterprising entrepreneurs and aggressive builders of a better life. Large segments of the population believe they are entitled to all the good life has to offer for little or no effort on their part. They believe that when things go wrong it is the government's job to bail them out. This attitude is causing the United States to devolve into a moribund, selfish, entitlement expecting welfare state. The heavy hand of government and acrimonious discord between people of differing opinions is destroying the country.
I admit I have painted a very dark picture of America's future. We have suffered hard times and political acrimony in the past, and have always recovered and moved forward with renewed societal and economic progress. But the United States faces challenges today that did not exist in the past, challenges that will require changes in our political structure for us to maintain our standard of living and national security. Mountains of debt, growing threats from weapons of mass destruction, and a society that has evolved into one where more people are dependent on the government for their means of support than pay taxes to provide it has dug Americans a deep hole that will be difficult to escape.
What can be done to reverse this destructive polarization of American society. What can we do to restore our country to a true democracy and our traditional culture of personal responsibility, self-reliance, national unity, tolerance, and compromise for the greater good? Obviously a good start would be to elect more responsible political leaders, who would understand their job is to serve the people and try to unite us rather than divide and conquer. But how is that going to happen when our political leaders are primarily engaged in expanding and securing their power and influence rather than performing their public duties? Who is going to challenge the institutions that run the country to do the right thing when they are all involved in feathering their nest?
Who is going to force journalists to report real, unbiased news rather than slanted, partisan essays designed to influence public opinion? And who could possibly convince the rabid bloggers to tone it down before they cause a civil war? Practically speaking, since free speech is a basic fundamental right of our constitutional republic there is not much we can do about published and broadcast bias and incendiary opinions. Hopefully, Americans will come to realize these sources report inaccurate, provocative, malicious information that misrepresent reality.
Unfortunately, America is unlikely to reverse its downward spiral until it recognizes its underlying cause. We cannot, and should not, restrict the right to free speech. But we can improve our political system. Politics is the art of a politician having the ability to make people believe he will make their lives better than his opponent will. And the best politicians are adept at convincing the people someone else will pay for making their lives better. Unfortunately, the better liar usually wins.
It can be argued that American society's polarization began with the government gradually granting political empowerment to those receiving entitlements. Charity to the poor and support of the underprivileged is a necessary and required duty in civilized society. But when income is distributed by government in order to generate votes for incumbents rather than to provide for the sustenance of those who need it, then that society becomes corrupt and illegitimate. Eventually government officials entrench themselves in office by buying votes with taxpayer dollars. That is where we are today. Consequently, the only viable course to the restoration of true democracy, genuine liberty and equal justice in the United States of America is to completely reform the American electoral system.
Many will consider this blasphemous, but there are legitimate questions about the relevancy of the U.S. Constitution to a nation that has evolved over more than 200 years. The founders could not possibly have anticipated everything that has transpired in the development of our country. We have grown to a population of over 300 million people compared to a population of three million in 1787 when the Constitution was ratified. And the nature of our government has changed dramatically since then. It is now an enormous administrative bureaucracy with two dominant political parties. Today, large corporations, wealthy individuals and special interest groups finance candidates and lobby elected officials, thereby buying the influence to shape public policies.
Furthermore, technology has produced communications systems that disseminate information instantaneously, and the sources of information and opinion have become practically infinite. Transportation has been revolutionized as people can now travel halfway around the world in less than a day. Health care has improved exponentially and people are living longer. And weapons of mass destruction can destroy a nation and kill millions in less than a second. We live in a different world from that of 230 years ago.
Unfortunately, our system of choosing our leaders has not progressed to accommodate a changing society. The result is we now have a government that is no longer functional. In fact, it can be argued that our government is now regressing to the type of autocratic oligarchy or monarchy that our founders rebelled against.
Our system of electing government officials needs to be updated. We must take money and tenure out of government and put knowledge, integrity and competence in. In order to accomplish that, I have seven recommendations regarding reform of the electoral process. The first six are reforms that definitely must be considered. The seventh would be a significant change that could at least begin discussions to create a more sustainable national environment that rewards hard work and productivity.
One - The most obvious and important reform is the implementation of term limits. Everyone knows the majority of the American public is in favor of term limits. The current system of unlimited terms for both the Senate and the House allows congressmen and women to spend their entire time in office campaigning for the next election rather than doing the jobs they were elected to do. They generally do not read the legislation they vote on and depend on their huge staffs and lobbyists to determine which way to vote to further their best interests, not their constituents.
In recent years over 90% of incumbents in the House of Representatives are re-elected to their seats. In many cases, the incumbents run unchallenged. In others, the challenger cannot raise anywhere near the amount of campaign funds as the current seat holder since special interests prefer to keep the devil they know in office. Qualified, capable and honest candidates know they do not stand a chance, so they don't run. That leaves voters with no choices that will dutifully represent their interests.
Unfortunately, setting term limits on members of Congress requires an amendment to the Constitution. Initiative and referendum are not available to American citizens at the national level. And of course politicians will never vote themselves out of office by approving term limits. But there are a couple of ways Americans can flex their Constitutional muscles and set the process in motion.
Perhaps the easiest approach, particularly in today's world of the internet, would be a grass roots initiative to start a petition among the voting public demanding that each candidate for the Senate or the House supply a signed pledge to introduce, sponsor or support legislation to enact a term limit amendment to the Constitution, and promise to work aggressively to ensure enactment. If a majority of constituents sign the petition, the candidate can not fail to understand the will of the people. If the candidate signs the pledge, is elected and fails to perform, he knows his political career is over after just one term.
The other approach would be based on the Constitution itself. Article V provides for the right of the legislatures of two-thirds of the states to call a convention for the purpose of proposing amendments to the Constitution. Amendments produced at the convention would become law if ratified by three-quarters of the states. This course of action can be implemented through the process of initiative and referendum in each state, which is based on a direct vote of the registered voters of each state. This would probably be a more difficult and complicated route to term limits since congressional incumbents, experienced political attack dogs and their friends in the media would certainly muster all their ammunition to propagandize and fight the amendment to the death. But if enough Americans become thoroughly disgusted with the way Congress conducts itself, as mounting evidence seems to suggest, it could possibly work since it actually bypasses the inert and irresponsible members of the congressional club.
I would propose that each elected official of our government, including the president, by limited to one term in the office he was elected to serve. Six years for the president, eight years in the Senate and four years in the House of Representatives would give each elected official enough time to influence legislation and provide the proper representation for his constituents rather than wasting their time and money by constantly campaigning for re-election. In fact, I can't see how it would hurt to limit Supreme Court Justices to twenty year terms. They are not infallible, either.
Two - Amend the Constitution to establish certain requirements to be eligible to vote in national elections. Democracy works only when the people voting for their representatives in government possess a basic education, an understanding of our system of government and the ramifications of the important issues those elected officials will be debating. Perhaps folks who have no idea who or what they are voting for other than what a favorite television talking head tells them should not be voting. People who do not take the time to educate themselves on the issues and each candidate's position are doing the country a great disservice if they step into the voting booth. Voters should focus on the substance of a candidate's knowledge, competence, experience and platform, not personal popularity or skill in reading from a teleprompter.
Consequently, basic voting requirements should be implemented to improve the quality of the electoral process. One, a diploma from an accredited American high school or the equivalent would not be too much to ask in order to be eligible to vote. Two, requiring a voter to be a U.S. citizen for a minimum of five years and to maintain residence during that time would assure that only those who have a genuine and vested interest in the policies of our national government are allowed to influence it. And three, how anyone could oppose a national photo ID voter card is beyond my comprehension, unless they are a member of ACORN.
Three - Campaign finance reform is a must if Americans are to have free and fair elections. Disclosure of contributions is not enough. The underlying principle of democracy is that no one should be able to buy an election. Buying an election is what happens when special interest groups are allowed to spend unlimited amounts to promote their narrow, selfish interests at the expense of the general public. Money should not be the determining factor in public policy. Past efforts to address this problem, usually designed to accommodate some concept of free speech, have not worked.
Campaign financing is not an issue of free speech. It is bribery, plain and simple. Those who argue that it is an issue of free speech imply that some people's speech is more important and free than others, because they have more money. In the public arena there is no reason legislators should be allowed to accept gifts, free entertainment, rides on corporate aircraft, money in campaign funding or any other potentially compromising situation from those who benefit from a legislators position. In order for congressmen to do their job effectively, they should get information regarding every issue from as many sources as possible, and definitely from each opposing side.
Campaigns should be funded with public funds, with the government setting aside a limited amount to be equally distributed to the candidates running for office. Obviously, more money would be allocated to the presidential candidates and the Senate races than the House campaigns. Public financing with equal amounts provided to each candidate for a particular office will level the playing field and allow them to get their message across, if they have one.
Four - The state primary system in America is an absurd travesty. Usually only a small percentage of eligible voters participate, typically the most extreme and radical from each party. That means the nut cases are determining who the party's standard bearers will be. At the national level, due to the large influence of super delegates, the Democratic Party's nominating convention defies the concept of democracy. One in five delegates is a super delegate, who are in fact the liberal party leaders, current office holders and others who can vote for the candidate they please regardless of state primary and caucus results. In other words, one candidate may win a substantial majority of state delegates, but lose the nomination if the party leaders so choose. Where is democracy in that?
Instead of being ultra-expensive, over-indulged, gluttonous, drunken orgies that cater to incumbents and national leaders, the party conventions should be low key affairs focusing on the job at hand - combining the outcomes of the individual states results to select a presidential candidate, and formulating the platform on which the candidate will agree to govern. Concentrating on policy rather than pomp and propaganda would be extremely beneficial to the election process.
Five - A key issue in generating a more representative republic responsible to the people is to move beyond the dominance of two political parties. Voters need to have multiple choices to choose from, not just between bad and worse. It is interesting to note that the United States and Spain are the only two countries in the developed world that do not have more than two parties comprise more than five percent of their senior legislature. This is true regardless of whether the countries are a federal republic, constitutional democracy or parliamentary monarchy. In fact, the majority of developed countries have four or more parties that have meaningful representation in government. The same is true in most of the developing countries of the world that have democratically elected governments.
Reform providing equal funding and more emphasis on policy would open up the American electoral process to more candidates, giving voters a better opportunity to identify candidates that represent their views. The more viewpoints participating in political debates would create more responsive and effective government. No one party could dominate the debate and railroad their agenda into law. Rational discussion and compromise would result in coalitions between parties forming on each individual issue to produce legislation more in the interests of the general public.
Six - Another obvious change in the election process that can be covered in one short paragraph without much debate is the issue of gerrymandering. The concept is ridiculous, and serves no purpose other than to create safe seats for particular parties. Gerrymandering should be eliminated, and representation should be re-instituted on the basis of recognizable districts, cities or counties.
Seven - Perhaps we should even consider something sure to be more controversial, such as a proposal to amend the Constitution to ensure that those who depend on government for their livelihood do not determine public policy. A Constitutional Convention could be convened to consider the concept of alternative rules for electing representatives in the House and Senate. For the House of Representatives, the rules would not change. The popular vote in each district where each eligible voter gets one vote would continue to apply.
As regards the Senate, votes would be based on the amount of taxes paid. In effect, those Americans who contribute to the functioning of our government would have a greater voice in choosing senators. If a citizen doesn't pay taxes, then he or she does not have a vote for their senator. Votes would accrue to individual voters based on one vote for each $10,000 paid in federal taxes, starting with one vote for taxes paid up to $10,000, two votes for taxes paid up to $20,000, and a maximum of three votes for taxes paid up to $30,000. If a taxpayer paid $250,000 in taxes they would still only receive three votes. This method of bicameral voting rules would allow those Americans who are productive and contribute to a more prosperous society to have a strong say in the legislation that affects their ability to continue to generate rising living standards.
The political reforms discussed above could go a long way towards returning America to its traditional values and restore the magnificent vision of our founders. At the very least they present issues for discussion that could most likely be improved upon. But there is one other issue that remains troubling and needs to be investigated by folks with more knowledge of the subject than I.
It is truly frightening that a large segment of the population seems to be in favor of an all-powerful central government. The fact is that socialism is making a strong push in America. Recognizing that polls can be and are manipulated, it is interesting to note that a Rasmussen poll released last April reported that only 53% of Americans believe capitalism is superior to socialism. 20% favored socialism while 27% had no clue. Of those under 30, a staggering 33% said they preferred socialism according to the poll. Does this represent an indictment of the American educational system as the teachers unions dumb down and propagandize the politically correct agenda in the public schools and the ubiquitous socialist college professors brain-wash the malleable in university lecture halls?
We need to know if it is possible that as a country we have been asleep at the switch while left leaning socialists permeate the elementary and secondary education system and design curriculums intent on teaching their version of American history, social and industrial development, and current events. We need to know if our children are learning the facts about how the United States of America became the leader of the free world or if they are just being taught the politically correct rendition of environmentalism, gender and racial inequality, and evils of capitalism. It is no secret that 60's and 70's radicals such as our current president's buddy William Ayres have curriculum determining positions at such organizations as The American Educational Research Association. How much influence do people such as Ayres have on setting curriculums?
Our children need to learn about the United States that we know, the one that began with the powerful ideals and bold courage of the American Revolution; that created a society based on the principles of democracy, liberty and justice; that struggled to grow with the pioneer spirit of opportunity and hard work; that suffered great sacrifice to prove that all men were created equal; that came to the aid of freedom loving countries threatened by murderous dictators; and that achieved levels of technological, economic and social progress never before imagined, bringing the rest of the developed countries of the world with it and providing a model for the developing world to follow. But evidently they are not.
Is it possible that socialism is growing in acceptance in America because our schools are emphasizing liberal philosophy? The vast majority of Americans do not identify with either the extreme left or right, but are radical liberals in charge of our educational system? Of course our schools should teach our children about Martin Luther King and his non-violent campaign to overcome racism and inequality. He was a great man and a major positive influence on American culture. But kids also need to learn more than they do about the ideals, courage and sacrifice of George Washington, Thomas Jefferson and Benjamin Franklin, too. It would also be good if the schools would provide a dose of a Thomas Sowell for each reference to a Jesse Jackson.
The constitution begins with 'We the People', not we the liberal, we the conservative, we the privileged, we the wealthy, we the college professors, we the news media, we the lawyers, or we the Hollywood celebrities. Elected officials are supposed to represent the people, not those who stuff their pockets full of money with bribes for special favors.
It is not supposed to be about left versus right, or liberal versus conservative. It is about right and wrong. It is not about socialism versus capitalism. It is about what works and what doesn't. It isn't even about democracy versus oligarchy versus dictatorship. It is about government being for the people or against the people. It is about freedom and individual rights versus arbitrary laws and state control. And it is about progress and preservation versus stagnation and decline.
The founding fathers, and historically most Americans, fiercely believe in liberty, justice, security and capitalism. Government requiring us to live our lives as it demands and taxing us to implement unworkable programs and policies that we don't want is not liberty. Bailing out those who are responsible for financial and economic collapse at the expense of those who suffered the consequences is not justice. Unilateral disarmament while our adversaries grow stronger is not security. Government take-over of commerce and industry is not capitalism. America is headed in the wrong direction.
It is time for us to realize America is not a greedy, evil, imperialistic predator as some of our politicians try to tell us. The United States has been the guiding light and incarnation of freedom, justice and democracy for over two hundred years. We have lived our ideals and served as the beacon of hope for all those that reject the bonds of tyranny and aspire to claim their individual rights and pursue their potential destinies. We have produced standards of living beyond our ancestors' imagination and shared it with the rest of the world. We have come to the aid of fellow democracies threatened by brutal tyrants and suffered great sacrifice to help them preserve their freedom. We have accomplished this by relying on the collective wisdom of our people and the power of private enterprise rather than unproductive bureaucrats and a government controlled economy.
We don't need and cannot afford change that destroys our fundamental principles. We must reverse our slide down the slippery slope toward the virtual imprisonment of socialism and return to the selfless values and strength of character that created the great nation we became, and can remain. We are at the crossroads. Let us not pursue the wrong course.
In the context of politics, differences of opinion are generally a good thing. Freedom of speech and the ability to discuss ideas and opinions among ourselves is why the Free World has led the development of modern, prosperous societies. Rational discussion and debate is necessary for decision makers to arrive at optimal solutions to the issues that challenge them. Closing our minds to alternative courses of action because of blind faith in a particular ideology, a specific cause or a charismatic leader often leads to disaster, as we have seen many times throughout history.
I am politically independent. I prefer to consider myself an American who supports leaders that actively work to maintain the founding principles that produced the greatest country in the history of the world, whether they be Republican, Democrat, Libertarian or Martian. I believe that government should exist solely to ensure justice, protect individual rights, preserve freedom, and create an environment that allows private enterprise to flourish. In other words, to establish justice, insure domestic tranquility and provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity. Most of us should remember those words from the preamble to the Constitution.
Unfortunately, the United States of America is currently undergoing radical, unprecedented changes in our culture, our economic system and our philosophy of government. Democracy, freedom and capitalism in America are under attack, and the issues Americans face are a real threat to our way of life and long term survival. These issues must be discussed openly and constructively among our citizens and political leaders, because in the not too distant future we may end up with a country that is much different than the one we inherited from our forefathers. If we continue to blindly pursue our present course we are likely to evolve into a polarized, violent, economically stagnant society with limited liberties and minimal ability to defend ourselves from foreign adversaries.
Nearly all of us have been blessed to live and work in a Western society and enjoy the good fortune of individual freedom and the opportunities created by free markets. That is because the founding fathers of this great nation conceived a constitution that for over 220 years has allowed us to live free, pursue our personal interests, and participate in selecting our political leaders.
Freedom for Americans has meant the right to engage in the occupation of our choice in free and open markets, and to be compensated well enough to enjoy the lifestyle we choose. Capitalism has allowed the innovative and entrepreneurial among us to generate standards of living for all that were incomprehensible just a few generations ago.
But despite the unprecedented prosperity and freedom we have achieved in America, many people in our society don't seem to acknowledge or appreciate it. It seems that many among us believe our country is an evil and imperialistic bully, controlled by greedy businessmen intent on destroying the environment and exploiting the world's resources. Others are convinced we have become an immoral, decadent society that must be purified and taken back from the control of contemptible, Godless perverts. Somehow we evolved into an America that has become angry, hateful and intolerant of those who do not agree with us.
This polarization of society is like a deadly virus that threatens the future of our country. The individual rights challenged authoritarians on the right and the common sense challenged socialists on the left have no respect for differences of opinion, and are both completely convinced they are one hundred percent right while those who disagree are uneducated idiots or vile, conspiratorial pawns of some special interest group. Actually, both are right. The other side is the problem.
Unfortunately, even though the extreme elements are a minority within their respective political parties they are the most influential because they scream the loudest and are the most committed. And the leaders and elected representatives of each party often tend to come from their radical activist wings. Once elected, these extremists have a much bigger soapbox from which to polarize the country further, and they do. Politicians today do not use their status to reconcile Americans and promote unity, but use these differences to create even more animosity in our culture in order to solidify their power.
The continued expansion of the welfare state has resulted in open warfare between those who are beneficiaries of government entitlements and those who pay for them. The two opposing forces are nearing equilibrium, and those who pay for it all are not happy about government confiscating their hard earned dollars to redistribute to others. The rise of the victim mentality and the outrageous transfer of money to them from those who have victimized no one has resulted in escalating partisan animosity.
There is no question that the United States, through the economic growth engine of capitalism, has achieved a remarkably high standard of living. At the same time we have created a disparity of wealth and income among our citizens that needs to be addressed. In a society of abundance there is no legitimate reason for those at the bottom to be left out. If future economic growth has to be marginally sacrificed through higher taxes on the wealthy in order to provide support for the disadvantaged, disabled and dispossessed, then a society of advanced affluence can certainly afford it.
But in order to actually accomplish the objective of providing assistance to the unfortunate, the resources of our country need to be spent wisely, not thrown away to some favored interest group, politically correct crusade, or government program that never produces results. The preamble to the Constitution says the government should promote the general welfare, not supply it. The best way to do that is by supporting capitalism, open markets and equal opportunity, not redistribution of income. In order to maintain the ability to generate the resources that provide for public assistance, government should never cripple the engine of economic growth by interfering in private enterprise.
The last election in the United States resulted in monumental change to our culture and economic system. The winners campaigned on a slogan of change, as many challengers often do. Obviously they did not use the word as an empty political slogan. They produced more change in their first months in office than ever seen before in American history. But is this the kind of change Americans who voted for them expected? Enough time has now passed for those who voted for the new leaders to ask themselves if the new administration and legislature really represent their views and opinions?
For example, regarding capitalism, does anyone really believe that government can allocate investment capital more effectively and operate commercial and industrial organizations more efficiently than private enterprise? Does anyone believe the productive members of our economy will remain motivated to produce more goods and services and that government revenues will increase if taxes are raised, despite strong historical evidence to the contrary? Do some believe that American workers should be bullied into joining a corrupt, autocratic, competitiveness killing labor union, and then be required to contribute a portion of their earnings to overpay its leaders? By their actions to date, this administration and Congress does.
Is it justice for all if the government bails out the billionaires and mega-millionaires responsible for the financial meltdown from their stupid investment gambles with middle class taxpayers money while unemployment rises to double digits? Does anyone actually believe in leaving our children with the burden of insurmountable debts by creating even more social programs that never accomplish their objectives? Do some people really think multiculturalism is helping to assimilate immigrants into American society, and do they support illegals unlimited access to education and health care paid for by legal citizens? Our current leaders obviously do.
Are our liberties and individual rights being infringed upon when our government dictates that Americans should be forced to drive small death traps and be required to freeze or melt in the dark rather than develop new supplies of energy that might inconvenience some polar bear or caribou? Do we really think we must not use scientific analysis to challenge the environmentalist theocrats who are 100% certain humans are the cause of global warming and are mandating that we drastically change our lifestyles, even though a generation ago the same folks were frightening the public about global cooling? Should talk shows with political viewpoints opposing the policies of the government in power be shut down and silenced? Those are policies our current leaders support.
And perhaps most logic defying of all, do the majority of Americans really think America is an evil and imperialistic country that should apologize to the rest of the world for our behavior despite providing the economic engine generating global prosperity and twice saving the world from mass murderers and unspeakable tyranny? Do some people actually think negotiating with terrorists whose religious duty is to eliminate us from the face of the earth will make the bad men go away? Or that interrogation techniques such as waterboarding that resulted in saving American lives from planned terrorist attacks is the moral equivalent of cutting off heads and setting off car bombs that kill dozens of innocent women and children? Does anyone truly believe eliminating cutting edge defense programs is a good idea in the face of increasing global threats? How about negotiating arms control treaties with strategic opponents where we concede everything and the other side gives up nothing?
It is one thing to oppose participation in wars in Iraq or Afghanistan based on differences of opinion over the actual identity of those who attacked us, or questions about the propriety of attempting to force democracy on sovereign countries. It is another thing entirely to ignore responding to those who are responsible for the deaths of thousands of Americans on our own soil, and to unilaterally disarm our military based on naive or outright false understanding of global relationships, ignorance of world history or a dangerously optimistic concept of the nature of man. That is suicidal lunacy.
These are all actions taken or policies advocated by the folks now running the American government. The actions and policies all violate the fundamental principles of liberty, individual rights, security, justice and limited government as embodied in the U.S. Constitution. Are such radical policy changes really what Americans wanted when they voted in the last election?
Traditionally, the majority of Americans have been in general agreement regarding our basic principles. I would like to think they still are. But who today represents those who believe in limited government, capitalism and free markets, individual freedom, personal responsibility, impartial justice, reward based on merit, punishment for wrongdoing, and a strong defense to protect us against foreign adversaries and terrorist organizations who want to dominate or exterminate us? The answer is no one. No such party exists any longer in America. Based on their performance while they controlled Congress, the Republicans did not stand for many of those ideals either. The principles that formed the foundation of our country are now nothing more than buzzwords used by corrupt politicians to get elected and then ignored.
The solution provided by the Constitution for Americans to remedy misrepresentation by politicians is to throw the bastards out at election time. At the presidential level, we often do. Unfortunately, it seems that every new president proclaims he was overwhelmingly elected with a mandate to immediately employ his policies. In 2008, only 62% of eligible voters in the United States voted. Our new president won 53% of the vote. That means less than one out of every three Americans who could have voted actually did vote for the new administration. Despite that fact, the new president is totally ignoring the two-thirds of Americans who don't necessarily agree with his agenda, as if they don't exist, and implementing his policies with no discussion and no compromise.
And what about Congress, where the true power lies? Do the majority of American citizens have a vote in selecting these legislators? Basically, the Senate Majority Leader, the Speaker of the House, and the Chairmen of the Congressional Committees run this country. In the senate there are sixteen standing committees, four special committees and four joint committees. Arguably, only four or five of these committees really have any significant impact on the average American. The House of Representatives has 25 committees, with only five or six of major importance.
How many of us actually voted for these dozen or so congressional leaders that rule over the two houses of Congress and control these committees? I will tell you. The last time he was up for reelection, less than 500,000 people voted for the Senate Majority Leader, and no one outside his home state of Nevada unless ACORN had something to do with it. That is less than one-half of one percent of Americans who voted nationally, and less than one-quarter of one percent of eligible voters in the United States.
205,000 people in her home state of California voted for the Speaker of the House, or 0.16% of voters and 0.10% of eligible voters. 203,000 voters in Massachussetts elected the Chairman of the House Financial Services Committee, arguably the one man most responsible for the collapse of the sub-prime mortgage market and global financial crisis that erupted in 2008. Each of these folks have been in Congress more than twenty years, and they control our lives as they see fit.
In effect, about a dozen people in Congress plus the President determine the policies of our government. They are typically career politicians, and today they are all members of the same political party. Yes, the Republicans held the presidency and both houses of Congress less than five years ago, but they did not have the inclination or the audacity to completely overhaul America's cultural foundation and economic system. But when one party controls the government and is willing to ignore the constitution and the general public to radically change two hundred and thirty years of unprecedented progress and social tradition, then society and the nation's culture is fundamentally transformed. With negligible opposition, such a government can violate laws with impunity, particularly when they appoint like minded judges to the judicial system. And they can reward their supporters and disenfranchise their opponents to maintain control.
This couldn't happen in America, could it? Unfortunately, it is happening in America. The sanctity of the law of contracts is viewed by many as the foundation of the American legal system. But the new administration apparently doesn't think so. The financial system bail-outs and nationalizations as well as the General Motors and Chrysler government directed rescues involved wholesale violations of legal contracts. Bankruptcy laws and established banking system procedures are the legally prescribed methods providing for remedies of non-fulfillment of contracts, and they have worked quite well throughout our nation's history. But this government chose not to use them. Their actions indicate they do not respect the law or the rights of American citizens, principles that form the very foundation of the Constitution.
In the United States of America, the public tends to credit or blame the president for implementing government policies that affect us. But he cannot execute those policies without the permission of Congress. It is Congress that makes the laws. It is Congress that controls federal spending. It is Congress that declares war. Presidential appointees and Supreme Court Justices must be approved by the Senate. The point that we all need to understand is that how we vote for Congress is just as important as who we vote for president.
As we know, there are standard stereotypes attached to each political camp. Democrats are identified as supporting big government, redistribution of income, high taxes, maintenance of a minimal national defense, central government mandated economic policies, more public assistance for the disadvantaged, and, shall we say, 'new' moral standards. I seriously doubt if everyone who voted for the Democratic Party candidate in the last election supports every one of those positions. Does the Democratic Party really represent those who were just voting against the other guy?
Republicans supposedly support limited government, low tax rates, a strong defense, private enterprise, and traditional moral standards. But that often hasn't been the case when they were in charge. Some Republican legislators hypocritically displayed questionable personal moral standards despite proclaiming their ethical purity. And the majority of them seem to like spending the public's money and using the tax code to conduct industrial and financial engineering as much as the Democrats. I would bet money that many folks who voted for Republicans were not too impressed with their performance while in office, either.
Half a century ago the two political parties had their differences but generally seemed to be on the same page regarding the relationship between government and private enterprise. Unfortunately, society has now degenerated into separate camps where conservatives seem to think that everyone in government is a corrupt, totalitarian socialist while those in private enterprise are all honest, hard-working capitalists. Contrarily, liberals are convinced that all those involved in private enterprise are selfish, greedy crooks while everyone in government is an altruistic, compassionate angel.
I am compelled to ask why the self-assured activists on either side always believe their opponents have evil ulterior motives, as if they alone have a monopoly on compassion, righteousness and good intentions. Isn't it plausible that people on both sides have similar objectives but just disagree on the course of action to achieve them? Wouldn't the probability of mutual objectives being accomplished be higher if each side would now and then shut up and listen to the other? Demonization of political adversaries is a poor substitute for rational debate, and is a sign of supporting policies that lack real substance or viable solutions. It is past time for Americans to start acting like adults and realize the other side is not evil or ignorant, and begin to understand that legitimate differences of opinion in political discourse do exist.
But we are a long way from that understanding now? This government that is radically changing our economic structure and the lifestyle of future generations was elected because the last government did not do its job either. We now have a political system where neither party displays any sense of responsibility. They spend their time promising everything they know they have no intention of delivering and denigrating their opponents in order to accomplish their one objective of getting re-elected. We end up with career politicians who establish dynasties that preclude the election of citizen legislators as intended by our country's founders, and they ignore the real issues that confront the country. Their primary objective is to buy our votes with our own money. They proclaim their policies will greatly benefit the American people, but are sure not to apply those policies to themselves. They cannot possibly represent the American people in a responsible manner.
In 1776 we rebelled against a tyrant who demanded taxation without representation. Today, nearly half the voters pay no taxes or are beneficiaries of government programs. This segment of our population now has representation without taxation, a very good deal for them indeed. Meanwhile, those who pay the freight have returned to the status of taxation without representation. That is an untenable situation.
When a very small number of politicians who wield the most power in government become entrenched in their positions for long periods of time, we no longer have a democracy. We have an oligarchy, run by a politburo. And when a president is elected who is either in complete agreement with the Congressional leaders' agenda, too weak to over-ride them or too busy promoting himself to get involved, then there is no functional system of checks and balances. The ruling politburo does anything it damn well pleases.
How did we regress to the point where our freedoms, rights and prosperity are threatened by internal forces. In my personal opinion there are two primary factors that allowed this transformation to take place. One is the dysfunctional nature of our current two party system of politics.
It is clear the United States did not transform its political and economic system overnight. It took gradually increasing intellectual arrogance and cumulative failures of competence, integrity and moral courage over time by members of both dominant political parties. The fact is that Americans in general are compassionate and willing to provide assistance to those who genuinely need it, but they are not in favor of the government spending money beyond its means. Never-the-less, over the years' government expenditures continued to grow for expanding entitlements, new social programs, new bureaucracies and the unnecessary earmarks thrown in by most congressmen to provide goodies to their benefactors.
By its very nature, politics always involves corruption. It involves money, and it involves favoritism. Powerful people always attract folks willing to provide enticement and indulgences in order to gain influence on decisions that affect their interests. Special interest lobbying firms have grown to immense proportions, and their ability to influence legislation has become enormous. The interaction between lobbyists and legislative staffs is often the determining factor in legislative decisions, irregardless of the will of the American people.
American International Group, or AIG as they have become notoriously known, General Motors, Bear Stearns, Lehman Brothers and even Fannie Mae and Freddie Mac had some of the largest lobbying organizations in existence. It is not surprising that these enterprises were at the heart of the economic and financial meltdown. In fact, one has to question why quasi-governmental entities such as Fannie Mae and Freddie Mac were even engaged in spending millions of dollars to lobby Congress.
Given the money involved and the way political campaigns are conducted today, it is difficult to attract honest, qualified people to run for public office. With a vast number of interest groups to deal with and each offering campaign backing for legislative favors, a candidate who is not willing to compromise his integrity or principles has little chance of winning. Only the candidate that satisfies the most powerful and wealthy lobbyists has a chance. Unfortunately, there are many candidates who are willing to do anything to gain the power and the limelight, and they will sell their souls to the special interest groups. This results in government for the benefit of those who provide the cash. Money talks, and the average citizen is ignored.
Furthermore, incumbency strongly favors the office holder in local elections. Public office has become a full time career. The incumbent has strong advantages in name recognition and funding support from their supporting interest groups and national party organizations. They also have access to their public relations and advertising professionals, who are experienced at designing winning campaigns. Once a congressman is in office, they are tough to get rid of.
In order to make their tenure permanent, politicians have adopted the strategy of totally destroying their opponents through character assassination and bogus indictments for alleged misdeeds. They conduct politically partisan witch hunts against their opposition whenever they assume power, as if nothing the other party did in office was ever right. The timing of the allegations is often used to deflect public attention away from serious misdeeds of senior members of their own party. Politics has become personal combat, with the primary strategy of demonizing and criminalizing opponents. Politicians who contrive the most creative lies about their opponents win elections. Experience, track records and actual accomplishments have become irrelevant.
In the rare occasions politicians and top bureaucrats do lose an election or influential government office, they seldom retire or return home to resume their prior careers. They are hired by Wall Street investment houses, Ivy League academic institutions, or Washington "think tanks" for lucrative salaries to bide their time until their party returns to power and they rotate back into government. Consequently, very little new blood or new ideas ever make it to positions of influence in our nations leadership.
The Founders strived to create a government that served the people, not one that evolved into a giant black hole that sucks the life out of its citizens. Today, following years of spending money that it doesn't have and putting Americans in debt beyond our capacity to repay, America revolves around Washington, D.C. The U.S. Bureau of Economic Analysis reports the average compensation for federal employees is now more than double the average in the private sector. Seven of the ten richest counties in America surround Washington, D.C. Is that indicative of a government that serves the people, or one that exploits them?
There has to be a better way to ensure that Americans elect leaders who are honest, diligent, competent, and focused on working for the people who elect them, not themselves and their lobbyist benefactors. The United States, in order to return to the country our founders envisioned and our predecessors created, must have a federal legislature and administration that represents the American people rather than the vocal lunatic fringes of our society, wealthy benefactors and politically connected special interest lobbyists. We need leadership that is socially compassionate, fiscally prudent, worldly wise and administratively competent. Our current leaders are none of those. They are not even socially compassionate as they proclaim since they have no empathy for the vast middle class that comprises the majority of Americans, fuels the American economic engine and pays the taxes that government lives on. It may be an old cliche, but money is the root of this evil. Changes need to be made in the election process and limits placed on terms in office.
The second factor leading to the polarization of American society is the bias and misinformation produced by the various providers of information to the public. It is unfortunate that people cannot believe anything they read anymore. Depending on the source, one gets a completely different understanding of issues that should be straight-forward. This includes issues such as whether a health care bill contains certain clauses or it doesn't, whether methods of interrogation produced information that saved lives or it didn't, and even whether polls indicate a majority support a particular issue or they don't. Obviously, one or both sides are playing fast and loose with the facts and the truth in order to convey the message they want. People are going to believe the side they are pre-disposed to believe. News reporting has become so slanted and biased it has become useless.
The traditional sources of communication and information - newspapers, magazines, radio and television news programs, and particularly opinion oriented books and movies - have always displayed a certain bias depending on the political leanings of the producer. Realistically, complete objectivity is probably an unattainable goal. But bias has become so prevalent in the mass media that Americans have developed adversarial positions on the issues they are unable to compromise.
Many may strongly disagree, but it is really undeniable that the so-called mainstream media is biased toward the liberal agenda. It is on public record that journalists overwhelmingly vote for Democrats, the party that markets itself as the one with human compassion even though the reality of that contention is debatable. Perhaps there is a reason journalists try to identify themselves with compassion. Those who make a career of journalism often tend to be the altruistic types who want to expose the suffering and misery of the poor and the hungry, or root out corruption wherever it may be found. They are often on the front lines of the wars and conflicts and witness first hand the brutality and senselessness. The world needs these stories to be reported.
But perhaps journalists sometimes are too close to the story, which may limit their objectivity and ability to see the big picture. Socially speaking, what if there are limits on what government can do to assist the poor or feed the hungry? What if the best course of action for the less fortunate would be to put limits or stipulations on government assistance and strongly encourage them to become more self-sufficient? What if throwing money at the social problems really only ends up making them worse? What if we embark on uncertain quests to solve problems we are certain exist but end up creating even more damaging unintended consequences?
Regarding national security, what if we never did anything to assist those persecuted and terrorized by genocidal dictators? What if we didn't build and maintain the capacity to defend ourselves against foreign adversaries? What happens if we don't pursue terrorists who are committed to killing Americans? These are questions journalists need to consider before berating those who may believe in a different approach to solving the world's problems.
But journalists refuse to believe they are biased in reporting the news. They ask the accusers to provide evidence. That is not too difficult, since the evidence hides in plain sight. It is in the adverbs, adjectives, suggestive phrases and unsubstantiated innuendoes. It is in the routinely used descriptive terms that are either praiseworthy or derogatory in order to paint the picture the journalist wants. The evidence is also in the customary 'authoritative' statements declared as truth or fact without providing any proof, or assertions that cannot be proven or disproven. If 'sources' are quoted, they are typically only from one side of the story rather than from multiple sources that may provide more fair and balanced information. Journalists may not even do this intentionally. It may be just a product of their ingrained mindset.
The controversy over National Security Agency monitoring of telephone calls and emails in order to identify terrorist cells and potential plots to attack Americans is another prime example of media bias. When this happened under the Republican administration the mainstream media and various civil rights groups went ballistic and claimed it was illegal violations of citizens rights to privacy. But when it continued under the current Democrat administration, the news organization spun it by reporting it was believed to be unintentional and that steps had been taken to correct the situation, without offering any proof that they had. One administration is automatically labeled as violators of civil rights while the other is summarily excused. Is that balanced reporting?
Many editors, publishers and producers will admit their product is opinionated. They say that is what the public wants. Maybe they are right. A reader can buy either the New York Times or the Wall Street Journal and know what kind of slant to the news he is getting. The expectation of opinions must be why so-called newsmagazines such as Time carry feature articles by unelected and uncredentialed writers that arrogantly second guess elected Republican officials by questioning or ridiculing their decisions, as if the world would be a better place if the writer was in charge. It also explains why they have the audacity to publish a cover story by a staff reporter that tells us all how a president can fix the economy, which assumes the writer is an expert on subjects that are extremely complicated and consume the full time of thousands of highly educated professionals whose viewpoints and opinions differ greatly. Most of Time's articles suggest the solution to all of America's problems would be simple if only Republicans would disappear.
Do editors and producers have the right to make their own editorial decisions when reporting a story? Certainly. Do they have the right to intentionally mislead and create false representations? Unfortunately, yes. Is that ethical and responsible journalism? Certainly not. Americans have had enough of journalists' telling them what to believe and what to think. They are tired of the arrogance, condescension and pretensions of intellectual superiority. Americans want real, honest, unbiased news so they can educate themselves and form their own opinions. They know they are not getting it from the mainstream media. That is why newspapers are shutting down across the country and broadcast media is losing its audience.
The entertainment industry is another source of propaganda indoctrinating the American public with the liberal agenda. So-called documentaries 'exposing' scheming Republicans marketed as factual contain few grains of truth. Over-promoted films depict American businessmen and intelligence operatives as evil villains. Industry ceremonies award prizes to those productions that are the most politically correct.
For example, our current president won a Grammy in 2008 for Best Spoken Word Album for a recording of his book 'The Audacity of Hope: Reclaiming the American Dream.' The year before the award was given to Jimmy Carter, the one-term Democrat president of the late 70's. The year before that the award was again given to our current president, and the year before that to Bill Clinton, the previous Democrat in the oval office. In 2004 it was given to truth-challenged, manure-flinging clown Al Franken for a completely unintelligible and fictional bashing of Republicans labeled 'A Fair and Balanced Look at the Right'. I am not making this up. Look it up yourself. Perhaps a better name for the self-righteous, self-indulgent orgy of an awards ceremony would be 'The Audacity of the Entertainment Industry'.
You often hear from the Democrats, and consequently the media, how America has alienated people in other countries around the world. Although there is certainly room to dispute that, particularly in view of the fact that immigrants keep showing up at our door, it would be a wonder if foreigners had not lost some respect for us. Foreign news organizations, particularly in the Middle East, report nothing but slanted and outright false information that paints the U.S. as a mean and evil monster. Unfortunately, our own media does the same thing. There is often little difference between the New York Times and al-Jazeera.
We now live in a world where deeds no longer speak louder than words. Deeds are ignored while words are used to deceive, mislead, misrepresent, misinform and lie. They are used this way to vilify, demonize, denigrate and defame those who do not agree with the politically correct viewpoint. The result is dangerous polarization of society.
Earlier I mentioned I am politically independent, neither a Republican nor a Democrat. One could ask if I am supposedly independent of either party, why have I spent most of this essay bashing the Democrats. Good question. The answer is because Democrats are the ones who dominate the mainstream media, therefore the ones responsible for the majority of the biased, misleading, often fabricated information that is disseminated to the public.
Democrats are the ones who initiated the strategy of legal harassment against their opponents - generating indictments of members of the opposite party's staffs for just doing their jobs, and filing numerous bogus ethics complaints against their challengers, including vice-presidential candidates, to bog them down in legal proceedings and raise unsubstantiated questions about their character.
The Democrats are the ones who cried political partisanship when Gorge W. Bush dismissed seven U.S. Attorneys, who by law serve at the pleasure of the President, while completely ignoring the fact that Bill Clinton fired all 93 U.S. Attorneys at the beginning of his first term. They are the ones that escalate non-events into major scandals and turn routine actions of government into criminal behavior. They intentionally create negative character assassinations out of nothing. No administration in history has had to withstand the degree of unsubstantiated, unwarranted and untruthful accusations of transgressions and misconduct as the last Republican one. This political character assassination is what has polarized the country.
It is the Democrats who belittle the average American citizens who gather at town hall meetings to register their concern and exercise their political voices that the Democrats do not want to hear. The Democrats declared war with no ethical limits or rules. And because they started it, they are responsible for the backlash of the out of control reactionary invective that now consumes the internet, where the public has turned its attention to get the information they can't get from the mainstream media.
The internet, with its emails, blogs, twitters and whatever other forms of communication derive from it, has the capacity to be the most instructive and enlightening source of communication ever created. Unfortunately, it has also proved to be one of the most destructive. There has been a generational change in the way people obtain information. The younger generation does not watch television news or read newspapers. They get their information from the internet, much of it from extremely one-sided blogs that are filled with fabricated, misleading and false claims. This is happening not only in the United States, but around the world. These blogs are the madrassahs' of Western Civilization, filled with hate and venom for those with opposing opinions. Reasonable and rational debate has been replaced with intolerant, unaccountable personal opinion.
The internet has arguably become the primary accelerator of polarization in America. Blogs have overtaken the traditional sources of information from newspaper reporters and editorials, television talking heads and radio talk shows. Unfortunately, they are becoming even more vitriolic and socially destabilizing. The internet gives the bitter, hate-filled, uninformed members of our society a forum, and it is easy for the like-minded to tune them in, dividing the citizens of the country further into fanatical opposing camps.
Despite the widespread hate-mongering, it is still possible the eventual impact of the internet will prove to be positive. It allows information about important issues to be disseminated more widely among the public, often informing people who would otherwise not take the time to learn anything about the issues. It can serve to offset the money and influence of the powerful special interest groups as the public becomes more aware of public policies and their effect. Over time the misinformation and lies generated by both opposing sides can become exposed and diminished, hopefully leading to better understanding and rational compromise. But we are a long way from that now.
At the present time, dysfunctional government, divisive journalism and internet driven sectarianism is driving a wedge between various segments of American society. The country is no longer a vibrant, ambitious, progressive, ethnic assimilating frontier society of enterprising entrepreneurs and aggressive builders of a better life. Large segments of the population believe they are entitled to all the good life has to offer for little or no effort on their part. They believe that when things go wrong it is the government's job to bail them out. This attitude is causing the United States to devolve into a moribund, selfish, entitlement expecting welfare state. The heavy hand of government and acrimonious discord between people of differing opinions is destroying the country.
I admit I have painted a very dark picture of America's future. We have suffered hard times and political acrimony in the past, and have always recovered and moved forward with renewed societal and economic progress. But the United States faces challenges today that did not exist in the past, challenges that will require changes in our political structure for us to maintain our standard of living and national security. Mountains of debt, growing threats from weapons of mass destruction, and a society that has evolved into one where more people are dependent on the government for their means of support than pay taxes to provide it has dug Americans a deep hole that will be difficult to escape.
What can be done to reverse this destructive polarization of American society. What can we do to restore our country to a true democracy and our traditional culture of personal responsibility, self-reliance, national unity, tolerance, and compromise for the greater good? Obviously a good start would be to elect more responsible political leaders, who would understand their job is to serve the people and try to unite us rather than divide and conquer. But how is that going to happen when our political leaders are primarily engaged in expanding and securing their power and influence rather than performing their public duties? Who is going to challenge the institutions that run the country to do the right thing when they are all involved in feathering their nest?
Who is going to force journalists to report real, unbiased news rather than slanted, partisan essays designed to influence public opinion? And who could possibly convince the rabid bloggers to tone it down before they cause a civil war? Practically speaking, since free speech is a basic fundamental right of our constitutional republic there is not much we can do about published and broadcast bias and incendiary opinions. Hopefully, Americans will come to realize these sources report inaccurate, provocative, malicious information that misrepresent reality.
Unfortunately, America is unlikely to reverse its downward spiral until it recognizes its underlying cause. We cannot, and should not, restrict the right to free speech. But we can improve our political system. Politics is the art of a politician having the ability to make people believe he will make their lives better than his opponent will. And the best politicians are adept at convincing the people someone else will pay for making their lives better. Unfortunately, the better liar usually wins.
It can be argued that American society's polarization began with the government gradually granting political empowerment to those receiving entitlements. Charity to the poor and support of the underprivileged is a necessary and required duty in civilized society. But when income is distributed by government in order to generate votes for incumbents rather than to provide for the sustenance of those who need it, then that society becomes corrupt and illegitimate. Eventually government officials entrench themselves in office by buying votes with taxpayer dollars. That is where we are today. Consequently, the only viable course to the restoration of true democracy, genuine liberty and equal justice in the United States of America is to completely reform the American electoral system.
Many will consider this blasphemous, but there are legitimate questions about the relevancy of the U.S. Constitution to a nation that has evolved over more than 200 years. The founders could not possibly have anticipated everything that has transpired in the development of our country. We have grown to a population of over 300 million people compared to a population of three million in 1787 when the Constitution was ratified. And the nature of our government has changed dramatically since then. It is now an enormous administrative bureaucracy with two dominant political parties. Today, large corporations, wealthy individuals and special interest groups finance candidates and lobby elected officials, thereby buying the influence to shape public policies.
Furthermore, technology has produced communications systems that disseminate information instantaneously, and the sources of information and opinion have become practically infinite. Transportation has been revolutionized as people can now travel halfway around the world in less than a day. Health care has improved exponentially and people are living longer. And weapons of mass destruction can destroy a nation and kill millions in less than a second. We live in a different world from that of 230 years ago.
Unfortunately, our system of choosing our leaders has not progressed to accommodate a changing society. The result is we now have a government that is no longer functional. In fact, it can be argued that our government is now regressing to the type of autocratic oligarchy or monarchy that our founders rebelled against.
Our system of electing government officials needs to be updated. We must take money and tenure out of government and put knowledge, integrity and competence in. In order to accomplish that, I have seven recommendations regarding reform of the electoral process. The first six are reforms that definitely must be considered. The seventh would be a significant change that could at least begin discussions to create a more sustainable national environment that rewards hard work and productivity.
One - The most obvious and important reform is the implementation of term limits. Everyone knows the majority of the American public is in favor of term limits. The current system of unlimited terms for both the Senate and the House allows congressmen and women to spend their entire time in office campaigning for the next election rather than doing the jobs they were elected to do. They generally do not read the legislation they vote on and depend on their huge staffs and lobbyists to determine which way to vote to further their best interests, not their constituents.
In recent years over 90% of incumbents in the House of Representatives are re-elected to their seats. In many cases, the incumbents run unchallenged. In others, the challenger cannot raise anywhere near the amount of campaign funds as the current seat holder since special interests prefer to keep the devil they know in office. Qualified, capable and honest candidates know they do not stand a chance, so they don't run. That leaves voters with no choices that will dutifully represent their interests.
Unfortunately, setting term limits on members of Congress requires an amendment to the Constitution. Initiative and referendum are not available to American citizens at the national level. And of course politicians will never vote themselves out of office by approving term limits. But there are a couple of ways Americans can flex their Constitutional muscles and set the process in motion.
Perhaps the easiest approach, particularly in today's world of the internet, would be a grass roots initiative to start a petition among the voting public demanding that each candidate for the Senate or the House supply a signed pledge to introduce, sponsor or support legislation to enact a term limit amendment to the Constitution, and promise to work aggressively to ensure enactment. If a majority of constituents sign the petition, the candidate can not fail to understand the will of the people. If the candidate signs the pledge, is elected and fails to perform, he knows his political career is over after just one term.
The other approach would be based on the Constitution itself. Article V provides for the right of the legislatures of two-thirds of the states to call a convention for the purpose of proposing amendments to the Constitution. Amendments produced at the convention would become law if ratified by three-quarters of the states. This course of action can be implemented through the process of initiative and referendum in each state, which is based on a direct vote of the registered voters of each state. This would probably be a more difficult and complicated route to term limits since congressional incumbents, experienced political attack dogs and their friends in the media would certainly muster all their ammunition to propagandize and fight the amendment to the death. But if enough Americans become thoroughly disgusted with the way Congress conducts itself, as mounting evidence seems to suggest, it could possibly work since it actually bypasses the inert and irresponsible members of the congressional club.
I would propose that each elected official of our government, including the president, by limited to one term in the office he was elected to serve. Six years for the president, eight years in the Senate and four years in the House of Representatives would give each elected official enough time to influence legislation and provide the proper representation for his constituents rather than wasting their time and money by constantly campaigning for re-election. In fact, I can't see how it would hurt to limit Supreme Court Justices to twenty year terms. They are not infallible, either.
Two - Amend the Constitution to establish certain requirements to be eligible to vote in national elections. Democracy works only when the people voting for their representatives in government possess a basic education, an understanding of our system of government and the ramifications of the important issues those elected officials will be debating. Perhaps folks who have no idea who or what they are voting for other than what a favorite television talking head tells them should not be voting. People who do not take the time to educate themselves on the issues and each candidate's position are doing the country a great disservice if they step into the voting booth. Voters should focus on the substance of a candidate's knowledge, competence, experience and platform, not personal popularity or skill in reading from a teleprompter.
Consequently, basic voting requirements should be implemented to improve the quality of the electoral process. One, a diploma from an accredited American high school or the equivalent would not be too much to ask in order to be eligible to vote. Two, requiring a voter to be a U.S. citizen for a minimum of five years and to maintain residence during that time would assure that only those who have a genuine and vested interest in the policies of our national government are allowed to influence it. And three, how anyone could oppose a national photo ID voter card is beyond my comprehension, unless they are a member of ACORN.
Three - Campaign finance reform is a must if Americans are to have free and fair elections. Disclosure of contributions is not enough. The underlying principle of democracy is that no one should be able to buy an election. Buying an election is what happens when special interest groups are allowed to spend unlimited amounts to promote their narrow, selfish interests at the expense of the general public. Money should not be the determining factor in public policy. Past efforts to address this problem, usually designed to accommodate some concept of free speech, have not worked.
Campaign financing is not an issue of free speech. It is bribery, plain and simple. Those who argue that it is an issue of free speech imply that some people's speech is more important and free than others, because they have more money. In the public arena there is no reason legislators should be allowed to accept gifts, free entertainment, rides on corporate aircraft, money in campaign funding or any other potentially compromising situation from those who benefit from a legislators position. In order for congressmen to do their job effectively, they should get information regarding every issue from as many sources as possible, and definitely from each opposing side.
Campaigns should be funded with public funds, with the government setting aside a limited amount to be equally distributed to the candidates running for office. Obviously, more money would be allocated to the presidential candidates and the Senate races than the House campaigns. Public financing with equal amounts provided to each candidate for a particular office will level the playing field and allow them to get their message across, if they have one.
Four - The state primary system in America is an absurd travesty. Usually only a small percentage of eligible voters participate, typically the most extreme and radical from each party. That means the nut cases are determining who the party's standard bearers will be. At the national level, due to the large influence of super delegates, the Democratic Party's nominating convention defies the concept of democracy. One in five delegates is a super delegate, who are in fact the liberal party leaders, current office holders and others who can vote for the candidate they please regardless of state primary and caucus results. In other words, one candidate may win a substantial majority of state delegates, but lose the nomination if the party leaders so choose. Where is democracy in that?
Instead of being ultra-expensive, over-indulged, gluttonous, drunken orgies that cater to incumbents and national leaders, the party conventions should be low key affairs focusing on the job at hand - combining the outcomes of the individual states results to select a presidential candidate, and formulating the platform on which the candidate will agree to govern. Concentrating on policy rather than pomp and propaganda would be extremely beneficial to the election process.
Five - A key issue in generating a more representative republic responsible to the people is to move beyond the dominance of two political parties. Voters need to have multiple choices to choose from, not just between bad and worse. It is interesting to note that the United States and Spain are the only two countries in the developed world that do not have more than two parties comprise more than five percent of their senior legislature. This is true regardless of whether the countries are a federal republic, constitutional democracy or parliamentary monarchy. In fact, the majority of developed countries have four or more parties that have meaningful representation in government. The same is true in most of the developing countries of the world that have democratically elected governments.
Reform providing equal funding and more emphasis on policy would open up the American electoral process to more candidates, giving voters a better opportunity to identify candidates that represent their views. The more viewpoints participating in political debates would create more responsive and effective government. No one party could dominate the debate and railroad their agenda into law. Rational discussion and compromise would result in coalitions between parties forming on each individual issue to produce legislation more in the interests of the general public.
Six - Another obvious change in the election process that can be covered in one short paragraph without much debate is the issue of gerrymandering. The concept is ridiculous, and serves no purpose other than to create safe seats for particular parties. Gerrymandering should be eliminated, and representation should be re-instituted on the basis of recognizable districts, cities or counties.
Seven - Perhaps we should even consider something sure to be more controversial, such as a proposal to amend the Constitution to ensure that those who depend on government for their livelihood do not determine public policy. A Constitutional Convention could be convened to consider the concept of alternative rules for electing representatives in the House and Senate. For the House of Representatives, the rules would not change. The popular vote in each district where each eligible voter gets one vote would continue to apply.
As regards the Senate, votes would be based on the amount of taxes paid. In effect, those Americans who contribute to the functioning of our government would have a greater voice in choosing senators. If a citizen doesn't pay taxes, then he or she does not have a vote for their senator. Votes would accrue to individual voters based on one vote for each $10,000 paid in federal taxes, starting with one vote for taxes paid up to $10,000, two votes for taxes paid up to $20,000, and a maximum of three votes for taxes paid up to $30,000. If a taxpayer paid $250,000 in taxes they would still only receive three votes. This method of bicameral voting rules would allow those Americans who are productive and contribute to a more prosperous society to have a strong say in the legislation that affects their ability to continue to generate rising living standards.
The political reforms discussed above could go a long way towards returning America to its traditional values and restore the magnificent vision of our founders. At the very least they present issues for discussion that could most likely be improved upon. But there is one other issue that remains troubling and needs to be investigated by folks with more knowledge of the subject than I.
It is truly frightening that a large segment of the population seems to be in favor of an all-powerful central government. The fact is that socialism is making a strong push in America. Recognizing that polls can be and are manipulated, it is interesting to note that a Rasmussen poll released last April reported that only 53% of Americans believe capitalism is superior to socialism. 20% favored socialism while 27% had no clue. Of those under 30, a staggering 33% said they preferred socialism according to the poll. Does this represent an indictment of the American educational system as the teachers unions dumb down and propagandize the politically correct agenda in the public schools and the ubiquitous socialist college professors brain-wash the malleable in university lecture halls?
We need to know if it is possible that as a country we have been asleep at the switch while left leaning socialists permeate the elementary and secondary education system and design curriculums intent on teaching their version of American history, social and industrial development, and current events. We need to know if our children are learning the facts about how the United States of America became the leader of the free world or if they are just being taught the politically correct rendition of environmentalism, gender and racial inequality, and evils of capitalism. It is no secret that 60's and 70's radicals such as our current president's buddy William Ayres have curriculum determining positions at such organizations as The American Educational Research Association. How much influence do people such as Ayres have on setting curriculums?
Our children need to learn about the United States that we know, the one that began with the powerful ideals and bold courage of the American Revolution; that created a society based on the principles of democracy, liberty and justice; that struggled to grow with the pioneer spirit of opportunity and hard work; that suffered great sacrifice to prove that all men were created equal; that came to the aid of freedom loving countries threatened by murderous dictators; and that achieved levels of technological, economic and social progress never before imagined, bringing the rest of the developed countries of the world with it and providing a model for the developing world to follow. But evidently they are not.
Is it possible that socialism is growing in acceptance in America because our schools are emphasizing liberal philosophy? The vast majority of Americans do not identify with either the extreme left or right, but are radical liberals in charge of our educational system? Of course our schools should teach our children about Martin Luther King and his non-violent campaign to overcome racism and inequality. He was a great man and a major positive influence on American culture. But kids also need to learn more than they do about the ideals, courage and sacrifice of George Washington, Thomas Jefferson and Benjamin Franklin, too. It would also be good if the schools would provide a dose of a Thomas Sowell for each reference to a Jesse Jackson.
The constitution begins with 'We the People', not we the liberal, we the conservative, we the privileged, we the wealthy, we the college professors, we the news media, we the lawyers, or we the Hollywood celebrities. Elected officials are supposed to represent the people, not those who stuff their pockets full of money with bribes for special favors.
It is not supposed to be about left versus right, or liberal versus conservative. It is about right and wrong. It is not about socialism versus capitalism. It is about what works and what doesn't. It isn't even about democracy versus oligarchy versus dictatorship. It is about government being for the people or against the people. It is about freedom and individual rights versus arbitrary laws and state control. And it is about progress and preservation versus stagnation and decline.
The founding fathers, and historically most Americans, fiercely believe in liberty, justice, security and capitalism. Government requiring us to live our lives as it demands and taxing us to implement unworkable programs and policies that we don't want is not liberty. Bailing out those who are responsible for financial and economic collapse at the expense of those who suffered the consequences is not justice. Unilateral disarmament while our adversaries grow stronger is not security. Government take-over of commerce and industry is not capitalism. America is headed in the wrong direction.
It is time for us to realize America is not a greedy, evil, imperialistic predator as some of our politicians try to tell us. The United States has been the guiding light and incarnation of freedom, justice and democracy for over two hundred years. We have lived our ideals and served as the beacon of hope for all those that reject the bonds of tyranny and aspire to claim their individual rights and pursue their potential destinies. We have produced standards of living beyond our ancestors' imagination and shared it with the rest of the world. We have come to the aid of fellow democracies threatened by brutal tyrants and suffered great sacrifice to help them preserve their freedom. We have accomplished this by relying on the collective wisdom of our people and the power of private enterprise rather than unproductive bureaucrats and a government controlled economy.
We don't need and cannot afford change that destroys our fundamental principles. We must reverse our slide down the slippery slope toward the virtual imprisonment of socialism and return to the selfless values and strength of character that created the great nation we became, and can remain. We are at the crossroads. Let us not pursue the wrong course.
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