One of the Many Problems with Politics

In quest for votes politicians bombard us daily with outlandish theories to bolster their claims and win our vote. In preparation for the upcoming presidential elections, politicians have started a year earlier than usual advocating pie-in-the-sky proposals hoping to outdo one another and gain the nomination.

The problem for me is that many of these proposals appear to be half-baked and not well thought through. In fact, some include distortions and exaggerations designed to advance a point of view. This cacophony masks the lack of clear thinking and avoids leveling with the American people.

A Few Examples

Taxation.

Politicians on the hard left advocate draconian tax increases on the 1/10 of 1% in the name of fairness. They include raising the federal income tax rates up to 70%, imposing a wealth tax of 3% on income above a certain amount, increasing inheritance taxes up to 85% for estates exceeding a valuation, and elevating the current percentage of taxes on capital gains.

The tax system is often used as a political football. Last year’s reform fixed some loopholes while it created others. It shrunk the number of brackets when it should have added 2-3 more to address fairness issues related to the rich and super rich tax rates. The system surely needs changes to resolve these perceived inequities. Currently, the system is perceived as unfair. Draconian measures, however, are not the answer.

It looks ludicrous to me to ask those who pay little or no taxes whether somebody else should be paying more. An independent commission should be formed to determine what constitutes fairness in taxation. Relying on political hacks will surely continue to lead us toward oscillation.

Principally the impact on: Job Creation, on Housing, on Wall Street, on R&D, on Defense, on Philanthropy, on Farms Ownership, on Property Rights, just to mention a few.

Let address one for a minute: philanthropy. 

The proposed draconian taxes would pretty much wipe out one of the most generous social justice-oriented source of funding. Americans are very generous. They earmark large portions of their wealth for good causes.

The proposed taxation would make it impossible to amass super-wealth in the future. Trillions of dollars are spent each year by foundations established by super wealthy donors. Such system of taxation would make it difficult for future Gates, Hewlett, Packard, Zuckerberg, Moore, Ford, Rockefeller, Carnegie, and other big foundations to emerge.

Another case is:  Farm Ownership.

The proposed taxation system would just about wipe out family ownership of our farms because it would force heirs to sell farms at distress prices to pay the taxman, thus making way for corporate farms to get bigger and more powerful, leading to the elimination or reduction of farm jobs.

What seem to drive this radical approach to taxation are, in my view, three factors: envy, resentment and hate. Lets face it. Some people are jealous of others who are economically better off. Surely, they might suspect, they have gotten rich because of special privileges, e.g., inheritance, old boy network or illicit conduct. Merit is ignored or excluded all together. These resentful and envious folks have problems accepting the hard work and sacrifice entrepreneurs and immigrants make to clime up the ladder. I recognize that some wealthy folks do engage in excesses, which can be turnoffs.

Socialism.  

We seem to ignore the time tested wisdom that there is no one best system (it all depends) and that all systems have pluses and minuses. It is true that capitalism has no heart. It is also true that socialism has no soul. Let me elaborate.

Folks in developed countries have long recognized that capitalism needs to be supplemented with government intervention to remedy its downside. We have seen over the years labor laws enacted to shield workers from unfair and unsafe labor practices, We have witnessed during our life time laws enacted to provide assistance to the poor and needy. We have seen taxation used as a means of income redistribution. Countries have been more generous; some more than others in dispensing welfare programs.

Communist China concluded some 50 years ago that pure communist policies by themselves would not improve the standard of living of the Chinese people. The ruling party wisely decided to supplement its political system by introducing capitalism as a parallel. This binary solution has contributed to formidable rise in productivity and standard of living.

Contrast China’s approach with that of Cuba, Venezuela, Nicaragua, and the former Soviet Union, and you might conclude, as I have, that socialism by itself runs out of gas rather quickly. While at the beginning it lifts the bottom tier of the population (proletariat), in the long term it loses the advantage that comes from a growing economy, and permits its select nomenclature to accumulate privileges and benefits.

In the end no country becomes richer or better off by robbing Peter to give to Paul. A country becomes richer by producing more than it needs and using the surplus as an export.

Redistribution is akin to sitting on a balloon. As you shift from one position to another, you might change its shape but you do not change its size. No country can progress without motivated and capable individuals.

To me, socialism by itself is a zero sum game, and capitalism by itself is a greedy affair. Socialism becomes more powerful when it is blended with the proven capabilities of capitalism. The opposite is also true. Capitalism with a conscience gains more followers and supporters. So, the big issue is not whether to select one or the other, but what is the proper blending of the two, e.g., how much of each is necessary for the benefit of all.

This country’s success over the centuries has been tied to its core founding principles of freedom, smaller government, and individualism. For many, socialism is an anathema. As we shift from a philosophy of “to each according to merit” to “to each according to need” many will surely continue to resist the shift. As we increase the gap between the rich and everybody else we surely will run into more resistance and protests by those who might be left behind. We need a balanced approach.

Identity Politics

I would be remiss in this blog not to address this political phenomenon.

Like Romans before, politicians have learned that rulers can dominate their constituencies by dividing them. While we lament our divisions as a nation, we seem to foster more divisive politics. The British leveraged what they learned from the Romans to rule half of the world through the late 1940’s. Not to be outdone our politicians of the day have taken this approach to a higher level.

Technology has made possible to slice and dice us into a multitude of cells. Each cell becomes a rich target for grievances, resentments, and inequalities.  By pitting different cells against one another enough chaos can be created that encourages divisions and polarization.

I personally dislike being pigeonholed: white, old, male, legal immigrant, married, parent, college educated, heterosexual, European, 1%, privileged, and so on.

My race is contrasted with black, brown or other racial configurations. My age puts me at the opposite side of the younger generation. Being college educated pits against my high school and non-high school neighbors. My being a heterosexual is used to suspect me of homophobic bias. By being classified as part of the 1% puts me into a category that has difficulty relating to the workingman, overlooking the fact that I started my journey at the bottom. Being an immigrant puts me in collision course with nativists even though I have served in the U.S Armed Forces and possibly have paid more taxes than they had.

This slicing and dicing kind of takes away my individuality. After all, I am just someone … with a few qualities and many foibles. As humans we are more complex than each cell or its composite suggest. Our brain is a gift that endows us. As we learn more we have the capacity to change.

America Bashing

I must admit that I am totally baffled by this trend.  It has become fashionable in some quarters to pillory the country and accuse it of all unimaginable sins.

I just don’t get what the purpose is and what benefits flow from tearing down what many will profess is the best country in the world! Still many on the hard left see a flawed country not meritorious of its wealth, power and prestige. In fact, they see it as ill gotten.

Is America perfect? No! It is still a young country in the process of becoming more inclusive, more diverse, and more just. Most of us are aware that mistakes have been made and that people have suffered as a result. Changes have been made to ensure a more leveled and humane field.  

America has been the chosen destination for millions of immigrants over the past three centuries in search of freedom, opportunity and a better way of life. While some lament our lack of control over illegal immigration, millions of law-abiding immigrants are permitted in each year. Over a million of the new arrivals become U.S. citizens every year.

Last time I checked, the Soviet Union built a wall (Iron Curtain) to keep its people in. Folks are now criticizing Trump because he wants to build a wall to keep out those coming in without permission and by breaking our laws.

Politicians that oppose the wall or barrier do so by not differentiating between lawful and unlawful entry. They clamor that Trump’s policy is anti-immigrant and racist to boot. Trump is against ILLEGAL immigration. I don’t see racial animus everywhere or lack of compassion. International norms continue to ensure admittance of those with valid reasons for asylum.

As we learned during the sixties, there is a vast silent majority in America that has a way of waking up and cleaning house. This surely will happen when folks reach an impermissible level of dissatisfaction with unrelenting attacks on their country and way of life.

We all deserve a more civil discourse.