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.
