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Friday, February 15, 2008
 Hillary Clinton is the Dick Cheney of the Democrats

Topic: Commentary
It will be a sad day in American history if Hillary Clinton manages to get the nomination of the Democratic Party. Hillary has done her best to convince women that her campaign is an affirmation of feminism, but in reality her candidacy has nothing to do with feminism.

Unfortunately, millions of women have been convinced otherwise, and seem equally convinced that any opposition to her is an affront to all women and an affront to the feminist movement, and thus they will support her no matter what and they simply see the race as an issue of race vs gender.

The irony is that in this primary with the first major viable female and black presidential candidates, the contest is really nothing about race or gender, despite everyone's attempts to make it so, most notably Hillary herself.

The reality is that this is a primary campaign where the choice is not between a woman or an African American, but between one of the most secretive and manipulative political figures of the past 20 years in American politics vs. a new and inspirational natural born leader.

Hillary Clinton truly is the Dick Cheney of the Democratic Party, and the election of Hillary Clinton to president would be to simply put the yin to the Bush administrations yang into power. The election of Hillary Clinton would not be a rebuke of the Bush years, it would not make a change in American society and it certainly wouldn't change American politics. The election of Hillary Clinton would be ensuring at least four more years of Bush style leadership, with the exception that the agenda would be slightly different. The methods and approaches would be the same though.

Sure Hillary would not appoint judges to the Supreme Court that would be likely to overturn Roe vs. Wade, but what we can be sure of is that the nomination process would be virtually identical to the Bush nomination process, with the only exception being that the ideologies would be flipped.

Hillary, like Dick Cheney, has been one of the most secretive forces in American politics since 1992. Like Dick Cheney, she has worked behind the scenes, gone to great lengths to keep her activities secret, and has a history of strong arming those who disagree with her.

Let's look at all of the reasons not to elect Hillary Clinton:

1) Doing so would practically be a violation of the law on term limits. Certainly, though it may not violate the letter of the law it violates the spirit of the law. The intention of term limits is to prevent corruption and the building up of power through cronyism. Clearly, where it is Bill or Hillary officially at the helm, this principle is still violated.

2) There is no way that Bill Clinton will not enter back into a level of power and influence that no other president in American history has had after the end of his term. The whole issue of electing spouses simply sets a horrible precedent. It is bad enough that we have to deal with the political dynasties of parents and offspring, but now we also have to worry about husbands and wives as well?

3) Hillary has been very calculating from the time she was in the White House as first lady in terms of planning to capture the presidency. After her time as first lady, she then carpet bagged her way into New York because she knew that it was an influential place from which she could launch her bid at president. During her time as Senator she has been focused on building her personal political power and alliances, not doing the business of New Yorkers. She is among the top 10 earmarkers in the Senate. Why? Because she has been using earmarks, like all politicians do, do buy political support.

4) Hillary sets a horrible example for women and power. Instead of a woman who has clearly earned her place through the same type of hard work as her peers, Hillary is an example of using underhanded tactics and riding the coat tails of her husband to get to the top. Obviously she wouldn't be running for president today if her husband had never been president. This isn't really a feminist message at all.

5) In her pattern of secrecy she has refused to release her tax filings and also refused to release the documents from her time in the White House. In the process she avoids taking any responsibility for this, saying that it is Bill's decision, not hers.

6) She has pandered to lobbyists and corporations more than just about any political figure in the Senate. In her typical old school politics style, she has worked at trying to amass a base of power by pandering to the powerful. This is reflected in the manner is which she began with the most pledged super delegates as well.

7) Even now she is trying to change the rules of the game and work to seat delegates from states that at the outset everyone agreed would not be seated. I agree that this was a poor decision in the first place, but those were the rules that she agreed to from the start. Changing the rules now is simply one more example of her underhanded ways.

If Hillary Clinton gains the nomination of the Democratic Party, it will be through another Bush style assault on democracy. Having Hillary Clinton in office would be like four more years of Bush/Cheney, with the only exception being that it would be a Democratic version of Bush/Cheney.


Posted by rationalrevolution.net at 9:57 AM EST | Post Comment | Permalink
Wednesday, February 13, 2008
 Against Bio-fuels (Part II)

Topic: Facts and Figures

First, I have to say congratulations to Barack Obama last night, it was a great victory and an amazing speech. They seem to get better every time.

Now on to business.

Almost a year ago I posted here about the inherent problems with bio-fuels, and recently major scientific studies have confirmed those fears.

The New York Times wrote about these studies in an article called Biofuels Deemed a Greenhouse Threat.

This article makes it clear that my previously voiced fears were well founded, and indeed it does appear that bio-fuels have unleashed a very ugly genie.

It seems clear from this article and these studies that essentially all bio-fuel production other than the relatively small production of bio-fuels from waste and possibly algae, should be stopped.

At the very least, any and all subsidies of bio-fuels should be terminated immediately.

The studies do point out that the sugar cane grown in Brazil is the only real potentially viable bio-fuel crop, but I wouldn't even consider that viable, because this sugar cane still causes land use problems by displacing farmland.

Growing crops for bio-fuel is simply not viable idea, and it is time that this practice is resolutely denounced by environmental groups, industry, activists, and government organizations.

At this point there are only two real groups who have any real interest in bio-fuels, and that is the farmers and industry that stand to profit, as well as the politicians who can use government subsidies to buy votes.

Any politician who supports government subsidies for growing bio-fuel should be absolutely denounced in unequivocal terms, because the only reason to support bio-fuel is to buy votes, and supporting bio-fuel is something that is ultimately harmful for everyone in the long run and it is having major and immediate negative impacts on the economy and on the environment.

Bio-fuel is driving up the price of food, it is driving subsistence farmers off their land, it is destroying forests,  and it is contributing rapidly to greenhouses gases and global warming.

There is basically almost nothing good about bio-fuel at all, unless you are a farmer who happens to be the one supplying it. And I don't begrudge the farmers the desire to make good money by supplying it, and I don't blame the farmers, but the fact is, that this is simply a really horrible product and a horrible movement, and it really needs to be stopped as soon as possible.

From the New York Times article:

"Almost all biofuels used today cause more greenhouse gas emissions than conventional fuels if the full emissions costs of producing these 'green' fuels are taken into account, two studies being published Thursday have concluded."

"The destruction of natural ecosystems — whether rain forest in the tropics or grasslands in South America — not only releases greenhouse gases into the atmosphere when they are burned and plowed, but also deprives the planet of natural sponges to absorb carbon emissions. Cropland also absorbs far less carbon than the rain forests or even scrubland that it replaces."

"In the wake of the new studies, a group of 10 of the United States’s most eminent ecologists and environmental biologists today sent a letter to President Bush and the speaker of the House, Nancy Pelosi, urging a reform of biofuels policies. 'We write to call your attention to recent research indicating that many anticipated biofuels will actually exacerbate global warming,' the letter said."

"But even with such restrictions in place, Dr. Searchinger’s study shows, the purchase of biofuels in Europe and the United States leads indirectly to the destruction of natural habitats far afield."

Please see my previous post on this subject from last March:

Against Bio-fuels 


Posted by rationalrevolution.net at 8:02 AM EST | Post Comment | View Comments (4) | Permalink
Tuesday, January 22, 2008
 The Addict Has Yet to Hit Rock Bottom

Topic: Commentary
With the news that the economy isn't quite on track, the reaction from the Federal Reserve and the government is to cut the federal funds rate and to come out with some kind of government "stimulus package". Given the other economic conditions in the country, this is really just a sign of crack addiction.

This all goes back to core fundamental problems that have been discussed on this website for quite some time, and while it is true that economic fluctuations come and go, I think that this is really indicative of a much larger and longer term problem.

This really does go all the way back to the Reagan Revolution and the track that Reaganomics put this country on. That track is a track of major deficit spending, manufacturing off-shoring, and tax and interest rate cutting.

This country has been addicted to these things for 2 or 3 decades now, and its a situation that inevitably leads to problems, because growing an economy through tax cutting, borrowing money, and farming out work can't go on forever. At some point taxes can no longer be cut and the reduction of spending becomes a lack of investment in the future. At some point you can't borrow any more. At some point your income can't be generated without producing tangible goods, and likewise, at some point the gap between the enfranchised wealthy and the working classes becomes so great that the wealthy no longer find opportunity within their own country and their capital increasingly leaves the nation to seek out other opportunities. At some point the working class just can't afford to provide the profits to the wealthy anymore.

So, now, after having recently reduced interest rates to their lowest point in generations, the Fed finds that it needs to reduce them again. But where does it all stop? There never was any real "recovery" after 2001 in the first place. All that there was was another bubble created by massive borrowing, and now apparently the only medicine that the Fed can come up with is more of the same. But borrowing more doesn't help us. We are already in over our heads.

The Bush administration's plan, and those of pretty much every politician, involves simply borrowing more money from the federal government to give back to citizens, but what good does this do us really? Its like you realize one day that you are in over your head in debt and you can't pay your bills so you apply for another credit card. That is basically the only plan that the nation's best economists have come up with so far.

But what is the core of the problem here? The core of the problem is that taxes have been reduced too low on the wealthy for too long, capital ownership in America has become too concentrated in the hands of a small portion of the population, and the public has taken on massive debt essentially as a means of redistribution to the wealthy.

The federal government basically works for the corporations and the wealthy in America, it has done this in earnest since the Reagan era. The wealthy and corporations haven't been paying their way. They have been receiving more value from public resources than they have been paying. As a result, the public has gone massively into debt paying for the services that have primarily benefited the wealthy. The wealthy have realized real material gains and left the public institutions holding the bag. But that can't go on forever of course, and that's where we find ourselves today.

We have the largest gap between the rich and the middle class since just prior to the Great Depression. We have a higher debt to GDP ratio then just about any time in American history aside from during World War II. We have the lowest per-person savings rate since the Great Depression. And, we already have low taxes and low interest rates, which means that we really can't count on cutting those things to continue to help "aiding" the economy. The value of the dollar is falling, the price of internationally dominated resources are rising (namely oil, metals, and labor). A large number of Americans are getting ready to retire. Material American infrastructure is deteriorating and in need of major investment to maintain. And to top it all off we are still stuck in a seemingly endless war, which I don't think we will be honestly and fully out of for another 20 years. This war in the Iraq and Afghanistan is going to be a drain on the American economy for at least 10 years, if not longer, and the only way that it won't be a drain for longer is if we simply cut and run and leave the place in a mess.

My assessment is that 2008 will be the year that people look back on 20 years from now as the year that the long term decline of the American officially began. Of course there will always be ways to push the time back, but 2008 will be the clear demarcation. The only way out of this mess as far as I can see is major technological innovation, but unfortunately the American education system hasn't really put us in the position for that as well as we might want, nor is American society or the legal system really setup to make the right moves anyway, even if we had the technology.

The way I see it, America has absolutely squandered the opportunities of the past 20 years. We are the richest and most powerful country in the world, and even with that we have an overwhelming debt, we have a relatively poor education system, we have overpaid athletes and underpaid teachers. We have totally misplaced priorities, we've wasted trillions on the military, and the capital that wealthy Americans have amassed with the aid of the American public is fleeing the country, which, ironically, is kind of a good thing if it helps to improve foreign economies (not that it necessarily will).

And the kicker to all of this is that all the Republicans want to talk about is cutting taxes more. The dollar is falling and the markets are aborting largely because of the American debt. Cutting taxes while running a deficit, when you already have a massive outstanding balance, is not an option. And that is the predicament, and that is why the problem is as big as it is, because there simply is no easy way out. None of the tools that have been used to "stimulate" economic growth for the past 30 years can continue to work. We are now in a position where every move is a bad move. It's like Chinese handcuffs, where the more you wiggle the tighter they lock on.

As I said, certainly there are economic cycles, and certainly things will improve at some point, perhaps even shortly, but I think that we are looking at the beginning of a long term relative decline in the American economy at this point. This country has become addicted to debt, and right now the only solution being proposed is more of the same...


Posted by rationalrevolution.net at 11:19 PM EST | Post Comment | Permalink
Sunday, January 6, 2008
 What Needs to be Done on Economic Policy

Topic: Semi-random Thoughts
Unfortunately it doesn't seem that any of the presidential candidates, even Obama and Edwards, have good ideas for economic reform in America. Having said that, here is what I would like to see done:

Healthcare Reform : The primary goal should be eliminating employer provided health insurance. The second goal should be universal or near universal basic care.

Tax Reform : Move to a single income taxation system, basically eliminating the discrepancy between wage, capital gains, and inheritance taxes. Also dramatically reform the income taxation rates. Increase tax collection to pay down debt.

Government Spending Reform : Completely eliminate the current earmark privileges. Reduce the military budget (after ending the war in Iraq). Fully adopt PayGo at the Federal level.

Trade Reform : Eliminate all tariffs. Require labor, environmental, and safety standards for trade with the US. Use fines for violations instead of tariffs. Open trade with every country in the world. Enforce standards on a per-trader basis, not per-country basis.

Social Security Reform : Change how benefits are calculated to use a combined median-wage and inflation index instead of the current average-wage index. Reduce the Social Security payroll tax by 1%.

Those are the basic policy positions I would take, but lets look at them a little more deeply.

Healthcare Reform

I really don't know why the Democrat haven't figured this out, but it is a shame that they haven't. Healthcare reform can be billed as, and can in fact be, the greatest pro-business move in America in 50 years. We have to get employers out from under the burden of providing health insurance. This is the single biggest selling point of a national healthcare system. By removing health insurance from employers this helps both employers and employees.

This would eliminate a huge burden from employers and it would make things much easier for employees. You would no longer need to worry about losing your health insurance if you lost your job, you wouldn't have to worry about health insurance when switching jobs. This is an opportunity for real tangible change that would make everyone's life easier, so I can't figure out why politicians haven't picked up on this. The current growing trend, and what several of the candidates are proposing, is mandatory health insurance. This is a horrible idea, it is the worst of all worlds, and the only reason that this approach is even being proposed is because the health insurance companies like it, of course. This is where Edwards is right, it doesn't seem that Obama has the backbone to stand up against these corporations. Mandatory coverage just puts even more strain on the employers to provide coverage and more strain on people who lose or switch jobs. Employers provided health insurance is horrible. It provides an incentive for employers to discriminate against good workers who have health problems, and it gives them an excuse to pry into employees personal lives. This is an abomination and must be gotten rid of.

The solution is a national health insurance system. This needs to be clear, we aren't talking about government run health care, but rather government run health insurance. In fact, I wouldn't even recommend a truly government run health insurance system either, but rather I would recommend a quasi-government system, where the government acted like a broker, to give government the ability to drive down prices and make demands, but keep the actual insurance in the actual insurance in the hands of private industry. Everyone's healthcare would be provided through the government, but would be held and run by the private insurer, just like it works now with employers. Your employer provides you the insurance, but they aren't the insurer. Same idea here, except the insurance is paid for via taxes, and is provided to everyone who pays taxes. There would still have to be a separate system to deal with people like the homeless, etc.

Tax Reform

The tax code needs to be simplified, no question there. The main reason it is complicated in the first place is due to corporate and special interests. Most of the deductions need to be simply eliminated, including things like the deduction for interest on a home mortgage, etc. Why should renters, generally poorer people, be subsiding the people who can afford to buy a house? It is popular, but it makes no sense. Eliminate deduction for dependents also. Why should without dependents subsidize those with dependants, typically children? Its basically a tax on being childless. There are many other much more complicated rules, most of which are popular, that also need to just be eliminated.

As a further simplification, eliminate the different types of income, and just have income. There are some valid arguments for the different classifications, but they are more trouble than they are worth. The Republicans have been wanting to get rid of the so-called "death-tax", the estate tax, then fine, let's get rid of it, and just count inheritance as normal income, problem solved (not the way they wanted to, but hey). Right now the wealthy a pay lower tax rate on capital-gains than they do on wage income, but the poor and middle class typically pay a higher tax rate on capital-gains than they do on wage income. This further skews investing in America to favor the wealthy.

After we simplify the code and simply count yearly income as income, next the tax brackets need to be radically overhauled.I have tinkered with taxation brackets several times, but here are my latest views. First we have to look at the current income tax brackets for 2007:

$0 - $7,825 - 10%
$7,825 - $31,850 - 15%
$31,850 - $77,100 - 25%
$77,100 - $160,850 - 28%
$160,850 - $349,700 - 33%
$349,700 and over - 35%

Keep in mind that these brackets are cumulative, i.e. we all pay only 10% on our first $7,825 of income, then 15% on our next portion of income, etc., thus what you actually pay is much less than simply looking at the percentage next to you yearly wage income.

The problem with these brackets is that they have way too much to do with low levels of income and don't address income at the really high levels. This was not typically the case in American history, when usually the tax brackets dealt most with the very high income levels.

What I propose is to eliminate most of the brackets at the bottom end and dramatically reduce taxes there, while adding many more brackets going up into the millions. Here is what I would propose:

$0-$30,000 - 0%
$30,001 - $100,000 - 10%
$100,001 - $300,000 - 15%
$300,001 - $500,000 - 20%
$500,001 - $1,000,000 - 25%
$1,000,001 - $3,000,000 - 30%
$3,000,001 - $5,000,000 - 35%
$5,000,001 - $10,000,000 - 40%
$10,000,001 - $50,000,000 - 45%
$50,000,001 and over - 50%

Some things to keep in mind here are that most people with an income under $30,000 today pay almost no income tax anyway, due to deductions. I would eliminate the deductions and just have these people file a simple form saying their total income was under $30,000 and move on with it. We waste tons of money dealing with the nonsense in this tax bracket, and usually it ends up that they pay no taxes anyway, but why waste time with the filing and processing instead of just calling it a simple zero?

The numbers are a little hard to compare since I would eliminate many tax deductions, but generally this would be a tax cut for everyone with an income under half a million. The average income tax rate actually paid by those in the top 1% in 2006 was 19.4, per the Congressional a Budget Office (see blog post from Dec. 18th below).

The percentages I provide here would be much closer to what would really be being paid, whereas due to deductions the current percentages greatly overstate the payments in those brackets.

Keep in mind also that under the current income tax system these percentages are applied only to wage income. Under my system these percentages would be applied to ALL income, including inheritance and capital gains. This means that capital gains for people with an income under roughly $500,000 a year would be taxed less than they are now. For people over that level of income they would essentially be taxed more.

Adjustments to these numbers would have to be made to ensure that enough taxes were being collected. Tax revenue would generally have to be increased over current revenue in order to, combined with cutting spending, be able to operate without a deficit and pay down the debt.

Government Spending Reform

The biggest and most direct spending reform would be the complete adoption of PayGo, where any bill that cuts tax revenue or that incurs a cost must pay for that cost in the same bill. Congress has already adopted PayGo, this was done in 1990, but the Republican controlled congress, under the leadership of Tom Delay, then developed ways to work around the PayGo rules. These ways need to be removed and PayGo needs to become solidly enforced again.

In addition to this, earmarks need to be completely eliminated as they currently are. There were $29 billion worth of earmarks in 2006, for projects considered to be unnecessary "Pork" projects. In 2007, under the Democratic Congress, that number dropped to $13.2 billion, but this is still way too high. There could perhaps still be some earmarking system, but not the current system whereby individuals can add earmarks on their own without any review, to an already established bill. At the very least a committee should be setup to review earmark proposals before they can be added, or a whole new process should be setup for the funding of projects of interest to a given state. I would perhaps favor a standing 6 person bipartisan committee, with an additional 7th person that has to be a Congressman from the same state as the Congressman requesting the earmark. This committee would review and approve earmarks before adding them to current bills. The committee would have to support the earmark by a simple majority.

Trade Reform

Trade is the area where America interacts most with the world, and this is greatly overlooked as one of our greatest public relations tools. Firstly, I do favor free-trade, but I also favor-fair trade and safe-trade and think that these things are immensely important for addressing everything from terrorism to global warming to immigration.

Firstly we should stop, as well as we can (this depends on cooperation as well), from dealing with countries and start dealing directly with corporations. There are many advantages to this, though it also can make things more complicated. When we negotiate trade deals at the national level to reward and penalize companies for things that they aren't directly responsible for, and also this drives companies to move around from country to country based on trade deals, but there is no need for all that, and its a waste of resources and everything else.

We should very simply come up with one set of rules, any anyone who wants access to American markets has to follow those rules. As long as you follow the rules then you get free and unfettered access to the American markets, no tariffs. If you don't follow the rules you can be fined or, if the infraction is bad enough, barred.

The biggest problem with tariffs is that they punish the wrong people. Tariffs typically drive down wages in the country of origin, because in order to stay competitive while still paying the tariff it gives an incentive to pay workers less. This is the opposite of what we should be doing. What we should do instead is require compliance with a given set of pollution regulations, minimum wage, and employee rights. These rules would be the same for everyone. If you can't obey the rules then you pay a fine or are barred. This would move what is currently being paid in tariffs to the US into wages and improved working conditions in the home country, which would in turn also eventually open up more foreign markets for American companies as well, without adversely affecting consumer prices in America. At the same time, it would reward good corporate stewards for being good stewards no matter where they are. This would help to foster better relations with places like Iran and even perhaps Cuba, which could be opened up to trade as long and the proper conditions were met and of course as long as the home country allowed it. This would do more to promote progress and democracy than shutting off interaction with such places as we do today.

Likewise, poor stewards in good countries would be penalized more than what they are now or instead of simply relying on the home country to penalize them. There may be problems getting other countries to agree with these terms, that would remain to be seen, but basically any country that didn't agree would simply still be under a tariff. Regardless, we should work towards removing all tariffs and breaking down the barrier to trade, while at the same time focusing much more on ensuring the quality and fairness of that trade.

Social Security Reform

I have written about Social Security several times on this website and already covered what really needs to be done with it here:

Getting a grip on Social Security: The flaw in the system

Basically, Social Security is really not that bad off and with just a minor adjustment can easily be made solvent. In fact, with the minor adjustment so much money will be saved that it would be possible to reduce the Social Security tax, making it effectively another tax break for the middle class.

All that really needs to be done is to stop using average wage indexing. I think a good way to do would be to use a combined median-wage and inflation index instead. This would currently reduce the rate at which Social Security payment would be projected to increase. Some people complain about this, but there is no need for complaint. Currently Social Security payments are scheduled to increase dramatically above the rate of inflation, so people 30 or 40 years from now are schedule to get as much as 40% more per paycheck, after adjustment for inflation, than people today. This really makes no sense. Why should people in the future be getting paid more than people today? There is no reason why, and it wasn't even understood that this would happen the way that it has when the legislation was passed, because what has happened is that since wage discrepancy has dramatically increased over the past 20 years, the average wage has gone up much higher than the median wage, yet, the people making the high wages in the top 1% that are pulling that average wage up are not paying Social Security taxes on those wages. Thus, the poor and middle class are having to pay for increasingly higher payments even though their wages aren't going up. This is a hugely unfair tax on the middle class, and its really unnecessary.

Conclusion

I think that these economic reforms would strengthen the American economy, simplify the tax system, be more fair, and help the poor and middle class, while not harming American businesses, indeed the overall effect would be beneficial to business.


Posted by rationalrevolution.net at 10:57 AM EST | Post Comment | View Comments (8) | Permalink
Updated: Sunday, January 6, 2008 11:18 AM EST
Saturday, January 5, 2008
 Populism reigns

Topic: Commentary

I watched several different coverages of the Iowa caucus last night, and have read several articles today, but none of the coverage seems to pickup on the biggest point to come out of Iowa, which is that economic populism won the day.

This is very interesting because Mitt Romney had made several statements over the past couple of weeks which I think really showed that he has no clue about what is going on in America. Many of the pundits simply attribute the loss of Romney to his Mormonism, but I think that it had just as much to do with his economic comments. Romney clearly took economic positions favoring the typical "trickle-down" economics of the post-Reagan Republicans and saying things like "there are not two Americas", referring to Edwards' comments on the growing economic divide in America, and also attacking Huckabee's economic policies in Arkansas, where he did many things that helped the poor.

I think that while what is going on the Democratic side of the aisle is by far the most exciting, what is going on in the Republican camp is by far the most interesting.

It seems that many Republicans are finally getting it, and finally looking for an alternative to the pro-corporate policies of the post-Reagan era. I certainly do not favor Mike Huckabee due to his religious views, and more importantly his interjection of his religion into politics and government, but I will say that he is at least a true "compassionate conservative" as best as that can be true (though he still displays social intolerance to several groups, such as homosexuals, the nonreligious, and holds a demeaning view of women). I think that Mike Huckabee is the first candidate in a long time that actually truly matches the views of many social conservatives, who are both economically populist and socially conservative. This scares the hell out of the Republican establishment.

What is taking place in the Republican Party right now is all of the various factions within the party are breaking up. You have Mitt Romney who represents the typical pro-corporate social conservative, you have Guiliani who represents the more pragmatic pro-corporate and hard on crime agenda but lacks the religious elements, and you have Huckabee who represents the pro-faith social conservative agenda, but with also economic populism and a more forgiving view on crime. Of course there are others in the mix a well, each holding out different elements of the Republican platform.

What I also think is interesting is that the two front runners from each party are the two candidates that are the most alike from each party. Obama and Huckabee are the two candidates that are the most similar to each other from the different parties, so this shows a real consensus in America I think, I think that Obama did very well to pickup on that, because in fact I think that Obama has a better chance of picking up Huckabee supporters if Huckabee doesn't become the nominee than anyone in the Republican party.

When voters from both parties are heavily backing economic populism, that really demonstrates that the winds of change are coming, at least in the public's mind (whether it actually happens or not remains to be seen). I like John Edward and favor his policy statements the most, but don't think he can win a national election. I'd like to see an Obama/Richardson ticket, but there could be a fear that having both and African American and a Hispanic candidate together might scare some people off, which is too bad, because I think that Richardson really fills in the gaps of Obama's resume very well. I don't think that Obama will have any problem being elected the first black American president in his own right, but I think there is a possibility that if he partnered with Richardson then some of the more xenophobic independents and cross-over Republicans could be scared off.

But by far what is most interesting is what is going on in the Republican camp. The Republican pundits, including people like Rush Limbaugh and folks at FOX News, are attacking Huckabee because it has really never been about the "values". The "values" have always only been a Republican tool to manipulate voters into voting for pro-corporate policies, but now that a serious candidate has come along that touts the values but doesn't support the pro-corporate policies they want nothing to do with him. What Huckabee really does, in my opinion, is expose the Republican Party and its media backers as frauds. They don't really care about the "values", but they now see that they are unable to control the monster of their own creation, that their propaganda has taken on a life of its own, now they are terrified. Granted, Huckabee's policy statements are actually absurd, such as replacing the income tax with a sales tax, but the opposition to him among the Republican elite goes to a much deeper level.

See my article from 2004 basically predicting this breakup of the Republican Party:

The Contradictions Inherent in American Conservatism

News pieces covering the Huckabee controversy:

Limbaugh, Other Conservatives, Slam Huckabee 

Huckabee Described As 'Christian Socialist' 

Rush Interviewed on Fox News Channel Iowa Caucus Coverage


Posted by rationalrevolution.net at 10:30 AM EST | Post Comment | View Comments (1) | Permalink
Updated: Saturday, January 5, 2008 10:35 AM EST
Thursday, January 3, 2008
 Instant-Runoff Voting and the Two Party System

Topic: Semi-random Thoughts

With the Iowa Caucasus taking place tonight I have heard many pundits and reporters decrying the Democratic Party caucusing system. The system they are using is antiquated, but it has many advantages and should be a partial model for all major elections.

If you don't know about the Iowa Democratic Party caucus voting system, they basically have a 15% threshold that any candidate must meet in order to receive any delegates, and if they don't reach that threshold then there is a 2nd round of voting whereby the voter can change their vote to a different candidate that has already met the 15% minimum. This allows voters to avoid wasting their votes.

This could all be made much simpler however with an instant-runoff system.

The voting system in America is really a horrible system which virtually guarantees the perpetuity of the two dominant parties. This problem could easily be overcome with an instant-runoff system, and even in cases where it didn't affect the two party system, it would still greatly improve the voting system and make it more equitable and representative.

In the system we currently have for basically all of our elections a person gets a single vote. They can choose to cast that vote for a single candidate. When there is more than two candidates, this almost always ensure than the most popular candidate will not get elected. The reason for this is quite simple.

Let's say that there are three candidates. When more than two candidates are in a race it is most often the case that two of the candidates share some political leanings and the reason that two candidates sharing similar political leanings are running is because that political leaning is probably the most popular in the country. The election of 2000, when Gore, Bush, and Nader ran is a perfect example.

In our current system, what typically happens is that the voting block of the most popular political leaning gets split when there is more than two candidates.

So, for example, in 2000 both Gore and Nader were "progressive" or "liberal" candidates. Bush was the conservative candidate.

Because there were two progressive candidates the progressive vote was split. This, as we all know, "cost Gore the election", something that is a hot button issue that I don't wish to get into. But, due to the way our voting system works, the conservative candidate won, even though far more people voted progressive. Gore won the popular vote all by himself, but when you factor in the Nader vote it is clear that the voice of the nation was in favor of a progressive leader, not a conservative one. Yet, the conservative won because the progressive vote was split. Something similar happened when Ross Perot ran in 1992, perhaps costing Bush Sr. the presidency. Perot tended to attract more conservative voters, thus siphoning voters away from Bush Sr.

With an instant runoff system, instead of simply selecting one candidate on a ballot you rank the candidates on the ballot from 1 to N, with 1 being for first choice, 2 your second choice, etc.

Thus, in the 200 campaign people who wanted to support Nader could have ranked him 1 and Gore 2 (or chosen to only vote for Nader and rank no one else). In 1992 Perot supporters could have ranked him 1 and Bush 2, etc. In such cases, after their primary candidate failed to gain enough votes to win the election then the votes would have gone to their secondary candidate, thus in 2000 Gore would almost certainly have won and in 1992 Bush Sr. would possibly have won.

The instant-runoff system has many advantages. Not only would it prevent the problem of "wasted votes" when there is more than two candidates, but it would also make other parties more viable and have a greater voice, making the political system more responsive to voters. The instant-runoff system would give a lot of people the confidence they need to vote for a third party candidate, knowing that if that candidate doesn't win, at least the election won't be likely to go to the person they totally oppose.

There is really no downside to this system, other than having to retool the voting procedures and machines, but it is doubtful it will happen because the two main parties know that it would empower alternative parties, so it is in their interest never to adopt such a system. Nevertheless such systems are gaining support and are being adopted at the local level around the country. You should defiantly support such a system in local politics in your area if you ever have the opportunity, it could be the single most important change to the American voting system in American history.

To learn more about instant-runoff voting systems see:

http://en.wikipedia.org/wiki/Instant_run-off_voting

http://turbulence.ucsd.edu/~bewley/muppets.html

And by the way, congratulation to Barack Obama!


Posted by rationalrevolution.net at 11:10 PM EST | Post Comment | View Comments (3) | Permalink
Updated: Friday, January 4, 2008 8:30 AM EST
Tuesday, December 18, 2007
 Widening of the American Income Gap Accelerates

Topic: Facts and Figures

Report Says That the Rich Are Getting Richer Faster, Much Faster

The New York Times recently reported on a new CBO report on taxation and income distribution which shows that the incomes of the wealthiest 1% have continued to grow at an accelerating pace over the past 5 years while the incomes of the bottom 90% have effectively stagnated. Slight growth is shown in the middle income range, though very modest.

This report showed the same trends that were already highlighted in my article on taxation, In Depth Analysis of American Income and Taxation,  namely that the tax burden is shifting from the super wealthy onto upper middle income households. Those with an income between about $90,000 and $400,000 are seeing their tax burden increase while those with incomes in the $500,000+ range are seeing their tax burden decrease.

Unfortunately, it seems that most politicians, including those running for president, fail to correctly point this fact out, and thus many of the upper middle income households view themselves as "the wealthy" so that when talk about the wealthy being under taxed comes up, these people self-identify with "the wealthy" and end up frequently taking sides with the super-rich, not realizing that it is the tabs of the of the super-rich that they are picking up. In other words, the upper middle class tends to vote along with the super rich to reduce taxes "on the rich", but they don't realize that they aren't a part of that group, and in fact when taxes are reduced on the rich, the upper middle class is to takes the brunt of the tax shift.

The result is that the very influential upper middle class votes against themselves repeatedly and unwittingly supports lowering the taxes of the wealthiest 1% at their own expense.

But let's look at a few highlights from the New York Times article:

"The increase in incomes of the top 1 percent of Americans from 2003 to 2005 exceeded the total income of the poorest 20 percent of Americans"
"The poorest fifth of households had total income of $383.4 billion in 2005, while just the increase in income for the top 1 percent came to $524.8 billion, a figure 37 percent higher."
"The total income of the top 1.1 million households was $1.8 trillion, or 18.1 percent of the total income of all Americans, up from 14.3 percent of all income in 2003. The total 2005 income of the three million individual Americans at the top was roughly equal to that of the bottom 166 million Americans"

"Earlier reports, based on tax returns, showed that in 2005 the top 10 percent, top 1 percent and fractions of the top 1 percent enjoyed their greatest share of income since 1928 and 1929."

"About half of the income going to the top 1 percent comes from investments and business."

"On average, incomes for the top 1 percent of households rose by $465,700 each, or 42.6 percent after adjusting for inflation. The incomes of the poorest fifth rose by $200, or 1.3 percent, and the middle fifth increased by $2,400 or 4.3 percent."

"The share of their income that the top 1 percent paid in all federal taxes and in income taxes fell. The total tax rate dropped 1.8 percentage points, to 31.2 percent, from 2003 to 2005 while their average income tax rate declined one percentage point, to 19.4 percent, largely because of the cuts in taxes on capital gains and dividends."

While neither the article nor the report state it, I believe that the modest income increases for middle-income households in 2005 was related to the rising real estate prices at that time and the sales of homes by middle-income households. I would predict that when the 2007 numbers come in we will see that incomes for middle-income households actually declined when adjusted for inflation between 2005 and 2007.


Posted by rationalrevolution.net at 11:44 PM EST | Post Comment | Permalink
Tuesday, December 11, 2007
 China and the Environment

During his Nobel Peace acceptance speech Al Gore recently called on both China and the United States to take the lead on environmental issues, and during the climate change summit in Bali Western nations led by Canada urged for China to be subject binding emission reduction targets.

Nations argue over emission cuts 

Can the Planet be Saved in Bali?

U.S. says no to firm emissions targets 

Is there really any fairness in asking China to reduce its emissions however? Absolutely not. Much is made of the fact that China is projected to surpass America as the leading emitter of carbon dioxide and leading overall polluter very soon, but this is really to be expected. China has five times the population of the United States, so it should be expected that the country will eventually produce more pollution than America.

Per-capita emissions for China are still far below American and European emissions. China is calling on the United States and the West to lead the way, and I agree, it is America that should be taking the lead on emissions reductions.

Unfortunately, instead of actually trying to solve the problems, developed nations, primarily America, are using environmental issues as another foreign policy weapon and as another way to try and gain advantages over other nations. America cannot be used as the standard against which to judge other countries. It is already well established that it would be impossible for every country in the world to rise to the living standards of the United States. The United States also consumes five times more resources than it produces.

With a population of only 300 million people, however, we cannot say that other countries with larger populations cannot exceed the overall levels of consumption and pollution of the United States. This would be tantamount to legislating poverty upon the world.

Any emissions caps and regulations have to be based on per-capita metrics. What this will mean that is the United States will have to make the biggest cuts in emissions, because right now the United States far exceeds everyone else in the world in per-capita emissions and resource consumption. Looked at on a per-capita basis, China and India are not even close to Western levels of pollution and consumption.

Obviously, however, the pollution and consumption of China and India are still problematic, so what will that mean as their levels of consumption and pollution rise? The only thing it can mean is that levels of pollution and consumption in the West will have to go down. This is the problem. Leaders in the West know this and are working now to try and address it, but it cannot be fair to require that the living standards of other nations remain below ours.

The issues are even more complicated than this however. Not only does the developing world contain much more of the world's population, but it is also where much of the production for Western consumption is done. This is especially true of China. Not only are raw per-capita emissions much lower in China than they are in America, but a very large portion of Chinese pollution is really a product of American consumption, not Chinese consumption. In other words, we in America are directly responsible for a lot of the Chinese pollution. It is effectively as if we are running an extension cord from America to China and then complaining about the energy usage measured at the Chinese meter, even though we are the ones using that energy.

Industrial production is one of the major sources of pollution, and is the most concentrated source of emissions. Over the past 30 years much of American production has been moved offshore, but Americans are still the consumers of that production, so in fact, even though the emissions of China have risen rapidly over the past 10 years, much of this represents the moving of American factories from America to China, but the goods are still being shipped right back to America, so we Americans are still the ultimate sources of the pollution, not the Chinese people.

This factor will complicate any efforts to come up with a global pollution regulation system, because factoring in where production takes place vs. where consumption takes place will not be easy. Overall, for global emissions standards and reductions to be fair they have to be based on per-capita emissions and in addition to that they have to take into consideration where the products of industrial production are consumed. We can't have places like China producing all of the goods for the West and then telling the Chinese people that they can't own cars because they produce too much pollution because the West has moved all of its factories to China.

There is no way around the fact that the West and especially America must lead by example and must make dramatic reductions in levels of pollution and consumption. We cannot put the burden of reducing emissions on the larger poorer nations of the world. The responsibility is ours and we need to take that responsibility seriously.


Posted by rationalrevolution.net at 10:00 AM EST | Post Comment | View Comments (1) | Permalink
Updated: Tuesday, December 11, 2007 10:07 AM EST
Saturday, December 8, 2007
 The Misdirection of American Conservatism

Topic: Commentary
The Cold-War continues to shape American politics and American society. It was during the Cold-War that the American alliance between conservative Christians and free-market ideologues was born, and that relationship continues to dominate American politics and shape our culture.

The alliance between Christians and free-market ideology developed from the common opposition to Marxism. But the Christian opposition to Marxism was in Marxism's atheism, whereas the capitalist's opposition was to Marxist economics.

In the process of common opposition it seems that the Protestant Christians adopted the economic views of the capitalists. You don't find this so much among Catholics however, no doubt because of the more centralized, educated, and institutionally robust nature of the Catholic system which allowed it to better maintain its own distinct ideology.

Protestantism is more populist of course, and thus moved with the tides of Americanism more readily.

I'm not completely opposed to capitalism, but criticism and understanding are always important. The problem in America is that "free-marketism" has become its own ideology, dogma, and religion. Even after this mortgage nonsense I still hear pundits on TV saying that there is no place for government in regulating or correcting the mortgage issues and that the market should just be allowed to "work it out", even though we can plainly see that it was "the market" that caused the problem in the first place.

But fundamentally, all religious values and "free-market" values are totally at odds. If you look at almost any religion (aside from a few weird offshoots), they are concerned with social justice, regulating human behavior, and controlling human desire.

While not a believer in the metaphysical "truth" of any religions, I do think that religions play important roles in society and that their values have evolved for beneficial reasons. I think that social justice, regulating behavior, and regulating desire are all important for a healthy society and for healthy individuals. The difficultly is in figuring out how this should be done and the degree to which it should be done, but I don't think its a question of if it should be done.

This is also where family values come in conflict with free-market values. Families also of course recognize the value of restraint and regulation and that allowing their children to purely follow their desires is not what is best for anyone.

Christianity, like most religions, tries to make sense of the world and address the practical concerns that societies have. People from all societies have realized that people have desires to do things which are neither in their own best interest or in the community's best interests. We have tendencies to self-destructive and socially destructive behavior. We have desires for sex that can lead us into harmful situations, desires for food that can undermine our health, desires for power that can hurt others, desires for substances that impair our judgment and lead to accidents and harm.

These are all real problems that religions in cultures around the world have tried to address for centuries.

Now, the fundamental idea behind "free-market" theory is that human desire should be completely unmitigated and that unregulated human desire should be the basis of the economy. Its complete nonsense and completely at odds with all traditional values. There is nothing at all "conservative" or "traditional" about free-marketism.

Free-marketism is the most liberal of all policies, indeed it is probably the most revolutionary idea (in a very different way) in human society to come along since institutionalized religion.

Free-marketism has become an excuse for predatory exploitation of human flaws. Christians complain about the undermining of family values in America, but the single greatest culprit of this undermining is free-market capitalism.

American families are in a battle against corporations for the souls of their children, not against "gays, liberals, secularists", etc.

Free-market theory is fine when applied to things like the supply of bricks, or lumber, or farm supplies, etc. I think that allowing markets to operate freely to find prices for those types of raw materials and industrial equipment is just fine. The problem comes in with consumer marketing, especially when it comes to food and the use of sex, etc.

The fact is that people have innate instinctive desires. Christianity recognizes this, it is what many Christians call original sin or the tendency towards temptation, etc. The fact is that people's desires evolved in a very different environment millions of years ago and that civilization has changed that environment rapidly over the past 10,000 years and behaviors that were beneficial in the wild are no longer beneficial in complex societies.

For example, in the wild, our ancestors had an unlimited food desire and a strong desire for sweets, because in nature food was scarce so there was no real possibility of getting fat in the first place, and naturally sweet food tends to be very nutritious, such as fruits. So, people evolved a strong affinity for sweet food because people who sought out sweet food tended to eat more fruits and honey, etc., which contains lots of vitamins, etc.

In nature sugars are generally paired with nutrition because they are concentrated into products that plants or animals use to store nutrients for their young, such as fruits, honey, tubers for plants that spread by budding, etc. These things are similar to eggs or milk. The sugar is in these substances because it is a highly accessible form of energy needed for the growing young. But the sugar only provides energy, not nutrition.

About 200 years ago the technique of making processed sugar was developed, in which pure sugar was able to be extracted from plants.

People have an evolved affinity for sugar, which in the wild led them to food products that were high in vitamins and minerals. But our desires are blind... because evolution is blind. We can't taste nutrition, if we could then nutritious foods would taste good, but our pallets aren't that sophisticated.  Evolution just happened on correlations that generally seemed to work, the correlation in nature between sugar and nutrition.

But the thing is that these simple systems can easily be fooled or overloaded.

With processed sugar one can simply concentrate the product that we are able to taste, and which we have evolved to like because in nature it was always paired with nutrition

What people follow and pay attention to is just the sugar. Now you can make something that is pure sugar with zero nutritional value and that is what people will instinctively desire.

Religions tend to work this out in round-about ways and then do things like condemn eating pure sugar. That's not a real condemnation in most religions because the processing of sugar is a recent thing, but that's what a religion would typically do. Parents would likewise learn that a diet of pure sugar is bad for your health and prevent their children from doing it.

What does "the free-market" do however?

The "free-market" isn't a thing, people are the ones doing everything, but under "free-market" principles people are going to want to sell as much of a product as possible and get as much money as possible. To do this you cater to people's desires. Furthermore, you try to keep production costs as low as possible and prices as high as possible. So, you want to make something cheep that people will desire highly. Thus, you make products that are high in sugar and low in nutritional value because making things with pure sugar is cheaper than making things that also contain vitamins and minerals, etc. and people can't taste nutrition, they can only taste sugar, so you focus in on what people will react to and eliminate everything else.

Thus, you make "junk food". Not only do you make junk food, but you then go into people's homes, right under the noses of the parents who are trying to act in accordance with the best interest of the child, and you tell the child that its cool not to obey your parents and that if you eat this "junk food", (which you don't call junk food) then you will be cool, and if your parents don't want you to have it, then that just means that it must be cool.

This is basically the status quo of marketing in America today, and it is a direct product of free-market principles. Obviously, this is in direct opposition to religious tradition and family values.

As production is consolidated under capitalism into a few huge mega-corporations, the ties to community and the social pressures on producers are reduced vs. the traditional local and home-based production systems, further adding to the problems. Instead of working to address the flaws that we have as humans, free-marketism preys upon those flaws, exploits them, and exacerbates them, leading inevitably to social and cultural corruption.

Personally, I'm big on family values, but not on religion, though I understand the basis of religion and aspects of value that religion has. Religions come with good and bad, and I think you can keep the good and throw out the bad.

Regardless of that though, the main thing is that Christianity and free-marketism really have nothing in common. Free-market values are in direct opposition to Christian values, and many people who are not religious, like myself, share values that are in common with Christianity and other religions and are trying to stand up against the assaults on these values by free-marketism, yet the Christian-Right in America is thwarting these efforts, and their own interests, at every turn by being so in bed with the Republicans.

Almost everything that Christian conservatives complain about is actually a product of free-market principles, yet they are the ones defending the very principles that are undermining the values that they tout. Its very frustrating.

Christianity actually directly addresses this issue, and condemns people who tempt others, much less people who temp others for self benefit. That is basically the whole basis of free-market capitalism, tempting others for profit. How Christians can support such a system I have no idea. The Catholic Church has always been more wary of this issue and taken stronger opposition to free-marketism, but you don't really see this among Protestants.

Even still, the Catholic opposition is mostly rhetoric and hasn't yielded much fruit either. It seems that both Protestants and Catholics are content to keep their ties to the institutional bases of power and don't want to rock the boat, as usual and is to be expected from them.

I think the biggest problem is the legacy of Communism, which made the unfortunate attempt to take on both religion and economic exploitation simultaneously, leading to the alliance between Christianity and Capitalism that we see today.

Hopefully over time this alliance can be broken back down and Christians can be a force for good and economic justice instead of primarily just defending economic injustice and greed. I don't have much hope for this in America though, as everything is so tied into the power structures and the powerful from the economic, political, and religious worlds are all in bed together... as usual.


Posted by rationalrevolution.net at 8:08 AM EST | Post Comment | View Comments (1) | Permalink
Sunday, November 11, 2007
 Greatest Threat to National Security? The National Debt

Topic: Commentary

For all of the Bush administration's talk about national security, what this administration has really doen is make America dramatically less secure. While many people recognize that things such as global warming and dependence on foreign oil also represent national security threats, it seems that people have failed to recognize the greatest threat of all, our national debt.

The Bush administration has argued that they have made America safer by carrying on these wars in Iraq and Afghanistan, but just ignoring the direct ways in which these wars have actually made us less safe, by actually contributing to global terrorism and increasing anti-American sentiment abroad, these wars have done something even more dangerous, which is dig America deeper into debt.

So, has the Bush administration made America more safe? Not at all, in fact it has made us many times more vulnerable and has dramatically increased our economic, and thus security, risk.

What people need to start recognizing is that our debt is a risk factor and that the increasing debt poses a direct threat to the security of this country.

Think about it. If you had a house with no security system, no dog, no guns, etc., you may not feel too safe. You may decide that you want to increase your security by buying a dog and an alarm system, etc. Okay.

Now, what if your income is $50,000 a year and you decide that you feel so insecure that you want to spend $400,000 on a super-duper state of the art ultra-max security system, including body guards, etc.

Now that you have spent more money than you can possibly afford and you have an additional $400,000 in debt, are you really "more secure"? No, in fact you are less secure.

Guess what, when you take on so much debt, now you are constantly worried about losing your job, now creditors are calling, now you have weaknesses that can easily be exploited financially, etc. No one may break into your house or rob you, but now your chance of being extorted by others or driven into bankruptcy has increased by far more than the chance of you being invaded was before.

This is effectively what the Republicans have done to America since the 1980s, but especially within the past 7 years of the Bush administration.

There are now fundamental problems with our economy that have no easy solutions. With essentially 30 years of Republican tax cutting and deficit spending, we are now at a point where we must raise taxes, probably significantly, in order to balance the budget and pay down the debt. Yet, our economy is in such a state that tax increase will surely have a negative impact, yet not paying down the debt will also have a negative impact. When this happens to your average person, this is usually the road to bankruptcy. Unless incomes go up dramatically, then there is no real solution here.

Additionally, interest rates also need to go up. Interest rates are too low, and have been too low ever since the large cuts from the 2001 recession. American's rate of personal savings is at an all time low. The average rate of Americans savings in now negative. Compare this to an average 40% savings rate of people in China.

The interest rate has a direct impact on savings. The lower the interest rate is the less incentive there is to save, because borrowing is cheap and there is little return on savings. As the interest rate goes up, the incentive to put money into savings and money market accounts goes up.

The falling value of the dollar hurts us even more. Now that the value of the dollar is dropping, even if you put money into savings its value is globaly falling faster than the interest can keep up. Even if you are getting 5% return on your money market account, the dollar is falling compared to other values of measure, such as gold, oil, and foreign currencies, at a higher rate than 5%. So right now, with the low interest rates, you are losing money even if you save money anyway.

All of the Americans with big money started moving their assets into gold and foreign currencies about 5 years ago at least. In addition, due to several factors, including new restrictions on foreign investment in America, foreigners have been increasingly investing outside of America, even pulling resources out of American markets.

Let's not even get into the issue of the aging baby boomers and the future cost of medical care and entitlement programs.

So what does all this mean? Well, it means that there is no easy way forward.

Cutting taxes always sounds appealing. The problem for the Republicans is that they have made "cutting taxes" a central plank of their platform, yet you can't cut taxes forever. You can always run on cutting taxes. Sometimes its appropriate to cut taxes and sometimes it isn't. Right now it isn't. Giuliani is once again running on cutting taxes. Well, then what. What if he were to win and cuts taxes. What will the next Republican run on, cutting taxes also? When does it stop? Meanwhile the debt is ballooning out of control.

Interest rates need to increase significantly, yet everyone knows that doing so would initially hurt the economy by reducing spending and investment. Actually, I don't think that increasing interest rates would hurt as bad as many people claim, because corporations are flush with cash at this point, unlike the American public, so investment would still go forward even with higher interest rates, there is plenty of cash on hand in the hands of the wealthy and corporations.

Still, increasing interest rates will have a negative short-term effect. A positive effect of increasing interest rates though is that it would bring more foreign investment into America and help to stabilize the value of the dollar.

The two things that need to happen are not going to be easy to do. Likewise, due to the international economic environment, doing the "right thing" is going to become increasingly difficult for every country, especially the United States. The reason for this is that there is growing economic competition between nations and it is becoming increasingly easy for capital to move from nation to nation. This means that international competition is going to drive down things like taxation, labor laws, and banking regulations down, because any country that tries to enact appropriate levels of taxation and regulation is going to see a flight of capital to other markets, and nations will lower their restrictions and taxation in order to attract foreign investment.

We already see this in Europe where Switzerland basically uses "predatory taxation" to draw in capital from the surrounding countries. The Swiss have implemented a regressive taxation system that has higher tax rates for the poor and working classes than for the wealthy. Taxation on wage income is much higher than taxation on capital income. Why do they do this? Because it allows them to attract money from all over Europe. In effect, the Swiss are stealing from everyone in Europe, depriving all of them of the ability to properly set their own domestic taxation policy and dramatically robbing them of taxation revenue. Why does this work for the Swiss? The Swiss can get by with very low taxes on the wealthy because it attracts so much money from around Europe and the world that the massive influx of capital from foreign markets more than offsets that lower tax rate.

In other words, if the Swiss system were a closed system it would fail miserably, it only works because it has an outside source of revenue. The problem is that this prevents other countries, where the wealth is actually created, from being able to properly tax their citizenry. The result is that the countries that have to pay for things like infrastructure and education and healthcare which make it possible for the wealthy to become wealthy in the first place are unable to actually get a return on their investment, because the wealthy move their money outside of the country where it isn't taxable.

This Swiss system is likely just the beginning of what is going to become a large international problem.

So, not only is it already going to be hard for America to balance its budget and pay down its debt, but the growing international climate is going to make this increasingly more difficult. The debt situation that has developed in America over the past 30 years, since the "Reagan Revolution", will increasingly become this nation's greatest point of insecurity and our greatest vulnerability. Through this debt the American economy, and thus America itself, will become increasingly vulnerable to foreign interests. Our debt is the biggest hole in our national security.

National Debt Clock

Is the National Debt Growing?


Posted by rationalrevolution.net at 8:59 AM EST | Post Comment | View Comments (3) | Permalink
Updated: Sunday, November 11, 2007 10:32 AM EST

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