This year’s political fights brought out by conservatives and republicans focused the attention of some on subjects many of us had thought were decided long ago. Not only did we hear their rhetoric pointed at century-plus past enemies, but in apparent total social, historical and ethical blindness, we heard how capitalism has always been good for the U. S. and the best thing for Government to do is to get out of the way.
Phew! What a crock - right?
They do have a point in there don’t they? I’m not exactly where they are coming from but I will give them a point that Communism has pretty much been a bust, wherever it has been tried has been pretty much a bust. In Russia, they slaughtered millions in a vain attempt to bring about a poor attempt. Indeed, some would point out that communism has never really been tried in it’s purest form. Wasn’t the elimination of money one of the key points? But I’m not sure I’d want to even see an attempt at that one - I lived in Moscow during the last trial and witnessed what a mess people really make of a ‘utopia.’
But conservatives weren't talking about communism. They were talking about socialism, kind of the little sister and not nearly as draconian. But what is really wrong with socialism? All we’ve heard is that it is not American, and not capitalism - and is bad.
Is that all they’ve got?
Other than flamers, the wealthy, or party hacks, I have not talked to a single individual spouting the socialism bad, Federal Government needs to be smaller, capitalism is always good, lower taxes are always better, health care reform is bad line - THE LINE - not a single individual who would give up Medicare, Medicade, Social Security, farm subsidies, unemployment insurance, national defense. None of them even knew Social Security or Medicare would be considered socialism. Get it? They were following the lead of people they trusted and didn’t even know what it meant.
What do they want to give up? Let’s see, what have we been falling behind other countries? Oh yea, it’s education! So the one thing we have been getting behind in, as kids are falling behind by being schooled by their parents at home, predominately in areas where the instance of STD and teen age pregnancies are highest, where test scores are falling farther and farther behind kids in other countries. Countries where we are also falling behind economically - because of course they are getting better and better educated. AND THEY WANT TO CUT THE EDUCATION BUDGET. Is there anything that makes less sense? Oh yea, like trying to talk people who love their Social Security into hating it.
What we know from economics: businesses are great when competing fairly with each other. The competition drives down prices, and inefficient operations are driven out of business. Once a business drives out all competition though, it becomes a monopoly, cutting output and raising prices. An oligopoly, with a few businesses with coordinated operations also keep prices up and volume down. Think AT&T when it was the only phone company. When it was broken up, we ended up with competition across the industry and many many more choices. If government wouldn’t have stepped in, we would still have AT&T - the only place to get a phone. And diamonds? Debeers is outside U. S. Government control. It controls a cartel that keeps diamond prices artificially high. The world has more than enough diamonds, that, if they all entered the market, would drive prices down. Diamonds might lose their luster as a special stone. But this that we have now, an artificial shortage is created. My point is that is good for the government to step in and break up companies.
And what about corporate compensation? We have all heard the stories over the last few years about corporate executives and sales staff making millions of dollars a year in companies the Government was forces to support before they collapsed. And why did they need support? Because of the deregulation of financial industries. Some businesses became experts in producing and selling toxic securities that were known to be very risky and likely to be a poor producer in a down economy.
The idea is sound up to a point. A business has a plan and needs to make a certain profit level. A business finance manager wants to hit that profit level regardless of economic conditions. This manager buys a basket of securities that are predicted to perform at a certain level under different market conditions. For instance, when the economic activity goes up and the world gets stronger then people buy more lobster and Mercedes Benz’. Prices and securities based in those goods go up. But the business financial manager needs investments in a down time too. Potatoes and gold both rise in value in down economic times: a finance manager might buy gold backed securities if she had cash in a down time, or she might buy invest with J. R. Simplot. In the same light, a financial manager may be talked into buying sub prime mortgages by Goldman Sachs to balance their portfolio for a certain situation. But as AAA rated they were sold as proven cash payers before the collapse - and as thus are paying a record fine. The bottom line is that without regulation, these markets will crash into a depression as we have already experienced, or they will fraudulently sell securities to each other, all to make more and more money.
And health care reform? Republicans have suggested as an alternative when the insured have been dropped because they have a costly disease, the dropped victims could pool together and buy insurance together. Do you get it? It’s like if your house burned down, your home owner’s policy would drop, and you’d have to buy insurance in a pool with other home owners with burned down houses. Are they serious? What is the use of buying insurance anyway if they are allowed to drop it. Only someone determined to destroy insurance and the business would suggest such a drastic approach. Most of us of course want a Government that is there to protect us from business.
And more on the health insurance. This past year, insurance companies, who pay their executives well, sometimes $10m+ per year each, spent hundreds of millions of dollars to attempt to destroy the health care reform supported by a majority of Americans. The bill that came out lacks some of the socialist parts favored by a majority of Americans, in the way of a government run insurance plan to compete with the insurance companies. But of course, in these crazy days, businesses, which are there to compete, don’t want to have t go up against a government rum play. It would drive them out of business. Nothing about inefficiency, nothing about being better for health care for Americans. It’s all about greed of the companies and making big salaries for their executives.
The bill we ended up with is not favored by Americans. Republicans would like to repeal it but the majority of the country is wary. By a two to one margin, and in direct opposition to conservatives and Republicans, Americans want more health care and not less.
What else does government do well. Of course defense of our county - but do you recall the founding fathers were wary of a standing army? I’m sure you will see the conservatives will flip sides again when they have to explain why the founding fathers didn’t want the expense of an army.
And tax cuts always make business better and increase tax receipts? As I recall that was the Laffer curve and even it’s author Arthur Laffer admitted it doesn’t work. Of course, once the tax rate approaches zero does Government tax receipts approach infinity. Pure garbage. But somebody is till believing it.
But Government is not efficient as well. We all have heard the stories about the defense department buying the $50 hammers and the $1500 coffee pots. They have departments that were created 100 years ago for processes that have ended yet the jobs are still here. And when they win wars, like the cold war, spending doesn’t really go down.
So what is the answer? It is going to be what we have had the last 100 years - mixed private and public. We need to stop the name calling and sloganeering and talk about substance and real ideas again. And we need good people to work in industry and government. Good ethical people, not just ambitious people that are trying to make as much money as possible, or get as much attention as they can, at the expense of everyone else.
