Epilogue

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tenthtee's picture
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Joined: 2006-11-16

How things have changed. A couple of years ago, the debate raged about progressive versus conservative philosophy.Things have melted down. Obama does not even trust his chief of staff. Californian legislators today are saying they want half of the state's energy to be wind and solar by 2020, even as business people are fleeing the broke state. Maybe CA will become a retirement home for old hippies. Most of us are back to basics, including selling insurance. I notice Bond Guy gave up on progressivism here. The only political message that has any clarity is: reduce spending and taxes and regulations.  The story that ends, begins again with new life. Maybe the cycle is coming full circle. Time to be bullish on America? Who will recognize the fruits and profit from creative destruction of the status quo? Will it be small steel producers who benefit from tariffs on China, or health care providers who impose efficiencies following the repeal of Obamacare?

BigFirepower's picture
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Joined: 2010-07-09

It is funny, that there is less red tape in China, capital is easier to find there, and the govt there is not stimulating more govt, but industrial capacity.Our country is being "lapped" by Asian nations. We run the risk that our young talent goes overseas, and we become a pure have/have not nation, where the rich become obligated to pay the welfare/social bill. When you go after the "rich" to pay their "fair share", the rich pack up, and move away. We'll see if the voting public would like to proceed with this hopey change stuff, or if they support freshmen in congress that are willing to turn back the big govt machine.  

iliketennis's picture
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Joined: 2010-08-30

If you want to avoid a have/have not scenario, the income distribution trend has to be reversed through political initiatives benefiting the middle class.Not trying to sound like a communist here, but I think that's the only way to get around things.

tenthtee's picture
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Joined: 2006-11-16

Irony is, we've done a lot of the "hard" work. Opened our markets to competition, opened our borders to "cheap labor". There's plenty of capital around.Someone was saying this morning that Obama would throw Congress under the bus: after the election, a divided DC would gridlock, demonstrating that fiscal conservatives are ineffective, helping Obama with re-election in two years. I suspect the major (economic) advances will come from the individual states. Look at the states that are doing comparatively well with their budgets, the ones that have a better business environment. Or states that are challenging Obamacare as an obstruction to business and infringement on their rights. Or AZ, taking control of immigration. All of this bodes well for states' rights, and voting with your feet, as Reagan used to say. I believe we can compete with Asia, we gotta be smart about it and take a fresh approach. We don't have to empty out our lake and become the Sea of China.

tenthtee's picture
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Joined: 2006-11-16

Like, the middle class need good paying jobs. That's why I say tax cuts, regulatory cuts, government spending cuts, and tariffs. The only good, secure, uncorrupt path to independence and security and self worth is meaningful work and pay.

BigFirepower's picture
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Joined: 2010-07-09

Tennis, the govt has repeatedly proved that it is incapable/too corrupt to be trusted with redistribution of wealth/income. For example, Los Angeles was allocated 111 million from a special ARRA fund related to the Stimulus package. By their own audit, it only created 55 jobs...When less than half the nation even pays income tax, but still afforded the right to vote, then you'd better believe that those non payers will vote in favor of taking even more from those that have. Until, it's all gone...

iliketennis's picture
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Joined: 2010-08-30

I think there has to be a misconception somewhere, though. The disparity between the top 1% and the rest of us keeps growing and growing. So taxation couldn't really be the chief issue - I mean this is happening despite growing taxes amongst the wealthiest.IMO, people need to take a long hard look at compensation for jobs in the lower/middle class brackets.

gethardgetraw's picture
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Joined: 2009-10-22

The wealthy earn 7% on their money. The poor pay 20% on their money. They need to stop using credit cards. I know its not an easy fix but its a good start. Edit - And the wealthy own the credit card companies and banks. Through stocks and bonds.   I still don't see how it's legal to charge 20-30% on lines of credit. Look at those 2 numbers. That's insane. (Although the poor should not sign up for the card in the first place.) It's a downward spiral.

tenthtee's picture
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Joined: 2006-11-16

Globalization makes capital, labor, even land a commodity. Taxing the "rich" is futile, because the money just moves to a competitive environment (China). Progressive and conservatives will have to agree with you, tennis and Firepower: we need to create a unique environment here in America that finally marries traditional opponents: trade protection with the destruction of unions, big government, heavy regulation, excessive taxation. This is where we will eventually end up, because the political economy will reward this behavior. What it looks like is Toyota making cars here, small business flourishing. That is exactly what is happening in China right now, China has enjoyed double digit growth with cheap labor and hard work, but to say China has been protectionist in developing its economy would be an understatement. In absolute economic terms, Big, look at the Commonwealth Games and the corruption in India. Or look at the potential for political unstability in China, if and when there is a massive recession there: these are factors that help negate some of the traditional comparative economic advantages associated with pure free trade. Bond Guy must have started drinking already today, the world markets and traditional theory is changing so fast.

loneMADman's picture
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Joined: 2010-05-10

Firepower, I can only assume you have never been to China, or even read anything factual about it.  Less red tape?!?!?!  That's completely hilarious.  China is "competitive" for its low cost labor, protectionism and profound government subsidization of business.  In terms of regulation and taxation they, and most Asian nations, are vastly more "progressive" than the U.S.The problem with idealogoues of all stripes is the facts don't matter; they are just used to fit your worn out theories.  And conservatives really need some new theories.  Maybe the so-called progressives do too, but yours are looking more like some 60-year old hooker with a habit, with prospects equally pathetic.Just because the average person is frustrated by the recession - that started when the country was employing the exact ideas you are now spewing, I mean espousing - doesn't mean your "ideas" are vindicated.  It just means people are frustrated.  People's opinions of Republicans and their agenda hasn't changed; they still have about a 20% approval rating.  People are just tired of high unemployment, stagnant wages and Washington gridlock.  They are looking to throw the bums out and right now the math says there are more (D) bums than (R) bums.Tenth, some of your ideas have merit, but a blanket recommendation of less regulation is painfully forgetful of the conditions that caused our financial system to verge on meltdown.  And you want to destroy unions?  Right after you finish off the horse and buggy industry?  Other than in our schools, they don't amount to a gnat's a$$ anymore.  We're losing plenty of jobs in industries that were never unionized, like engineering.  So we need a new theory there too.I agree that our trade practices are flawed; we have hte most open system in the world and no one reciprocates.  But you need to keep in mind there are benefits to ensuring global prosperity, including economic and political, and you can't throw out.  We need to be judicious about how to approach the problem, but we can never get past the idealogues on either side of the debate to get to a solution.Tennis, you are right.  The biggest issue is finding ways to create conditions that promote good paying jobs for the vast majority of people.  The Nanny State failed just as miserably as the Reagan/Bush revolution.  We need new ideas not chained to either idealogical anchor.  I've already posted on what I think those are, so I won't  bore you again (anymore than I already have!).  

tenthtee's picture
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Joined: 2006-11-16

Sorry, guess I missed your ideas for what some of the solutions might be. I don't have a lot of faith in regulators. Unions represent most of government, which is something like 40% of GDP. For example, teachers. This is a monopoly which has corrupted the education business. Burning down the house should be sufficient to cover most of our problems, I have more faith in the markets (not the Chinese market) than almost anything else, except God.

loneMADman's picture
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Joined: 2010-05-10

Ok, unions represent a lot of government, but that has nothing to do with our competitiveness with other countries, unless, of course, we start outsourcing government and education to India.  Perhaps that is the next great conservative budget cutting idea.  In truth, a lot of states have done exactly that already!  Good grief.Tenth, that other post was in response to yet another of your provocative messages...pasted below.  I challenge anyone to pidgeon-hole those ideas into any idealogy.___________________________________________________________________________________ I don't think it's a mystery what Americans will vote for - less government and taxes.  They only choose an alternative when we are on the brink, as we were two years ago. But there's a difference between good politics and good policy.  All anyone seems to talk about anymore, including the news networks, is politics, which is probably why the country can no longer reach any consensus on good policy.  On tough issues, the two are usually incompatible.  But back to the subject at hand.  In the long run, we do need to address the deficit.  The key elements need to be:

  1. (a) Reduce entitlement benefits, especially to the baby boomer generation who, since they've been in charge, have done nothing but lower their taxes and increase their benefits.
  1. (b) Reduce military spending.  Folks we spend almost as much as the entire rest of the world combined.  It's time for our allies to start pulling their weight.  We may have a great military, but most of our allies live longer, work less, have better retirement security, better primary education, and essentially the same economic standard of living.  That's not advocacy for a progressive agenda, it's just a statement of objective facts.  And the main reason they have these things is not that they pay higher taxes, although many do, it's that they don't have this huge military industrial complex to support.  Besides, to terrorists, a giant military is more of a target than it is a deterrent.
  2. (c) Adopt a simpler, fairer tax code.  I'm not just talking income taxes, but payroll taxes, sales taxes, property taxes, etc. These need to be look at holistically and streamlined.  Their needs to be a better balance between the burden placed on work and that placed on wealth.  The subtle change in the tax code the last 30 years is that the amount paid by people who work and spend, including individual W-2 income taxes, payroll taxes and sales taxes as a portion of all tax has soared, while the portion from corporate income, capital gains and interest income have fallen precipitously.  No wonder working people feel they pay more than their fair share of taxes.  Relative to 30 years ago, they do.
  3. (d) Improve education.  We need to prepare kids for the modern work force and our schools are failing miserably.  As a consequence, even college grads are struggling to find careers that will earn sufficient income to afford a middle class lifestyle and contribute meaningfully to tax revenue.  Education reform starts with school reform and here, you have to give Obama credit in that he is at least selectively willing to take on the status quo and teachers union.  We also need more emphasis on developing skills and less on memorizing generic knowledge that anyone can look up.
  4. (e) Incentivize businesses to hire Americans.  This goes hand-in-hand with improving education but would also include eliminating employer payroll taxes, imposing real and substantial penalties for hiring undocumented workers, and closing tax breaks for companies who move jobs and profits offshore.
  5. (f) Improve our infrastructure.  Massive leaps in productivity have generally followed substiantial public and private sector investments in infrastructure like railroads, electrification, the interstate system, and airports.  Our infrastructure today, rather than improving, is in decline.  This cannot be good for commerce, our future economy and deficits.  It's unfortunate, but these kinds of systems, require investments so massive and interdependent that the ROI for any individual business will almost always be negative.  Public investment is usually necessary, but, when done well, nearly always pays for itself in future economic growth.

There's no simple fix for a problem of this magnitude, but the good news is that the deficit is a problem, not a crisis.  We have time to deal with it, but we have to work on good policy, not good politics.  You may say this is IMPOSSIBLE!  Well, it's hard, but we're Americans and we can do hard things.  The first thing we do is take these issues out of the political realm (i.e., Congress).  When we needed to close hundreds of military bases in the 90's, we set up a bipartisan and non-partisan commission of experts and had them make comprehensive rather than one-off recommendations.  It wasn't perfect, but it worked pretty darn well.  We need something on an even bigger scale to tackle the deficit.  Incidentally, Obama proposed something similar, but more modest, and Republicans (nearly unanimously) and even some Democrats shot it down.  Just shows Congress isn't really serious about this issue.  It's just politics. 

tenthtee's picture
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Joined: 2006-11-16

You are a big thinker, and it is worth framing out the big picture. Setting it right in our own minds at least helps us enjoy the moment a little better. As you implied, the best way to get a perspective is to "go to China" - haven't been there myself for many years. I was reading the online local paper today, some educators had obtained a 17 million dollar grant from the feds to improve teacher mentoring and motivation. The web site that represents this program is really pathetic, in the sense of, if you were sitting in Hong Kong or Bejing reading this site, you would think, those dumb Americans are not getting it, this programs looks about as effective as creamed corn. I guess you know I favor small business, and basically believe big business and government are corrupt. From my viewpoint, we need to focus on quality of life and "small is beautiful", in the Schumaker sense. http://en.wikipedia.org/wiki/Small_Is_BeautifulIf I was the emporer, I'd take all of your ideas and bring them to play on the head of a pin. Well, we're Americans and we can do hard things. Take these things out of the political realm.Basically, my optimism is waxing. Doing lots of continuing education this fall for the CFP and insurance license. Clients and their friends need us. And I guess the annoying people have mostly left this forum. Lots of good people, too, I'm sure, but I find population annoying. But these economic thoughts keep playing, you have to try to put them down. Nature of this business, I realize, walking in the full moon tonight, how much stress we have endured this past decade. Gracefully and cheerfully, I'm sure, but honestly, stressful. Picked up the guitar tonight after a few years break (golf took over). In golf, you keep learning and forgetting the same things, but you keep pushing forward. Same with guitar. Same with financial planning. We become what we do, what we think. Had some great training this week from a planner from CA who says he'll never retire. What a great transition plan, happens to be mine, too. Can't afford it, anyway. The economics of reality saves us from ourselves, just like the market will save America. You learn so much about money, the relationships go so deep, the portfolios hold and you are piloting a small spacecraft in low earth orbit held in perfect gravity, silent but awake with a giant view through the small window of a tiny spacecraft going twenty thousand miles per hour. ( I guessed this watching on the golf course one night, I guess it's closer to 17,000). People say, you're a numbers guy, not.  Another good day in the life of a planner. Well, America will come back together, but not because of our reasoning or persuasion. It's political correctness that needs to die, the market is killing it, slowly. Taking your pidgeon hole challenge, I would name your philosophy, " Not PC".

iliketennis's picture
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Joined: 2010-08-30

Just a brief comment before I head out into the fray today.Lowered cost of education will be a key component to righting the ship. It will also help when addressing issues like health care. 

jamesbond's picture
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Joined: 2005-03-21

 The quality of the education not the cost of education is one of the main hurdles. Public schools long ago deemed it more important to make students feel good about themselves that they forgot to educate them, so now we have generations of people who lack the basic skills to better their own lives. Gone are the days when Joe dropped out or barely graduated from highschool, got a factory job, worked there 30 years and retired with a pension. Now what you have is  a dumbed down work force. In addition, our economy has changed. We are no longer an industrial economy. The jobs that pay real money are now very technical and a good education is needed in order to get them. Taking money from Paul to give to Joe is not the answer, neither are punitive tax policies that penalize successful people.

tenthtee's picture
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Joined: 2006-11-16

Education IS the key. We spend about 10k per year per student. Some will need more $$ spent on them, some will need to get out into the small business community as quickly as possible to engage in the skills and relationship building required in the new, post-industrial small business economy.The irony or conflict of interest: many who favor saving the planet, having a balanced lifestyle, buying less imported junk from China on borrowed money, want to trade good and service locally with their friends - many of these folks have good paying government jobs that are threatened by the "new" post-industrial economy. Especially most government payroll teachers. And now the government is increasingly dependent on big business. What you really have right now is the progressives defending the status quo, which is the gutting of the American economy in favor of big business, which has always supported whichever candidates can "win".Education can't change because it is run by the government, which looks after its own economic interest. Children in schools must remain segregated from the community until age 18 because a system that was set up long ago refuses to adapt to the new economic realities of a post industrial America.

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