Happy Anniversary, Boston Tea Party!

In the 1760’s and 70’s, the East India Company was struggling as a consequence of poor management and reckless financial speculation. To bail out the company, Lord North and other British ministers enacted a law granting the company a monopoly on sales of tea in the American colonies. On the face of it, this was not a bad thing for most Americans. The price of tea went down, even after taking into account the small tax added to the tea before it reached American shores. But the colonists would have none of it. On November 29^th, 1773, a shipload of tea was seized by Sons of Liberty and tossed into Boston Harbor.

 

Political cartoon depicting British ministers forcing America to drink its tea.

If the reader knows a bit about American history, he or she will recognize that the East India Company symbolizes a set of economic policies known as mercantilism. In essence, mercantilism refers to an alliance between government and private business, designed to benefit both their interests. If the government helps the business and it succeeds, sales of taxable goods and services increase, the government benefits from increased revenue and individual members of government will receive gifts from the company as a token of appreciation. Of course, the people who don't benefit are the consumers, who come into the picture late, and are obliged to pay whatever the asking price happens to be.

So let’s honor the anniversary of the Boston Tea Party by reflecting on the evils of mercantilism. As Americans, it is incumbent on us to remain alert to usurpations of power by oligarchs who trade in money and political influence. 

A monopoly is an easy way to succeed in business. There is little pressure to keep prices lower than competitors’ prices, and little need to ensure that the quality and availability of one’s products remains superior to that of competitors because, very simply, there aren’t any competitors. 

Nowadays, the biggest monopolies are located in China. Foxconn, for example, has over a million employees and earns hundreds of billions of dollars in profits each year. Foxconn manufactures the iPhone on behalf of Apple. Yes, Android phones like Samsung’s Galaxy Nexus do compete with the iPhone, but the fact is, Foxconn manufactures parts for both Apple and Samsung. 

Foxconn, unlike many of China’s vast and lucrative companies, is not (as far as I can tell) a state-owned enterprise. But it does receive generous subsidies from the government to help it keep prices low. And it is willing to sell its products at a loss if necessary to maintain its dominant position in the market (source). In the old days, selling at a loss would have been considered an anti-competitive practice, but nobody seems to be complaining. 

Foxconn (aka Hon Hai Precision Industry) is also one of the top ten stocks held by Goldman Sachs in its Growth and Emerging Markets Equity Portfolio. So, when Foxconn succeeds, so does Goldman Sachs. So, if you ever wonder why Goldman Sachs donates so much money to the political campaigns of Republicans and Democrats alike, or if you ever wonder why the United States doesn’t do more about the unfair trade practices that have cost America so many jobs, reflect on these facts.

On the Trans-Pacific Partnership: Media Blackout?

I've mentioned the Trans-Pacific Partnership (TPP) to a lot of intelligent people, only to get a blank look in return. Apparently, there are people who've never heard of it. Giving this some further thought, I realized that it shouldn't be surprising. If you Google "Trans-Pacific Partnership," you are likely to turn up results that include the phrases like "closed door discussions," "little-known trade agreement."As it turns out, not even members of Congress are allowed to see the draft of the treaty (http://huff.to/NsXgC6)

The purpose of this post is to examine the question of whether media coverage of TPP has been adequate, given the huge (and I believe, quite dire) implications of TPP for the American people. So, I posed the question, "in the last two years, what has the New York Times said about TPP?" Here is a summary of ALL the articles that came up in a search of the paper's archives.

A chronological list over the last 2 years, along with some items that were not reported, is provided below. I'll let you decide.

NOT REPORTED: Dec. 9, 2011: Over 50,000 South Koreans march in protest over TPP. Protestors had to be restrained by force. There are complaints that news media outlets are not covering TPP. TPP is accused of being "anti-parliamentary and anti-democratic."

South Korean protesters

(1) Feb 14, 2011: An article in the Business section reporting on the debate within Japan about the merits of joining TPP.

(2) Feb 28, 2011: An article in the Business section discussing Republicans' resistance to the plan on the basis that, at the time, it excluded Colombia and Panama from the deal.


NOT REPORTED: April 25, 2012. Thousands of Japanese march in protest of TPP.

Japanese TPP protesters

NOT REPORTED: on June 13, 2012, a draft of TPP was leaked to the public, and reveals provisions that will (1)  limit the extent to which U.S. federal and state officials can regulate foreign firms operating within U.S. boundaries, (2) create new incentives for U.S. companies to offshore jobs, (3) allow foreign firms to demand compensation from the U.S. when required to comply with financial or environmental regulations (source: http://bit.ly/Kopu4m).

NOT REPORTED: On June 19, 2012, President Obama issues a press release announcing the TPP partners countries accept the admittance of Canada to the deal. This will increase free trade with Canada beyond levels achieved by NAFTA.

NOT REPORTED: On July 7, 2012, About 250 opponents of TPP march in San Diego. Arrests were made (source: http://exm.nr/MdTeyZ).

American TPP protesters

(3) On July 26, 2011, in the Opinionator blog, Tine Rosenberg points out that TPP will forbid signing nations from setting prices on pharmaceuticals and extend the period of time that pharmaceuticals fall under patent protection.

Filipino TPP protesters

NOT REPORTED: On July 26, 2011, Trade Representative Ron Kirk, in a discussion at the Bretton Woods Committee, points out that TPP must include some financial support for workers who will lose their jobs as a result of TPP (source: http://bit.ly/URtUCC).

(4) On September 28, 2011, in the Opinion pages, C. Fred Bergsten argues that TPP will expand the American economy. Mr. Bergsten is a former assistant Treasury secretary, and served between 1977 and 1981.

(5) On November 11, 2011, in the Asia Pacific section of the paper (hey, we all read that section, right?), it is reported that Japanese Prime Minister Yoshihiko Noda will join discussions on TPP. The article also reports that, although Japanese exporters are pleased about the prospect of TPP, Japanese farmers are protesting it on the basis that imports will pose a threat to the very fabric of Japanese society.

New Zealand TPP protesters

(6) On November 12, 2011, in the Asia Pacific section, it is reported that President Obama claims that TPP will benefit South Korea and increase U.S. exports.

(7) On November 15, 2011, in the Asia Pacific section, one may find a single reference to TPP, indicating President Obama's view that it will exclude China and serve as a counterweight to China's trade dominance.

(8) On November 16, 2011, in the Asia Pacific section, a passing reference to TPP in an article concerned with the creation of a Marine Base in Australia.

(9) November 17, 2011. In an article about President Obama's visiting troops in Australia, a reference is made to TPP.

(10) December 27, 2011. In the Opinion section, a contributor makes a passing reference to TPP as one reason for hope that the American economy will improve.

(11) January 10, 2012. In the Business section, there is a passing reference to TPP in an article about Treasury Secretary Timothy Geitner's trip to China.

(12) January 20, 2012. In the Business section, President OBama's trade policy is discussed, and TPP is briefly summarized. In an address to business executives at an Asia-Pacific Economic Cooperation meeting, the president asserted, "if we are going to grow, it's going to be because of exports."

(13) March 6, 2012. In the Global Business section, it is reported that people in India are alarmed by the fact that President Obama supports tougher patent protections on drugs, even in cases where the result will be an increase in number of deaths from HIV/AIDS. These tougher provisions are included in TPP at the behest of Pharmaceutical Research and Manufacturers of America, a lobbying group.

(14). July 8, 2012. In the Asia Pacific section, TPP is discussed briefly in connection with the Obama administration's  increased diplomatic focus on Asian Pacific nations other than China.

NOT REPORTED: Observers have expressed concern that TPP will re-introduce the same forms of Internet censorship attempted by the Stop Online Piracy Act (SOPA) (source: http://bit.ly/zYZGHM). For more information: http://bit.ly/KLqkq7    http://bit.ly/PjSgGi

On Thanksgiving

We all know that Native Americans rescued the pilgrims from starvation back in the 1600’s. And we all know that the European settlers would eventually repay the generosity of the Native American people with smallpox, bubonic plague, broken treaties, and genocide. 

We Americans have had an uneasy relationship with our own history. Some Americans believe that it is wrong to extol America’s greatness in light of the crimes of its past. They are the ones who march in protest on Columbus Day and attempt to paint American history as an uninterrupted saga of imperialism and injustice. Others believe that it is appropriate to turn a blind eye to these historical events; they may mention, as a dubious argument for mitigating circumstances, that the Native Americans eventually fought back, and took European lives. Both of these views are one-sided, and ignore the truth that light shines most brightly in the dark. 

I will suggest a third option. On Thanksgiving Day, let us we remember with gratitude the Native American people, and recognize that the country we know today would not exist if it were not for them. 

There are simply too many examples that could be offered to illustrate the magnitude of the debt that the United States owes to the Native Americans. In keeping with the spirit of the New Independent Whig, I will focus on the relationship between the Native Americans and the Founders, with an eye toward insights that are relevant to the challenges we face today. 

John Locke

John Locke, as I have pointed out in earlier posts, was among a handful of early modern political philosophers who had a profound impact on the views of the Founders. In his Two Treatises on Government, written in the 1680’s, Locke declared, “In the beginning all the World was America.” Thus, he began the argument that the principles of Natural Law and the Social Contract can be empirically validated by studying the way of life of the Native American people. 

Some scholars have been dismissive of Locke’s reasoning in this area, and have claimed that Locke knew little of Native Americans and was merely trading in Rousseau’s sentimental myth of the Noble Savage. In fact, John Locke owned land in the American colonies, had access to abundant first-hand accounts, and was careful when selecting the data on which he based his conclusions. He wrote,  

[W]e see, that the kings of the Indians in America, which is still a pattern of the first ages ... whilst the inhabitants were too few for the country, and want of people and money gave men no temptation to enlarge their possessions of land, or contest for wider extent of ground, are little more than generals of their armies; and though they command absolutely in war, yet at home and in time of peace they exercise very little dominion, and have but a very moderate sovereignty, the resolutions of peace and war being ordinarily either in the people, or in a council.

Locke will argue that, in a state of nature, God has provided the human race with land to share in common. When property in land is abundant, human beings do not need to develop a form of government that is founded on the idea of private ownership of property. In this state of abundance, both laws and crimes are few, because every member of society has an equal and bountiful share of property, and no occasion for envy or ambition. It is possible for members of the society to come together and discuss, civilly and in a disinterested manner, the proper role of government. 

It is a very different matter when the population has grown large and property has become scarce. In European societies, “It is plain that Men have agreed to disproportionate and unequal Possession of the Earth, they have by a tacit and voluntary consent found out a way, how a man may fairly possess more land than he himself can use the product of, by receiving in exchange for the overplus, Gold and Silver.” In other words, when property becomes scarce, its value in the eyes of men increases. And once its value has increased, ambitious men will keep property that they do not use and land that is unnecessary for fulfilling their basic needs, simply because property has economic value. People who lack property will be obliged to pay rents to people who own property, if they wish to farm the land for food. When members of society meet to discuss issues of governance, some of them will be self-interested, and incivility will inevitably manifest in their interactions. 

Locke continues, “The Law of Reason makes the Deer, that Indian's who hath killed it; ‘tis allowed to be his goods who hath bestowed his labour upon it, though before, it was the common right of every one.” Thus, if property is regarded as belonging to everyone, a strong claim to private ownership exists when labor is added to property, and the aim of labor is self-sufficiency. This view, however radical in its implications, was shared by Montesquieu and other Enlightenment thinkers including the much-misunderstood Adam Smith. 

Eventually, Karl Marx would propose radical solutions for addressing the harms that can arise from the inequitable distribution of property. Enlightenment thinkers and the Founders gravitated toward a different solution. Rather than advocate for state ownership of property as Marx did and place that much faith in government, they concluded that every citizen has the right to possess some amount of property. Whenever the right to property was invoked, it came alongside the right to life and liberty. It remains unclear whether the rights to life, liberty, and property were, in the minds of the Founders, separable or facets of a single right of enfranchised citizenship. 

It is clear, though, is that Enlightenment thinkers and the Founders would agree on the following point. If some people are starving because they have no land to cultivate, and other people own land that they do not bother to cultivate, it is a form of social injustice. 

The Romans of the New World

William Penn was a Quaker and a pacifist whose ideas influenced the authors of the U.S. Constitution. Penn was celebrated by Voltaire for making the only treaty with Native Americans that was never broken. He was a friend to the Lanni-Lanape (also known as Delaware) tribes, and seemed genuinely admiring of their way of life. He said of these Native Americans, “if they are ignorant of our pleasures, they are also free from our pains. They are not disquieted with bills of lading and exchange, nor perplexed with chancery-suits and exchequer-reckonings. We sweat and toil to live; their pleasure feeds them, I mean, their Hunting, Fishing and Fowling.” He perceived that, “They never have much nor want much. Wealth circulateth like the Blood, all parts partake; and … none shall want what another hath.” 

Similarly, Benjamin Franklin said, “Happiness is more generally and equally diffused among Savages than in civilized societies. No European who has tasted savage life can afterward bear to live in our societies.” It is also clear that, in Franklin’s view, the colonists benefited from the Native American example, 

Whoever has traveled through the various parts of Europe, and observed how small is the proportion of the people in affluence or easy circumstances there, compared with those in poverty and misery; the few rich and haughty landlords, the multitude of poor, abject, rack-rented, tythe-paying tenants, and half-paid and half-starved laborers; and view here [in America] the happy mediocrity that so generally prevails throughout these States, where the cultivator works for himself, and supports his family in decent plenty, will, methinks, see the evident and great difference in our favor.

Again, one may ask whether the Native Americans were being sentimentalized. When the Dutch explorer Jasper Danckaert studied the Delaware tribes in the years 1679 and 1680, he recorded a balanced and credible account of what he saw. His experience did lead him to reflect, years before the “noble savage” motif had been popularized in Europe, that “most labor arises from want or need” or else “from avarice and greed.” The Native Americans he encountered labored only to satisfy their wants and needs, and enjoyed “a sufficient abundance of necessities.” They “had no external example of more or greater that could cause them to judge themselves deficient.” 

Among anthropologists, the question is framed in terms of the theory of original affluence. According to this view, some hunter-gather societies – particularly those which supplemented their food sources with agriculture – were able to enjoy a very satisfactory existence. They were able to avoid hunger, enjoy leisure activity, and be comfortable during cold winter months. And members of these societies did not work the long hours that were then typical in European societies. Based on the preponderance of first-hand accounts of Native Americans, it is evident that their way of life was enviable to any European who was able to recognize that the European standard of a good life (defined by Christian beliefs, permanent architecture, cleanliness, fine clothing and material accumulation), was not the only standard by which one could judge.

When Franklin referred to the Native Americans as “The Romans of the New World,” he was drawing attention to the fact that, during the height of their civilization, and before their slide into corruption and decadence, the Romans also shunned materialism and prized frugality. This was, in the minds of many Whig philosophers, the key to Roman greatness. The great North Carolina Whig James Iredell believed, “luxury and its never failing attendant corruption, will render easy the attempts of an arbitrary prince, who means to subvert the liberty of his country.”   

Thomas Jefferson was well aware of John Locke’s use of the Native Americans in his philosophical treatises. But, always the good empiricist, he was more impressed by the evidence of first hand observation. “Before the establishment of the American states, nothing was known to history but man of the old world, crowded within limits either small or overcharged and steeped in the vices which that situation generates.” The Native American way of life was proof of the existence and the viability of an alternative to the European style of oppressed labor, avarice, and arbitrary rule.  

On "The Grand Bargain," Beware the Canard

President Obama's plan for addressing the debt polls well with Democrats and Independents. After all, it sounds fair: an equal mix of revenue increases (i.e., taxes) and spending cuts. Americans will hear this and say to themselves, "Democrats want to raise taxes and Republican want to cut spending. This gives both sides what they want. It must be fair! This is how I convince my kids to share their toys." However, to believe that the notion of fairness to President Obama's so-called "balanced approach" to the budget is fair is to accept a canard.

To raise revenue, the president will let Bush era tax cuts expire. The top two tax rates, currently 33% and 35%, will rise to 36% and 39.6%. Many Americans, particularly those of us who earn less than $200,000 per year, don't see a problem with that. They might even indulge in a bit of schadenfreude, believing that their own economic woes have something to do with the excesses of the wealthy. Most Americans don't realize that the real money is not in income but in long-term capital gains, which are only taxed at 15% now and will only go up by 5% if Obama prevails. Who are the people who own these assets? You guessed right: half of them belong to the wealthiest 1%, and another 25% of them belong to the wealthiest 10% (source). The wealthy do not earn income; they allow their assets to appreciate. 

The other part of the president's plan is to make deep spending cuts. As outlined in a leaked draft of the president's "Grand Bargain" with Republicans (source), he is willing to consider cuts in Medicare, unemployment benefits, and Veterans' medical programs.

What is terribly unfair about this is the fact that the deepening economic crisis that this country is facing has little to do with our failure to tax wealthy Americans more than we already are. It has little to do with what we are spending on Medicare, unemployment benefits, and Veterans' programs.

The deepening economic crisis has everything to do with the fact that the heads of a small number of financial firms and multinational corporations are continuing to promote the idea of exporting American jobs overseas. And as this select group of oligarchs becomes increasingly wealthy, they are happy to share scraps with members of Congress. Now, readers of my blog have heard about this in previous posts, but please forgive the writer of this humble post for wanting to proclaim this simple truth on regular occasions.

President Obama takes pride in his willingness to solicit the wisdom of Warren Buffett, but he wasn't paying attention when the financier said, "The U.S trade deficit is a bigger threat to the domestic economy than either the federal budget deficit or consumer debt and could lead to political turmoil…(source)." 

The hope is that the reader , when he or she hears about this "Grand Bargain" between President Obama and Republicans, will remember this: raising taxes and cutting programs won't affect the budget deficit as long as the trade deficit is allowed to increase. Between 2001 - 2011, the U.S. balance of trade with China has increased by over $301 billion dollars. During the same year, The U.S. lost over 2,742,200 jobs that can be directly attributed to this trade imbalance (source).

Since the late 1970's (at about the same time that the rules restraining campaign contributions were greatly weakened), an increasing share of American wealth has become concentrated in the hands of a few. There is good reason to believe that many of the beneficiaries of this new-found wealth are the very same financiers and CEO's whose actions have directly contributed to the loss of American jobs and the emergence of China as an economic and military power. 

On the Election: What Have We Learned?

On Tuesday, the cynic may say, the American voted for the party of “I can’t” and against the party of “I won’t.” So, in the months to come, when the post-election giddiness has worn off, President Obama will be proposing legislation that the Republican House of Representatives will obstruct at every turn. Don’t expect this to change. 

Some disturbing turns of phrase have entered the political discourse. Paul Ryan’s vision of society, in which the interests of “makers” and “takers” are perpetually at odds, was revealed. The sentiment, aped from Ayn Rand, was taken up with relish by the punditry at Fox News. And Mr. Romney evidently believes that the percentage of “takers” hovers at around 47% of all Americans.  The Fox pundits, along with Hannity and Limbaugh, believe that Americans are a nation of children, eager to vote for the parent who offers them the most candy. 

It may also be said that the party of “we” prevailed over the party of “us and them.” When Mr. Romney spoke of the middle class, he used the word “them,” and in doing so, betrayed his aristocratic colors. As his wife went about the business of dressage, the Romney family took on the appearance of a time-lost relic of an era of country squires and fox hunts. 

So, on a certain level, it was encouraging to see President Obama prevail, simply because his victory is a repudiation of the divided and classist vision of society extolled by his opponent. Many of us want to believe that he advocates on behalf of the struggling masses of Americans. 

But we cannot afford the luxury of wishful thinking. The Founders, as they braced themselves for the War of Independence, could have soothed their anger by believing that King George III might someday find mercy in his heart toward the British subjects residing in the American colonies. Or, they might have held out the hope that his successor would be more generous. The Founders could have listened to the Tories among them. But the Founders were wise, and they know that greed does not relent. Greed is like a shark that scents blood in the water. And it is we, the American people, who are bleeding.

The Ship of State

President Obama’s true motives may remain forever hidden from us. We can only surmise, based on observations. He wants to raise taxes on the wealthiest Americans, but failed to do so during his first term. 

But we must also remind ourselves that the issue of taxation is a red herring. Raising taxes on the wealthy is satisfying for those of us who suspect that the wealthy are benefiting too much at our expense. However, raising taxes will not reduce the national debt, nor even slow down its increase. Knowing this, it is reasonable to be suspicious of President Obama if this is his only suggestion for addressing America’s insufficient revenue. Because we all know why the revenue is insufficient; it is because jobs are being sent to China and Mexico and other low-wage countries. And President Obama has not championed a plan to end this practice, a practice that will certainly doom American prosperity forever. If nothing is done, America will someday be counted among those low-wage countries.

In fact, the problem is not that taxes are too low, the problem is that too few Americans have the opportunity to pay taxes; they are instead left unemployed, struggling to remain housed and to feed their children, living from paycheck to paycheck, unable to put aside money for retirement, unable to earn interest on the money that they can put aside.  

I suggest that the problem is this: members of Congress rely on money donated by multinational corporations to get elected; once elected, they delight in the emoluments of office, the power, the bribes, and the foreign junkets. Members of Congress share their easy fortunes with Supreme Court justices. They buy the loyalty of voters by means of lavish gifts. And there is very little an honest American can do to ensure that a public-spirited and virtuous individual find his or her way into Congress. 

One reason for this is that the two-party system is a conduit that channels money into the pockets of members of Congress who are most pliable and most eager to maintain the status quo, and honest members of Congress will rarely be seated on a powerful committee. A second reason, it must be admitted, is that the voters are ill-informed and many have become accepting of and beholden to the culture of corruption. I was ashamed for the people of Tennessee, who re-elected Robert Corker, the very man who shocked the nation by publicly fellating JP Morgan CEO Jamie Dimon (source).

The two problems are interrelated. The two-party system is not only a conduit for corporate money; it also amplifies the power of ignorant, venal voters who are willing to cast ballots for men such as Robert Corker.  

To understand how this works, the situation is analogous to a situation where, for example, two companies control the market in a particular community. The consumer is forced to choose between these two companies. In this scenario, the two companies do not have to compete with each other. They may decide instead to content themselves with the profits they are already enjoying. So, if one company raises its prices, the other company will do the same. If one company skimps on quality or customer service, the other will do the same. And what guarantees that the two companies each enjoy a large share of the market is the fact that they are the same: customers will tire of switching their loyalties from one to the other, and see no advantage in doing so, and in the end, each company will control close to 50% of the market. 

The situation will only change when new companies have the opportunity to enter the market. These new companies are willing to compete on price, quality, and service. And, once competition is introduced, every company will be forced to re-assess prices, quality, and service.  If there is a company that lags behind, it will be eliminated. 

As it applies to party politics, what is needed is a multi-party system, where new parties will offer genuine alternatives. Of course, the American political system is such that formidable barriers have been erected to prevent the entry of new political parties. And here is where the hard work lay, for engaged Americans who wish to take control of their futures.

On the Issues, November 2012

Below is a partial summary of the issues facing this country, and some predictions about what will occur after the election. It is hoped that the reader will be encouraged by this to vote for a third party candidate. But the problems this country faces will continue after tomorrow’s election, and the New Independent Whig will continue to seek answers on how to bring reform to this country that will advance the cause of liberty, so cherished by our Founders.  

Social Programs

Of the two major party candidates, President Obama is evidently more favorably disposed to protecting social programs such as Medicare, Medicaid, and Social Security. Neither candidate is willing to address the structural problems in the U.S. economy that have led to unemployment and loss of government revenue. As long as these structural problems are not addressed, it will become increasingly difficult for the federal government to pay for these programs. Thus, ten or twenty years from now, if the economy remains weak, Republicans will have a stronger case to make for cutting social programs, and Democrats will have given them the power to do so.

Although it is true the Social Security “pays for itself” through worker contributions, Social Security is similar to state and city pension funds: even though the pension funds were paid for by employees, state and local governments have made it a practice to “borrow” money from these funds. States and cities are now reneging on its contractual obligations to retired employees, and a similar experience may await Americans who expect to receive Social Security benefits.

Austerity

Both candidates have advocated economic austerity programs as a means of reducing the national debt. Austerity programs will not reduce the national debt. Austerity programs reduce services and cut jobs, thus, any savings that are realized in the form of reduced expenditures will manifest as higher unemployment, larger numbers of Americans who are dependent on government assistance, and higher numbers of Americans who are too poor to pay taxes. Austerity programs do not address the root cause of the loss of government revenue, namely, the trade deficit.

Income Taxes

President Obama proposes to raise taxes on the wealthiest Americans. This plan did not succeed during his first term, so there is no guarantee that it will succeed during his second term, should he be elected. Mr. Romney’s tax plan is veiled in secrecy, although there is every reason to expect that he will seek to reduce taxes on the wealthiest Americans, who are so-called “job creators.” Increasing taxes will not reduce the national debt. Lowering taxes will not create jobs and it will not reduce the national debt.

Corporate Taxes

Both candidates have pledged to reduce the corporate tax rate which, in real terms, is already the lowest tax rate among western industrialized nations (source). When corporate tax rates are reduced, the government seeks to make up the loss of revenue by increasing taxes on individuals. The reduction in corporate tax rates is not accompanied by a provision ensuring that the corporations desist from sending American jobs overseas.

When taxes on corporations go down, taxes on individuals go up.

Import Taxes

Neither Obama nor Romney dares to suggest that taxes be raised on imports. Currently, the tax on Chinese imports is zero. However, China taxes the import of American goods, and that is one of the reasons why the Chinese do not buy American goods, and it is an incentive for American companies to build production facilities in China. It should be obvious to all that an import tax would encourage Americans to buy American goods, and put more Americans to work. Such a tax is just, because it negate the effect of the Chinese import tax on the trade between the United States and China. The Americans who would suffer the most from an import tax are those who have decided to send their manufacturing overseas, but they are also among the most influential Americans. 

Foreign Trade and the Trade Deficit

Both candidates promote so-called “free trade” agreements with other countries. The public is told that free trade agreements lead to larger numbers of American jobs, but our experience with NAFTA proves that this is incorrect. Candidate Obama promised to renegotiate NAFTA, President Obama has chosen not to, and has instead signed new trade agreements with South Korea, Panama, and Colombia. Candidate Obama professed concern with human rights and worker safety, but these concerns are ignored with respect to Colombia, where union leaders are regularly murdered. 

So-called “free trade” agreements benefit a small number of multinational corporations that produce on a large scale in several countries. Heads of multinational corporations regularly contribute to both the Democratic and Republican parties, and these trade deals are what they receive in exchange for their contributions. When corporations send jobs overseas, they increase their profit margins, which results in a windfall for financial firms such as Goldman Sachs. That is why financial firms are also generous contributors to both Democrats and Republicans.

At the cafeteria, in China

When President Obama asked Steve Jobs about the thousands of jobs he sent to China, his reply was simply, “they’re not coming back.” When President Obama sought a “jobs czar,” he chose Jeff Immelt, the head of GE, who has single-handedly sent thousands of American jobs overseas. 

Mr. Romney has indicated that he will label China a “currency manipulator,” in recognition of the fact that China’s program of artificially lowering the value of its currency gives it an advantage in trade with the U.S. However, this is a deliberate distraction aimed at confusing voters. Mr. Romney supports the expansion of so-called “free trade” deals around the globe. Obviously, when jobs leave America, the trade deficit grows.

Perhaps it is karma, punishing us for not being more concerned about the dignity and basic human rights of working people around the world. The remedy for our lack of concern is to provide an example to the world, and care for workers at home, and give them the opportunity to work.

Economic Fundamentals

The American people have forgotten that the economy was faltering well before the Great Recession of 2007. Governors were desperately competing against one another to attract industries to their states. It is, however, nearly impossible to convince a company to set up shop in an American state as long as the situation in China continues to be ignored. Glass-Steagal legislation has not been reinstated since President Clinton did away with it, and there is nothing to prevent the financial industry from becoming besotted in another speculative frenzy, and bringing the country to near-ruin once again.

Habeas Corpus

Habeas corpus – the principle that an American citizen cannot be detained or imprisoned without just cause – is a bulwark erected by free countries against the advance of tyranny. Thomas Jefferson said, “Freedom of the person under the protection of the habeas corpus [is among] … the essential principles of our government.” William Blackstone, the British jurist who influenced the thinking of the Founders, said “To bereave a man of life, or by violence to confiscate his estate, without accusation or trial, would be so gross and notorious an act of despotism, as must at once convey the alarm of tyranny throughout the whole kingdom; but confinement of the person, by secretly hurrying him to jail, where his sufferings are unknown or forgotten, is a less public, a less striking, and therefore a more dangerous engine of arbitrary government.”

Under NDAA, President George W. Bush suspended habeas corpus. President Obama has also suspended it. Mr. Romney, if he is elected, will undoubtedly do the same.

Torture

According to the United States Constitution, in matters involving citizens of foreign states as well as American citizens, it is the responsibility of the judiciary to uphold the Bill of Rights, and among the basic human liberties contained therein is protection against cruel and unusual punishment. Opposition to torture -- not even torture, but cruelty in the treatment of human beings -- was stated in The Declaration of Independence. There is not even the slightest equivocation among the Founders: torture is immoral, it promotes tyranny, and it is inimical to the principles of this country. Neither President Obama nor Mr. Romney can be relied on to punish Americans who condoned torture during the war with Iraq. Americans have no reason whatsoever to believe that government-sponsored acts of torture are not still taking place.

Spying on Citizens

As stated in the Fourth Amendment, "The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized." NDAA negates Americans' Fourth Amendment protection against warrantless spying by government agents. Neither Obama nor Romney stand in opposition to this tyrannical practice.

As noted by a scholar studying the former Soviet Union,

Almost all secret services – whether in communist one-party systems or democratic societies – employ formidable armies of informants to infiltrate and monitor their [own] populations.

Yet what has made an organization such as the KGB so invasive – and ultimately so deadly for thousands of people – was that it sought more than just passive conformity to the law. When KGB agents wanted to "get to know you," ... they wanted more than your address, your occupation, your hobbies or the names of your friends.

They wanted to know what and how people were thinking. And, in almost all cases, they wanted to fundamentally change that way of thinking (source).

Does the comparison to the former Soviet Union strike you as extreme?  The Founders urged Americans to be zealous in defense of our freedoms. Why allow that first step down a slippery slope of excess government power? We have not seen the last of the Stop Online Piracy Act.

Campaign Finance Reform

Neither candidate will address this issue. We cannot expect that politicians who become fabulously wealthy as a result of the status quo will be willing to change the situation as it stands today. The only hope for campaign finance reform is to start at a grassroots level, building new political parties and creating opportunities for new parties to compete effectively against the two major parties. This will require national popular elections, an end to “first past the post” or “winner take all” elections, and public financing of political campaigns. 

National Defense

Shortly after this election, the issue of war with Iran and/or Syria will re-emerge as a pressing issue. If re-elected, President Obama will be drawn into the situation. If elected, Mr. Romney will pursue the opportunity for war with gusto. America’s almost inevitable involvement in Middle East conflicts is partly a result of the influence that Israel holds over American leaders, partly the result of the circle of corruption that allows defense contractors to make campaign contributions and reward faithful political allies, and partly the result of America’s abject dependence on foreign oil. Drone strikes will continue to kill innocent civilians and inflame Arab hostility to America.

Health Care

In 1993, the Republicans devised a scheme whereby the United States government would funnel public money into the hands of for-profit private insurance companies. They claimed that this would provide health care to a greater number of Americans at a lower cost. The American people soundly rejected this plan at the time. Since then, Mr. Romney put this scheme into effect when governor of Massachusetts. President Obama has implemented the Republican plan at the federal level.

It is easy to sympathize with Americans who support the president’s health care plan. Given a choice between health care that they cannot hope to afford and healthcare that is barely affordable (but will still consume a large portion of many Americans’ monthly household budgets) there are people who will choose the latter.

To understand why the Affordable Care Act is problematic, it is necessary to introduce the idea of rent-seeking. This is not the kind of rent that tenants pay landlords. In the language of economists, a “rent” is money received simply by virtue of possession. If a pharmaceutical company holds a patent for a certain drug, it collects rent on that patent by holding out for a higher price on the patented drug. So, certain life-saving drugs are not produced at all, because the profit margin is too small to satisfy the Chief Financial Officer at the pharmaceutical company. Other drugs are sold at inflated prices, because the patent-holder needn’t worry about lower-priced competition. And doctors receive money from pharmaceutical industry reps each time the prescribe their product.

The same drug is sold at different prices in different countries.

Physicians obtain rent because they hold a scarce resource: medical care. This gives them leverage to charge more for their services than the services cost, or submit false claims to insurance companies. Private insurance companies obtain rent by offering special discounted rates to hospitals in exchange for certain considerations, and the hospitals make up the difference by charging higher rates to other insurance companies and charging higher rates to the “individual market” consisting of people who don’t have private insurance, who under the Affordable Care Act fall into the “high risk pool.” 

To make a long story short, private insurance companies command bloated profits but they also command bloated revenue: that is, the money insurance companies have to pay out is spent on over-priced pharmaceuticals, over –priced medical equipment, over-priced medical care, and bloated salaries of insurance executives.  Thus, taxpayers and people who pay monthly premiums under the Affordable Care Act will be squeezed. Countries that have efficient health care systems contain the cost of drugs, devices, salaries, and procedures before asking taxpayers to pay for health care. American politicians, beholden to corporate oligarchs, dare not follow this example. This is not merely a matter of cost. The more expensive health care is, inevitably, the less health care there will be to go around. In one form or another, health care will be rationed or its quality reduced, to make up for its inflated cost.

Maybe I am over-complicating the issue. Private insurance is nearly twice as expensive per patient as Medicare. So why choose private insurance over Medicare for all?

Medicare vs. private insurance (source)