Showing posts with label Debt. Show all posts
Showing posts with label Debt. Show all posts

Tuesday, July 5, 2016

We Did It, But Why?


I heard on the radio this morning that Juno was in orbit around Jupiter. That's quite an accomplishment. Like finding a needle's eye in a haystack. NASA's Jet Propulsion Laboratory sent a space vehicle nearly two billion miles, and its course eventually intersected with the largest planet in our solar system – and all at a cost of only one billion, one hundred million dollars (so far). That's really a bargain. At a cost of under a dollar a mile it's less than what we have to pay for some domestic flights. Economy class. And Juno is expected to provide scientific information for the rest of its life, which is estimated at twenty months. Moreover it achieved orbit on the Fourth of July. How proud we all are.

Or, at least, how proud they all are. I'm not proud. After all, I paid for this boondoggle. All American taxpayers did. And we're not done paying. Continued monitoring of the ship during its Jupiter orbiting, by the large governmental staff, will cost a lot of money. As will the analysis of the scientific data they collect. And that analysis will go on long after Juno crashes on the planet, as, ultimately, it will do.

Why are we doing it? Why, at a time when so many fear for the survival of the human race which they see threatened by nuclear power, global warming, war, disease, and a host of other scourges, do we devote resources to this kind of program rather than using the money to deal with some of the menaces we face? It must be remembered that the Juno expedition is only a small part of a much more ambitious effort, and the expenditures are far greater than the cost of this particular project. Consequently there would be a significantly larger pool of currency available for addressing more immediate problems if the program were to be tailored back. It's certainly not enough to solve all the world's ills, but it's a start.

Why are we doing it? Our scientists and our government will tell us that the advancement of science and knowledge more than justify the expense. Perhaps it will take centuries, perhaps millennia, but the scientific knowledge that humanity gains from this mission will certainly help future generations. Perhaps. But perhaps future generations should pay for it rather than we and our children. If there are future generations.

Even the results thus far leave me wondering. According to the report I heard today it won't be until the 2030's that we send people to Mars, and, in all likelihood, we'll never send them to Venus for reasons of time, distance, radiation, and many other factors. If it's for the scientific knowledge that our descendants a millennium from now have, give some thought to our own view of the science of the year 1016; those ideas that we don't consider to be old wives' tales we pass off as bad science, or we laugh. In all likelihood our efforts today will suffer the same fate no matter how much we invest in them.

So what is our motive? There are several motives, but the main ones are, firstly, that we can do it. In addition, it adds to our prestige as a nation and our profile as a force to be feared just to show that we can. But an important causative factor is curiosity – not the curiosity of most citizens who rarely if ever think about Jupiter, but that of the scientists who ponder the unanswerable questions of the universe. They may not benefit from the answers, but they want to know, and our government is willing to pay for answers. With our money.

This wondrous event, the shining moment of a project that will doom our children to increased debt and decreased security, marked the anniversary of another event in which one generation spoke for those that followed – the issuance of the Declaration of Independence by the “Founding Fathers” who soon thereafter wrote a constitution for their new country. Although most of us don't agree with the author of the Declaration, Thomas Jefferson believed that one generation should not speak for the next. It was has view that each of us should decide his own fate. There should be a new revolution every generation. Strangely enough, that was his understanding of the mathematics and science of the time. Many philosophers based their ideas on imaginary equations which lacked any validity. And, as a result, Jefferson's approach was a faulty one which would have limited the entire concept of a heritage.

In the past couple of centuries we've become more selective about what is important and what is not – what we accept and what we don't – what we can live with and what can wait. And we're a little more cognizant of what we're passing on as obligations and goals to our children. Some of what we leave as a heritage is reasonable and, indeed, necessary. But not everything. Tikun Olam, the repair of the world as it is now, is high on the list of valuable aims. We do those children no favor by ordaining that they pay for projects that may help their distant descendants while having to limit their investment in their own world.

Before we worry about the thirty-first century we should deal with the twenty-first.

Sunday, September 11, 2011

Washington Arms

 

We face a fiscal crisis. Not just in the United States but in many countries around the world. So if there are problems in Europe there will be repercussions here – and vice versa. There's not much we can do about Greece or Spain. Europe, and its Economic Union, have to solve those problems and, without doubt, they're working on it. We can only hope that they're successful. Which leaves us to focus on our own situation.

The debt crisis and debt ceiling are issues that aren't as much in the news as they were a few months ago – at least in the media – but we don't seem to be any closer to a solution of those problems than we were then. So this may be a good time to review the situation and, perhaps, offer a few suggestions to improve our condition. In the absence of a method for creating real governmental wealth,i,ii the two main mechanisms for managing the situation are the same on a national basis as they are in more modest settings – what goes out should not exceed what comes in. At least that's what used to be viewed as responsible money management.iii So that's the route I'll follow.

First of all there's income. The vast majority of that comes from taxes of one sort or another. As is the case with any rule, some have found a way around them. There are tax breaks and benefits enjoyed by the rich – both as individuals and companies. So the first step is to eliminate those benefits. It may not help that muchiv – there aren't all that many “super rich” – but we'll all feel better if we make them suffer like everyone else.v So the real help will have to come from the rest of us. But, as I've noted in the past, Congress has taken taxation far beyond what the Founding Fathers originally included in the Constitution, and the general populationvi will react negatively to any increased taxes.vii Nonetheless, some nominal increase will have to be imposed – if only to demonstrate the idea of shared responsibility.

The real change though – the one that can bring us closer to a balanced budget – has to relate to the outgo rather than the income. And it is not unreasonable to look for an improvement in the lives of our citizens along with a cut in costs. We have always assumed that we can solve problems by “throwing money” at them, but perhaps the opposite is true. Perhaps we can save money by solving some of the problems at which we now throw money. Here are a few suggestions.

Eliminate Congress and the Pentagon. No. Not the functionsviii but the physical plants. At least move the activities to lower cost property. In fact, with video conferencing and the ability to vote over the internet, it is difficult to imagine why members of Congress need to leave their houses at all. The savings in travel and housing should be significant, and the Representatives will have more opportunity to hear from their constituentsix if they are at all interested. Of course that will mean an increase in costs to the lobbyists, but their employers will pass them on to consumers resulting in higher prices and a boost to the economy.

There is also no need to use expensive property in Virginia to house the military complex. The government owns lots of land in more desolate areas, and the construction of scattered buildings in various wilderness areas would improve the local economies in those placesx and make terrorist attacks more difficult. No single attack could damage more than a small part of our military facilities. Communications systems between them, like those for Congress, could be handled electronically – especially since they're probably managed that way now, with telephone calls from office to office. The scattering of generals and admirals around the country, though it may improve their safety, could provoke terrorists to attack civilians, but there are so many of them that it won't matter much.

What about those civilians? Although the Founding Fathers (and presumably the Mothers as well) didn't envision the new government taking responsibility for all their needs, entitlements are now a given. Do entitlements extend beyond Medicare, Medicaid, Food stamps, welfare, and the like? All of them are burdens on our economy. How can we get them working for us? Perhaps we could take the now abandoned Pentagon and Congressional Office Buildings and subdivide them into apartments for the poor and homeless. Make those buildings into taxpayers instead of drains. A lot of those who now receive disbursements from the Treasury could get jobs in the construction trades working on those buildings and wind up paying taxes. And they would eventually get places to live in central locations.xi Another possible piece of real estate which could be used is the White House. The President, like Congress, could work from home. Think of the money we'd save. (Each of those buildings also has a lot of unused land around it and the addition of more apartments would be a great benefit in all the ways already mentioned. Land developers would have a field day.) The prestige of the locations would encourage bidding for the apartments newly available and may even result in their being turned into condos.xii The Pentagon could be renamed “The Washington Arms,” the Senate and House of Representatives might be relabeled “Congressional Alms,” and the White House, well the White House would certainly keep its old name.

Social Security is also very costly. We talk about increasing the age necessary to receive benefits but there are too many opposed to such an action. And rightly so. All it does is increase the number of working years, resulting in increased competition for jobs and a high rate of unemployment. We'd be better served if we lowered retirement age, paring back the payments if necessary. It might be necessary to increase the Social Security levy in order to do so, but people would probably be willing to pay to retire early. That would make more jobs available for the unemployed and increase tax revenues. And it would cut the costs of unemployment payments, food stamps, and welfare. Many of those unemployed could probably be trained to be medical providers and, even with limited training, they could provide many of the services now offered by doctors through Medicaid and Medicare, at lower cost. If the medical care they receive isn't very good and they die young, all the better – at least in terms of costs. We spend too much trying to make people better. Rationed care, as is offered in many other countries, would save us a lot.

Another big cost is that for defense. Wouldn't it be cheaper in the long run if we built up our supply of armaments and then used them to destroy everyone else. Savings would be significant if we no longer had to send troops to protect other countries – and we wouldn't have to do so if we had destroyed our enemies, and our friends no longer existed. It would not be necessary to spend the huge costs of weapons development and maintenance of personnel. We could decrease the size of our armed forces. That would mean the addition of many to the work force, but they could be employed rebuilding the countries we destroyed. Costs would be paid out of the resources of those countries, resources that would now be ours. And once some of those countries reconstituted themselves, we could rent them our military as mercenaries. It would be to naïve to suggest that we would no longer need a military, but its size, and the expenses it incurs, could certainly be reduced.

There are certain means available to the government that might be used to increase revenue – apart from taxation. The first step I'd take is the nationalization of the paper industry. Irrespective of computer advances, the government is addicted to paper printouts of everything. And that's a lot. All Congress has to do is to authorize a department to regulate something and there are certain to be thousands of pages of regulations resulting. When they are printed, with thousands of copies required, a lot of paper has been consumed. Since there is no end to what Congress can regulate, there is no end to our need for paper. Why pay for it when we can own it? And while we're at it, we should be regulating private industry and selling them the thousands of pages of regulations we print.

Private industry would also be a likely target for the sale of government information – no, not the material we label as secret to hide mistakes and mismanagement, but census information which would be useful to marketers. And we should take the DNA of every newborn and naturalized citizen both for our own use and for sale. Sale of excess government land and National Parks would also bring in a great deal of money. We're only hoarding it for a bunch of well-off hikers.

Another big problem we can solve while saving money is that of hunger. If Congress feels the need to give special subsidies to the agricultural giants that are fixing prices and impoverishing all of us, they could be made to provide food for the poor so the government doesn't have to do so. Of course that means that our prices will be higher, but we won't be able to blame it on taxes – only on those giant corporations, and they don't care what we think anyway. In an analogous way, gasoline companies might be required to provide fuel for government vehicles. That would save a lot of money when it comes to the Federal budget. It may hit our personal budgets when we pay higher prices for gas, but we have to drive so we'll continue to do so.

Anyway, that's a start. I'm sure there are other steps we can take to control our debt. At least the public debt if not our private ones. Modern times offer us modern opportunities.





 
Next episode: “F U cn rd ths …” – If you can't, go back to prehistoric times.



 


 
i     Not just printing more money.

ii    There are some, however, and I'll offer some suggestions presently.

iii    It is hard to deny that not everyone accepts this formulation. There are many who contend that borrowing to invest in the future is the only way to strengthen the economy. The fourteen and a half trillion dollar debt we've amassed should not be viewed as in any way negating this philosophy. All we need to do to get out of the mess we're in is to double down. Or, at least, up the ante.

iv    A letter to the New York Times dated August 17, 2011 states: “The Internal Revenue Service's own statistics indicate that if the top 1 percent of all taxpayers (households with annual income of more than $380,000) were taxed at a rate of 100 percent, it would net $938 million, which would barely make a dent in the nation's multitrillion dollar annual budget.” And, of course, no one is proposing a tax rate that high – even for (or against, depending on your perspective) the rich.

v     In fact, they should suffer even more than we do. They can afford it.

vi     Not to mention the Republicans.

vii    Many view the disbursement of “entitlements” as charity which, however meritorious, should be a private matter, not a public one. Individuals should not be forced to give charity. But such a parsimonious attitude doesn't deserve consideration. Of course taxpayers should be required to pick up the tab to ensure equality.

viii    And of course not their “perqs” and benefits, which they get directly and in the form of inside information on which they can act before it becomes public. And the valuable inducements they receive from lobbyists and others eager to earn their favor.

ix    Original discussions of the Constitution placed representation at no more than one Representative per 30 thousand constituents (a number some viewed as too high). It's about one per 718 thousand now. If we can't increase representation, perhaps we can get our “Representatives” closer to us.

x     It's likely that new communities would rise around the new office buildings, and land developers would be quick to build additional homes, malls, and offices there. That would require, among other things, more transportation facilities, cell phone towers, energy sources (green), and roads. A building boom with lots of jobs is certain to result.

xi    Alternatively they could be moved to other government land where they could get forty acres and a used car. We need more farmers, though multinational corporations are doing very well (for their stockholders) in that regard. They would probably buy the land given to the homesteaders and thus enrich them. But only someone who is biased would believe that the poor are not as entitled as we to live in prime locations. And they may not wish to be farmers. They may prefer to be politicians. However the more spread out the politicians are, the better.

xii     And if the bidding gets too high because those who are better off want those addresses, the spaces they leave would probably become available at reasonable prices for the poor.

Sunday, August 7, 2011

You Get What You Pay For?

 

All Western democracies are, to a degree, communist.

The United States is a Western democracy.

Ergo, the United States is, to a degree, communist.

That's not a compliment nor is it an insult. It is a straightforward argument exemplifying deductive reasoning. You may disagree with the conclusion, but the logic is sound. So if you disagree, it must be that you don't accept one or both of the premises. You probably agree with the idea that the United States is a “Western democracy,”i so the first premise remains has to be the one in question. Most likely, you disagree either with the word “all” or the word “communist” – probably the latter term. So let me explain what I mean when I use it.

In a world in which the original principle was “every man for himself,” societies were established. The “State of Nature” may have a lovely ring, but the “Law of the Jungle”ii was the general operating principle, and it was this system from which people needed protection. So societies were established: people agreed to trade some of their liberties for protection. It was a selfish agreement, but a necessary one. In fact, the American Constitution is based on the idea that the primary function of the new government was for the protection of its citizens from each other and from outside powers. To ensure governmental adherence to its limited responsibilities, and to “protect” its citizens from … From what, precisely?

That's not so clear. The Constitution was, by design, a little ambiguous on several issues. Only twice in the body of the document is the word found – once in Article II Section 1 Paragraph 8, which includes the protection of the Constitution in the presidential oath, and once in Article IV section 4 which includes, as an obligation of the United States to its citizens, to “protect each of them against Invasion.”

Congress has seen fit to enlarge that apparently limited responsibility to include many of the vicissitudes of life. The term “promote the general welfare” also appears twice in our constitution and the idea is that concern for the “welfare” of our citizens is a primary goal, though there is ample disagreement as to the meaning of the term. It seems to be the basis for the entire idea of entitlements. Indeed, much our current concern for the equitable treatment of all our citizens falls under the rubric of “welfare” – whether that was its meaning or not.

On both occasions of its appearance, “promote the general welfare” followed “provide for the common defense.” The first occasion was in the preamblei and the second in Article I Section 8, which dealt with taxation. Thomas Jefferson understood that section to indicate that the taxation was not to be used for general welfare but to provide funds to support armed forces. Along the way, however, the concept of general welfare has been expanded to include far more, and those who oppose entitlements or the taxes to support them are deemed racists or worse.ii Nonetheless, we are left with numerous programs offering payments to many different groupsiii in terms of cash, food stamps, housing allowances, government jobs, tax breaks, health care, and a wide variety of other means to help them make ends meet.iv We're left with the need to protect ourselves from ourselves and from others in our own society as well as threats from abroad.

We're also left with what we viewvii as high taxes and a huge national debt. But our children and grandchildren will deal with that.

We have adopted the well-known approach: “From each according to his ability, to each according to his need.” After all, it's only fair that we help those who are in need. That's what Karl Marx saidviii and it's a shame that labeling it as a Communist doctrine gives it a bad name. What is clear, however, is that it's a costly idea, and that those who decide how to redistribute the wealth – as well as those who already have it – usually make out like bandits.




To be continued.




Next episode: “You Get What You Pay For? – Part 2” – At least most of us pay.





i     I'm sure that some of our citizens – usually members of what are politely called “fringe groups” – would disagree, but I'll proceed without their concurrence.
ii     Rudyard Kipling, in The Jungle Book, spoke of it this way:
              “Now this is the Law of the Jungle – as old and as true as the sky;
             And the Wolf that shall keep it may prosper, but the Wolf that shall break it must die.”
iii    We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence [sic], promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”
That's the preamble, and it states the purpose of the entire document. Parts of it are quite clear although others, especially the idea of the “general Welfare,” are somewhat ambiguous and subject to interpretation. The same is true of the other reference.
iv    The subject of entitlements, in the context of that compromise document, the Constitution, will be treated in a future blog.
v     Including large sums for the rich by means of programs, loopholes, and various kinds of other benefits. Also gaining by such means are members of Congress, and politicians in general, who seem to be entitled to whatever they can get their hands on.
vi     The ends justify the means.
vii     Not everyone would agree, however. Some countries charge higher taxes and provide greater benefits.
viii    Critique of the Gotha Program, 1875. The full paragraph in which it appears reads:

"In a higher phase of communist society, after the enslaving subordination of the individual to the division of labor, and therewith also the antithesis between mental and physical labor, has vanished; after labor has become not only a means of life but life's prime want; after the productive forces have also increased with the all-around development of the individual, and all the springs of co-operative wealth flow more abundantly—only then can the narrow horizon of bourgeois right be crossed in its entirety and society inscribe on its banners: From each according to his ability, to each according to his needs.”

Friday, July 29, 2011

Tea For Who(m)

 

Let's start with the easy part. Not to mince words, in my view the Tea Party must accept responsibility for our current debt crisis.i But no service is performed if we overlook the involvement of the Republican Party as a whole.ii And the President and Democrats as well. They all bear some of the blame for the situation. And so do we.

However threatening the issue may be, it reflects the major problem of our political system. The same situation seems to involve all legislation. Our current system often seems incapable of achievement because our politicians are incapable of compromise. There's too much of a “my way or the highway” mentality. Selfishness rules.

Why do people run for office? Why do they vote on legislation as they do? It's not very complicated. There are only four real reasons. The first two are the critical issues for someone considering candidacy: ego and self-gain. But with those two in the background, there are two others which govern day-to-day voting. They are personal beliefs and, more important, concern over the views of supporters. Politicians are always looking to the next election. Only by being elected can they satisfy their egos and fill their pockets. Perhaps that's a cynical point of view, but it's hard to find exceptions to this rule.

I don't know if the problem will be solved by the deadline, but right now we face a fiscal crisis – the possibility that our nation will default on its debts.iii I don't really expect that to happen,iv but there is no question that the major news of the day is the dispute over raising the debt ceiling, paying off what we owe, the cost of programs we have established, and the financial obligation that we are leaving to our children and grandchildren.

We're all responsible for the situation. Groups that are receiving entitlementsv demand that the payments they receive be increased; various professional groupsvi who insist that theirs is the last that should be cut since the job they perform is critical to keeping our economy intact and to keeping our citizens served properly; taxpayers complain that the government is taking too large a part of their earnings; lobbyists are making sure that their clients benefit from whatever legislation comes about; and everyone complains that prices – especially gas – are too high.

People want what they don't have. It doesn't always matter if their wants are justified. It may be reasonably argued that the Tea Party is taking its “mandate” too far, but apart from their own perspective, they are espousing what they believe the voters' viewpoint to be. After all, they want to be reelected. As do their opponents. So everyone is acting in a pig-headed manner to demonstrate their willingness to fight for what they claim the voters want. Those who support their position see it as virtuous; those who oppose it consider it the embodiment of evil.

But everyone agrees that some accommodation must be reached. Principles are important, however they cannot be allowed to prevent any movement from taking place. It's better to pass a measure that satisfies only some of our aims than to place ideals above action. We can try to change it later, but an incomplete solution is better than none at all.

Compromise. After that we can renew the fight.












 


i     The doctrinaire, at least those who read this, are likely to focus on this sentence and not read further. Certainly the liberals will see it as confirmation of their own view. But things are not as clear as we'd like to believe.
ii    See the first note. But also read the next sentence. And further.
iii    The employment and housing crises are a severe backdrop to the budget debate. They are not to be minimized, but they are not the subject of this essay.

iv    Although as time passes I become less and less confident.
v     And this includes the rich who are getting a variety of benefits through loopholes, special legislation, and the like.
vi    For example teachers, road builders, and health care workers. But those are only examples.