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Tuesday, May 8, 2012

Gay Marriage and Austerity

Last night I watched the news. There were two principle discussions. The first was on Gay Marriage and the second was on Fiscal Austerity.

On Gay Marriage

The media is in a tizzy right now. Hosts and Anchors are beginning each interview with the question: Do You Support Gay Marriage? What an awful and invading question to ask our country's leaders. A more appropriate question is do you support Marriage Benefits? At issue here is the rights of married citizens of the United States.

Rights Extended to Married Citizens

Our structure of government has always been about the rights of citizens. We have gone through social revolution to ensure that the rights of each US citizen are guaranteed regardless of sex, handicap, race, religion, or otherwise. Somehow, our government went off track. The legislature created a special class of citizen called Married People, and granted Married People extra benefits - like tax deductions.  Our government should be discussing the question of Marriage Benefits rather than the discussion of who can get married.


A Thesis for Change



Marriage Benefits should be abolished in America. That is an issue for American politics, not the issue of who marries whom. Each citizen of the United States should be treated as an individual citizen, and granted citizen rights and citizen benefits onto themselves. Affiliation with other citizens by any measure - family, marriage, or contract should not alter those individual benefits. This is a simple and elegant construct that resolves the debate and aligns our public policy with the nature of of our founding beliefs as a nation.

On Austerity in Government Spending

Austerity Defined: I am using the economic definition of austerity, a policy of deficit-cutting, lower spending, and a reduction in the amount of benefits and public services provided.

Austerity in the Media

The headlines in every newspaper and on every news show yesterday covered stories whereby Europeans in the countries of Greece, France, the United Kingdom and elsewhere have elected government leaders who plan to ease Austerity measures in those countries. The media is suggesting two very important perspectives.

  1. To get elected in the middle of an economic crisis, it is better for politicians to promise more spending.
  2. The United States economy and government operates like the government of european nations.
Spending gets you elected

The truth hurts. But the reality is that the majority will always vote to get more benefits even in the face of economic disaster. There will always be a segment of the population in need, and sometimes dire need. People in America are facing the lack of shelter and food at levels not seen since the Great Depression. By many measures, this economic crisis is the equal of the Great Depression or worse. To my knowledge, not a single citizen has been turned away from the public safety net. 

But like addicts, the citizens will always want more. The nation is on a slippery slope, and there is a debate raging about what level of public benefits to offer citizens. This debate needs to balance on the question of what our economy can afford rather than what our citizens deserve. Remember, as you tax the rich and give to the poor, you reduce the rich and increase the poor. That is not a good policy, but it will get you elected. 

The United States is Not Europe

My home State of California would be the fourth largest economy in the world if it were a country. I say that to put things into perspective. As business operators know, scale is a major influencer of fiscal policy and operational effectiveness.

In order to draw parallels between Europe and America, you need to treat the European Union like the US Federal Government and each country like a State. The very moment that you begin to draw those comparisons, you gather the sweeping differences between the two economies. For example, there is a relationship in America between the State Government and the Federal Government. They revenue share tax dollars in turn for policy adoption. The EU does not have any tax system. Each country within the EU manages its taxation and policies independently. This has been the challenge of normalizing their currency.

Shame on Thompson-Reuters

The media has had a field day with graphs produced by Thompson-Reuters that show how the policy of the United States to spend its way out of recession has been better than the European Union's policy of requiring it member countries to seek out Austerity policies. The graphs show that the United States economy has rebounded faster and stronger than its European counterparts. The point made by the media is that expansion of government spending and benefits yields the return to economic stability.

This is absurd.

In the case of many European Counties like Italy, Spain and Greece - the country is close to bankruptcy. Those governments did not have strong and robust economies before the economic crisis. They are like some of our municipalities, towns, counties, and even some States in America who were broke.

At issue here (pun intended) is the Bond market. Bonds are sold to investors willing to buy public debt. Public debt is guaranteed by the tax system. If a government entity defaults on its bonds, it is compelled to raise taxes. In other words - governments cannot fail. If they run their coffers dry, they extort money from anyone who has it. 

If you are a socialist, you have the belief that the government should level the playing field to create equal living standards for everyone. Create high tax rates for the rich and spend money on the non-rich.

If you are a capitalist, you believe in the the pay offs of entrepreneurism and its economic rewards. A dollar earned and a dollar saved is yours and it should not be taken from you.

My point here is that America is not like Europe. It is a different economic structure and they face different issues. While Austerity Measures in Europe came too late and were perhaps too severe - they worked and they salvaged the EU. Frankly, Germany bailed everyone out and did not get so much as a "Thank You." 

The United States does not perform well when we operate with high taxes and high benefits. That is flawed economic policy that led Italy, Greece, and Spain to near disaster and bond defaults. Europe need Austerity in the face of Bankruptcy. The United States needs softer Austerity today to prevent further economic recession.

3 comments:

  1. Victor, regarding tax rates on the rich: As the theory goes, tax cuts produce more jobs because the rich have more money to start new businesses which then employ more people. That is the theory. But I have never seen the data to prove the theory. Some would say that the Reagon tax cuts grew the economy and jobs, but what about all the tax increases under the Ronald? And the Bush tax cuts ultimately led to higher debt and the biggest/longest recession since the great depression.

    But help is on the way with the Mitt. Mitt had the benefit of a 15% tax on his unearned income. So hpe could sock away $20 million a year in his island bank accounts. I am not aware of any companies that he started over the last ten years and the people he employed with all that extra cash.

    So, I am still looking for data to back up the theory that trickle down works.

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  2. I did not make that argument. My argument is, and always has been that private industry operates more efficiently than public industry/government. As a result, I believe that more services should be delivered by private industry rather than government - especially the Federal Government.

    The Federal Government should be a servant to the States - not the other way around. This massive Federal Government is stealing money from all of us, and giving it to a war machine and a fear machine. Perhaps I am a lonely voice - but I am not in favor of large government. I believe in people, freedom, and personal prosperity. I believe in wealth building by parents for their children. I do not believe in socialism. I do not believe in leveling the economic playing field.

    Please do not think that I am not sympathetic. You know me, and you know how charitable I am to friends and family. I would give anything to help out a friend in need. That is the way it should work. I believe that my person to person support is stronger and more effective than person to government to person support.

    I do not believe that we need to cancel support programs for the needy, but I do believe that we need to tighten our belts on spending at the federal level. It is out of control.

    ReplyDelete
  3. Victor, I spent a significant amount of time providing my answer to your post. But because I had to go through Google Account and type in the "defeat the robot" words I lost the entire reply. Is there not an easier way to reply and provide a post??

    ReplyDelete

Thanks a lot for leaving a comment. My phone number is 805-709-6696 if you have any questions.