As of late 2011, our nation is borrowing around $0.42 for every dollar the Federal Government spends. This has contributed to a national debt between 14 and 15 trillion dollars. When we listen to politicians’ opinion of how this problem should be solved, we find little agreement. This lack of agreement points to the root cause of the problem, and the Debt Crisis is only one symptom of the root cause. To improve or cure any symptom, it is necessary to minimize the root cause.
Our nation has over 200 years of history that demonstrates the result achieved from different approaches to solving the same or similar problems we have today. It should be easy to logically resolve the problem by studying history and using common sense–assuming both sides of the argument desire the same purpose, which is to increase the financial and social strength of our nation. It is not even necessary to limit our studies to our nation’s history. We can look at the history of most other nations on our planet, also. Unfortunately, the two sides do not have the same purpose because of the root cause. For this reason, one side wants to cut taxes and spending, and the other wants to increase taxes on a small segment of our society with minimal spending cuts. The argument is driven primarily by political ideology.
Unfortunately, historical fact arguments can be slanted to fit the political ideology of the parties debating the issue. We only have to watch two opposing politicians discussing an issue where they disagree to see this fact proven. As we listen to the two politicians, we will notice that we agree more with one than the other. Is this because the politician, with whom we agree, is more correct, or is it because his argument better fits our self-interest? Self-interest is what drives each politician to slant his argument and determines his political ideology, and we should admit that we have the same problem because self-interest is the root cause. Therefore, the logical approach to any solution must minimize the effect of self-interest. The logical solution will be for the good of all in our society-not one group at the expense of another. Of course, the logical approach’s solution will most likely consider the self-interest aspect of individuals as an important factor in minimizing the symptoms.
Lets begin with the extremes in tax rates to determine how an individual’s self-interest may affect his/her actions. If the individual’s current tax rate is 50% and that rate is increased by 70%, will the individual be motivated to work more or less? The new tax rate is 85%. Therefore, as the individual works more, he/she only gets 15% of the extra work instead of 50%. Do you believe the individual will be as motivated to work harder? I don’t think so.
The other extreme is an individual with a tax rate of 5%. The 70% hike in taxes will increase that individual’s tax rate to 8.5%. As he/she works harder, the net income will be 91.5% instead of 95%. In this case, the increase in taxes will probably have little effect on the individual’s working behavior after a short period of complaining.
Obviously, a tax rate policy that maximizes the government’s income while also balancing an individual’s desire to work is possible. Of course, this will vary between individuals; but a median tax rate policy can be determined. The tax rate policy could then be tied to the GDP to determine the government’s spending level for the next year. Once the optimum tax rate policy is determined, it would probably not be necessary to continuously recalculate it.
Because of political approaches to gaining power, our nation currently has almost 50% of the population that pays little if any taxes. Therefore, they have no “skin in the game” when taxes are increased on the other 50%. If they aren’t paying any taxes, then many probably aren’t contributing to the financial health of our society either. At the same time, they need the taxes from the paying 50% to maintain their way of life. Obviously, this is highly self-serving.
If you have two 50-member teams of equal physical weight for a tug-of-war effort, it should be obvious that each team is strongest when all 50 members are contributing to the tug-of-war effort. If one team only has 25 members pulling against the 50 members on the other team, then it is obvious that they will lose. Suppose there is an unannounced million-dollar prize for the winners. Obviously, the 25 non-pulling team members will lose just as much as the 25 pulling team members. This exaggeration’s purpose is to reveal the folly of any government instituting policies that allow any segment of society to be non-contributors if the goal is to strengthen the nation.
Why are we in this state?
When we consider that self-interest plays a big part in the life of any politician, it is not difficult to see how this happened. When each member of society has one vote, a small group can have a political approach that utilizes the self-interest of each voting member through the “divide and conquer” concept. During difficult times, they can begin instituting government programs under the guise of helping those in need. Unfortunately, they need the government to be well funded to accomplish this task. Therefore, they pass laws that take more money from the wealth creators and use the programs to feed a part of that money to those in need. Eventually, even this is not enough; so, they begin setting up a method that allows the printing of fiat money.
Eventually, a web of illogical solutions with only one purpose has been created. The one purpose is to keep the politicians in power through a large enough voting block that depends on their policies to survive. When one party is in power, they feed public funds back to their supporters; and when the other party is in power, they do the same. In both cases, the public suffers from their elected officials’ self-serving ways through recessions, misuse of public funds, etc. Of course, with each failure comes another opportunity to help the needy with another program; and more and more become dependant on the government. In America, all of this began decades ago-creating our current situation.
The logical approach would be to create an environment that gives all members of society an equal opportunity to earn their living and pursue their hopes and desires while contributing in positive ways. The needy do not need a handout, but a way to contribute and earn their living accordingly. The old saying, “Give me a fish, and I eat for a day. Teach me to fish, and I eat for a lifetime,” is very appropriate. Government should do all they can to help all of society’s members to be all they can be-not less. For the politicians, the logical approach does not keep them in power; and they know it.
A few years ago, I heard a story that was supposed to be true.
Some individuals living in a blighted neighborhood in a large city decided to improve the neighborhood. They needed some seed money to accomplish the task. Therefore, they went to their congressman and asked for a relatively small government grant. The congressman was able to get the grant; and neighborhood organizers began getting those living in the neighborhood working on various projects to improve the neighborhood. With the small seed money provided through their congressman, they eventually made a dramatic improvement in the neighborhood at a very low cost to the government. Unfortunately, for the congressman who obtained the seed money, a neighborhood organizer became well known in the neighborhood and ran against him in the next election. The neighborhood organizer won, and the congressman lost his job. Other politicians noted this fact; and the success of that low cost approach to solving local problems has not been duplicated since.
Every eligible member in society has one vote, but all eligible members of society do not have an equal say in the laws enacted. The word “lobbyist” should mean the use of money to obtain favoritism under the law. This favoritism has resulted in extremely complicated tax laws. Some of the tax breaks require a considerable amount of money before they can be utilized. Therefore, a company can make a few billion dollars in profit and pay no taxes after the tax breaks are implemented. This approach to government does result in lots of jobs for tax lawyers, though. Is it good for the public? No, because the money used in the lobbying effort is designed to obtain a tax break far exceeding the money spent lobbying.
Obviously, we will never stop anyone from expressing their self-interest to the detriment of others if they decide to do so. Therefore, we should set up procedures that minimize its affects in society. Here are a few of the ways to do that?
Everyone should have the freedom to pursue their dreams; but they should have to take the consequences of their choices. Freedom needs to be balanced with a sense of responsibility. Receiving the consequences of our choices is one of the best ways to get us to not take shortcuts or risks. Would a CEO of a large shareholder owned company take huge risks if he knew he would be the first to pay the price for poor choices? Probably not. Would the nation’s government employees instigate policies that weaken our economy if they knew the ones suffering the consequences first would be them? Probably not. City, County, State, and Federal governments should not be able to pass laws that favor a sub-group within their electorate. Therefore, the Federal government could not use any funds in any activity that does not benefit every citizen in the U.S. A congressman could not take funds collected from all citizens in the U.S. and earmark their use for a project that only serves his/her state. Such a project should only be supported by state funds. If the project only serves the citizens in a city, then it should be supported by city funds. Government services should only be those services that are most efficiently done as a group. Example: It would be ridiculous for everyone to furnish his/her water, power, trash disposal, security (police force), etc. At the federal level, National Defense is a good example. Government employees should have the background and experience for the position they hold in the same sense as in the public sector. Therefore, no one would become a mayor unless they had the background to support it. To be a governor, the individual would have managed a city or large business. To be the nation’s president, the individual would have managed a state or a very large business. The election process should not depend on money in any way. In today’s world, this can be done by a series of television debates where each candidate outlines his/her background and accomplishments, how he/she will resolve problems, etc. The debates could be supported by advertising just as any other TV program is. Each candidate would be in a sound proof enclosure unable to hear how competitors answer the same questions given to all other candidates. Only questions related to the job would be allowed. No candidate could spend a penny in mass advertising beyond a website outlining his/her accomplishments and devoid of comments about other candidates. Once a candidate provides the details of how he/she would resolve any problem or how he/she would manage the country, they must do exactly as they said they would do or resign. Telling the voters one thing and then doing another would not be allowed. Lobbying would be unnecessary. Any worthwhile project only needs the support of those it serves. Political parties would be unnecessary. They only result in divisiveness. Government benefits would not exceed those normally provided in the public sector. The only way to keep any elected government job would be to serve all of those electing you successfully. Elected government officials would not have the authority to appoint anyone to a government position. Independent HR departments would do all government hiring. Government policies should insure each member of society would be responsible for their personal needs and only receive help from others when an unforeseen situation overwhelms their means to deal with it-such as, natural disasters, an accident that devastates their resources, etc.
Naturally, there are many details left out of the outline above; but it is the intent revealed that is important-not the details.
With the intent of the above outline implemented, a framework for dealing with the debt crisis would be in place. Many governmental departments could probably be eliminated. Political ideology would diminish. The tax base would be broadened and tax favoritism would be eliminated. Government spending would be tightly controlled to only that which efficiently serves the electorate. Most of all, though, self-interest, the root cause of most of society’s problems, would be tightly controlled.
To Know Truth, It Is Necessary To By-Pass Our Self-Interest Filter.