Two notes before I start this post. Given the title of my blog I expect two comments; one from Bob telling me that he thinks socialists are stupid and he can't believe I would even say something like this and another one from leeroy saying he couldn't believe I would blog about something like this because I will get marked by the government and they might start spying on me. :)
I don't really think I'm a socialist (see the definition here) but I agree with some of its principles. After doing a little reading I think I lean more towards market socialism since it applies some principles from capitalism. I do believe in private property, and different wages for different kinds of work (meaning the garbage collector shouldn't make as much as a surgeon), but I believe our current economy is pulling society as a whole down. The economic gap between the rich and the poor is steadily widening and there are no signs that it will stop. I think individuals have an obligation, and an interest, to see that the economic well being of our society as a whole (including and especially those at the bottom of the economic pile) improves. When we act with the best interests of our society at heart, we will benefit. That is why I believe it is right that the richer you are, the more your societal obligations should increase (i.e. taxes). I don't mean that the rich should have to give up their Mercedes or BMWs and be content to ride around in Hondas and Toyotas (or even a Chevy). It is important to retain incentives and rewards for working hard (such as salaries). And we should view taxes not as a burden but as an investment in society so that as society improves so does our quality of living (I believe that if you invest in education for everyone our social "ills" will decline, such as teenage pregnancy, crime, and drug use which is better for us all).
I am also starting to wonder if the stock market is really a good thing. I know it has been a good investment vehicle for many Americans (and foreigners) but is it really good for our workforce? CEOs look to the stock price to guide their decisions because the board members look to the stock price in judging the CEOs performance. Many executives have their pay tied to stock performance so they have an even greater personal incentive to do whatever it takes to drive the stock price up. I know boards are starting to tie executive compensation to the long term performance of the stock but I don't believe it's enough. Take outsourcing. At my company we moved some manufacturing operations overseas to take advantage of a huge tax break that country was giving us. It increased our profits on those parts but it put many people out of work here locally. I believe most were able to find work again but it wasn't work that paid the same, or required the same skill, as my company. Now these employees have less income with which to buy products that support our economy (including products made by my company). With outsourcing it seems like you are increasing profits for the company, but decreasing the buying power of those employees who were employed domestically. I know there are arguments that outsourcing is absorbed by our economy and it is better for our national economy but I am not convinced (I would like to understand these arguments better so if you have a link to an article online put it in a comment so I can check it out). This is why I'd like to try working for a privately owned company and see how operations are different, if they are, when management is not pressured by the stock market and Wall Street and the profits stay with the company.
I think this is one of my longest posts, a record! Seriously this is an area I would like to understand better - I know enough to have an opinion but not enough to debate the merits of one economic system vs another. Comments? Thoughts?
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12 comments:
Well, Amanda, let me start off by saying that I don’t think socialists are stupid; they’re just misguided.
I have never understood why anyone in their right mind thinks that government should decide what people get to do with their money. Our government is bloated with overpaid workers who get benefits that are above a beyond anything in the private sector, and then on top of that, when they retire, they get a sweet pension deal. Our government is full of ineffective programs that waste money. Do you honestly think that the right answer is throwing more money at the problem? Why is it that you want to punish successful individuals by confiscating more of their earnings? And what exactly is your definition of “rich?” Are you rich? Am I rich? And how much should the “rich” have to pay?
I do agree with you that there is a need to increase education, but it is certainly not through the ineffective government education system where teachers’ unions hold children hostage to get extraordinary benefits for its members. This is why I believe school vouchers are the way to go. Give every kid a check for the amount of taxes we pay each year to educate him, and let him choose where he wants to go. Hold schools accountable by making them compete for students.
I find it ironic that in the first part of your piece you advocate for higher taxes, yet then you complain about jobs being outsourced from the United States. Don’t you think they outsourced those jobs to escape our convoluted tax system? I can hardly blame them for doing so. It’s a sound business decision. Which is why I advocate the FairTax (national retail sales tax). I think you should check it out. Did you know that every year we spend $300 billion to comply with our current tax code? And under the FairTax system, the poor pay nothing in taxes, because everyone gets a prebate check for taxes they would pay on items up to the poverty level. The more you spend, the more taxes you pay.
And what is wrong with the stock market? It is a great investment tool, and frankly, the CEO’s sole job is to make money for shareholders. If not the shareholders, who exactly are companies supposed to be making money for? The government? I certainly hope not.
Misguided??? Socialists (or American versions) helped build the largest wealthiest middle class in the world. Crabby righties like yourself always forget the good things they've done (like any public company praying to the stock market gods doesn't waste money - where in the hell are you working)...
Social Security - prior to SS nearly 50% of all retired people lived in poverty. Now they are consumers of the lower and middle-middle classes at least (poverty for the aged is now lower than for any segement of our society).
GI Bill & Other College ed - Sent millions to school and help make us a great technology leader (we'll see if we can keep it).
Rural Electricification Program - yeah a bit outdated but without it 1/2 the south would still be on welfare.
Highways!!! Oh my god. Without the billions spent on highways there never would have been a boom!!! There wouldn't be more cars in America then licensed driver (a figure we happily past in 2005). There wouldn't be suburbs requiring fat ass wide screen TVs, an army of construction crews and repairman to maintain them.
Yeap. Socialism has its wastefull spending, but in general it's done this country way more good then harm. Have you really thought about your Fair Tax system? I'm guessing not. They are consumption taxes. That means you pay based upon the amount of money you consume versus the amount of money you make. Sound wonderful until you realize that for the bottom 50% (or more) of Americans that's nearly 100% of their income. They get taxed at 100% rate and as their incomes increase (or as you get richer) proportionally they pay less in taxes (the reverse of our current system - no wonder every rich righty likes these ideas). That's why they love to say they'll return all taxes up to the poverty rate. Do you have any idea how low that really is? It's a joke. For a family of 4 it's under $20k. For an individual it's $9k a year. Can you live on $9k a year???? OK, so that can be fixed you say, raise the limit, well that only means more money needs to be collected in sales taxes. Well it's mostly going to come from those above the poverty line, but well below the, oh, $200k income line. Unless you make way more money then I do, and I'm not poor by any means, your tax bill will have to go up.
Every righty out there should have voted for Gore. He was going to pay off the debt (granted for SS, but that could have been changed). We spend nearly $400 BILLION a year on interest to the debt. That would make for one hell of a tax cut. Unlike the righty tax cut which was deficit financed and oh damn... get paid to finance their tax cut - we call it the $400 BILLION ineterest payment on the national debt.
Enough for now.
Adam, if you want to go on believing the myth that government is what has made and makes America great, it’s your right to do so. Ignorance is bliss, I guess.
Do honestly think that Social Security is a good program? Let me ask you this, adam – do you think that all Ponzi schemes should be legalized, or does only the government have the right to conduct one? The reason why seniors today aren’t living in poverty is because people have figured out that they need to save for retirement, not because of measly SS checks. Why is it that the government deems us all incapable of saving for our retirements and confiscates money from us in the name of “social security”?
As for the GI Bill and highways, I think those are worthy government programs. Just because I don’t believe it is the role of the government to redistribute wealth does not mean that I don’t think government has a role in society. If believing that government should be responsible for certain types of infrastructure, like highways, makes one a socialist, then I guess I’m a socialist too.
Actually, adam, I’ve thought quite a bit about the FairTax system. I’ve read the book by authored by the sponsoring congressman, and I’ve read studies done on the FairTax by economists at Harvard, MIT, and Stanford. You, adam, are the one with the gross misunderstanding of the FairTax. If you think the current tax code keeps the poor from having to pay any taxes beyond payroll taxes, you are dead wrong. On average, 22% of the cost of consumer goods is because of the embedded taxes and costs of tax compliance. Do you honestly think that some giant evil corporate entity pays corporate taxes and for the cost of tax compliance? You’re sadly mistaken if you do. They’re just passed onto the consumer. With the FairTax, everyone keeps 100% of their paycheck, and the 22% of embedded taxes is removed. It is replaced by a 23% national sales tax. So, by simple math, you can see that consumer goods remain roughly the same price after implementation of the FairTax, yet everyone keeps 100% of their paycheck AND doesn’t have to pay taxes on items up to the poverty level. It sounds pretty fair to me. The more you spend the more tax you pay; it’s that simple.
Actually, adam, the poverty level in 2005 for a married couple was $25,660 (that’s two people making $6/hour each; if that’s happening they shouldn’t be having kids in the first place, but that’s another issue for another time). And I’m not really sure why you think that people making over $200,000 don’t spend money. The more you spend the more taxes you pay. You need to reconsider using the tax system to conduct class warfare and benefit special interests and actually make it a practicable, workable, fair system.
You talk of $400 billion. $300 billion is CONSERVATIVE estimate of how much we spend each year to comply with our convoluted tax code (that doesn’t include the $$$ wasted having to include tax implications in every business decision). You want to pay down the national debt? Implement the FairTax and watch our economy grow by 10.5%, our exports grow by 26%, our capital spending by 70%, and watch our interests decline by 30%. (These are Harvard’s and MIT’s numbers, not mine). And that’s only after the first year of implementation of the FairTax. If we had been operating under the FairTax, government revenue would have increased in fifteen of the last sixteen quarters, plenty to lower deficits and pay down the debt.
Unlike everyone else, I will try keep this short.
Yes, outsourcing is good. Studies vary, but for every $1 that gets outsourced, $1.75 come back to the US. When tech jobs get outsourced to foreign countries, who sells them computers, routers, telecom equipment? The bigger picture, however, is competition. Outsourcing jobs will only drive Americans to become better educated and work harder to compete in the global market. Do you think keeping those lazy S.O.B.’s sitting next to you employed is good for the US? Foreign competition is what drove us to be the world’s technology & economic leader. Just look at the US space program as an example. Russian competition drove us to go to the moon. Now, with no competition, the space program is a debacle to say the least.
One other thing everyone seems to forget is that we are a world economy. The world is now flat. Why are we so concerned about only the US? Is it ok to have 300 million fat, rich Americans, but 2 billion people in poverty in India and China? Outsourcing improves the standard of living across the world. Is that bad? Improving the world economy will also increase world stability. Would fat, rich, happy people from China, Pakistan, Iraq, or Afghanistan want to start wars? If the average Iranian made $20k/year, would they hate us, or the rest of the world, so much?
I would rather live in a world where everyone lived like Americans. It might mean that the US won’t be the world’s dominant economy, but it would be a better place. Reading some of the posts, I can see where the term “ugly” American came from.
No, Bob, taxes have NOTHING to do with anything. Quit being so short sighted and complaining.
I guess I lied when I said I’d keep this short.
Unlike everyone else, I will try keep this short.
Yes, outsourcing is good. Studies vary, but for every $1 that gets outsourced, $1.75 comes back to the US. When tech jobs get outsourced to foreign countries, who sells them computers, routers, telecom equipment? The bigger picture, however, is competition. Outsourcing jobs will only drive Americans to become better educated and work harder to compete in the global market. Do you think keeping those lazy S.O.B.’s sitting next to you employed is good for the US? Foreign competition is what drove us to be the world’s technology & economic leader. Just look at the US space program as an example. Russian competition drove us to go to the moon. Now, with no competition, the space program is a debacle to say the least.
One other thing everyone seems to forget is that we are a world economy. The world is now flat. Why are we so concerned about only the US? Is it ok to have 300 million fat, rich Americans, but 2 billion people in poverty in India and China? Outsourcing improves the standard of living across the world. Is that bad? Improving the world economy will also increase world stability. Would fat, rich, happy people from China, Pakistan, Iraq, or Afghanistan want to start wars? If the average Iranian made $20k/year, would they hate us, or the rest of the world, so much?
I would rather live in a world where everyone lived like Americans. It might mean that the US won’t be the world’s dominant economy, but it would be a better place. Reading some of the posts, I can see where the term “ugly” American came from.
No, Bob, taxes have NOTHING to do with anything. Quit being so short sighted and complaining.
I guess I lied when I said I’d keep this short.
Actually clark, if you think tax policy has nothing to do with anything, you're not being short-sighted, you have your head buried in the sand.
Militant Islamists don't want to kill us because we are rich. They want to kill us because we are infidels. Do you think those that plotted to blow up 30 planes this week had a low standard of living in England? Is that what drove their hatred toward the U.S., or was it fact that we don't submit to Islamic law?
They hate because of their economic condition. If they had a higher standard of living, they would be more worried about their designer clothing, finding good thin crust pizza, and their retirement fund rather than hating non Islamics. They hate because that is all they have…
People of other religions can be just as militant (crusades?) but if they live better they usually have better things to worry about other than hating people who are different. Like taxes, for example.
They're sitting on top of the largest oil fields in the world. Why don't they blame their leaders who hog all the oil money instead of the U.S. or the Jews?
People of other religions CAN be militant, but they're not. That's the reality.
I don't claim to know a lot about the stock market, but I think doing an IPO is like selling your soul to the devil. You get the cash to fund your company for virtually nothing. Unfortunately you pay a price for the rest of the life of the company, through public reporting requirements.
If you didn't do the IPO, would your company have had enough money to grow at the rate you were looking for? Would a bigger company either bumped you out of the way or gobbled you up? An IPO can be what makes or breaks a company.
Most of the companies we compete against (generic pharmaceutical industry) are public, but I can think of one private company that seems to be doing well. The interesting thing is that we know little about them since they are not required to do their public reporting. This is a competative advantage since they seem to come out of the blue with new products and strategies. I am sure there are ways to find this stuff out even with private companies, but it takes a bit more effort.
If we look at the world with our economic glasses on, I am in favor of outsourcing. The key is understanding what the US is good at these days. We currently are the smartest people in the world due to the education system we have. By helping people do business better, we help the world be a better place.
Unfortunately what I think the easiest thing for other countries to improve on is their education system with the internet the way it is today. In one or two more generations, the US is not going to have a competative advantage over many parts of the world. Where we are going to be stuck is that at that point we will be on a level playing field as many of those countries that stole our manufacturing. The problem is there is going to be little motivation to bring the manufacturing back if we are only level with the other countries. The only thing that will save us is higher transportation costs.
Maybe rising gas prices will actually solve a lot of our problems. It can make outsourcing less attractive, it will cause people to use their cars less and maybe ride their bikes or walk which will clean the air, cleaner air will reduce or reverse global warming, if people are biking or walking more they will be in better shape and not need so much health care costs, with less cars on the road we won't have to worry about as much traffic (last time I checked a bike is about 1/5 the size of a car). There are a lot of down sides for disabled people and older people, but it is an interesting thought.
Why doesn't leeroy put some more interesting stuff like this on his blog?
The better question is "Are you a blogger?" JK
hey B - I know - I have been slacking! I can't think of anything I really want to "blog" about. Got any ideas?
You could blog about the wedding, about your new job, about some TV show, deep thoughts, cool things you read about, The Office...I haven't had too much inspiration either so I kind of understand. I was on a roll for awhile.
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