Utopianstates Blog

Ross Perot

During his first run for president, billionaire Ross Perot famously warned that the North American Free Trade Agreement would create a “giant sucking sound” by vacuuming away American jobs. Sixteen years later, he’s worried that out-of-control spending and the current presidential contenders are sucking away hope of addressing the giant pile of federal debt.

“We only have a few years left to get our financial house in order,” says Perot. He points to the massive federal debt load, already $9.4 trillion. The problem will only grow worse as the first baby boomers begin collecting Social Security and Medicare benefits.

Dr. Ravi Batra

[…] the loss in manufacturing jobs, growing national debt, and record trade deficits is due to international free trade. “Competitive protectionism is a proven idea with a lot of success. Free trade is historically a relatively new idea with a lot of failure,” said Dr. Ravi Batra , international economist, in his book, The Myth of Free Trade. “Free trade has done to the us what Hitler and imperial Japan could not do during the war,”

From the Free Trade Debate:

1 – As economic efficiency is the main goal of neoclassical economics, “softer” goals like the general happiness of society are ignored. Studies show that unemployment has a much more deleterious effect on a society than lower consumer prices have a benefit. But things like unemployment, ecological damage, damage to family relationships from employee relocation, are not counted by neoclassical economists because, simply, there is no way to quantify them and so they can’t be plugged into a mathematical model. French economist Leon Walras is reported to have said: if you can’t model something mathematically, it’s not worth studying.

But maybe free trade, despite its theoretical flaws, actually works? Well, no. For some 30 years, the World Bank and the IMF have provided assistance to countries in need on the proviso that they adopt free trade policies. But the World Bank has admitted this hasn’t worked well. Others say that this is putting it mildly, that it’s been a disaster, e.g., the documentary “Life and Debt”.

We nearly pay a flat tax now. If you’re good with spreadsheets enter wages into column A, the corresponding tax for those wages into column B, the employer part of SS into column C, and the employee part of social security into column D. In column E add together the cells for column B + C + D. In column F, divide column E by column A.

You will discover that those making minimum wage pay less, but everybody else pays around 33%. There is a curious blip around $80,000 where the middle class actually pays at the higher rate of around 38%. There are also tax free bonds and other things that give the opulent a tax rate of around 25%. I believe John Kerry’s wife paid around 25% the year he ran.

If you take the cap off of social security taxes, and add a flat tax of 20% starting at around $25,000 and you get a tax with no bulge for the middleclass; you get a tax where the rich don’t pay at a lower percentage than the middleclass.

Including SS, our taxes are flat under the present system.

Take the cap off SS and add to that a flat tax. This new system would look identical to the old tax system, except that the buldge at around 80,000 would not be there.

Note: This is the result of an investigation made in 2002.

The following is an example of a flat tax that would tax people earning under $100,000 less and those earning over $250,000 a little more while producing the same revenue for government.

1) No income taxes would be paid on the first $40,000 worth of earnings for a family of four. The rationale is that income needed for food, clothing, shelter and other essentials should not be taxed.

2) Income over $40,000 would be taxed at 22%.

3) Social security deductions would not be limited to the lower incomes. People earning millions a year would pay 15% social security on their income. The total deductions for the opulent are now 33% a year. Under this proposal, the opulent would pay a total of 37% (22% plus 15%). The opulent would pay 4% more per year.

4) Those earning under $40,000 a year would continue to pay social security as they do now. The social security contributions they give plus the matching contributions of their employers would be compounded at the rate paid on T-Bills or other government securities.

5) Those earning $80,000 a year would pay taxes at an average rate of 11% (0% on $40,000 plus 22% on the next $40,000). They would contribute to social security as they do now. Their tax rate would decrease slightly.

6) Social Security benefits for the opulent would be capped. The extra money they contribute would fund social security for the poor. The middle class should be relieved of the burden of sharing their social security with the poor.

This tax scheme is simple and would raise more revenue than the current tax and social security scheme. The tax rates would be about the same. Social security benefits for the middle class would be higher. Tax forms would be simpler.

Unfortunately, if the American government turned these few words into law, several thousand pages would result.

Professor Igor Panarin said in an interview with the respected daily IZVESTIA published on Monday:

He predicted that the U.S. will break up into six parts – the Pacific coast, with its growing Chinese population; the South, with its Hispanics; Texas, where independence movements are on the rise; the Atlantic coast, with its distinct and separate mentality; five of the poorer central states with their large Native American populations; and the northern states, where the influence from Canada is strong.
[…]
Asked why he expected the U.S. to break up into separate parts, he said: “A whole range of reasons. Firstly, the financial problems in the U.S. will get worse. Millions of citizens there have lost their savings. Prices and unemployment are on the rise. General Motors and Ford are on the verge of collapse, and this means that whole cities will be left without work. Governors are already insistently demanding money from the federal center. Dissatisfaction is growing, and at the moment it is only being held back by the elections and the hope that Obama can work miracles. But by spring, it will be clear that there are no miracles.”

Drudgereport

Warren Buffett and I think there are ways out of this mess.

A breakup of the U.S.A. wouldn’t necessarily be bad, if a way to manage the nuclear arsenal emerges.

Extracted quotes from I.O.U.S.A:

In August 2007, China threatened to liquidate it’s 1.3 trillion in U.S. Treasuries continued to insist on placing tariffs on Chinese exports. This act would have destroyed the US dollar, according to some.

Since 2005 when China depegged the Yuan from the dollar, the USA has been after China to lower the value of the Yuan from the dollar being worth 8 Yuan to 5.5 Yuan. This would have made US products cheaper in China and China’s products more expensive in the USA. Most economists think this would eliminate the trade deficit.

It isn’t all bad for the U.S.A. however, as the dollar declines against other currencies, it makes the Yuan worth less in relation to those currencies. This effectively makes the dollar value of the T bills China holds worth less and thus our debt to China is somewhat lessened. However, the threat is that the ability of America to manufacture products may be approaching extinction. In other words, the U.S.A. might never regain a manufacturing base in this country. Another threat is that if China buys property in the U.S.A. in lieu of T bills, they will be purchasing the U.S.A. Eventually they may own the U.S.A. Paraphrasing Warren Buffett: “this is conquest by purchase rather than by war”.

If the U.S.A. creates, produces products, even infrastructure and property in the U.S.A., then the problem will be averted as the aggregate amount of property in the U.S.A. will increase. As long as the U.S.A. increases the worth and amount of property faster than it is purchased by foreign entities, then the U.S.A. will never cease to own their own country. The U.S.A. needs capital to do this. We can’t continue to give sub-prime mortgages. This squanders our credit for legitimate purposes.

Both parties have contributed to this crisis. Don’t entirely blame the Republican party and don’t think that Obama’s team of Democrats are your saviours. I have no complaints as of this time with Obama. I hope Obama does well. Most Americans hope he leads well.

Recommendation: Hope that Obama and the Democrats will solve this problem. Better yet, support a Utopian City State and move there.

The book I.O.U.S.A. discusses America’s four deficits – the budget deficit, the savings deficit, the trade deficit, and the leadership deficit. There is a magic bullet that can solve three of the deficits. A national sales tax that would refund the American portion of the sales tax receipts to American manufacturing companies is such a magic bullet.

Advantages:
American manufacturing, especially American automobile manufacturing companies, would become profitable. They could hire more workers to build more cars. More people working means government has to pay out less unemployment compensation but collects more income tax revenue and more tax revenue from the national sales tax.

Disadvantages:
Foreign governments would get angry. There might be retaliation. Some of America’s industry might be effected. Also, our government could squander their newly collected revenue on poorly conceived and executed programs.

Solution:
The solution is to simply impose a five percent national sales tax and refund the revenue to the American manufacturer. This would allow the American manufacturer to hire more workers, pay more taxes and sell more products.

This action would produce rapid results, once implemented. People might even go on a Christmas buying splurge in anticipation of a 5% price hike due to this national sales tax. This tax increase MUST be accompanied refunds or rebates to American manufacturers that face stiff foreign competition.

To compensate for the extra national sales taxes paid by most Americans, they would need McCains’ promise of a $3000 per person increase in deductions. To compensate for this decrease in tax revenue, those earning over $250,000 would have to have their taxes increased slightly.

The USA is in an EXTREMELY dangerous economic situation. Read I.O.U.S.A. (ONE NATION. UNDER STRESS. IN DEBT) or Empire of Debt, if you need further convincing.

The Bush administration seems unwilling to see the white elephant in its White House living room. Turning a blind eye on the upcoming Kyoto Protocol and continuing unilateral compromises in the Doha Free Trade agreement, Bush and Co. won’t admit that the true culprit to environment degradation, as well as the regression in America’s standard of living, loss in manufacturing jobs, growing national debt, and record trade deficits is due to international free trade. “Competitive protectionism is a proven idea with a lot of success. Free trade is historically a relatively new idea with a lot of failure,” said Dr. Ravi Batra , international economist, in his book, The Myth of Free Trade. “Free trade has done to the us what Hitler and imperial Japan could not do during the war,” he said.

Congress can’t pass a lot of laws that protect labor and the environment and then expect our businesses to thrive without protection. Government cannot pass laws and then relinquish control to the governance by a free market.

The American marketplace has enormous value and should have been sold to the highest bidder – the government willing to allow the maximum tariffs.

Protectionism, according to conventional wisdom, is a bad thing. However, protection of our rights is the only right that government really has; the only job of a government is to protect their citizens. To insinuate that protection of the marketplace is bad establishes a dichotomy because protection, in one form or another, is the sole purpose of government.

The free market is actually a form of anarchy, which is not necessarily bad. But if anarchy is to work, forces that cause disruption have to either be eliminated or controlled. The forces that disrupt can be internal (caused by our own government) as well as external (pirates).

The American marketplace has enormous value and should have been sold to the highest bidder – the government willing to allow the maximum tariffs. The marketplace access should be sold in intervals, perhaps a year. The only rule should be that our government accept the highest bid; the highest tariff. This is the easiest solution to our mess.

Are Lawyers, as a profession, in conflict of interest? They have control of the house, the senate, the executive branch and the Supreme Court. Lawyers write and enforce the law (with the aid of the police and the military). Were lawyers to write laws that protect and enhance their profession (including the police) while writing laws that encourage competition with other professions, then they would have a conflict of interest (by the definition given, if applied their group). Encouraging the outsourcing of engineering and manufacturing jobs and increasing competition for teachers, farmers and everybody else justifies the allegation that they have a conflict of interest.

Randomly picking our representatives from a pool of college educated people would end this problem.

conflict of interest
Law.com
n. a situation in which a person has a duty to more than one person or organization, but cannot do justice to the actual or potentially adverse interests of both parties. This includes when an individual’s personal interests or concerns are inconsistent with the best for a customer, or when a public official’s personal interests are contrary to his/her loyalty to public business. An attorney, an accountant, a business adviser or realtor cannot represent two parties in a dispute and must avoid even the appearance of conflict. He/she may not join with a client in business without making full disclosure of his/her potential conflicts, he/she must avoid commingling funds with the client, and never, never take a position adverse to the customer.