The Big Fix

"Opinion"

08/22/2010

Paul Munnis


Our American Economy needs to be resuscitated but several basic flaws prevent it from happening. The purpose of this article is to examine various impediments to economic recovery at Federal, State, and Local levels.

LABOR: There are three stakeholders in the American Corporation: the Corporation as a legal entity, Stockholders as stakeholders, and Labor as a stakeholder.

The interests of all three must be represented in corporate decision making yet only two are actually represented: the Corporate Entity and the Stockholders.

Labor is thrown to the wolves and the result is contention between Labor and the Corporation.

Labor representation has been prevented by the GOP since Reagan and that has resulted in a handcuffing of Labor and the use of Labor Law to prevent Unions from adequately organizing.

That then contributes heavily to unemployment and it prevents solutions to the joblessness rate here in America. The unconscionable corporation then suffers from workers who feel the company cares nothing about them or their families thus demoralizing the worker.

If we wanted to have half time or quarter time employment in America we could not have it for we lack any mechanism, either legal or governmental, to permit it. This paradigm of the American Corporation is locked into labor law and government oversight and is also legislated into Labor Law, Case Law, and social tradition. It has become a cultural attribute of America to brush workers aside. The last time this happened it resulted in a Revolution that shook the world in the form of a Socialist Revolution. It could repeat itself but not as Soviet style Leninism, a.k.a. Communism.

We have just seen huge productivity gains in the American Corporation. Labor did not benefit from these gains; indeed wages shrank and jobs were shed as the productivity gains were realized for the financial benefit of the Corporation and their Stockholders.

No wonder American worker wages are stagnant, no wonder the American economy is shedding jobs, no wonder there is less retail spending.

If you would fix the American Economy then fix the plight of the American worker.

VENTURE CAPITAL: Access to venture capital in America has become so tight that innovation and expansion of business is stymied. Obama has tried to fix this and it requires him to manage three aspects: banking, financial houses, and taxation.

These three sectors control venture capital formation and access to venture capital in America.

Capital availability is stymied because of the greed of bankers, the seizure of capital by large companies to improve their productivity while preventing competition, and the lockout of Labor interests. Labor itself can be a capital loan force if there are Union jobs available as a result.

Obama has tried to fix this by using stimulus funds to replace venture capital and it is not working because of strong lobbies and legislative foot dragging by Republicans using the deficit as an excuse to prevent capital distribution by government.

The result is that the money does not reach Main Street and so we are stagnant in terms of both growth and innovation.

MONOPOLY: After twelve years of Republican control of Congress, the last eight years of it in a new century running from 2000 until 2008 when Republicans had total control, then the GOP looked away from regulation and oversight responsibilities of Congress and they encouraged monopolies to form.

These monopolies were found in the automotive, insurance, financial, banking, medical, and in areas of import/export. All are in the process of being reformed to some degree.

The result has been the loss of jobs, the stagnation of wages, and the control of prices. At the same time speculation in commodity markets was allowed and that lead to manipulation of commodity prices.

We must break up the monopolies and permit free markets to have their day once more in America. We hesitate to do what is needed because doing so has an immediate negative effect: it increases unemployment, something that we are not willing to take a political hit on. The cure is too politically painful for us to bear.

Obama made an attempt to reform health care in America. The result was much squawking and much watering down of the needed reforms. Those impacted would have been medical firms and insurance companies. They have such strong Lobbies that they bought Democratic Politicians like Blanche Lincoln off and then watered the legislation down to where it did not achieve the promise of reform. We needed revolution and instead we got evolution.

LOSS OF THE COMMONS: Those items that the American people hold in common like community infrastructure have been severely impacted by a Republican demand to privatize them and are hobbled by the inability of local government to sustain them because State budgets are slashed and local property taxes are maxed out.

The Tragedy of the Commons is well documented and we witness it daily in our society.

The result is increased property taxes, higher utility bills, and loss of local control.

In many communities energy provision has gone from being a community owned public utility just happy to just break-even to becoming a corporation with stockholders and these are on a profit curve that drives prices constantly upwards.

In a public owned corporation the services are sold at cost, in a private corporation at least a 30 - 50% profit margin is demanded for stockholder distribution. In a public corporation profits are distributed to hold down taxes while in a private held corporation the goal is to avoid paying taxes and to distribute profits to the stockholders.

Thus we have the worst of both worlds: public money is used to finance the corporation with venture capital while the profit goes to private individuals even as taxes are avoided.

This problem is compounded with the give-away of future taxes to corporations who swap jobs for immunity from taxation and for free utility fees. Corporations have become modern freeloaders and they are a drag not a help to our communities. When corporations dump workers they create community chaos instead of strengthening the community.

Taxpayers have lost control of their cities and towns and essential services like transportation, roads, bridges, sewage, water, electric, and cable-vision should generate income to control the tax base that supports the community. But they are not doing so.

The result is that schools are closing or going onto short school weeks, fire and police workers are being laid-off, public works projects are dumped due to shrinking budgets, while public service workers are furloughed.

LOSS OF BIPARTISANSHIP: I will not dwell long on this matter for when one Party puts their ideology ahead of the common good then we are all doomed and readers know it is so.

We all know it, we are all witnessing it, and we have a chance to fix that this November.

Whether we will or not is an open question. Cooperation and bi-partisanship are needed to solve the above woes.

DUMBING DOWN OF AMERICA: Educated workers are a basis of a modern society. We are allowing our education system to be dragged down by a number of factors that include: a failure to look ahead to future needs of corporations for educated workers, a lack of investment in plant and facilities, and workers, plus a sufficiently broad tax base to support local education.

We have so many dumb people in America that it is shocking to see things like 20% of Americans who believe that Obama is a Muslim, not an American Citizen, and who can’t name the States and Capitols of America. Many people cannot read and write at a literate level and this makes them not trainable for high skilled jobs having plenty of job openings.

The schools of the American south are a national disgrace. Bigotry and prejudice are expressions of educational failure. The result is that our whole society is being dragged down into the mud and our future looks poor. Some 20% of Americans are polluting the well and we are letting it happen.

Many Americans do not know, understand or support our American Constitution and American Bill of Rights. The result is that they can be exposed to propaganda and made into a demonstrating and dangerous herd. Examples are the Tea Party and the Mosque Flap people who cannot distinguish between al Qaeda and a peaceful people seeking religious freedom guaranteed to them under our Constitution.

Dumb people do not create strong societies.

GUILT COMPLEX: Americans tend to feel bad when we witness world poverty and starvation. We are living so well -- they are living so poor.

This has led to a moral argument that we must support globalization in order to empower others. That is happening by risking the whole world economy by closely coupling it especially through global banking and finance.

Another way to view this situation is that if we can make ourselves strong then so can others. We are not responsible in a direct sense for the economies of India and China, the leaders of those nations are the responsible ones.

We have to preserve our own economy and make it strong thus providing an example to others on how to become strong.

Because of this guilt complex we do not tax job off-shoring, nor do we demand import taxes for goods imported from other nations.

We are not forcing war spending through the American economy but providing billions instead to others.

We are placing Billions into other nations and not bringing the bucks back home for domestic investment in jobs and housing.

Looking to be strong and vigorous is not selfish -- it is just common sense behavior.

BABY-BOOMERS: Millions of elderly workers need to transition to retirement and the economic melt-down is pushing them out the door and onto Social Security via our unemployment rolls.

Part of the problem is that we are measuring unemployment incorrectly. If we would establish the number of Baby-Boomers who must retire annually and then report on how many have actually retired we would be better off than counting these people as unemployed workers seeking work. Of course they are. Most Americans do not want to retire and give up their high earnings. But the Boomers need to move over and make room for new workers.

We need to start reporting the number of people over age 65 on the unemployment roll. If we did this then we’d understand the real problem of unemployment in America. Those who are retirement eligible are a drag on employment numbers and create a false picture of our economy.

As Baby-Boomers retire they will have twice as much time and half as much money.

They will down-size real estate, buy fewer automobiles, reduce personal spending, stop eating out, and they will need to increase spending on healthcare. They will need community services like hospices and nursing homes plus tons of medicine.

They are yanking tax money out of our system and expecting workers to pay for their needs as subsidy. When we look at the plight of American workers (above) we can see that it won’t happen unless wages ramp up. We look for increased poverty among this segment of America.

Boomers are shifting from being an asset to becoming a burden. Paying for them will likely force us into a consumption based tax system.

RETURNING TROOPS: We have not faced this problem for it hasn’t fully hit us as yet. We have thousands of people coming out of the military and back into a society that lacks jobs.

Furthermore much of this workforce is not well educated and is thus unemployable except as laborers.

On the plus side we have troops with great education benefits coming to them and American colleges and Universities are lusting for them to show-up at their doorsteps.

On the negative side, we have a need for increased jobs and services to meet their needs.

On the plus side they will have a pocket full of cash to spend and invest.

CONCLUSION: The integration of all of these problems is dragging America down yet the mess is fixable and controllable although we are losing precious time to get needed fixes into place. Since a large piece of the problem is political we can fix these in the upcoming November election.

Electing Democrats is not the whole answer though. We can see that some Democrats are sell-outs to industry who are eagerly buying votes. We must demand that Congress organize to address the changing needs of America in the 21st century and craft a rational conversion plan that uses all of the levers of government to advance our future. We must look at voting records and funding sources of incumbents and dump those politicians who sell their votes.

When we fix these matters then we will see American prosperity return and a strong nation take its place on the world stage. When prosperity does return the landscape will look far different than what it used to look like.