Where Did My Capitalism Go?

I was thinking the other day about what my federal tax money goes to. There’s a whole range of uses that the government employs our tax dollars for, but I increasingly feel that where I want this money to go is not being recognized by our representatives in government. While I hold that federal tax money should be used for utilitarian purposes like civil works and national defense, our representatives increasingly create budgets authorizing the use of taxpayer funds for social programs that I have no interest in funding. While I understand that we elect these representatives to speak for us in the creation of a national financial plan, we know from experience that what they decide is not always what their constituents want.

So, could we create some sort of check on how our tax money gets distributed for federal uses? What if we developed a survey that was required to be filled out each year at tax time and then sent to the IRS with our other required information? The survey could ask each taxpayer to rank, in order, the buckets that they wanted their money to go into. What percentage of your taxes would you want to see go to the Department of Transportation? What about the Defense Department, or the Department of Health and Human Services? Now, I’m not advocating a mandatory use of these rankings to alter the US budget, but I am interested in seeing the results of a survey like this, and in having some weight attributed to this survey by the US Congress as they develop future budgets. The money we pay today in taxes is used immediately to fund federal programs so it only makes sense to supply the Congress with an accurate portrayal of what its constituents want to see their money go to, and to have that breakdown influence the decision makers.

I realize that our nation consists of a wide variety of people with different backgrounds and from all walks of life, so I’m sure that the summarized results of a survey like this might be different from what I would choose to spend my tax money on. But the great thing about an effort like this is that our representatives would be able to see exactly what their employers want to do with the nation’s money. This would go a long way towards making our Congress men and women honest. We could more easily hold them accountable for their actions if they see in plain light what their constituents expect from them.

Maybe a survey like this would leave some Americans disappointed, thinking that they might not benefit from the outcome of such an initiative. That line of thinking might be warranted given the fact that the power of decision, in terms of monetary value, would be held by the rich, and the weight of fund division would be skewed towards their preferences on tax funding. This makes sense if you look at it from a business standpoint: the investors of a company that hold the highest amount of shares (have supplied the largest amount of capital funding) have the highest percentage of say over how the company is run. It’s the wealthier taxpayers in America that have provided and continue to provide the majority of funding for America’s federal programs, whether utilitarian or social. So why not give them their fair share of say over what those tax funds are used for? Those citizens providing less funding to the government through taxes might cry foul, but the fact is that they would still be given the right to influence decisions about where their tax money goes and their contribution, like everyone else’s, would be taken at face value.

In the end, I think a survey like this would incentivize those with a smaller stake in the breakdown of tax distribution to increase their wealth, and become greater voices in the national discussion. I know I’m extremely interested to see the results of such a survey. It would be fascinating to look at the breakdown and spot the differences and similarities between what comes directly from the voters of America and what comes out of the halls of Congress.

Well, gosh, there is just so much going on with this health care legislation that it’s difficult to not write about it.  This new law encompasses the most effective denunciation of personal responsibility and decrease in incentive to better yourself than any other piece of legislation I can think of.  This is what America has become, and we have to turn it around before more of our individual responsibility slips away.  It seems that more and more people don’t want the responsibility of taking care of themselves, but I guarantee that a major portion of the citizens of this country understand the after-effects of responsibility lost.  This governmental takeover of personal responsibility is a slippery slope, with the gravity of every new piece of legislation accelerating us towards a totalitarian end.

American liberty used to mean the power to choose for yourself how you wanted to live. With this new healthcare law, every American that chooses not to buy health insurance will be penalized.  How does this profess the principles of liberty and freedom to the citizens of our country?  To be required to pay for something you don’t believe in.  To be forced to take part in a government-run program that you don’t need.  To be penalized for not wanting to be under the thumb of the US government, and by paying that penalty effectively contributing to the program’s upkeep and expansion.  How is this freedom?

American liberty has been replaced by the priority of equality.  With this law, the government has demanded that the rich pay for the care of the poor.  Mandatory charity nullifies the good intentions of the benefactor.  It removes the morality of a good deed and destroys the integrity of both the giver and receiver.  But, hey…everyone is entitled to health care, right?  Not at all.  Are you entitled to your neighbor’s wealth?  Is it your right to force your friend at gunpoint to hand over their wallet?  Some citizens of this country would have you think so, because they think they are entitled to receive the benefits of their fellow citizens’ hard work. Entitlement was a relic of monarchs past…it has no place in American society.  Yet, somehow the concept of health care entitlement ended up in US Congressional legislation.

I commend the 14 state governments that are suing the US government over the constitutionality of this new law.  How the Congressional Democratic supporters of this bill think the forceful distribution of earned wealth to the undeserving was something the founders intended is beyond me.  Of course there will be haggling over the word of the law (as there should be in a government of law, not of men) but to myself and many Americans it is obvious that the spirit of the Constitution is what’s being trampled here.

The intention of the creation of the United States of America and the governing document of our nation was to preserve a person’s right to his or her property.  This new legislation only serves to redistribute the property earned by many hard working wealthy Americans to those people that are not incentivized to take responsibility for their own care. The lack of desire to take responsibility for oneself and the misguided intentions of those that sympathize with the irresponsible is the reason why our country is at this point in our history. We cannot rely on these people to bring themselves up and realize the immoral and illogical nature of their ways. The personally responsible citizens of this country that strive to exercise their basic rights of life, liberty and property will have to make the changes necessary to ensure our return to the principles that our wise and forward-thinking founders originally intended.

This blog has been silent for too long a time (over six months!), but over the next few weeks I’d like to change that. 

Given the recent events in Massachusetts regarding Scott Brown’s win of that state’s Senate seat, the Republicans now have the ability to filibuster legislative action in the Senate.  Even with this greater balance of power, however, the citizens of this country and our representatives must remain diligent in their efforts to combat the anti-capitalistic tendencies that have emerged from the Democrat’s Congressional majority over the past year.  Now that the Democrats can be stymied by a Republican filibuster, we must be wary of the political wheelings and dealings that can occur on both sides of the aisle.  As the balance of power approaches equilibrium in Congress, the propensity for compromise grows, and the temptation to make a deal in order to push legislation forward can become great.  I urge all members of Congress to resist this temptation. 

This nation was built by those who would not compromise their beliefs, who stood for what they believed in and could not be swayed by gestures of appeasment.  Spirited debate led us to independence and gave shape to our government, but a deal that compromises the morals, values or beliefs of the dealer has no place in the realm of a republic.  Speak for your people, for those you represent, and for yourself.  When you deal in politics as a trader, you speak only for politicking itself. 

Our Congress should be pressed by their public to serve the American and capitalisitc ideals that have made this country the nation that it is today.  Those ideas of spirited competition, freedom from government restriction and unbounded opportunity for all citizens which were so celebrated in early America have been gradually limited  by our government over time.  I can imagine that these ideals might have remained as centerpieces of American business and thought had our politicians been less compromising in their agendas.  It would be an interesting study to find out how we got to where we are in our current state of government, but that’s a conversation for another post.  As far as this topic goes, I believe it is the representatives duty to hold the peoples will at heart whenever decisions are made, and when this will is compromised, the representation of the public is forfeited.

General Motors is now back in business, albeit as a diminshed version of its former self. The company is still largely owned by the American and Canadian governments which means that the taxpayer is footing the bill when it comes to GM’s operating expenses. One of the stipulations that the Obama administration has for GM is the expectation that the company will increase their efforts to build more fuel-efficient vehicles and become a
technological innovator. I don’t see how a government owned company could ever innovate like a private entity can, and I certainly don’t expect GM to become a technological innovator that out-performs their non-government owned competitors.

Government sponsored innovation will never produce results equivalent to those bourne out of market driven competition. GM’s main source of funding is more concerned with creating and maintaining jobs than they are with improving technology and finding new solutions for more fuel-efficient cars. Keeping those jobs was the primary driver for the government takeover of the company, so why would it be any less important to them moving forward? The ability for GM to innovate will be hindered by the fact that they know the government will not let them fail. This comfort does not produce a more efficient company; it breeds laziness. Just look at how innovative GM was before the government bailout. You might say that they were one of the least innovative companies on the market, and yet the US and Canadian governments decided to keep them afloat. These governments have set a precedent that GM will surely take advantage of as they continue to fund their research
and development operations with taxpayer money. The government will surely not be as hard on GM as they say they will be when there are jobs at stake, a fact that gives GM license to become a bloated beauracracy where nothing gets accomplished.

Another issue to consider is that if GM actually does stumble upon some new technology, or new method of manufacturing that improves efficiency or reduces costs, who will own the rights to that idea? At any other company, a new product or idea is patented or copyrighted to ensure the ownership is retained by that company for their exclusive use. At GM, a new idea is essentially a government funded initiative that the government may see as their property. This new product or idea could then become public domain that GM’s competitors may use in their own operations, possibly even improving upon it and beating GM at their own game. The fact that the government has control of GM because of the funding they provide makes GM less able to compete in the marketplace through innovation. A government controlled by special interests and beauracracy cannot competitively control a company in the marketplace and expect to win.

The fate of GM is still unraveling. It will be interesting to see how the government performs in the vehicle manufacturing business, and even more exciting to see how GM’s competitors will win out over the taxpayer funded entity in the market. I see GM’s ability to innovate severely limited by this takeover, but perhaps it’s better to still be in business, unable to innovate, than to not be in business at all.

There’s been a lot of talk about the legislation that was hastily passed by the House this past Friday night. The “American Clean Energy and Security Act” as it is called, is around 1200 pages long, and apparently already has another 300 pages of amendments which were added shortly before it was passed in a narrow 219-212 House vote. In short, this bill is long: there is a lot of stuff going on here. I’ve taken the liberty of downloading a version of the bill (before the 300 pages of amendments were added) to review myself and I’d like to address a few choice sections of it here, including my opinion on why these new laws are no good for the American taxpayer. I urge all readers to also review the text of the bill and educate themselves on the major shift in federal legislation that is currently taking place.

The first portion of the bill I’ll address is “Section 201 - Greater Energy Efficiency in Building Codes” which calls for a national building code energy efficiency target of 30% reduction in energy use as dictated in local building codes at the time of adoption of the bill in 2009, and 50% reduction in building energy use by 2015. The bill requires state by state adoption of these targets to be written into new building codes within a year after the adoption of the federal law. Each of those building codes must also be approved by the national overseer, the Secretary of Energy, as meeting the targets set forth by the bill. The fact that the government needs to use the states as a vehicle for this shift in building code (a responsibility solely entrusted to the states) is evidence of the federal inability to dictate and enforce such legislation. This change, if adopted by the states, would cause major hardships for the construction industry, not only for builders but for architects, engineers and local jurisdictions, burdening all involved with the extra cost of acheiving this reduced energy consumption target that will ultimately reflect itself in higher housing costs.

The bill realizes that, by its own actions, the cost of energy to the consumer will be increased. This is exemplified by the text in “Subtitle B, Section 432 - Energy Refund Program for Low Income Consumers” which gives refunds to those who can’t afford to pay for their energy consumption. This section is a built-in method for the government to chip in on the increased cost of energy that will result from this bill. Again, the administration of this program also falls on the states who will need to create new beauracratic infrastructure for the pay out of refunds to consumers that can’t afford the energy they buy. The bill also does not specify a budget for the expense of this new program as is customary with legislation funded by taxpayer money.

The final section, which has gotten much more media attention than those previously discussed is the latter portion of the bill, “Title VII - Global Warming Pollution Reduction Program”. This is the basis of what is also referred to as the “cap and trade” program. This section of the bill sets limits on the carbon emissions that companies and industry can, well, emit. The bill allows those that fail to reduce their own emissions to buy credits or offsets from other entities that have been successful in that endeavor, or by investing in sources of renewable energy and thus playing the carbon offset market. The bill sets regulations for the offset market, and targets for reduction of greenhouse gas emissions. The issue here, again, is the increased operating cost transferred to the businesses affected by this legislation. Companies will be forced to limit their production, find new manufacturing methods or be forced to buy offset credits. This will inevitably cut jobs, increase research and development costs, and increase operating costs in an attempt to compensate for money dedicated to adhering to these new regulations. This increased cost to American businesses will be transferred to the consumer…why else would such a provision as the Energy Refund Program be made in the bill?

The provisions of this latest legislation passed by the House, in my opinion, will have detrimental effects on the American economy, the power of states to write their own building standards, the value of energy for the consumer and supplier, and the perception of what climate change means for the American taxpayer. American people across all classes will be affected by increased taxes to support the local, state and federal beauracracy needed to enforce this legislation, and by increased energy costs that the American business will need to pass on to the consumer in order to adhere to new emission and energy efficiency standards. Please read this bill and learn about its contents. The American standard of living and free market are under severe threat.