Saturday, February 4, 2012

We Aren't Broke

Contrary to conventional wisdom, the United States is not broke.  In fact, the U.S. is very, very rich.  The problem is that the money is sitting in offshore and private accounts like those owned by Mitt Romney and his Wall Street friends.  This is also why the economy for 99% of people is terrible.  Because such a large share of the money is in the hands of the top 1%, the bottom 99% lacks the funds to spend.  This means decreased demand.  It's not surprising that the economy isn't doing well for the vast majority of Americans.  Money is like water.  Right now it's not flowing because some are hoarding it.

The current unemployment problem is easy to solve.  Hiring would increase if we increased consumer demand.  This means getting money to consumers.  Consumers aren't buying now because they are indeed broke and don't have jobs.  This means taxing large corporations and the rich and using the money to hire people to repair the infrastructure of our crumbling roads and bridges.  It means investing in alternative forms of energy and building more broadband Internet connections and investing in high tech energy research and development.  The problem is that unemployment benefits the large corporations and richest donors.  How?  By not hiring, large corporations can force existing workers to do more.  This means less cost to them and more profits.  The stock market, unlike the unemployment numbers, is doing fine.  The relatively small number of stockholders in America are happy.  Also, unemployment means less inflation.  If you are a bondholder, such as the holder of U.S. Treasury Bonds, then you don't want inflation, because this means your investment goes down.  So for those with stock and bond portfolios, unemployment is a good thing.  And who donates money to politicians?  The largest holders of stocks--large corporations and the rich.

Giving tax breaks to the very rich has never been shown to increase hiring.  In fact, during the 1950s and 1960s, the tax rate was much, much higher than it is now, and the economy was growing like gangbusters.  Corporations and the rich just use tax breaks to hold onto more cash.  Apple, for example, currently has 72 billion dollars of cash on hand. This is more money on hand than the U.S. government.  Apple could use this to hire more people, but they don't need to.  They already have enough cheap outsourced labor from China.  The "job creators" aren't creating more jobs from tax breaks.

The neoliberal policies of the last thirty years have destroyed the American economy.  Take the education system, for example.  Public education at the elementary and college level is more expensive than ever.  This has a cause, too--it's called excessive tax breaks for the rich.  The Reagan, Bush, and Obama tax cuts have caused massive budget deficits. Add to this two unfunded wars.  Then there is no money to fund and repair the nation's infrastructure, government, or educational institutions.  Students graduate from college now as indentured servants to corporate America.  With student loans in excess of the average $30,000, this isn't surprising.  But it works out perfectly for corporate America.  Workers are more docile and compliant when they have nowhere else to turn.  And if the workers become too problematic and demand more rights, their jobs can always be outsourced to India or China.  In fact, the less educated people are, the better, because then there is an excuse to outsource.  Engineers in India get paid much less than those in America.

The healthcare issue is another one.  It's a matter of socialism for the health insurance companies and capitalism for everyone else.  As Ron Paul points out, capitalism and the free market have nothing to do with our current healthcare system.  That is why it is so expensive.  As a nation, we spend twice as much as any other industrialized country.  This expense is reducing American competitiveness.  In fact, the extreme health care costs to the American auto industry is partly how Obama was able to get his healthcare reforms passed.  When General Motors decided it was time for change, we got change.

When I go to the hospital to get my cholesterol tested, the cost is three times what it costs me to go to a private lab and pay out of pocket.  The difference is the middleman.  With the health insurance industry as a buffer, consumers are insulated from the costs.  The Obama healthcare reform bill cannot bend the cost curve because only the public option could have done that.  As it stands now, the health insurance industry is guaranteed to get extra consumers by mandate.  This is socialism for them, but capitalism for everyone else because they are forced to buy health insurance which has a built in profit system for the private health insurance companies.

The answer is not doing away with health insurance, but instead doing away with health insurance designed for profit.  The free market doesn't work efficiently in the area of health care because the incentive is to not provide care for those who need it most.  There isn't going to be competition to sign up the sickest people for health insurance policies.  Health insurers only make money when they deny health care to those who need it and collect money from those who don't need it.  This is completely the wrong incentive system.  A single payer system, such as that found in almost every other industrialized nation, helps keep costs down while ensuring health outcomes are reasonable.  Through the use of public taxes, the costs for health care can be regulated.  American business would no longer be competitively disadvantaged by yearly increases in health care premiums.  Those who need care get it.  Those who don't need it, don't.  Because everyone is required to pay into the system, everyone can benefit.  By spreading the risk, each person benefits.  This is the same thing we see with public taxation for fire and police services. The risk is spread around so everyone benefits.

Some elements of capitalism in a single payer system can in fact be utilized to save money.  For example, if the government used its bargaining power to buy pharmaceuticals at a reduced rate, this would save a tremendous amount of money.  But of course, this was not part of the Obamacare reform legislation because the Obama administration made a secret deal with the pharmaceutical industry to not include this so as to gain their support.  This would have saved a tremendous amount of money.  Again, we have socialism for the large corporations and capitalism for the consumer.

Social Security is another example.  Even the language around this program is framed by Republicans in a propaganda sort of way.  When we provide money to sick and old people at even the most basic subsistence level, this is actually a form of tax relief for them.  We are placing less of a burden on them.  Instead, the pejorative term "entitlement" is used, as if the sick and old are spoiled brats wanting a free handout.  Never mind most old people having worked and paid into the system for their entire lives.  But when we give large corporations massive tax breaks even though these same corporations are using public roads, infrastructure, national defense, etc. for free and making private profits, this isn't called an entitlement.  It's not even called a subsidy.  No, this is "investing" in the "job creators."  Social Security as it stands now is no ponzi scheme.  It is self funding and with the right tweaks, can exist for our children and grandchildren.  But Republicans despise this system.  Despite overwhelming public support for Social Security, they will stop at nothing to attempt to destroy it.  They resent the idea that the government can do something well and not exclusively for their benefit.

Ronald Reagan and George W. Bush's strategy of cutting taxes for the rich and creating massive budget deficits actually benefits their agendas.  How?  Because then the government doesn't have the funding needed to pay for the social programs, infrastructure repairs, and other programs that they deem wasteful and useless.  It directly serves the rich by giving them welfare at the expense of everyone else.  It also serves as a fantastic means of social control.  The poorer people are, the more they begin to blame others for their problems--like immigrants, minorities, union workers, teachers, etc.  This has been a consistent feature of American history.  Scapegoating isn't new.  And it helps deflect attention from the real causes of poverty--the greed and selfishness of the power elite in charge of this country.  Keeping people divided and full of anger works well.  Add to this the other forms of social control used by the rich--mindless entertainment, such as reality television shows, act as a form of modern day bread and circus games approach to keeping the populace docile.  This was done during the Roman times as well.  The gladiator games served an important purpose, to keep the people from rioting and demanding change.

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