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Friday, April 27, 2012

Presidential Elections and Economic National Security

Barry, My Liege:

It is no secret that Presidential election campaigns are well-renowned for ignoring most of the critical issues facing the country. We expect to see passionate debate about irrelevant trivia as we go into the silly season.

However, we cannot discount the process. After all, it is the only method we have to judge the character of you and your opponent. So, even though any individual subject may affect only a few people, the real debate is about your inner make up.

My Liege, this is a critical time for our country. We face numerous decisions which will affect the National Security of the United States in the next few years. The following somewhat lengthy posting will examine some of those issues ; the hope is that this list will serve as a reminder of those questions as you go forward.

The foundation of the National Security of the United States lies in our economic soundness : if we have a good economy, we will have a secure future.

We have seen that we prosper as a country when our middle class has income sufficient to enable them to act as consumers of some products beyond basic needs.

That has been the source of American exceptionalism and of American security since before the Revolutionary War. But, middle class prosperity has eroded severely since the 1970's.

If we can reverse the current trend of increasing income and wealth polarization, then we may be able to go forward as a prosperous and secure country. If we fail to reverse those trends we will inevitably decline in both prosperity and security.

And, My Liege, let us be clear headed : reversing those trends will be exceeding difficult.

There are powerful and influential interests who wish current trends to continue. They will fight tooth and nail to prevent any change in direction.

It is my opinion that any Republican Party member will consistently make exactly the wrong choices about our future and will thus greatly harm our National Economic Security.

However, there is no guarantee that you as a Democratic Party Member will make the correct choices. Your administration has not achieved a course reversal of some negative economic trends as of this writing. We pray, my Liege, you will be elected and will make the correct choices in the coming years.

My list of Federal government actions required to reverse current trends is a long one, My Liege. The list's length can't be helped inasmuch as we face many serious issues :

1. STRENGTHEN UNIONS - Union organizing and negotiating rights are created by Federal labor laws. When unions can organize and press for higher wages, the country benefits from higher incomes going to the middle class. It is true that unions can be messy organizations, but overall they succeed in raising middle class incomes when they can function freely. This will increase middle class purchasing power and help restore Aggregate Demand.

An inevitable result of raising wages through union activity will be that businesses have to raise prices to survive - that will require some adjustments to our trade policies as discussed below.

2. ENHANCE LABOR LAW ENFORCEMENT - Some business owners think they have an economic incentive to interfere with union actions ; they will have to pay higher wages if unions are successful. In our history, blood has been shed in labor disputes.

Henry Ford knew that true national prosperity lies with workers receiving wages high enough to buy the cars he made, but many business owners are not so enlightened.

When there is little labor law enforcement or penalties for labor law violations, then labor law has little effect.

The United States should enforce labor laws vigorously.

3. ESTABLISH ANTI-MONOPOLY LAWS - Monopolies are bad for the country, per se. Such firms have economic incentives to charge higher prices and sell fewer products than firms in competition. Their actions create a deadweight loss from economic activity not undertaken and further transfer some consumer surplus to monopoly profit. This results in less economic welfare for the country and thereby damages our National Security.

The United States should strengthen existing anti-monopoly laws, increase enforcement activity and write additional anti-monopoly laws.

The concept that monopoly is a reward for efficient firms is a false concept which serves to undermine National Security.

4. CANCEL FREE TRADE AGREEMENTS - United States trade policy does not work. We adhere to a low tariff concept that undermines our National Security. It does so by transferring jobs to foreign countries and by facilitating huge trade imbalances which serve to transfer wealth created in the United States to our trade partners.

It is time to change trade policies so that we import only as much as we export.

Our trade partners do not reciprocate our trade encouraging practices and in fact use their trade laws and national customs to protect their domestic industries. It is time to recognize reality in trade.

5. TAX AWAY GREAT FORTUNES AND GREAT INCOMES - Huge concentrations of wealth and annual income harm our economy by diverting money away from risky investments in economic growth and into safety seeking investments.

It is well known that the primary criterion of investing is safety of principal. People with large amounts of money are risk averse and do NOT wish to risk that money in new ventures, preferring to find safer investments.

Our economy will grow faster and we will be more secure when we do not have extraordinarily large income and wealth concentrations. Then will capital have greater incentives to take risks and create growth.

6. CREATE NATIONAL INDUSTRIAL POLICY - The United States should create a blueprint for our future economic growth. We should establish industries in which we wish to participate and then establish policies which encourage and protect companies in those industries.

Industries should be chosen on the basis of the likelihood that they will create good jobs in the future.

Critics argue that the government is unable to make sound predictions in this area since even private companies have difficulty doing so.

While that may be, there are countries which use this practice with great success and many more countries which are beginning to establish this process. The government of South Korea established this practice in the 1950's and was able to convert a nation of rice farmers and fishermen into an industrial powerhouse.

7. EXPAND PUBLIC UTILITY INDUSTRY DESIGNATIONS AND REGULATE EACH DESIGNATED INDUSTRY WITH AN ELECTED COMMISSION - There are some businesses which require a government protected monopoly for some reason ; for example, some industries like electricity generation and distribution require such huge capital investments that investors will not make that investment unless assured of freedom from future competition.

In these cases it makes economic and national security sense to regulate the prices charged to the public so that the company earns a normal profit, which allows a return to investors sufficient to ensure survival and uninterrupted service provision, but does not allow for monopoly profits.

Any industry whose products or services are regularly used by more than one third of the population and in which there are few suppliers is a candidate for public utility designation.

8. ENSURE FINANCIAL SYSTEM STABILITY BY RESTORING GLASS-STEAGALL - Stability in our financial system is required for our national security.

We know absolutely that the financial system cannot regulate itself without great harm to our economy.

Under Glass-Steagall we had stability for 50 years.

Restore it.

It is the only choice.

9. KEEP SOCIAL SECURITY AND MEDICARE - Not only do these programs provide dignity to people who have worked all their lives, they provide significant income to help support Aggregate Demand.

There are pressures to reduce or destroy these programs. The stated reason is the budget deficit, but the real reason is simple greed from the financial system.

Countries which have chosen to reduce pensions and healthcare because of a fiscal deficit problem are now experiencing recessions and high unemployment.

No country in history has been able to cut its way to prosperity. Many countries have found prosperity by borrowing in bad times to sustain employment.

10. INSTALL SINGLE PAYER HEALTH CARE - Regardless of the outcome of the Supreme Court's decision, there is no place for profit in the healthcare system. If we can eliminate insurance company profits, we can pay for our healthcare with current expenditures.

11. MANAGE DEBT TO BORROW IN BAD TIMES, PAY BACK IN GOOD TIMES - With a properly functioning national government, we can use fiscal policy wisely to keep full employment and growth achievable.

The Federal Budget is the flywheel of the economy - it prevents stalls when the engine's speed declines.

12. REDUCE MONEY REQUIRED FOR NATIONAL ELECTIONS BY REQUIRING BROADCASTERS TO PROVIDE FREE POLITICAL ADS - One of the reasons for our corrupt political system is that elections are very expensive.

But, most of the money goes to running political ads on broadcast media. Since broadcast media receives a license from the FCC to use their frequencies, we can require them to run free ads as a condition of their licenses.

This would reduce the cost of running for office and, consequently reduce the opportunities for political corruption.

Other election financing reforms should be pursued as well.

13. RESPECT BUT DO NOT FEAR OCCUPY PROTESTORS - Occupy protestors are about 20% of our people who have been harmed by market failures in our system. They are exercising their Constitutional rights to seek redress of their grievances.

Creating a rigid, militaristic response to a peaceful protest is the opposite of our founding principles.

If they follow our past history of peaceful protest, they may well be the force that helps correct our imbalances.

In conclusion Barry, My Liege, we pray that you will remember these issues after you finish discussing any limited election issues such as gay marriage and student loan costs.

Your faithful servant,

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