We are at a crucial time in our country’s financial history. The Senate passed the $700 billion bailout plan on Tuesday, and the House votes on it Friday. We are supporting an alternative plan that will keep our nation from going even deeper in debt.
We need everyone’s help! Here are 3 steps you can take to change our nation’s future:
If you pray, pray for them to resist a spirit of FEAR and to embrace WISDOM. Even if you don’t like them or agree with them, pray for them and tell them you are praying for them. There is a spirit over this problem that must be broken. Also, most of the media personalities are afraid as well and that is affecting their reporting. Pray for fear to be removed from them; they are making this worse.
Send The Common Sense Fix to your Representatives and Senators and tell them how you expect them to vote, and that if they put this nation in $700 billion of debt, that you will vote them out. It’s their job to listen to us! (Whichever presidential candidate or political party that champions this plan from their leadership down will likely become the next president. That is because this plan fixes the crisis while going along with the wishes of the vast majority of Americans.)
- First, read this page (PDF)
- Next, copy the info on this page (text file)
- Then send it to your Senators and representatives by copying and pasting the text in the web form you’re sent to.*Note: If their websites are down, that means we’re making a difference! Keep refreshing the page until you get through. You can also go through Congress.org, though we don’t endorse this site.
Send a link to this page to everyone in your address book and tell them to urgently follow these 3 steps TODAY. The more people we have supporting this and contacting their elected leaders, the more likely we can turn our economy around!
More Info:
- Share your thoughts and read other’s comments
- Get a list of Dave’s media appearances this week
- Find out how your state reps voted for the $700 billion plan
- Hear author Dave Ramsey’s rant about it
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Ramsey’s Common Sense Fix is brilliant. Simple. Low cost. No Congressional bribing and treacherous earmarks. It involves establishing a government-backed special insurance program for subprime mortgages and mortgage bonds, temporarily suspending some of the worst Sarbanes-Oxley regulations (mark to market), and eliminating capital gains taxes.
If these measures are implemented there will be a flood of capital pouring into US markets. The current liquidity problem locking up the system would disappear almost immediately.
The best part…cost upper bound of $50 billion. Not bad considering the alternative is a $800+ billion bohemoth bailout, comprised of over $100 billion in earmarks and other non-bailout related incentives (including a healthcare plan!).
Last night I wrote my Representative (CA), Henry Waxman. This morning I was (not) pleased to get a (pre-canned) response encouraging me to sign up for his email list.
Hopefully the message got through. First time for me to contact my congressman!
How much is $700 Billion, really?
I’ve been hearing this number so much lately that it flies right by. Just to see how much this means to me, I busted out my calculator this morning.
– There are approx. 180 million taxpayers in the U.S. (300 million people, but 40% don’t pay taxes)
– $700 Billion / 180 Million = $3,889
This year, I had hoped to contribute $4,000 to my Roth IRA. Instead, I guess I’ll just give it to Barney Frank.
Nick, you can’t expect important government representatives to listen to you, can you? They are too busy for that. Don’t hold your breath for a personalized response. I’ve written to U.S. senators countless times in California and never once received even acknowledgement that they read my messages. I received canned responses they send to everyone.
The capital gains tax step makes no sense… the other step (the mortgage insurance backed by the state and regulated rates with all fees canceled) is great. It is also socialism, but what the heck, what’s a little socialism between friends?
Your friendly socialist
Traverse Davies.
Ha, a little socialismo between friends? You can probably guess that that part of Ramsey’s plan was my least favorite, but I can see the necessity of something similar. At least his projected costs were an order of magnitude lower than the monstrosity that was actually passed!
Capital gains taxes increase the cost of capital, decreasing demand for investments. Lowering cost of capital and increasing investment demand will increase liquidity.
See, it seems that the economic data of the last oh… century or so indicates that when you increase the capital gains tax and spend the proceeds on social programs, the economy as a whole actually gets better. In the meantime, every time the capital gains tax is reduced (it is always at the same time as social spending is reduced) the economy starts to go bad. The exception is when some outside condition (the discovery of a new market for example) brings in fresh sources of capital… but even so, cutting social spending always precedes economic woe. Not causation obviously, but then again, economics kind of forbids causation (there are no formal experiments in economics, and formal experiments aren’t even possible, how do you set up the control economy?)
What is certain is that the closer to unregulated capitalism an economy gets, the more it collapses, at least historically.
Traverse,
The issues of capital gains taxes and social spending are separate. One does not have anything to do with the other, except that levying a tax on capital gains is one method of many that can be used to fund social spending.
Capital gains taxes are a drag on the economy, since they increase the cost of capital. And I would be careful to say that historical data supports the concept that socialistic redistributive policies increase economic prosperity. There’s quite a bit of evidence to the contrary, including a long list of failed states.
The thing is, yeah you can go too far with socialism, but if you look at the history of countries like Chile, Argentina (in fact the entire southern cone of South America), the US, Canada, Australia, the UK, most of Asia, you get a very, very different picture from the mainstream view. It seems there is a balance and the balance seems to be pretty far on the left side of the spectrum, where the economy is most inclined to serve the needs of the populace. See, GDP is a really bad measure. If Bill Gates and a homeless guy are the only residents of a country, the country has a wicked GDP, but half the population is homeless.
However, even that hasn’t been the case in societies that have embraced the work of Friedman. In fact, the GDP has always gone down, even as the wealth has become increasingly imbalanced.
As I said, economics is not a hard science. Friedman’s theories have no proof in the scientific term (of course most things don’t) but they also aren’t falsifiable… neither is Keinsien economics, but at least it has a good track record. Friedman’s greatest success was Chile under Pinochet… until you discover that Chile never nationalized its copper mine and ended up re-nationalizing most of the industry it had privatized because the entire economy had fallen apart… and it never recovered the same median income or standard of living, not even close.
I have never seen a failed state that had a blended democratic socialism with moderately free markets that failed for economic reasons. Chile failed by revolution, so did Argentina. Nicaragua failed due to US interference when it looked like it was going to do well, and didn’t give in to economic pressure until hurricane Mitch. Then it started to fall victim to the usual pattern of laissez faire based philosophies.
Sorry, I do go on… I’m just very passionate on the subject.
Traverse,
This may just be the alcohol talking, but you have some really good points. The GDP-prosperity measure is a good one to ponder. I hadn’t considered that before, but you’re right, as income distributions gain kurtosis the measure becomes less meaningful. A society with a few super rich and multitudes of extremely poor is not a good one.
A state of blended socialism is almost always transitory, at least in democracies; entrenched beneficiary groups do not ever vote themselves less benefits, and the process is stacked such that the road to political power comes through promising increasing the beneficiary pool. This is at least the case in America. We do not adequately constrain the legal scope of authority for our federal government. It will ultimately collapse under the weight of combined socialism and imperialism.
The only potential case for coexistence of relative freedom and mild socialism is a carefully crafted, rigid legal structure that delineates the maximum authority of government. As long as it is impossible to cross a certain threshold, then it is reasonable to think that there can exist a minimal safety net. The key is to prevent people from being able to vote themselves benefits, so unconstrained democracies do not fair well here. I have never seen such a government, but concede that one could exist.
One more point…I have never known a society to fully embrace the work of Friedman. There have been some that pay lip service to his principals of freedom, but never any that have truly implemented anything close to his ideal. He was a great man who honorably advanced the causes of peace and freedom. There have been few political leaders in our time with such honor.
The thing with Laissez Faire (or free markets in general) is that they are also always transitory. Chile actually went a fair ways along the Laissez Faire direction, before being forced to pull back. In order to do it, they had to suspend democracy.
In basically every case the only way to develop a relatively Laissez Faire economy was to suspend or subvert democracy, and the money always flowed out of the hands of the poor and into the hands of the wealthy. Imbalance is built into any free market based economy because it is impossible to have equality of opportunity in the real world. In the real world someone starts out with more, and uses that more to leverage even more of an advantage for themselves, and in the end you have government by wealth, which looks a lot like feudalism.
Friedman’s theories are based on models which actually fail on close scrutiny. They utterly fail to account for non-rational behaviour by large portions of the populations, but come one, if we were rational would Justin Timberlake really be a multi-millionaire?
I think there is a big misconception on Friedman’s ideals, and even of the pure definition of Capitalism. Capitalism is an economic system of free exchange, period. It has no mechanisms for political preference and unilateral advantage. It does not involve corporate or wealthy control of government, nor any bias for some at the expense of others. Historical feudal systems existed solely because of political oppression, which had an economic manifestation. Chile was a military dictatorship, extending into a politically repressive government system, so despite increased economic deregulation Pinochet’s system can never be categorized as Capitalistic.
The big shame of history is that pure Capitalism has never been achieved, yet has itself achieved such a bad reputation! People picture robber barons coercing fickle politicians, 18th century English mercantilism-fed imperialism, and other aristocracy-biased political systems as having something to do with Captitalismo. This is such a shame because Capitalism can only exist in a purely egalitarian politican system. And by that I mean a system in which everyone is equal under the eyes of the law.
As you said it is impossible to have equality of material means. It’s far too ambiguous a notion, and entirely unrealistic. First, do we define equality of wealth at a certain fixed point in time and attempt to enforce rigidity in that metric? This would mean that everyone must earn the same income, spend the same, save the same, and earn the same rates of return on invested capital. Since that is so far from the realm of the possible, and even further from any sort of ideal.
Next, a dynamic metric that is measured over time would still require a system necessary to ensure that the most capable/ productive/ambitious earn the same as the laziest/least capable. This would also entail an enforcement body to ensure everyone consumes the same resources and compulsorily saves the same amount. This is truly tyrranical government!
Even the consideration of such systems of forced social engineering begs the question of why some feel it is acceptable to use force to coerce some to conform to their wishes? There is no set blueprint for how we must live, so why try to force an artificial one? I find human life to be far too precious to waste in social experimentation.
Rather than turning to a coercive entity to force the world to be more pleasant, I think our efforts are better served through peaceful means, i.e. charities, personal donations, time committments to help others, and even business ventures that create jobs and wealth. Good can be achieved through peaceful means.
And herein we have the key difference between my stance and yours. I don’t believe capitalism is possible and that every step towards it that doesn’t fully achieve it actually makes life worse on the balance. Pure, unfettered markets are wealth collectors in reality due to two factors:
1) People do not act in rational self interest… the assumption of Friedman is that rational self interest will cause the market to respond to the needs of the populace… but the populace often acts against its own self interest.
2) Unless there are limits placed on power, any excess wealth ends up in the hands of someone who wants power over other people will be used to achieve that power, often through the accumulation of wealth. Basically any truly free market system made up of human beings will end up with robber barons, but not until it has made its way through feudalism and government has been introduced.
Friedman’s vision is as much a Pollyanna fantasy as Marx’s, and both were willing to go to some pretty scary lengths to achieve their ends (read Naomi Klein’s The Shock Doctrine for some detail on ways that Friedman was less nice than he appeared to be in public).
Finally, capitalism has the nasty reputation it does because when people have tried to implement it they have always done so at the expense of the poor. From New Orleans and the Charter Schools experiment to the canceled community elections in Iraq to the fishing villages of Sri Lanka, the poor have always been brushed aside to make way for a free market economy, told that they will have to suffer for just a little bit and then the market will make things better. It never does.
Robber barons, feudalism, and other wealth imbalance induced inequities can only exist when power can be purchased. Without the ability to buy power wealth cannot be linked to injustice. Injustice is only caused by one party exerting force upon another. That’s why I maintain that Capitalism cannot produce injustice because it is merely the economic manifestation of a free society.
The term “free market” has acquired a bad taste for some reason, I think mainly because of association with wealth imbalance and ability to buy power. In that case then I entirely agree with your position that free markets are transitory. But strip the ability to acquire power through purchase and free markets are virtuous. How can a free society not be virtuous?
People will always make mistakes. The scary thing about free society, for many, is that they will suffer the consequences of those mistakes. Consequences are inevitable, a part of life, the only difference in socialism versus free society is that the consequences of bad decisions are collectivized, and spread amongst everyone (or a politically persecuted class…has often been Jews throughout European history, and is currently the wealthy in America).
The problem with socializing risk and bad decision-making is that realistic constraints are obscured; individuals who do not bear the consequences of poor decisions do not learn from their mistakes. The housing bust, credit crisis, and global economic meltdown are perfect examples. Large societies can bear a large amount of poor decision-making, but it always catches up. On the contrary, free societies relegate consequences down to the individual level, which avoids systemic issues. People learn from mistakes and ultimately act like adults. That is not a bad thing.
See, this is where I am unclear (or at least in disagreement). I have no idea how a free market system limits force in any way. If you can buy the cops (and in true laissez faire capitalism the only police are the ones you buy) you have force. If you own land and you can decide not to sell food to someone who doesn’t own land, how do you not have the balance of force?
What a free market system does is move the balance of power to an informal model, while a socialist system uses a formal model. Remember, Friedman’s theories have never come close to being proven so it is a matter of faith (not logic, because my logical analysis which is inevitably coloured by my perceptions differs from your logical analysis which is inevitably coloured by your perceptions… there is no absolute truth there) that they will behave as he has predicted. Markets are far too chaotic a system to predict with the kind of authority that Friedman and others from the Chicago school claim.
The only way I could see free market capitalism working would be if you removed the possibility of physical monopoly (impossible right off the bat) and made sure that at least the majority of people acted in their own interest, as well as starting with a clean slate… on day 1 everyone has exactly the same opportunities and since in a free market system opportunities are the result of wealth and education you would have to start everyone off with no education and equal money, give them the choice of education. Then you would have to kill inheritance, so that family dynasties couldn’t eclipse the rights of others. Then, maybe the system would work. Kind of like communism works perfectly if you remove scarcity. Neither system has any possibility of working in the real world, and in the real world neither has ever been enacted, but the attempts to create them have been disasters with the proponents endlessly claiming that this wasn’t the real thing, and if only we could change this, and that, and the other thing, the system would work.
Blended social democracy works… by virtue of a constant push and pull, the market types trying to push a free market agenda, the socialist types trying to push a socialist agenda and most people trying to make their way in life with the most joy and the least pain. When it becomes unbalanced in one direction or the other it tends to overcorrect… so expect to see a lot more socialist movements in the next few years. They will go too far, and then they will be brought down when things rebalance. Of course, that is completely ignoring peak oil, which will be a game changer.
I have thus far avoided using the term “laissez-faire” for the reason that it can be interpreted as a free for all, in which there are no protections on the individual. When I say “free system” I mean it in the sense that a governing body secures life and property, with minimal other functionality.
The closest approximation to this system was what was established with the early American form; a Constitution enumerating federal powers, and Bill of Rights safeguarding the individual. Here is where I am in agreement with you: it came with an intricate system of checks and balances to inhibit growth of power. This is absolutely critical.
So this being the case, the ability to exert force on others is severely curtailed. No one can physically violate another, and economic deprivation of property is restricted. Policing is left to government, so no amount of wealth can buy the ability to exert force upon others. Government is immune from coercive lobbying by wealth because it is restricted to a limited set of functionality. You cannot buy power in this kind of system because government does not have it in the first place; it is limited Constitutionally to defined authority.
I’ve heard the example of supreme monopoly posed as a counter to a free system, but I simply don’t buy it. To think that one person will acquire all property and refuse to sell output to anyone else is kind of out there. In a free system people enter agreements of mutual exchange, meaning value must be exchanged to acquire anything. To acquire land implies something else of value was furnished; this process should sufficiently limit extreme polarization of wealth. Producers will always need workers, who if not physically coersed through threat of force (which is not possible in a free system) must be compensated with a fraction of output.
A free system is best suited to ensure that those who don’t abide by reality will be out-competed by those who do. If someone refuses to sell to some group there will always be another who will. Global freedom of capital movements ensures that capital goes to those with ideas and capability, i.e. the ability to turn a profit. This motivation is blind to ideological persuasion, race, sex, creed, etc. It is the most egalitarian system imaginable.
I am very much opposed to the idea of property confiscation upon death. This is a philosophical perversion asserting that property belongs to the collective. It also ignores the notion that highly productive individuals might be better capable of deploying accumulated capital upon death than bureaucrats. This can either be in the form of charitable donations, philanthropic endeavors, and even just passing along to children who then decide how to use the capital. To think that any of us have a claim to such property merely because we happen to reside in the same political jurisdiction is wishful thinking.