Politics as Usual

Politics as Usual

Most of my friends describe themselves as Republican Conservatives. I suspect they view me as at least some form of Liberal. I have real problems with “labels”. I do not view myself as either Democrat or Republican or Conservative or Liberal. I am not a supporter of the two-party system. In that regard President Washington and I are on the same page (refer to his farewell speech). The two ruling parties are unindicted co-conspirators responsible for bankrupting our country.

With regard to my political views I come very close to the principals espoused by the libertarians. That said, I like to think I am “issue” oriented and hope to rely on “facts” when establishing a position, and not align with the “party line”.

I believe that less government is best government. I am extremely conservative when it some to fiscal issues. Both parties have a history of spending money that we do not have. The national debt and unfunded liabilities are unbelievable. We have mortgaged the future for our citizens with absolutely no plan to recover.

Everyone agrees that our government is not efficient and the facts show that we pay federal government employees at a rate fully 50% above the free market rate for comparable jobs. Despite this, studies have shown that productivity among government employees lags far behind that in private industry. My opinion is that achieving a 20% reduction in employee costs could be easily achieved by addressing both rates and productivity without decreasing services. Whom in our government is working on this?

 

Almost everyone agrees that Defense is important. I completely agree with providing the highest level defensive system. Where I vary with many of my friends is on how to accomplish this. My view is that it can easily be accomplished with-in existing budget limits. Having been in the military I can assure you that the same malaise the infects the other government departments is alive and well in the military. My belief in the 20% reduction factor would also apply here.

While I believe in an extremely effective defense, my views on offensive military operations are quite different. I do not support the idea of being the “World’s Cop”. We have spent many Trillions of Dollars on the civil conflicts in both Afghanistan and Iraq. We have sacrificed the lives of countless men and women. The vast majority of our citizens realize that we have to pull out of these conflicts at some point, but what is the cost of continuing, both in lives and $? What will these countries revert to when we finally do withdraw? Most now realize that Vietnam was a huge mistake, but we tend to repeat this insanity.

I completely agree that we need to attack terrorism where ever it exists and is supported. In that regard I favor “surgical strikes” with small or no commitments of bodies. I would hope that we could move in the direction of using technology rather than putting our men and women in harm’s way whenever possible.

Our National Debt – Update

Our National Debt – Update

I like to keep track of our debt since it the Elephant in three rooms (Oval office, the House & the Senate). It is our most significant financial issue and one which none of our elected representatives are willing to address. The solutions are easy, but it will be painful which is why no “career” politician will pursue them.

Now that the Republicans control the Executive & Congress you would expect that we would start to slow down the rate at which the debt is increasing. If you believe that, then you would be wrong. The National debt is currently increasing at the rate of $1 million every 50 seconds. It now stands at $21 trillion. The annual deficit is actually accelerating vs 2017.  President Trump is on schedule to set new budget deficit records:

The Total Actual plus Budgeted (projected) for the next 4 years = $5.683 trillion, almost as much in one term as Obama accumulated in two.

I am not taking sides politically as my view is that both the Dems & Reps are in this together. Ignore what they say, look at what they do. A significant contributor to the runaway debt is the recent tax cut. What we are doing is borrowing the money to fund this tax cut.

President Obama actually did the same thing in 2010:

In 2010, the Obama tax cut (an extension of the Bush tax cut) added $858 billion to the debt in its first two years. Obama increased defense spending, adding as much as $800 billion a year. Federal income decreased due to lower tax receipts from the 2008 financial crisis which was a result of the financial industry’s mismanagement during the President Bush terms.

Tax changes are always just a method of income redistribution. The only real difference is in who gets what. The problem is that we primarily fund these cuts out of borrowings which increases the size of the elephant.

The redistribution formula of the current tax cut is extremely complicated, but in general terms only about 20 – 25% of the funds end up in the pockets of the middle class and overall is the equivalent of a 2% pay increase. The vast majority of the benefit is going to the wealthiest segment and to corporations.

If tax payers had to payoff their portion of this debt it would require over $173 thousand each and it grows larger every day.

A significant measure of the financial health of country is the ratio of debt to GDP. Many were dissing the Greeks when they were facing bankruptcy at a ratio of 1.8 to 1. They were very lucky to have the EU to bail them out. Our current ratio is 1.06 to 1. The most optimistic projections for growth in GPD over the next 20 years is 3%. There are others that predict the new average real growth norm will be in the 1 – 1.5% range. Using a mid-point of 2% (inflation adjusted) and the current growth rate of our debt at 5% we will be approaching the level of the Greek financial status by 2050, if not sooner. Who will bail us out? Our grandchildren? China?

China: Communism or Capitalism

 China: Communism or Capitalism

I had been wanting to visit for quite some time. My folks visited there about 20 years ago. When I asked dad about the trip he made the comment that China was positioned to dominate the world in the future. At the time that comment seemed ridiculous to me, but I was curious and I valued my dad’s opinion. In the Fall of 2017 we discovered a travel deal to China that was just too good to pass up. It was an eleven day fully guided tour with airfare (it turned into a 13-day trip at the same price owing to a mix-up in flight schedules). It was a great trip that included numerous fully guided tours in five cities and accommodation in 4 & 5-star hotels.

The government is still stuck in the quagmire of Communism which is much less a socialist approach and more akin to an authoritarianist. Authoritarianism is a form of government characterized by strong central power and limited political freedoms. The official policy of the government bans access to numerous websites including You Tube and Facebook. However, our guide assured us that it is common knowledge among the masses that there are fairly easy “work arounds” that provide access. However, Facebook is not that popular as they have their own version called “Campus” (XiaoNei in Chinese).

It did not take long to understand that capitalism is alive and well in China. One factor in the amazing trip value is that subsidies are provided by several Chinese companies. As part of the trip itinerary, tours of the following were provided: a pearl factory, a Jade store, a tea plantation, a bamboo factory, a Chinese Herbal Clinic & visits to three “markets”. All of these locations provided ample shopping opportunities. We did spend a modest amount at a few of these locations, but some in our group went all out! What impressed me the most was the marketing professionalism of the “presenters”. All were women, all spoke precise English and all were enthusiastic, animated, accomplished and convincing. It was evident that they all had received considerable and effective training. Almost all of these stops involved private, for profit companies. The only government owned enterprise was the Jade store and the same level of marketing professionalism was not evident.

Until the trip I was completely ignorant of Alibaba. This marketing giant is the world’s largest and most valuable retailer since April 2016, with operations in over 200 countries, as well as one of the largest Internet companies. Its online sales and profits surpassed all US retailers (including Walmart, Amazon and eBay) combined since 2015. E-commerce giant Alibaba broke records with sales of $14.3 billion on China’s Singles’ Day. It is the largest online shopping day in the world. I would say that capitalism is alive & well in China.