Whack of the Week: Santorum

My whack of the week is Rick Santorum for his view on higher education.  Recently on the campaign trail, Santorum blasted Obama for wanting people to go to school and suggested that higher education, because he considers all of it "liberal" should not be supported by the government.  http://bit.ly/xFcDwk.  Is he serious?  How can we compete in this world with just plumbers and janitors and personal trainers (although I love and respect plumbers and janitors and I am a personal trainer ;-)  How out of touch can he be to suggest that higher education is a liberal plot to remake Americans in Obama's image???  Our higher education system is one of the best in the world, and having been through a whole line of them (fortunately for my knowledge and unfortunately for my debt) I know that they teach knowledge not some propaganda.  And if liberal is another word for educated... that means that conservative means uneducated and closed minded.  I do not believe that, of course, but drawing the connection between education and liberal values is ridiculous! 

The other issue he has brought up is that our public school system eats 11% of our budget (as opposed to over 40% spent on military) and he thinks it is too little, because we still have problems with it. So he wants to eliminate Department of Education.  It seems like Santorum is deciding to wage the War on Education, in the same way that Regan started the War on Drugs.  Now, our public school system IS broken (though I certainly received good education from it.)  But it is not because we spend too much money on it.  It is because we spend the WRONG money on it.  In this century of globalization our public schools are still funded by property taxes in most communities.  This might have made sense in 1800s but it hardly makes sense today.  Because of this, poor neighborhoods have poor schools and rich neighborhoods have good schools, perpetuating and widening the educational divide between have and have nots.  Our strategy should be to nationalize the financing of schools, where every school gets the same funding, but localize what is taught in the schools, so that teachers can do their job and parents have a chance to adjust the curriculum.  Every other developed nation has public schools funded like this and that is why American public education is falling behind. 

What say you, Bill?

WHACK OF THE WEEK-Italian Politics

For the last week, I have been traveling in Italy. It is my last BC vacation (before child) and my wife and I are enjoying it.

One thing that I have noticed in Italy is that the level of messed up politics far exceeds that of US. Talk to Italians about their political system and you consistently get a Whack Em All sentiment. Their biggest complaint--corruption. Think about it-despite all of the political differences in US, we rarely bring out corruption as our biggest issue. To say it in another way- we in US argue about how much money government can spend and on what. In Italy the question is how much money reaches the treasury to begin with.

This issue of politicians siphoning money of the top is even worth in developing countries-serving as one of the largest reason for suffering economy. And when the population does not have faith in the government they are much more likely not to pay taxes. That is what we found in Italy-many hotels want cash only to avoid paying taxes, which again decreases money in the coffers, creating a vicious cycle.

So lets give our political system its due - Americans have more integrity and trust in their government than many other countries... for now.

     

Whack of the Week - Timothy Geithner

Recently, Treasury Secretary Timothy Geithner said that the wealthier individuals should pay higher taxes as a "burden of the privilege of being an American."

First off, being an American isn't a privilege granted by a benevolent government. It is our right by virtue of our having been born or naturalized here, and the government is there to work for us not the other way around. It's also an equal right. The homeless guy at the soup kitchen and the dot-com billionaire each have exactly the same right to call themselves Americans and neither one can be stripped of that because someone doesn't feel they are contributing their fair share.

Ideally, I'd like to see a flat tax. That's the most fair to everyone. If you make a dollar, you contribute X% to the running of the government regardless of whether it's your first dollar or your millionth. I don't know whether or not such a flat tax would be practical (I've certainly seen people who've looked more closely at the numbers than me argue both sides.) Even if it's not practical, though, it's still the most fair, and we should be striving to get as close to that as possible. Instead, tax policy is being used to divide the country along class lines, and that never ends well. So, instead of just talking about how the wealthy should be paying more, let's look at comprehensive reform of both tax and spending policy and find a way for everyone to pay a fair share for a sustainable set of government services.

I think you're mistaken there, Leo. Google, Facebook and I grab a brewsky every other Friday (Google likes Bud Light, but Facebook's all about the micro-brew).

You have some interesting points, and I think there's an interesting debate to be had around whether or not corporations should be treated as people. There's also an interesting debate around money in politics. I'm going to take a little different angle, though, because I don't think that's what Romney was trying to say (although I may be mistaken, I skipped the last Republican mind-melding session because Dancing With The Stars was on). My take on the point he was making is that ultimately all the money that goes into a corporation ends up going to people, and therefore anything you do to impose higher costs on corporations will ultimately affect people.

Also, Romney didn't make the point, but I think it's also worth pointing out that the people most affected by those higher corporate costs won't be the wealthy billionaires running the big multi-nationals. Higher costs will get passed on to the middle-class consumers, and they will get passed on to the shareholders, the majority of whom are mutual funds and pensions (and a 10% loss to someone's retirement account is going to be a lot more impactful than a rich CEO who makes $90 million instead of $100 million). They will also disproportionately impact small businesses. Even if you focus higher costs toward the largest corporations you'll still end up squeezing the little guy because in many cases large corporations do a lot of business with small businesses and because of their size they're able to put pressure on those small suppliers to cut their margins to make up for higher costs elsewhere.

All that said, I'm not really going to defend our current corporate tax structure. We have one of the highest corporate tax rates in the world, yet our corporations pay one of the lowest percentages of net revenue, and there are lots of examples out there of corporations that made record profits and didn't pay any taxes. The problem is the system of tax incentives that we've created, where the government grants favoritism on some companies and tells them they don't have to pay their fair share. By doing that you not only have a system where some companies pay nothing and others pay at a usurious rate, but you also incentivize corporations to throw money into politics in order to get elected someone who will send the favoritism their way. If we were to instead lower our corporate tax rate to the same level as famously "low-tax" France or Sweden and pay for it by cutting all the special favors we'd not only have a tax structure that was more fair, I think we'd also see less intrusion of corporate money into politics.

WHACK OF THE WEEK

Today I am introducing a new type of post: A Whack of the Week.  This post will focus on a comment that a politician said that Bill and I think deserves a Whack. 

The first Whack of the Week goes to Mitt Romney.  He is getting a Whack for his comment in August in Iowa.  Here is the excerpt from Washington Post:
"'Corporations!' a protester shouted, apparently urging Romney to raise taxes on corporations that have benefited from loopholes in the tax code. 'Corporations!'
'Corporations are people, my friend,' Romney said.
Some people in the front of the audience shouted, 'No, they’re not!'
,Of course they are,' Romney said. 'Everything corporations earn ultimately goes to people. Where do you think it goes?' http://wapo.st/qJgMlt

"Corporations are people..."  There is so much wrong with this idea, that I believe it deserves a whack.  How can corporations be people?  Corporations are not animate, first of all.  I can't talk to a corporation.  I cant have a beer with a corporation.  I cannot date a corporation.  But wait, corporations pay taxes and people pay taxes, so therefore corporations are people....  Hmmmmm

But this is not just Mitt's opinion--this is the opinion of the US Supreme Court!!!  By approving the unrestricted donations by corporations, US Supreme Court basically said that corporations are people and therefore can donate as people.  This, of course, if why our political system is being bought wholesale by corporations and Super Packs.

And take a step back and consider this.  You are a CEO of a corporation, you are responsible to shareholders, or just to yourself.  You INVEST in products and new technologies to increase your bottom line.   WHY would you spend a penny on an individual politician if there was not a strong Return on Investment for it?  They would not.  And if you invested in a venture, you would only invest again and more IF your investment gathered you dividends ABOVE what you have spent.  That means that corporations and billionaires who plow millions into politics are getting their money's worth.  Where does it leave voters?  How much more powerful is a corporation than an individual citizen?  What happens when corporate greed goes unchecked?  Can you see the correlation?

So Mitt is right-in US corporations are considered people, but I argue that this is AT THE EXPENSE of the real people.  The only way to solve this problem is to take the money out of politics.

Hello World!  Leo here.  Great discussion is happening already, so keep it up! 

Bill, thanks for the thoughtful post.  I have to admit, I had to reread it a few time to get the full theoretical flavor.  If you boil down your argument, it is one that has at its center the belief that individual rights outweigh the social good.  My argument is that often social good is more important than individual rights.  But when it is all said and done, it is THE BALANCE between these two extremes that makes for good governing.

There are 5 areas where large scale projects are too big and too critical for a country to be left up to free market. These are healthcare, education, law enforecement, infrastructure and the military.   They just DO NOT FOLLOW the classic economic rules of supply and demand.  These are the 5 areas where we need strong government.  That said, the process of governing these 5 areas has to be transparent and constantly under discussion.  Taken too much into a socialistic system and the process will break down as well (think of my homeland, USSR!)

Leo,

The three examples you give (slavery, women's vote, civil rights) actually all fall into my exemption to incremental change for eliminating governmental violation of people's rights. For me, human rights fall into a different category than governmental policy. Legitimate governments govern at the behest of the people and as such have no mandate to prevent people from freely exercising their rights. If a government is violating people's rights, it is doing so illegitimately (because it has no right to do so) and therefore should stop immediately. Incremental change in this case makes no sense because a lesser violation of people's rights is still a violation of their rights and therefore illegitimate behavior for a government.

A good analogy here would be a person who is embezzling money from his employer. The theft is illegal and morally wrong. When he is discovered, he should be forced to stop embezzling immediately. He must stop because any ongoing embezzlement (even at a lesser rate) would continue to be a violation of his employer's property rights. However, that doesn't mean that there aren't unintended consequences to forcing him to stop immediately. The employee may have taken out a mortgage using falsified documents that he has been paying with the money he is embezzling. When he is no longer allowed to embezzle he won't be able to pay the mortgage and the lender (who acted in good faith and had no idea the money was stolen) loses its investment because the loan is defaulted. In this case though, we accept the negative consequences to the lender because we do not consider theft to be legitimate and therefore stop it whenever it is discovered. It is the same with government, if it is violating our rights it should stop, damn the consequences.

I think, though, that at this point it might be a good idea for me to define what I mean by a right. When I say "right" here, what I'm specifically referring to is the concept of natural rights. Natural rights are universal and inalienable, and are inherent in our nature as independent moral agents. The specific things that qualify as rights is open to debate, but there are a few minimum requirements that must be met for something to legitimately qualify as a right.

1. Free exercise of a right must not violate the rights of someone else. It would be illegitimate, for example, to say that I have a right to force you to follow my religion.
2. A right must not force action on someone else. For instance, I cannot have a right to daily free Pearl Jam concerts.
3. As a corollary to #2, a right cannot be actively provided by the government. There are many legitimate and valid government services, but it is not my right to have them because they require the use of limited resources and therefore proscribe others to give up some of their resources to provide me with the service. If those resources weren't available then the government couldn't provide me with the service. But since I have said that it is illegitimate for a government to limit the rights of its people then a government that didn't have the resources to provide that given service would become illegitimate. Without the government to provide the service we would still be absent the service. Since natural rights exist even in the absence of government, it is therefore illogical for any government service to be a natural right, regardless of how good an idea it may be.

Now that I've made it clear what I mean by a right, let's go to your comment on the health care debate. I would argue that people have a natural right to seek health care, because it is illegitimate for the government to deny me the right to attempt to cure any sickness or injury that I may receive. It is not, on the other hand, a natural right to receive health care, because that requires a doctor to take action. That means that health care falls under the umbrella of policy not right. That means that I do in fact feel that it should be fixed incrementally (and I do agree that there are things to be fixed). A massive overhaul sounds like a good idea because there are lots of things broken that we want to fix, but such an overhaul would be just as likely to cause new problems as it solves the old ones. By pursuing incremental patches to specific problems we can measure how those specific changes effect the overall metrics of the system and correct where necessary.

One more thing that I'd like to mention is that we have a powerful tool for enacting incremental change at our disposal here in the United States, in the form of our federal system of government. Since state governments are independent of the federal government they are individually free to try different solutions to problems. That actually gives us the ability to apply some degree of scientific method to determining what changes will work and what won't by measuring the success of states that enact a change vs. those that make no change (or enact a different change to address the same problem). When we apply changes (especially grand sweeping changes) at the federal level without state-level experimentation we lose our control and have a much harder time measuring the success of specific changes.