Thursday, 07 November 2019 18:40

A summary of key problems we face, and what to do.

What are the main social, political and economic problems we face today?

I think they fall into two groups, economic-political and cultural.

The economic-political issues are the continuing and still growing over-reach of government, both domestically and in international affairs.  Domestically, this means excess spending, taxing and borrowing by government at all levels since about 1960 – an excess that keeps growing every decade.  These fiscal problems are enabled to some extent by the federal monetary policy of printing excess dollars and thus inflating the currency.

It also includes the ever-growing excess in regulation of all kinds – health, safety, environmental and economic.  Plus government expansion into ever more sectors of the economy as a direct provider of services that would better be served by private markets.

The growing regulatory and intervention excess together make up the bulk of the modern administrative state; combined with excess government spending, it depresses economic growth.  Slowing economic growth means people on average are less well-off than they would be without these excesses.  That is, government excess diminishes aggregate human wellbeing – and also fairness.

Thus, from the 1960s to the Great Recession, we had real per-person growth in incomes of about 2 to 2.5 percent per year.  During that time, the growing government excess was offset by favorable trends in population growth, labor force participation, debt both public and private, foreign trade and international economic growth.  These trends are somewhat organic, but also greatly influenced by public policy.

In this century, all those favorable trends have reversed or slowed, and growth in government spending, regulation, etc. has continued.  So, for the last decade, our per-person income growth has been less than half of what we all grew up with.

Per person real growth at 2 to 2.5 percent per year means that incomes, wealth and overall wellbeing double each generation.  That’s a recipe for real progress – new medical cures, better diets, living standards of all kinds – and for general human happiness.

Growth at less than half those rates is a recipe for unhappiness, economic stagnation, political polarization and social upheaval such as we’ve seen in recent years.  It will continue for as long as we have slow growth.  And with continued government excess and the other problems driven by public policy, these problems may last for a long time.

A particular aspect will exacerbate these problems in the future.  Generous payouts for social security, Medicare, and pension and benefits systems constitute a transfer of income from young people to older folks.  These Ponzi schemes are, like all such schemes, unsustainable.  They will breakdown or blow up in the future, damaging many people, families and businesses, and producing more social and political upheaval.

What’s the government excess in foreign affairs?

With the collapse of the Soviet evil empire – which, thank goodness, we helped precipitate – our foreign and intelligence Deep State looked for new adventures to keep its numbers employed and growing.  The Deep State is the illegitimate child of the modern administrative state.

Certainly, Islamic-fascism is a major problem, but it doesn’t justify our continuous involvement in war in the Mideast and elsewhere, as favored by the Deep State. 

It’s also promoting more strategic responses to our next major international problem, the ever-aggressive Chinese state.  However, despite Chinese theft of intellectual property and similar aggressions, a trade war and tariffs are not the answer.  They diminish overall human wellbeing here and in China.

Cultural problems?

Participation trophies, trigger warnings, safe spaces, etc. get more attention than they deserve.  But they are the tip of the spear, reflecting a softening of society, a cult celebrating victim status, corrosive identity politics, and a deep sense of entitlement.  These, coupled with government over-reach in social and political matters, are leading to an inversion of fundamental historic values and rights such as freedom of speech and religion, due process and the presumption of innocence, and Second Amendment self-defense.

What to do?

First, live a good life as a spouse, parent, friend, neighbor and citizen.  Second, stay politically active to leave all our children and heirs a better legacy and life.  For their sake, don’t give up.

 

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Ron Knecht is a contributing editor to the Penny Press - the conservative weekly "voice of Nevada." You can subscribe at www.pennypressnv.com. This is an edited version of his column which has been reprinted with permission. 

 

Published in Opinion

If the tax plan presented by Donald Trump and Republicans is adopted, the average American stands to benefit very little. According to a new report by the nonpartisan Tax Policy Center, four-fifths of American taxpayers can expect their after-tax income to increase .5 percent or less, while the top fifth of earners would see a three percent increase in after-tax income.

The study also found that 80 percent of tax benefits would go to the top one percent of American earners. Households making more than roughly $900,000 a year would save $200,000 on average. The top one percent of American earners can expect a tax cut of 9.8 percent between now and 2027. Repealing the estate tax would cost the federal government $240 billion in tax revenue over the first decade, most of which would stay in the pockets of the super rich.

Big businesses stand to benefit from the Trump tax plan, too, thanks to a decrease of the corporate tax rate from 35 percent to 20 percent. But businesses that rely on debt to finance their investments, like real estate companies, private equity firms and financial companies, will likely see costs increase, because Trump’s tax plan proposes limiting the deductibility of corporate interest.

Realtors have been especially opposed to the Trump tax plan, because while it preserves the mortgage interest deduction, fewer people would benefit from itemizing their mortgage interest given the plan’s proposed increase to the standard deduction, which is closer to a 15 percent increase than a doubling of the standard deduction. This could make homeownership less attractive and hurt the housing market.

High-tax states like New York and California would be especially affected by Trump’s plan to eliminate the state and local tax deduction, which allows taxpayers who itemize to deduct property, state and local taxes. Congressional Republicans in high-tax states have already expressed their concern, so Trump’s tax plan might not pass without the state and local tax deductions being preserved.

Who is paying for these tax cuts for businesses and the super rich? The Tax Policy Center found that a majority of households earning between $150,000 and $300,000 would pay more in taxes under Trump’s tax plan, as would almost 30 percent of Americans earning between $50,000 and $150,000 annually.

Trump’s tax plan also doesn’t come in under budget. The tax plan would increase the deficit by $2.4 trillion over the first decade, and by $3.2 trillion over 20 years. And while the Royal Bank of Canada thinks Trump’s tax plan will raise gross-domestic product by .5 percent annually, even if that were sustainable over the next 20 years, Trump’s tax plan still increases the federal deficit by $1.252 trillion.

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Published in News & Information