Part V

Conservatives are all about excuses.  Waaaa!  Poor me!  Hunted at every turn by the wild eyed leftist hordes!  Poor me!  My way of life is under attack!

But when you press them for specifics, you find very little in the way of substance to back up their claims.  They’re mad because someone told them to be mad, and they accepted it without question, so once you separate them from the herd (or the radio, or the TV) and they are divorced from the talking heads giving them their marching orders, they often can’t really say WHY they’re mad.  Only that it must have something to do with the leftists.

Or the terrorists.

Or something.

One of the things they love to rail against is the fact that the top 1% of income earners in this country pay an inordinately huge percentage of the total tax bill (they’ll often cite 50% as the figure, but this is actually too high).

My response to that is…yes.  As they should.  After all, they reap the biggest benefit.

Usually, when you say something like this to a Conservative, they’ll get very red faced.  Some may actually foam at the mouth.  A few have been known to have heart attacks before they can compose to speak, and WHEN they speak, the first words from their mouth will be some variant of “WHATTHEHELLAREYOUTALKINGABOUT!?!?!  What about the welfare mothers skimming the system?  Huh?  What about them!?”

What our Conservative friends do not understand (intentionally or otherwise) is the fact that the tax bill helps to maintain the economic equilibrium necessary for capitalism to continue to function smoothly.  Remember, one of the primary ingredients needed for capitalism to succeed is strong, well-defined property rights…this implies a sufficient level of government control to keep track of and maintain those rights, which includes a robust policing function, and many other related services.  Hand in hand with this (as evidenced by looking at our own financial history, and that of Western Europe), is the need for regulation of banks and financial markets, and of businesses themselves, in order to prevent them from unduly harming our citizens, our municipalities, and our environment.  If these controls are not in place, mayhem ensues (again, this is not idle speculation, this is part of our historic record).

Given that today’s wealthy GOT wealthy on the basis of the system currently in place, it is entirely self-evident that it is in their best interest to maintain it (as it is, in point of fact, the vehicle that enabled their wealth in the first place).  Standing in opposition to the natural (and quite understandable) desire to keep the game just as it is, there’s the idea that a great deal of money to be saved by doing as little as one can get away with, and still maintain the current game, hence, the constant desire to push the tax liability lower, and place more burden on the lowly “serfs.”

The problem with that, however, is that it can end badly for the wealthy if they guess wrong (and historically, it has on numerous occasions).  If you take too much from the masses…if you press them too severely, they reveal themselves to be the mob, and when pressed to extremes, the mob will do what the mob always does.

Over the years, the very wealthy (those financial dynasties stretching back generations) have gotten quite good at gauging public sentiment…just how much “give” there is in the system, and they play to that.  One of the most powerful and compelling tools in their toolbox is to convince middle class people that if they but support the policies favorite the wealthiest members of society, they themselves will wind up with a bigger piece of the pie.

The truth, of course, is that in the overwhelming majority of cases, when a member of the middle class “makes good,” it is invariably by virtue of his or her own hard work, and has little to nothing to do with the policies the wealthy wanted them to support in the first place.  This fact is often obfuscated, and with good reason…it keeps a steady stream of newly minted Republicans coming to the trough, which is precisely what they’re hoping for.

What the uber-rich understand is that at the end of the day, the truth is that there are more of us than there are of them.  No matter how many people they buy off, they can never really be sure where the loyalty of their mercenaries lie, and because of this, they have to play a bit of a balancing act.  They have to throw the huddled masses a bone, sure.  Not too big of a bone, of course, but big enough to keep them from lighting their torches and grabbing their pitchforks.

We have a few examples of that happening in history, and it never ends well for the self-described “Masters of the Universe.”

Go figure, huh?

So yes.  The richest of the rich pay the most.

There’s a reason for that.

It is one of the bedrock truths of our history, and they forget it at their peril, because if pressed, the mob will do what the mob always does.

Rely on it.

If you take away all hope and all opportunity from a large group of people…if you push them into a corner until there’s no place left to go, then God help you if they get organized…

More Corporate Shenanigans

If you start talking business with a Conservative, and you mention how awful it is that more and more of our jobs are being sent overseas, said Conservative will likely agree with you, because it IS awful.  And yet…they cannot agree too strenuously, because the companies doing the worst of the off-shoring are also central to the Republican Base, and you can’t rock that boat too much, lest the ship risk capsizing, so most Conservatives will only go so far in condemning the practices of large companies, falling back on the tried and true line that “companies have a right to survive…they must be allowed to do whatever is necessary to survive.”

Okay…let’s say I agree with that (I don’t, but am willing to pretend that I do in order to see where that line of thinking leads).

So…why do we make it illegal for companies to put underage children to work in sweat shops?  I mean, could they not get by with paying the kids a smaller wage than they pay adults?  And in turn, would this not increase their profits, and make it easier for them to survive?

Or how ‘bout opening Crack Houses?  The Ronald McDonald Crack House, just down the block from the local Tattoo parlor.  Why not?  Crack has a fantastic profit margin, yes?  Surely the McDonalds corporation would be in a much stronger financial position if it were allowed to pursue this option.

For that matter, why both with financial or environmental regulations at all?  Do they not simply degrade a company’s ability to compete in the global market?

And yet…we DO have these laws and protections on the books.  As has been discussed, these laws exist precisely because if they didn’t, companies would line up to do everything above, and more.  Again, this isn’t idle speculation, we know it for a fact, because before these laws existed, the companies did as they damn well pleased.

Given that nothing is fundamentally different about human nature, there is no expectation whatsoever that if these laws were suddenly repealed, that corporations would, all by themselves, continue to be “good citizens.”  In fact, even with the laws we currently have on the books, big companies can hardly be considered good citizens.

Does a good citizen take millions (and often tens of millions) of dollars in tax credits and free construction to have a factory built, and on the same year that the tax-free holiday expires, shut the factory down and offshore their operations, throwing hundreds of productive Americans out of work?

Is that the mark of a good corporate citizen?

These cities and towns all across America have made investments in their future in good faith (the offering of these various incentives), only to have them thrown back in their faces time and time again by big business, and yet…we don’t complain.  We’re not outraged.

We should be.

Here’s a little lesson in economics for you.

Do you want to know why companies are leaving our shores for China?

If you’re a Conservative, you’ll probably say that it has everything to do with all the regulations we have in place, or health care reform, or any number of other reasons having to do with progressive-minded policies aimed at helping the masses.

The reality is that China has an unbeatable advantage that we can’t do a thing about.

China’s currency is pegged.  Its value is not determined by the market.

Now, normally what would happen in a truly free market is this:  China’s currency is undervalued with respect to ours, so factories close and jobs start moving to China.

This places an upward pressure on wages, which must rise.

The value of China’s currency increases in tandem with this as China becomes an increasingly attractive place to invest.

At some point though, China becomes a victim of its own success.  As the value of its currency rises, the advantages to moving to China begin to decrease, and at some point, an equilibrium is reached.

This mechanism is what creates the notion of Comparative Advantage, upon which Adam Smith’s Free Market is based.

But the Chinese aren’t playing that game.

By keeping their currency values artificially low, and coupled with their enormous population, China can produce anything at lower cost than anybody else on the planet, every time, and they can do it for decades to come.  Thus, the whole idea of comparative advantage is destroyed by China’s absolute advantage.

India enjoys a similar position, and will do so for an even longer period of time (they are, in fact, on track to surpass China’s population in the reasonably near future).

THESE are the reasons our jobs are vanishing overseas.  These and no other.

We could eliminate taxes from businesses entirely, and strip away all regulation pertaining to businesses in this country, and we still would not be able to overcome China’s absolute economic advantage with the playing field as it is.

You can dance around the issue all day long.  You can throw out one objection after another until your arms give out from exhaustion, but you cannot escape or avoid that fundamental truth, and it overshadows everything else in the room.

So where does that leave us?

Well, big companies have showed no signs of stopping the off-shoring trend.  That’s continuing at a frantic pace, and in fact, the biggest recipients of corporate welfare also tend to be the biggest off-shorers and out-sourcers (or, to put it another way, we are PAYING big business to economically gut the nation).

Welcome to the glories of the Republican Base.

Fortunately (and this is the reason that the unemployment numbers aren’t worse than they are), over the past several years, there has been a resurgence in small business owners, and smaller companies (those employing fifty employees or less) employ the greater bulk of America’s workforce.

This is much more in keeping with Adam Smith’s Free Market, and historically, smaller businesses are MUCH better corporate citizens, and have much stronger ties to the community.

This is, in fact, where our economic future lies.