Politics Not Your Bag? Not interested?

As we approach a presidential debate  many people perk up and decide maybe they should pay some attention, but some still don't pay heed. There are enough non- voters to change the results and for those who do vote, but pay little attention make mistakes against their best interest.

Too bad if you are not interested in politics as there are smart people wanting to pick your pockets and change your life style.  Some of it will be very subtle, some might be a news item on some media platform and some might be in the rarely read fine print.  There is also even more likely to be loads of misleading and falsified information readily available.

Have you heard some leaders, especially of the conservative variety promise to do away with regulations.  Perhaps you have no problem identifying rules that bog down businesses.  Have you also heard about environmental rules being dismissed?  How about gun regulations that fail to slow down mass shootings?  Many of the regulations are really protections that businesses find hurting their profits.  See  http://www.therealjohndavidson.com/2015/11/when-public-that-means-you-are-lied-to.html 

Did you think the Trump tax reductions had no harmful effects?  Two effects should be noted:  first it increased inequality and second increased the national debt.  Why?  So rich donators could save huge amounts of money and the government would not be able to spread their money for the benefit of the masses (who helped them make their fortunes)

Ronald Reagan said the government is not the solution, it is the problem.  What is needed is educated co-operation to solve real problems.  He also did away with a Fairness policy that the media was supposed to adhere to.  He also was quite proud of beating down a union.  A bit of an explanation:  http://www.therealjohndavidson.com/2024/05/monopolies.html

The Russians and Chinese are very slick and feel just dividing Americans (and other westerners) weakens their opposition. To learn more about Russian influence check http://www.therealjohndavidson.com/2022/10/freezing-order.html and check the links for more supporting information.  To learn more about Chinese influence check:  http://www.therealjohndavidson.com/2022/04/china-unbound.html

Electoral systems are critical to gain power.  As the American declaration of independence was being worked out rich slave owners realized they could be outvoted by the northerners.  The rich, white northerners needed these southerners to strengthen their own fight against the British so they agreed to some of the demands.  They wanted black slaves to count as 3/5 humans allowing a high count for the House of Representatives with each state having two Senators regardless of population.  They also wanted an electoral college to be set up that gave them greater leverage than their population merited.  The result was the first presidents (except for John Adams) were southerners.  In the past couple of decades the higher voter percentage has lost to the electoral college (witness Al Gore and Hilary Clinton).

You may have heard of "divide and conquer" the great strategy of colonizers.  They always tried to divide their opposition.  The FPTP (first past the post) system gives the advantage to the plurality winner against the majority.  It is not necessary to get 50% so it can be strategic to try to persuade some segments and ignore others.

The electoral system decided on by those able to do so affects everyone.  A lot of decisions like to go to war or not are binary.  But in reality there are usually more than two views on most issues.  Those who obtained power on the current electoral system will resist change, they in effect have a conflict of interest.  Divide and conquer is a tested method of dealing with opposition and money/power. 

To me climate change is THE mortal threat to mankind and requires sacrifices by everyone to make life bearable.  Far too many ordinary people see only the short term, while some of the wealthy see an opportunity to increase their profits.  Dealing with this problem requires political involvement.

Taxes are resented by all.  In effect they enable the government to provide an infrastructure that benefits everyone, but also they do spread the wealth.   If the resources of the poor are reduced they cannot afford to be profitable consumers and most would expect higher compensation for their labor and many fledgling businesses would never get started.   

How should the responsibility for taxing be divided?  If not perceived as fair many will rebel.  Modern governments realize that people need some sort of minimum to survive and taxes should reflect that wealthier people (who in some ways benefit more from government expenses) can afford to pay a larger share.  Some wealthy people advocate a flat rate meaning the poor would pay a higher percentage of the overall taxes.  Capital gains affect both poor and rich, but honestly the wealthy are more interested.  They argue that investments must be encouraged for society to advance and I agree.  Poor people have improved their lot by investing their resources.  An element of progressive rates should be seen as fair.  It is much more difficult for the poor to spare money for investments and everyone should be encouraged to invest.  Many of the wealthy are able to make most of  their income from capital gains.  When taxable capital gains are added to other income it would be subjected to graduated tax levels.  Dividends offer similar issues with in some cases poor people or charitable institutions relying on them to survive.  A complicated concern to be sure, but if you ignore politics the rules are slanted by those who study politics a little bit more.  Check out some of the links:  http://www.therealjohndavidson.com/2023/06/the-role-of-taxes.html

Another way of looking at politics is to see it as entertainment as it has most of the elements of your favorite tv. shows.  There are good and bad people, attempts at humor, misleading information, maybe even a little romance.  Bear in mind they are trying to get your vote and you should ask if they deserve it.  Check:  http://www.therealjohndavidson.com/2017/02/politics-as-entertainment.html

Politics certainly can be complicated and some people feel their interests are best served if fewer people pay attention to the details.  If you still don't see any merit in paying attention to politics you shouldn't be surprised at the results.

The role of taxes

As I write this the American government has been battered by some wealthy people who with the debt ceiling had a tool to force changes in the law that suit them.  Not sure how this particular battle will run out, but feel it is likely there will be future battles.

 With the Americans the discussion had been focused on cutting expenses and making the poor work to earn their welfare.  Assistance to the poor is to be cut.  All sorts of regulations were burdensome.  It is true you should not spend more than you take in.  There are painful results if individuals attempt to do it, but there are also consequences for governments.  One consequence might be inflation.  High interest rates.  Bankruptcy may seem impossible, but governments have faced that, just not the exceptional United States (so far).  Corruptions has overtaken some governments when the government can't provide services.

One part largely missing from the conversations is taxes.  Politicians treat taxes as almost a dirty word, to be avoided for fear of losing votes and the support of wealthy donations. Cutting taxes and bragging about it are normal.  Obviously most voters react negatively to increased taxes.

The Republicans have proven themselves to be hypocrites and working for the benefit of the wealthy.  A major cause of the increase in deficit came from the Trump administration's major tax reduction.  One proposal they rejected was to increase the number of tax collecting experts.  The one department that actually pays for itself and coincidentally mitigates inequality.  The subject of taxes is easily dismissed.

Progressive taxes are an attempt to be fair, but are resented by the very wealthy who have managed to reduce their high rates but still not enough.  In theory everyone pays at the same rate. When you earn more you pay more, but at established rates.  The wealthy also resent restrictions on their income.

Some commentators suggested that the poor could vote to get their way.  In truth there are attempts to bribe them and most politicians are careful not to increase their taxes.  The wealthy know they can swing the poor to their side; by appealing to their prejudices.

One sensible philosophy was provided by John Maynard Keynes who proposed in times of prosperity to build up surpluses and in times of need to use the surplus.  The wealthy feel rather than building up surpluses it is better to reduce their taxes.  

In a smaller simpler civilization the people had more real control.  As civilization became more complex, power becomes unequal and exploitation is normal-- check http://www.therealjohndavidson.com/2014/07/selected.html

A more rational plan to solve the many problems of Americans would include taxes.  Taxes are the price for civilization.  The government is not the source of all problems and in fact has been and certainly can be an engine for progress. Uneducated voters are easily manipulated. 

Even the wealthy overlook that they get infrastructure, a legal system, military protection, an educated labor force, and sometimes protection from pandemics.etc.

An earlier blog:  http://www.therealjohndavidson.com/2021/05/taxation-necessary-tool-for.html

Another blog:  http://www.therealjohndavidson.com/2012/07/price-of-civilization-book-review.html

Another perspective:  http://www.therealjohndavidson.com/2015/04/tax-collectors-dirty-job-frowned-upon.html  

Also following the Toronto Mayoral election where there seem to be all sorts spending programs proposed with any taxes ridiculed.  Olivia Chow is attacked for proposing increased taxes for one segment.  Rational people understand there is a cost to pretty much everything and fairness is the best way to win co-operation. 

MAKERS AND TAKERS

For many the title implies that some people do the work and others just live off the profits generated by workers.  Job creators and moochers is part of the thinking (or rationalizations) that enable a few to exploit the many.  The financial trade employs 4% of jobs, but extracts 25% of corporate profits.

There have always been some people who strive to take advantage of their naive comrades, but Rana Foroohar brings us up to date with some modern twists.  One starting point was with the American Civil War.  Abraham Lincoln needed to finance the Union cause, but learned he needed support from banks and they wanted concessions.

Not too long after the Civil War in both Britain and America the legal concept of limited liability started gaining momentum.  This meant an investor could not be held liable for financial disasters.  Basically it removed a hesitation to be a partner in a business when you could be liable for more than your investment.  It freed up a lot of capital for the benefit of most and also increased the willingness to take risks.

By the 1920's 3/4 of major household items were bought on credit.  This was just the start of making it easier to spend money one did not have.  As advertising helped create demand for more products, the cost of living or "keeping up with the Jones" got more expensive, more women became workers and then found even that became more difficult  to get ahead without credit.

American business schools have come to emphasize efficiency.  A short term view to boost shareholder profit.  This can be seen in countless companies that emphasized cutting costs at the expense of research.  Many companies could make a large part of their profits from financing.  Short term profits at expense of real long term growth (which might require research, training) has become normal..

I am reminded of Mariana Mazzucato who felt governments were not given enough credit for their efforts for research  Many governments are responsible for significant improvements.  Read more at: http://www.therealjohndavidson.com/2015/07/the-entreprenurial-state.html

Companies are finding more ways to avoid taxes.  A new strategy is called inversion where a large American company merges with a company in a lesser taxed nation and arranges their affairs to reduce taxes.

Commodities are the stuff of life, but not previously considered a very sexy investment.  Still huge investment firms always looking for new opportunities found a few.  One of the net results was the rising of prices including food.  Another interesting example was Goldman Sachs hoarded aluminum to raise the price.  Amongst other companies affected by that were Coke and Coors that used aluminum for canned beverages.

The author commented that the government chose to bail out banks rather than give more support for those with risky mortgages that often were arranged with a fraudulent element.  Basically the government did fine companies when they were able to prove fraud, but virtually none of the heads of the fined companies were sent to jail.  Jail time has proved to be more effective than fines.

Rana quotes Luigi Zingales, "Even in the United States public resentment against finance can undermine the expectation that the rule of law will be respected in the future.  Without this expectation the competitive, democratic and inclusive finance will quickly become unsustainable."

Because financing is so critical to a society they should adopt an equivalent of the Hippocratic oath.

Many other examples and explanations are in the book.  The average voter is unaware how finance has dominated their lives.  It is amazing that with 4% of the jobs, finance controls 25% of corporate profits.  Who are the makers and who are the takers?

Peace Pipe Dream

Just finished reading "Peace Pipe Dreams," by Darrell Dennis about two years after reading "The Inconvenient Indian."  They both should prick our conscience, but will probably only reach us "bleeding hearts liberals."

Descendents of Europeans don't spend much time worrying about the dilemma of modern day Indians.  For most of us the biggest concern is getting the politically correct title.  Native American, Native Canadian, aborigine or indigenous.  Legally speaking the original natives are split into First Nations, Inuit and Metis (which are really part European).

Darrell gives a bit of history of the image.  At one time Indians were seen as survival agents and then necessary allies and then backward and now just in the way.  They have been painted as strong and noble and also drunk and lazy.  Too many Canadians when they think of Indians are resentful of the "advantages" the Indians have.  The truth is they are unique individuals, that have and are contributing to our society.

Darrell Dennis is articulate with a comedic touch as he deals with several misconceptions regarding his fellow Indians.  He researched the historical background that developed these myths and makes them understandable.

When we (us non Indians) read about Indians demanding various things we often think it is pitiful they feel entitled and are so unreasonable.  We forget there was a reason for the treaties and they have not always been respected.  We resent they should feel they need control of more land and that apparently they aren't burdened with taxes.  Overlooking the fact that we have encroached on their land and used their knowledge, talents and bravery to help us get a toehold.  It wasn't long in our history before our European predecessors took advantage however they could with their technology and legal understandings.

Without the Indians the first Pilgrims would not likely have survived.  Trappers would not have prospered without the co-operation of Indians.  Different tribes were recruited by the British, the French and the Americans to help them tip the balance of power.  Many small events and more notable ones like the American Revolution and the War of 1812 involved deals with Indians to get their support.  Indians were tribal and considered themselves sovereign over different areas.  All sorts of things were promised and many of them not delivered.

Naomi Klein pointed out in "This Changes Everything" that some of the treaties are the best hope for environmentalists, but also warns that Indians often do not have the resources to fight for their rights.

In Canada, status Indians living on reserves are tax exempt.  But in fact most Indians do pay regular Canadian taxes and even status Indians do pay some taxes.  Darrel points out there are strict rules on qualifying.  We forget what the Indians did that we all benefit from.

Indians are too often pictured as wife abusers.  Darrel points that most tribes were actually matriarchal and respectful of women's opinions when Europeans first came to America.  It was actually the Europeans who kept women in their place.  For years the Indian Act discriminated against women so that if they married anyone other than a status Indian they lost their own Indian status and their children were ineligible.  Meanwhile if Indian men married outside their wives gained Indian status.

Alcohol is closely associated with views of Indians and in a negative way.  Many assume that there is some genetic defect that turns Indians into alcoholics.  Darrel sites research that disproves that theory.  He does go back into history into fur trading days when alcohol was very effective at inducing Indians to bring in more furs.  Most of the Europeans they dealt with tended to be binge drinkers and many Indians copied them.  After centuries of abuse many Indians find themselves as unwelcome outsiders and alcohol abuse is one outlet.  On the whole, Darrel points out most Indians are not extreme drinkers and there are many that avoid alcohol altogether because of the negative image.

Still another concern is that tribal politics are usually painted as corrupt.  Darrel concedes as with every group there are always some who take unfair advantage of their power.  But much of Indian elections is supervised by the government.  In fact much of the money that is supposed to be for the benefit of Indians ends up in bureaucratic politics.

In summary mainstream Canadians are mis-informed and inclined to believe negative stereotypes.  Part of it seems to be guilt, but we have to admit we are pretty ignorant about the realities and for some we don't want to think about the issues.  Darrel has done an excellent job going back to historical facts, making analogies and uncovering reality.  Indians were critical to our survival and we owe much to them, but more importantly they deserve to be part of a prosperous future.  This book raises many good points that Canadians (and Americans) need to understand.

"The Price of Civilization"

I read "The Price of Civilization" as I had enjoyed the other Jeffrey Sachs book my son Michael recommended, "The End of Poverty."

The title comes from a saying of Oliver Wendel Holmes who felt taxes were the price of civilization.  We could live in a world where the law of the jungle prevailed, but there would be a lot missing.

For instance a lot of what we call infrastructure would be missing. Roads, water works, airports, health facilities, etc.  Culture would be relatively primitive.

For another instance, security from all sorts of fears would be aggravated.   The feeling that allows you to plan ahead.  To motivate you to make an effort to make things better.

Amongst many other things Ronald Reagan deregulated media resulting in greater concentration of the message senders.  He also did away with service requirements and a fairness policy.  Broadcasters did what was intended, focusing on profits.  News became part of the entertainment package and changed to become part of the profit effort partly through sensationalism and partly through segmenting profitable niches.

Globalization has many benefits, but also in some ways generates a race to the bottom.  International co-operation is resisted by corporations who prefer to play countries against one another in such areas as wages, taxes, union rules and environmental regulations.

Redistributing wealth can boost productivity of the poor through education and nutrition, but of course powerful interests make this difficult.  Special interests have gained control of the United States partly because of the power of money.  But a disengaged population lets them do it.  People do vote for local special interests and then find that at the national level they work in concert to each get what they want.  Getting elected has become expensive and requires an almost constant campaign mode.

Jeffrey had some concerns on something more important than mere money, that being happiness. Westerners in general live in a consumer society and tend to addictions including gambling and watching tv.  He points out that excessive tv watching correlates with social distrust, obesity,  and low civic engagement.

He uses Buddha and Aristotle, both advocates of moderation as the key to fulfillment.  We can apply mindfulness to self, work, knowledge, other people, nature, the future, politics and the world.

One point that caught my attention was that Europeans generally pay more taxes, but enjoy a higher quality of life in many regards.  America has a geographic advantage of more space  per capita.

To learn more about Jeffrey Sach look here http://jeffsachs.org/  I recommend any of his books for depth of thinking.

"FAIRNESS AND FREEDOM" Book Review

When my son, Michael recently moved to New Zealand to try his luck at getting a job this book got my attention.  In some ways it is one of the more profound books I have read.  Profound might be interpreted to mean they supplied me with notions that support my already established beliefs.  Perhaps so, but  not enough people have really thought out the issues of fairness and freedom.

New Zealand and United States are both open societies with much in common.  The American author uses a comparative study of the two to analyze what he sees as a significant difference.  In United States freedom is the underlying philosophy, while in New Zealand it is fairness.  Fairness sounds namby pamby to those who feel individual freedoms are the highest value of all, but freedom, not really understood can be perceived as selfish and short sighted.  Your freedom should end somewhere away from my nose and vice versa, but freedom lovers don't always appreciate that aspect of it.

Each concept has its faults, after all human nature is not conducive to restraints of any kind.  Envy, resentment, vengefulness, pride, fear and above all selfishness are normal human traits.  Harnessing those traits is a hard task if one wants to optimize civilization.

They were both English speaking colonies.  The United States gained its independence after a bloody war whereas New Zealand took a longer more legislative transition.  Americans fought the original inhabitants, known as Indians and pretty much subdued them.  The New Zealanders fought the Maoris who were more united, at least in language.   The Maoris managed to find a more decisive role in their society.

Land seemed endless in America, whereas there was a definite limit to New Zealand.  Land reform helped to stabilize affairs in New Zealand in 1891.  There was a much higher percentage of owner occupied land in New Zealand.  New Zealand abolished provinces in 1876 whereas United States is really a union of states with federal oversight.

From the beginning Americans felt the need for personal liberty, although they justified slavery. Over time the New Zealanders developed a concern for fairness although they abused the Maoris.

In 1920 New Zealand put restrictions on gun ownership.  Americans are very vocal about their gun rights under the Second Amendment.  Violent crime and imprisonment are much more common in America.

In 1893 New Zealand became the first nation to enfranchise women.  Women were better represented in the New Zealand Parliament than in most of the world.  In 1936 New Zealand was the first nation to broadcast Parliament.

United States adopted an electoral college in order to assure the smaller states they would have disproportionate influence, but often distorts what the majority of Americans actually want.  New Zealand adopted a proportionate voting system that many people (including myself) believe is more fair and better reflects what New Zealanders want.

After World War II,  New Zealand fought against the United Nations Security Council having vetoes wishing to give more power to the General Assembly.  They always seem to fight for peaceful negotiations.  Ronald Reagan was infuriated with their refusal to accept nuclear battleships on their ports.

After a lot of historical details of both nations the author summarized his thoughts on the two title traits. Freedom can be interpreted in many ways, but essentially refers to no or minimal restrictions on what a person can do.  In reality one person's unrestricted freedom runs up against another person's freedom.  One of the best examples deals with slavery.  Slave owners were adamant that they had the right to own other humans whose freedom obviously meant nothing.  Any law is a restriction on someone's freedom, but is often to protect others.

Tea baggers seem to resent taxes, and claim that the American Revolution was fought against taxation.  In fact the actual Revolutionaries were against taxation without representation.  After the Revolution taxes were increased as it was realized money was needed to maintain a free and strong republic.

Fairness is a restraint on freedom.  One person's unlimited freedom has to cut into the freedom of another.  How do we determine what is free and fair?  The author has a good perspective well worth examining.

Rich people in the United States sometimes are heard to say that poor people are just envious of successful people.   In New Zealand and other countries envy has been a problem.  Equal opportunities do not lead to the same outcomes.  There is envy that some people with talent or who work harder achieve more.  There are many people who feel entitled, some because of wealth and others because they want to receive more than they give.  Fairness would include people rising to the top of their talent and effort.

Democracy and freedom come with responsibility.  Part of the responsibility is to vote and not claim ignorance or claim choices are fraudulent.  Americans actually have a very low voting record and yet one party seems to think there are too many people voting.  Part of the responsibility is to recognize no one got their level of success without support from a wider community.  The next generation deserves as much support as our generation was given.

By the way my son did get a job teaching and seems very pleased with living in Auckland.