The American Economy
What is the relationship between the government and the economy? Is the Federal government responsible for the condition of the nation's private economy? Where does government end and private enterprise begin? I am not an economist. I don't work for the government. I work for a non-profit organization and I am a tax payer. I am also curious as to what the boundaries, if any, there are between government and private enterprise. We all know the only interest of private enterprise is the bottom line, i.e., maximizing profit. In order to do that, competition takes place. Your business tries to get as many customers as possible and hold on to them which deprives your competitors of the same customers and the income those customers would generate for your competitors. Government gets involved in your business by establishing regulations you must follow in order to protect the health and safety of your employees, to protect the public from potential fraud, to protect your competitors from unfair competition, to protect the environment from being negatively affected by your business.
There are some people who think the answer to the recession in this country is to eliminate all these regulations. The regulations are not what caused the recession. China, which has very few government regulations of their businesses, is also experiencing a downswing in their economy. If regulations were responsible for economic problems, China would have no problems. Eliminating regulations is not the answer. In fact, it would cause more problems than it would solve, if not for businesses, then for people in general. Who is helped by the regulations? Consumers and workers. Who would like to eliminate regulations? Entrepreneurs, business owners, politicians eager to do the bidding of the citizens with the most wealth. You may recall seeing news reels of the days when Pittsburgh was so polluted one could not see the sun for days and crippled workers injured on the job had to beg for sustenance for themselves and their families. That is not what most people would be willing to accept in return for a swifter economic recovery. The people who benefited from those conditions were the factory owners. What stands between us and a return to those conditions is government regulations. Businesses in this country exist to make money - not to create jobs, not to protect the environment, not to protect the health and safety of their workers nor of the public. The only reason to create jobs is if it will result in more profit. The only reason to do the rest is because it's the law. In fact, many businesses will disregard the regulations in hopes of not getting caught. Others don't care if they get caught because the consequential fines will not be as great as the profit made by ignoring the regs. Then we have government inspectors that are willing to look the other way for a price. I understand that Romney, if elected, can deny funding to the EPA so they will be unable to enforce regulations designed to protect the environment. There are many, many examples of the government itself destroying environmental quality because it would cost something to do the right thing.
I am of the opinion that government should set the framework of what is best for society, not for business. For seven of the last ten years the incomes of the most wealthy Americans, the so-called job creators, have increased. This happened in spite of all these supposedly crippling regulations. For the wealthiest Americans, the economy is doing fine. They feel no obligation to help the rest of us improve. They can afford to hire lobbyists in Washington to influence legislation in such ways as to help them increase their personal fortunes. Their increase means a decrease for the rest of us. And yet there seems to be so many people who are willing to sacrifice the quality of life for themselves and their descendants in return for the promise of increased personal financial security.
I ask myself, ":What good is increased financial security if I don't have a decent park to enjoy; if I can't go outside without protection from the sun; if I can't plant a productive garden because of climate change; if I can't purchase affordable, wholesome, completely natural food; if I can't take a walk on public land without seeing an oil or natural gas well; if I get permanently injured at work; or lose all my savings to Wall Street; or get cancer because my environment is so polluted?" If I were one of the 1% wealthiest Americans, I could own my own park; I could build a large solarium; I could afford a green house in which to grow my own organic produce; I would not have to work in hazardous nor unhealthy conditions; I would be collecting other people's hard earned money; if I got cancer, I could afford the very best care available. And yet some people are willing to vote for politicians that will preserve the status quo for the richest while sacrificing the quality of life for the rest of us. It baffles me.
Right now the Federal government is doing the bidding of the rich. They refuse to increase rich people's taxes. (It's not a coincidence that a great many congressmen are rich. Sounds like a conflict of interest to me. Perhaps we need to declare millionaires and billionaires ineligble to occupy public office.) They want to do away with regulations that will help the rich make an extra dime. They want to put unemployed people to work - not for the sake of the unemployed but rather for the sake of business. More employed people means more people spending money on things they don't really need in order to make small business people richer and the banks they depend upon and the upper 1% even richer. A natural, healthful environment is worth more than all the money in the world and yet it is being increasingly destroyed by the day.
Back to the relationship between government and business. In the sense that the government has a duty to protect all the people and business has the duty to make as much money as it can for its owners and/or shareholders, the relationship should be intrinsically antagonistic. Government sets reasonable boundaries on business practices in order to protect the health, safety and financial security of consumers and workers. Some businesses have to get government permission to operate in the form of licensing, fees, etc. In addition to that, they have to pay different taxes to various government municipalities. In return they have access to infrastructure built and maintained by taxpayers such as water supply, roads, bridges, and sewer system. They also benefit from a mostly public educated work force. Some businesses are subsidized with government funds. Some are given tax breaks and grants. Some make a lot of money from government contracts. All the paper, pipes, sewers, cement and other construction materials, paper, pens, clips, computers, vehicles, gasoline and ad infinitum that the government uses is purchased from private companies. There has been a suggestion made that wherever possible these supplies should be purchased from American companies rather than from foreign competitors. I heartily agree. That would be one step to boost our economy and would hopefully increase tax revenue for government. The only caveat I would add is that no purchase of goods or services by government should result in an excessive profit for private companies.
Another way private enterprise benefits from the government is to get ideas, data, methods, from government-sponsored research. The space program made many innovative products possible and producible.
Government also affects businesses by regulating the minimum wage for most industries. Right now the farming, restaurant, and home health care businesses are excluded from that regulation. This is unfair to those workers and they should have the same minimum wage as the rest of American workers. The minimum wage has not been keeping pace with inflation. This needs to change, but politicians are reluctant to do so because such a measure will detract from the employer's bottom line and they don't want to lose the financial support of employers for their personal political campaigns. Meanwhile, business and government executives accept generous pay hikes and at the same time are laying off employees. Greed will not help our economy grow.
Government gives businesses various tax breaks, deductions , exemptions, etc. to the point where some businesses don't pay any taxes at all.
When it comes to foreign trade, the federal government evidently has the option of making trade arrangements with foreign countries to benefit private enterprise in this country. That seems like the mother of a girl scout helping her daughter to sell cookies. Of course, the Federal government can and has made it illegal for American companies to sell certain products to certain countries. So maybe trade agreements are designed to make up for trade restrictions.
Another thing I did not know is that American companies, working in other countries, have the legal option to invest the profits they make from those foreign countries in American banks without paying taxes on that money. I imagine the reverse is true. Foreign companies operating in this country have the option of investing their profits, tax-free in non-American countries. This does not seem fair to me. Using the infrastructure, labor, resources of a country to make a profit without having to pay taxes on that profit to that country-isn't that like taking unfair advantage?
Something which is interfering with job creation and thus slowing down the economic recovery is the cheaper goods being imported into American stores. Try to find an American-made winter coat at Sears or Walmart. It was a challenge for me to find Christmas ornaments last year that were not made in China. I try not to buy anything made in China because I don't like supporting the country that has been bullying Tibet since the 1950s and does the same to its own political dissidents. I understand that the Chinese government unfairly manipulates the value of its currency. (What else would you expect from a mega-bully?) I suspect tariffs are not the best solution. When one country imposes tariffs, what is to stop the other country from reciprocating? If there was an additional 8% Federal sales tax added to goods made in China, it would help make the price of American made goods more desirable, which would help American business and thus increase tax revenue to government. And the 8% Federal sales tax should be dedicated to extra payments toward the debt we owe China.
In regard to American companies that "ship jobs overseas", they certainly don't deserve tax breaks for doing so. In addition, if they want to sell their products made in another country in this country, their products should also carry a sales tax that will make those goods as expensive as they would be if produced in this country. The Federal sales tax idea may seem to penalize American consumers. Think about it. These cheap goods are contributing to our economic crisis and slowing our economic recovery. Purchasing cheap stuff made in other countries helps the economies of those countries, not yours. To purchase that stuff and then blame the government for the state of the U.S. economy is senseless.
On the one hand, individuals who try to live above their means sooner or later encounter hardship. Why buy a $100,000 house when a $25,000 house is sufficient? At least some individuals bare some responsibility for their economic hardship. On the other hand, I cannot overlook the role of business in creating economic hardship for Americans. I don't believe people become millionaires by accident. I'm sure it involved hard work (unless you won a million dollar lottery). I am also sure you charged more for your goods or service than you needed. Which means your customers paid more than they would have otherwise. Which means they have to charge more for their goods or services in order to pay you enough to become a millionaire. And they will pay their employees less in order to emulate your excessive success. Which means their employees will have to borrow money from the bank in order to purchase goods and services that would be cheaper if people like you were not so greedy. This is why Gandhi said, "There is enough for every one's need: there is not enough for every one's greed." This is where government fails us completely. Not only do government lawmakers kowtow to the richest, they won't even charge them more taxes in order to level the playing field in the least. Wealth is power in this country. Greedy people don't care about anything more than satisfying their own greed. That's why American businessmen ship jobs overseas.
If we had a different mindset, would things be better? What if we all worked together to create the maximized quality of life for everyone? Everyone would like to be a millionaire. Unfortunately, whether or not everyone deserves to be a millionaire, there is not enough money in this country for everyone to be a millionaire. The question is why don't we all deserve health care, clean air and water, wholesome healthful natural food, adequate healthful shelter, adequate clothing, free green space within walking distance of our shelter, soil in which to plant, a safe and healthful work environment? Why don't American business people try to make their goods and services as affordable as possible without sacrificing quality? We have more millionaires in this country than ever before. That indicates to me that there are a lot of goods and services that could have been made affordable to many more people.
This is simply my perception. But over the years I have sensed a trend toward determining price on the basis of how much people are willing to pay rather than how much one needs to charge in order to stay in business. You know we are paying more for petroleum-related products than is necessary for the oil companies to make ends meet. Otherwise they would not be declaring billions of dollars in profit every year.
Many things have changed over the years. For a dedicated conservationist like Theodore Roosevelt to be elected President would be a miracle these days. When I was growing up universal nuclear disarmament was viewed as an achievable goal. No one even talks about it these days. President Kennedy talked about people's right to clean air and clean water. Today those things are defined as having less than so many ppm (parts per million) of a witch's brew of toxic chemicals. I think many i influential people in the country have become materialistic pragmatists. They may talk about morality and religion but how often do they relate morality or religion to the almighty dollar?
For the truth as I see it about other aspects of the economy see my posts on Unemployment, The Foreclosure Crisis, The National Debt, and Wall Street.
Let me know your thoughts about our economy and what needs to be done to make it work for every one's good.
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