The Future of American Politics

We all have heard about how the Republicans are so opposed to deficit spending. Where were all the hard-core Republicans in Congress when Bush turned a surplus into a $400 billion deficit?

We all have heard about how Democrats are doves, where were the Democrats when the Iraq War got almost unanimous approval in 2002?

We all like to hope that Democrats will defend our freedom of speech, where were they when the Patriot Act was passed?

We all like to think how the Republicans put the deficit first as our most pressing national priority... but why do they seem to think that cutting only the $414 billion that the Department of Health and Human Services spends on everything except Medicare (which they want to keep) will balance a $900 billion budget?

We all like to think that the Republicans want a small federal government, but why then did almost all of them support the No Child Left Behind Act, bank bailouts, and PATRIOT ACT which expanded the role of the Federal government?

We like to think the Republicans are the party that supports America's future, but why do they keep cutting funds for schools?

We like to think that Democrats are in favor of expanding access to inexpensive high-quality college, but why have there been a total of 0 major college-education bills over the past 4 years providing more assistance been in the spotlight?

We like to think that Democrats are in favor of helping the poor, then why did Clinton pass the reform for TANF with the Republican-led congress which made it mostly a state-run program with 56 bureaucracies instead of 1?

We hope Democrats will stand up for what has to happen, but why did they not go to the Supreme Court when the Republican-led governments of Ohio, Pennsylvania and Florida gerrymandered their congresssional districts in ways that are very clearly designed to give Republicans an edge in both the maps and the votes?

This is because neither party truly represents America. If the Democrats represented America they would be a very different party. They would be pushing very hard to bring back the Work Progress Administration, and would have started pushing for an increase in the minimum wage a decade ago. The Democrats would have signed the Kyoto Agreement in 2009 when they had a chance. They would push for serious election reform to make it so that every vote counts, and gerrymandering will have almost no power. I am glad Obama is trying to push his party left on voting reform, climate change, and serious economic policy, and I hope he succeeds. I hope he pushes for making the border with Canada easier to cross, not harder. I hope he will seriously balance the budget by taxing capital gains as regular income, because that is all it will take. I hope he roots out waste in every agency, including the Department of Defense, and shortens the deadline for that agency to audit themselves. It shouldn't take years for an audit to be finished.

Why does this happen? Within both parties are large caucuses. We saw the Republican factions very clearly during last year's primary:

• Santorum with his Christian Democracy platform and soft opposition to the secular state. (I’ll call them Christian Republicans)
• Ron Paul with his libertarian small government ideology in everything except abortion (Libertarian Republicans)
• Mitt Romney with his beliefs between the two, believing in more social policy controls yet not to the point of Santorum. (I’ll call him Republican National Convention)

This is a really uneasy alliance between the three wings. I expect it will someday split.

The Democratic Party also has some uneasy disagreements which to those of us who were involved in Occupy are starting to become apparent on the ground. While I am not and do not wish to be a registered Democrat when it comes to my beliefs I fit into one of these camps. I expect we will start to see it during future Presidential election years like we saw it during last year's Republican primaries.

• Although unorganized, a large number of Democrats fit under the ideology of the Progressive Party (aka Bull Moose) of Theodore Roosevelt. These people are pro-globalization (which alienates them from the Libertarians and Greens), favor nothing less than Universal Health Care (which the Democratic Leadership Council and Libertarian Democrats fail to support and many oppose), and are pro-free trade with nations that have similar economic and political statuses yet oppose free trade for non-business practices (alienating them from everyone else) and are unlikely to support free trade to support American businesses alone, they are also likely to support free travel. They support regulation of the worst aspects of the financial industry. Some will favor a strong military to be used only when necessary. Elizabeth Warren is the epitome of the Progressives.
• You see the more traditional Democrats who want less government involvement in social lives and more governmental regulation in banking and the stock market along with pro-globalization leanings (Democrat Leadership Council). These people do not favor Universal Health Care but favor more centrist approaches. These people favor compromise to hard policy. Obama is the epitome of this party.
• You see people more in Ron Paul’s libertarian camp who avoid the current Republican Party like the plague due to their social policies (Libertarian Democrats).
• You see more isolationist Democrats, the anti-WTO protesters of the 90s who continue to take an anti-military, pro-visa, pro-tariff, and are shifty on immigration in terms of foreign policy along with some more mainstream Democratic policies (Progressive Democrats, merge with Green Party). Whether they will gain seats remains to be seen, but they are a powerful force of solid left wing Democrats and should not be underestimated.
• Some Democrats will join the left-wingers of the Republican Party (Blue Dogs). These people oppose universal health care and when it comes to free trade do not focus on fair trade as a prerequisite.

It would be quite possible to divide the Democratic party on these five lines. It is becoming a very uneasy alliance when you get into it. With so many different ideologies it makes for politics constrained in political beliefs by regional tendencies giving people in different parts of the country fewer choices once the general election comes because the Democratic candidate will be able to outspend the Greens and Socialist Workers. If the Democratic Party split into 4 or 5 factions than we will see more debate.

The Tea Party will be split between the Libertarians and Christian Republicans.
So, I predict that in the next 30 years we will see a reorganization of the American political spectrum as the parties change and we get a more diverse mix of parties. From left to right on the economic scale.

1. Progressive Democrats/Greens (PD)
2. Progressive Party/Bull Mooses (PP)
3. Democratic Leadership Council (DP)
4. Republican National Convention (GOP)
5. Christian Republicans (CR)
6. Libertarian Democrats/Libertarians (LP)

Here is the list of parties by social scale from smallest to largest involvement in personal affairs:

1. Progressive Party/Bull Mooses (PP)
2. Progressive Democrats/Greens (PD)
3. Democratic Leadership Council (DP)
4. Libertarian Party (LP)
5. Republican National Convention (GOP)
6. Christian Republicans (CR)

Here is a table for comparison. Vertical is economic, horizontal is social. Top-left is left-wing. Small vs. Big is the comparative size of involvement of the government.

	Small Social	Medium small	Medium big	Big Social
Small Econ	(Anarchy)	LP
Medium small	PD	DP (status quo)	GOP (status quo)	CR
Medium big	PP (W. Europe)			(NAZI)
Big Econ				(Soviet Union)

There is one more dimension that must be accounted for which is foreign policy: Here is a list of parties, isolationist on top, involvement on bottom:

1. Libertarian Party (LP)
2. Progressive Democrats/Greens (PD)
3. Progressive Party/Bull Mooses/Congressional Progressive Caucus (PP)
4. Democratic Leadership council (DP)
5. Republican National Convention (GOP)
6. Christian Republicans (CR)

I am expecting that the modern Bull Mooses will be more inclined to cooperate with other countries as opposed to the interventionism of Theodore Roosevelt which with the modern politics of America would not fit with their other policies. The Christian Republicans’ policy towards the Middle East puts them on the bottom.

This will be a much healthier system for American politics and we will need a new election system, which I have already talked about. Without using ranked voting we will find that there will be major spoilers which as we saw in 2000 dissuade people from breaking party line in the future. Changing will make every vote count and make it possible for strong political minorities to form their own parties. People will be able to vote their conscious and issues that currently get swept under the rug, like drone bombings (which I will hopefully blog about soon) or our relations with Israel, or issues that aren't even brought up, like our Relations with Canada or Progressive Capital Gains that could receive wide support if discussed, which neither party wants to talk about. This will be good for America.

Another thing that we have seen throughout history is that what happens in America doesn't stay in America. The very idea of democracy which developed here is now used in almost every country. By changing our election system it will be front page news around the world which will make countries like Canada and Britain more seriously consider changing their election systems. It will be a great step for mankind across the world.

I know the factions will continue to disagree in the major parties, and I hope that we can adopt an election system soon before people feel the same way we felt about how Ralph Nader spoiled the election and then go back to voting party-line. The differences in the parties are growing and I think we will.

Open The Border

Over the past decade the United States government has been making coming into and out of this country harder. So much harder that I have found coming home from Canada is sometimes harder than leaving America going over to Canada for a weekend. The US-Canadian border is the longest shared border between any two countries in the world. It stretches across oceans (in Alaska, Washington, and Maine), cities divided (in Washington, Michigan, New York, and Vermont), buildings such as the Haskell Free Library and Opera House, making it one of the most unique borders in the world given its history and what lies across it. People's houses can stand in two countries at the same time across this continent. Most of the border is undefended and without fences. In some places there are roads that lie on the border. With this very lax security there are other places, like travelling by ferry or plane between the United States and Canada where travelers need to go through American customs twice when entering. In some places, like St. Regis, Quebec the border is completely open due to an old treaty with the Iroquois nation that allows people to move back and forth freely, and with no customs there is no way to know if the person crossing the border is Iroquois or not, and non-tribal members can and frequently do enter the reservation. Also, to keep the border secure ferry and air passengers go through American customs twice to come back to America. In other words, the border security between the US and Canada is spotty, and doomed to be ineffective.

To think that such a long border could possibly be secured, or even might need to be secured, given the relationship and history between our nations, and the treaty we have signed with the Iroquois to allow them to cross the border freely in their reservation seems ludicrous to me. It seems like a waste of money because no matter how much you spend to defend it there will always be a way around it. Any attempt to block smuggling is futile, because it is so easy to cross the border.

Because of these facts, I propose a different solution, open the border. How far? All the way. Eliminate customs on the American/Canadian border to save some money and increase trade between our two countries. There is no benefit to us by attempting to secure such a border and it is undefended at some points. It doesn't take a lot of research to learn this and despite the attempt to appear secure at places like  the Victoria ferry terminal, it is in fact about as defended against illicit trade as the German/Polish border, the only people who are actually inconvenienced are the honest ones.

We should do this soon. The only major concern I can see is drug policy, but the border customs are not effective for controlling drug control anyways. The best policy for drugs is that if you are caught with an illicit drug in America you will be arrested or fined. With guns the best policy would be that if caught with a handgun or other illicit weapon will be arrested or fined. We should arrange a treaty with Canada that if someone is arrested in either one of our nations we will respect their laws and let them hold the other nation's citizen for the legal amount of time and respect all other fines and punishments for breaking each other's laws.

With tourism into the United States and Canada, we will need to synchronize our policies and set up a commission of the United States Department of State and Canadian Ministry of Foreign Affairs so that before any policy is adopted the United States and Canadian governments need to agree. We will need to synchronize the countries that can enter our countries visa-free, and which ones will need a visa-on-arrival. Fortunately, the United States and Canada have extremely similar visa requirements, the only differences are regarding people from the Czech Republic, Papua New Guinea, Croatia, Samoa, Pitcairn Islands, Barbados, Falkland Islands, Montserrat, Saint Kitts and Nevis, Hong Kong, Gibraltar, and Vatican City. I don't see any difficulty in getting over this hurdle, if the American and Canadian governments cooperate. We can then make a process for entering our new union, that can be agreed on by both governments, with the following proposed tenants with my reasons for having them:

1. A machine readable or biometric passport. This is to make them harder to forge and make a strong electronic record of what passports have entered to prevent forgeries.
2. A return or onward ticket if entering by air. This is to make it easier so the government will know if you have overstayed your planned time.
3. Must not have committed a crime that would be considered a felony in the United States or Canada. There will be a way for people to rehabilitate after a certain amount of years for some crimes like drunk driving (a felony in Canada).

Canada and the United States will continue to have full sovereignty, their own currencies, their own governments, and their own traditions. The only thing I think should change is the amount of control on the borders, which is something that can be done.

Individual power, opportunity, morals, and balance

I am right now starting a small business, and will be working (finally) by the end of the week. The license took a long time and my desire for technology is larger than ever before. It is far harder to lose an e-mail than a physical letter (as the people in my State's government showed yet again) but that isn't what I really want to talk about.

With a new job, and a future for myself, I am going to have as a young man money to invest. I will be able to make my own decisions on where I want to place my money and am currently studying (while not reading about politics and blogging about current events) how to be the best small business owner I can possibly be. How to balance my books without hiring an accountant and how to invest my surplus income in a way that will prepare me to be well-off throughout my life. I have made a few major decisions on what I will and will not invest in. Here are my opinions on the three most popular investment strategies.

1. I will never invest in a government bond, I would rather pay taxes so that the government doesn't have to pay 18% of spending to the debt. It is wasteful. I do not want the government to pay me directly, I want my government to build infrastructure, schools, and provide universal health care, not pay me as some lousy investor an interest rate that frankly doesn't keep pace with inflation. It also doesn't beat the stock market.
2. I will not invest in real estate as an investment for the long-term. It doesn't beat the stock market and I am extremely bothered with how just sitting in a house can through the miracle of voojoo make the house double in value without actually improving it. That doesn't make sense, and barely beats inflation when taking into account the time, and when counting the investment beyond the mortgage to keep it up could very reasonably cost more than any money you will get out of it. It has always been and always will be a bubble, and one rule of economics I have learned is that every bubble must pop.
3. The stock market however, and I consider hedge funds part of the stock market, beat inflation by a large amount almost every year. The actual value of the companies is actually increasing as they take your money and invest it in new infrastructure and grow their company. It is also one of the few things every person who is currently on the Forbes 400 has in common, they all invest in the stock market. I probably won't invest in a privately managed stock fund to avoid the massive fees that they charge to manage your money, but will invest long-term in a vast array of companies that I feel are going to grow and increase their value. This is value-investing philosophy and is the school of thought Warren Buffett practices, the most successful investor in history. I am reading his letters to shareholders which are on-line and I have gained respect for him.

I have heard one legitimate complaint about investing in these types of companies however, that I am investing in immorality, and will be part of the problem. I will start investing in a few companies along with companies that are part of ethisphere (www.ethisphere.org) which are selected for morality. There is not a choice between morality and wealth. You can have both. I will also invest in banks, conglomerates like Berkshire Hathaway, and other high-performing stocks with and without dividends. If enough moral people invested as owners and pressured their managers to be moral in their political and labor relations and work towards long-term growth than we could change the world, and I am going to follow Mohandes Gahndi's advice to be the change I wish to see in the world. By not being involved in the stock market we are saying we agree with the decisions of many unethical companies by not acting to change their business practices through voting stocks which would pressure them as owners to do things, because picketing outside their offices with signs hasn't changed anything yet, and I don't expect it ever will. This is my way of making the world a better place. This is the type of direct action Occupy should have done along with removing their cash from large banks. When ethical organizations are pressured by activists to divest from large companies they are hurting their proclaimed cause by removing ethical owners from large companies that hold the power, and the activists will lose once again.

Sun Tzu said: In the practical art of war, the best thing of all is to take the enemy's country whole and intact; to shatter and destroy it is not so good. So, too, it is better to recapture an army entire than to destroy it, to capture a regiment, a detachment or a company entire than to destroy them.
http://classics.mit.edu/Tzu/artwar.html

What Sun Tzu said about military war is just as applicable in activism. To capture the company and change how they do their dealings would a much more effective strategy.


Also, my previous post on Europe is becoming true, with the new progressive Czech president beating the conservative incumbent.

How to fix America's election system

I have proposed a few ways to improve our election system in this country, and over the past few months I have further clarified my ideas and thinking about the issues have come to agree with almost everything FairVote proposes. They have a number of proposals to improve our country's system and I highly recommend them.

I am unhappy with my last post back in March on how to fix our election system and see one big issue with it which is that I proposed to continue to have a primary, which is bad because primaries tend to have lower turnout, having only one election increases turnout and increases the validity of the election. Voting twice is expensive and time consuming, which must be avoided.

Instead, I have a counter proposal with a better way, which is mostly similar to Fairvote's plan but not completely. I also want to put in some advantages I see with it.

Congressional election
Make Congress bigger. Eliminate the Senate. Make 600 seats in the House of Representatives and abolish the Senate to more accurately represent the views of the American people. The Senate unnecessarily bogs down the process to pass legislation which helps people who want to stop the status quo and makes it so that people who want to improve the country have an extra hurdle. With only 100 Senators it is easier for the same amount of money to have a much larger impact in lobbying (which saves money for lobbyists and hurts the people) and with the filibuster makes it so that minority rules. It makes the voices of people in Wyoming, Montana, Alaska, and Delaware far more important than people in California and Texas. The Senate is usually not representative of the American People, and if eliminated the House of Representatives could do exactly what their constituents tell them to do, which is the goal of Modern Democracy. Government of the People. It will make good legislation that the American people are behind easier to pass because it will need the majority of the Representatives to be passed and that is it. This will take a Constitutional Amendment, but so did the bill of rights, abolishing slavery, giving African Americans, women, and 18, 19, and 20 year olds the right to vote. Basically the biggest successes in our history. The Senate was created in the beginning to represent not the People but the State legislatures, the elite, so it must go! The Senate also will never fully represent the diversity of viewpoints in a state, and will never proportionally represent the views of Americans by any measure, and will never give the opportunity for third parties to get a voice. If we moved the Senate to an IRV system making that the only change we would find a very dull legislature with almost no diversity because there would be a lot of Libertarians. The Democrats and Republicans would both find a compromise in the Libertarian party with their votes, and because Democrats and Republicans would lose votes (how much each would lose to the Libertarians in initial votes is hard to say) it could be a very bland institution that is not representative of what the people want.

So we are left with a House of Representatives with 600 representatives, one per 500,000 on average, which is much better than today's one per 700,000. This will make every individual's vote go farther and have a larger impact. With more representatives it will be easier to get minority views represented accurately which will give a more accurate view on what the American People support, what Democracy is all about. I agree with Fairvote that there should be superdistricts where the candidates are elected by Single Transferable Vote. I support STV because it is about the candidates, people are not locked into one party or another, and it is easy to understand how to use. It is very similar to IRV which is already used in several cities in California. http://californiansforelectoralreform.blogspot.com/2012/08/2012-ranked-choice-elections-for-sf.html This is something Americans will understand. It also helps to hurt the impact of money from a few people in elections. Learn more about STV here in a Kiwi accent and then Learn where Ranked Voting systems are used.

By doing this it will substantially increase the possibility of third party viewpoints getting elected if the people agree with their policies and instead of voting against the party you like least which is necessary in First Past the Post voting you can vote for your favorite candidate regardless of how popular you think the person may be because if the person doesn't win your vote moves to your second favorite choice which is a great way to increase election turnout because votes will count. It will also make it harder to gerrymander, which is why the Republicans won the House in 2012 despite losing the popular vote. This will seriously improve our elections. Vice President Joe Biden,  Senator John McCain, when you both said you would support anything to increase voter turnout, this is what you are looking for.

Right now, if a third party were to develop in the United States it would create a spoiler effect for the party which comes closest to its views and the party that isn't split would win. I have already explained what happened in Canada in 2011. If it can happen in Canada's elections it can happen in ours.

Presidential election
For the same reason as Congressional election, we need a much simpler election to increase participation and make sure that every vote counts. This is Instant Runoff Voting, as Fairvote proposes. We will not need primaries and can make candidates run and since voters rank their candidates there is no spoiler effect. This will make elections much more efficient, allow third parties to run without spoiling the election and make every vote count.

American Election Processes

Introduction

The American election system is the most complex in the world. It is also completely privatized and federalized for the Presidency. The Presidential cycle has been designed in a way that makes it completely possible for the majority of the voting population to oppose you and you can still win the election. The Senate and House of Representative elections depend on what state you live in. Because there are so many Senate and House elections and how they are all slightly different, I am going to focus on the 108 Presidential primaries, 50 states, 6 territories, and 1 for Americans living abroad.

Republican and Democratic, equally corrupt

The Republican and Democratic primaries are as confusing as they can be, but can be understood by breaking the election into several cycles:

1. Pre-election, this is the year before the first primary.
2. Primary season, this is the time between the first primary election in January and the last in June or July, an election season of just under 6 months. The longest single election in the world. Both major parties have similar systems.
3. Pre-general Election. Parties hold conventions, big lush events with thousands of people where they celebrate their candidate. The Democratic and Republican candidates begin to debate and attack each other.
4. General election. The simplest part of the entire election which is still quite confusing.

Pre-election season

During a President who is seeking re-election the third year of that person’s presidency will consist of people stating who is going to run against the incumbent, and if the President is a lame duck than both parties will begin their primaries. This begins in January or February of the previous year depending on who is currently president. It used to be much later. Once there are several candidates they start talking on talk shows and debating each other informally until December when the first debate hosted by a major private network will put them all on a single stage.

Primary season

The first election is traditionally in Iowa. It doesn’t have to be, but it usually is. Then New Hampshire, and then each party has a few other states which go first. There then will be different states voting until June  with the majority in March. The last states to go often don’t vote because the delegates are already proportioned and they don’t bother. The middle states are usually random and are selected by the Party leadership.

There are two sets of delegates in each party, they have the same system. There are pledged delegates which represent their states depending on how the State party leadership determines their votes to be split, or not split. There are also superdelegates, appointed politicians who can vote any way they want in the primary regardless of election results. Both pledged delegates and superdelegates have equal voting power. The winner of the delegates becomes the Party's candidate in both parties, regardless of what the popular vote was.

Pre-general election

All parties have now selected their candidates and the general election begins in July. There will be 3 or 4 debates between the Republican and Democratic candidates on different networks. CBS and ABC always have one. People start deciding who they are going to vote for and the ads are all over the news airwaves on private networks trying to get voter's attention for these four months. People discuss and debate, often quite passionately, who they are going to vote for and why. Throughout this time there are many polls trying to get a picture on who is going to win the election. By late October the polls have determined the probable candidate and ballots start to be mailed out.

General election

Every registered American voter gets a ballot in the mail or goes to a poll on the second Tuesday of November. How the general election is done differs state to state, but the number of each state's return is always together without party biases. Each state records their votes and the popular vote is determined. Everything up to this point is done by party decisions and conventions. The next three sentences are the only de jure parts of the election cycle. The President is determined in reality by the Electoral College. Each state has a number of electors equal to their representatives in Congress who vote along with their state in most years, but every so often a faithless elector will vote against the wishes of the voters of that state, which has never been enough to this point to change an election. The winner of the electoral college becomes President and his/her running mate becomes Vice President.

This was originally published in 2011, but I accidentally deleted it because I couldn't see anything not realizing the font was white and the content was there.

The Future Economy

What would a stable economy look like? What would the goals be, and how would we get there? There are a few ideas that I think will make a big difference. Most are based heavily off of Keynesian economics.

1. The government will make a business-friendly environment. Businesses will be easy to start and small businesses will be common. Countries with low barriers to entry for businesses to start tend to be more developed and vice verse. EG This is why Indonesia is not seeing rapid economic growth yet Georgia is.
2. There will be high wages to drive consumer demand. It doesn't matter how many things you make, if people can't make ends you won't be able to make any money by being an entrepreneur. People will have disposable income in the ideal economy. People had this in America in the 1950s when our economy grew the fastest, unemployment was low, public investment at an all-time high (my grandparents paid a low sticker price for college compared to me and my parents with inflation), and the growth was larger and shared by all.
3. The government will insure that all of their citizens have access to high-quality health care and high-quality education. It doesn't matter how many jobs as programmers are available if no one knows how to do it. If another country is training people to be the best the jobs will go there. That's the current world. Its not going to change. Don't fight it, work with it.
4. The government will run low debt year to year during the good times. Running a large debt means that tax dollars will go to paying interest to investors instead of growing the infrastructure countries require to be successful which is a waste of money. If times get bad the government will run a deficit to make the economy get better as quick as possible. It is the lesser evil to watching the economy go in freefall like from 1929 to 1933 when the debt was prioritized higher than jobs and growth.
5. To fulfill these job-growing strategies there has to be a cost, and that means a progressive income tax. It will be very progressive, meaning people who make the most money will pay the most in taxes (and, as my previous post showed, they will keep the most as well). This will create an economy where people with enough drive can go from rags to riches.
6. Most of the economy will be a free market, except for health care and education which are requirements and tend to form oligopolies, the military, and printing of money which the government must do. There will probably be subsistence housing for the homeless. Mass transit and maintaining roads and railways are required. Managing air traffic is a necessary duty. Reasonable regulations on health and safety are needed.  I am being deliberately thorough. Everything else will be on the free market.

Some people say keeping debt low and having a high quality of living is not possible. This however is misguided. Here are a few case examples of highly developed countries with world-class health care and world-class education with high median ages and low debt. There are a few rich oil nations that have low debts, but I will ignore them to show you don't need to have high exports to have a high quality of living, low debt, and economic growth. (data from the IMF which I have found to be closest to raw data sources www.imf.org/debt)

1. Switzerland has one of the best standards of living in the world, and a GDP per capita over $40,000. Their debt is worth 19% of their GDP. Hardly unsustainable with what would be deemed a welfare state by many here in the United States.
2. Luxembourg has a GDP per Capita, debt percent of GDP, and welfare system comparable to Switzerland, and a debt worth 21% of their economy. Also, despite the constant criticism of how the Euro is bad for Europe that is the currency Luxembourg uses. Most countries that use the Euro have Debts worth less than their GDPs. Hardly a cause for alarm. Other factors are at play in Greece as I have already blogged about. Get off the stupid currency high horse global media, it doesn't reflect reality.
3. So, these two previous examples are small countries and are heavy with the banking, but what about Australia? Finance doesn't make nearly as much of the economy of Australia as Switzerland and Luxembourg, they also have world-class education and health care systems, the 2nd highest quality of living in the world by HDI (behind Norway, but not by much) and their debt is worth less than 23% of their GDP. It is not known as a tax haven. It is not a net exporter of oil. Most of the country's land is practically economically useless. It is not particularly small in population or area. Why does Australia have such a low debt and such a high amount of investment? Their lowest tax bracket is 0%, their highest is 45%. They make enough revenue every year to balance the budget, and there are also some extraordinarily rich Australians. That is how you have a sustainable high quality of life and a low public debt while not being a tax haven and not being a net oil exporter. This system I described at the beginning of this post is in place in Australia, the only major economy to avoid the late 2000s recession. Also, Capital gains are taxed as regular income, which is another proposal I have made in a previous post. It works for them, why not us?
4. Another example, if Australia wasn't enough, the country most right-wing Americans will claim has one of the most out of control bureaucracies and welfare states is Sweden. Their education and health care are fully paid for by taxes, and from all the griping you would expect a huge debt. Well, the opposite of what laissez-faire advocates claim is reality once again. Sweden has a debt worth 37% of their GDP. Like Australia, Sweden is not a major oil exporter neither are they considered a tax haven, and they have a lower debt than their often referred to as wise counterpart Norway. Unlike Norway, Sweden is in the EU (although they don't use the Euro) and unlike Norway Sweden does not have massive reserves of oil, yet Sweden has a low debt compared to most other countries. You see the same type of tax system as Australia has, very progressive without treating Capital Gains like the holy grail of the economy. Government is entrusted to provide education and health care, they have a high quality of living, stable economy, low barriers of entry to business, and low debt.
5. Other examples of debts below 50% and a GDP per Capita above $20,000 are Taiwan, Czech Republic (a Eurozone member), Denmark (with a government system very similar to Sweden and a member of the EU), Slovenia, Finland (yet another Eurozone member), Norway (which has a larger debt than Finland, and doesn't use the Euro and unlike Finland is a net exporter of oil and like all of these nations above has a strong welfare system and low debt).

Basically, to say that there is a choice between prosperity and low debt is a fallacious argument on several major counts. Only 12 nations on Earth owe over 100% of their GDP in public debt, and 3 of them have GDP per capitas under $10,000. Low standard of living, poor education, poor health care, and high debt. What are the real variables at play here? It clearly doesn't work to say that high quality of living and high government services = high debt, with 8 of the most developed nation, several of which are not net exporters of oil, are not tax havens, positive economic growth in most of them even today, all of which have aging populations, and some of which use the Euro, there are other factors at play than are usually blamed. I would try to find the root cause, what is so similar between Australia, Sweden, Taiwan, Finland, and Norway that is so different from Japan, Greece, Italy, Portugal, Ireland, and the United States?

The following are similar: They are all rich nations. They all have high qualities of living, and all are democracies. They all have social safety nets of varying degrees, and one could successfully argue that the nations with the lower debt have the larger social safety nets which is like so many facts is contrary to popular belief. They all have aging populations as measured by median age relative to the rest of the world. What is so different between these nations to make such a striking difference in their debts?

The following are different:

1. The governments of the United States and Japan in particular are under conservative governments frequently, while the most conservative governments of Australia, Sweden, Finland, and Norway are in power far less frequently. One must wonder whether these "conservatives" are truly "fiscally conservative" given their massive deficit spending that doesn't exist in these "welfare state" governments which have far lower debts and higher standards of living when ranked fairly. Which matters more, a government that is out of people's pockets with high deficits or a high quality of living with low deficits? I choose a high quality of living and frankly couldn't care less about the size of government, that is the wrong question to ask. We need to ask whether the government works for the people, not whether it is "too big" or "too small" both of which are relative and impossible to fairly gauge.
2. Their tax structures couldn't be more different. The tax structure of the United States for all intensive purposes has the shape of a bell curve. While people who make next to nothing will pay no taxes thanks to standard deductions, the people who pay the most are people who make most of their money from wages and don't invest in the stock market. People who make the most money pay a middle-class rate, which has been raised to 20% as opposed to 15% recently, but still is far lower than the 39.6% if that same massive amount money (think hundreds of millions of dollars) had been made through wages. That means the government loses out on billions of dollars of revenue every single year. Australia on the other hand doesn't see a difference between capital gains and wages in terms of taxes and taxes both equally for the same amount. They also outrank the United States on a variety of quality of life measurements year after year, have more government services for the things that matter, and have a lower deficit relative to GDP year after year. They also outrank Japan on most factors. That is the only clear difference I can find to explain the difference in debts. Taxes.

There is not a choice to be made between good economics and a high quality of life, in fact, after reading the statistics one might argue the opposite that good economics will tie in with a high quality of life.

Progressive Capital Gains Taxes Make Sense

I have developed a tax code which I published previously: http://stidmatt-views.blogspot.com/2012/10/a-new-tax-code.html

I already know the least popular part of this plan will be taxing capital gains as regular income is going to be the claim that I am hurting investors. There is some merit to this, but it only looks at the individualistic side of the picture. People will claim I need to tax capital gains at a lower rate than regular income, that capital gains keep the economy running, that taxing capital gains as regular income introduces double taxation,  but there are some problems with this. Most arguments come from this far-right think tank’s article on why they claim to oppose a progressive capital gains tax: http://reason.com/archives/2013/01/06/why-double-taxation-must-cease

1. The biggest problem with this article is that the way we currently tax capital gains (which I would never change) does not introduce double taxation. The Capital Gains tax is only on the amount the investment made, which means that despite what many will claim, all income is only getting taxed once.
2. Another thing, is that you are only taxed once you pull the money out, if you leave the money in a stock for over a year you will only pay taxes the year you pull your money out. http://www.irs.gov/uac/Ten-Important-Facts-About-Capital-Gains-and-Losses
3. Taxing capital gains as regular income will give the government enough revenue to fix the debt without touching spending. 10% of our government spending in Fiscal Year 2012 went to the debt, and that money should be going to the American people in the form of health care and education, or a lower tax burden.

These types of groups write sensationalist loaded language that is designed to make people who already agree with them to be outraged (and frankly, I have occasionally been the victim of some left-wing groups doing the same tactic) and should be ashamed of themselves.

Taxing capital gains as a progressive tax is just fair and actually makes good economic sense.

• If someone invests their money early and keeps it in for decades they could have billions of dollars if they select right, like pretty much everyone on the Forbes 400 list. A progressive capital gains tax will encourage people to keep money in for the long term and withdraw gradually.
• If Capital Gains are taxed at a fixed rate and you have a billion dollars in the stock market and the market collapses and you pull everything out along with your billionaire peers the market will collapse further and companies will have less capital to invest with, which will put them at odds between the continued growth of the company through assets and employees, or giving their investors their annual/quarterly dividend and increase to their stock, and we all know which usually takes priority.
• To stabilize the stock market we need to give an incentive for these mega-investors to keep their money in for the long term so that companies can use their money efficiently, downturns can be short, and unemployment can be lower than otherwise which will preserve our economy’s demand curve. By preventing large market collapses it will help people who have their money in the market from losing all of their gains, and companies will continue to have capital to invest and grow, and hire more people which will raise the demand curve, decrease unemployment, and make a stronger economy.

This is why a progressive income tax that treats capital gains as regular income is just healthy economics for America and the world.

Another closely related issue with the corporate world is how much people should be paid. www.ethisphere.org is a collection of stocks that beats the S&P 500 every single year in growth, and are selected not for their stock returns (which are considerable) but for their morality. By paying their workers more every year than their counterparts they have lower turnover, lower training costs, lower hiring costs, and their employees make fewer errors which cost any company money, giving these companies money to either grow, and/or pay their investors more money than their minimum-wage and/or Chinese slave driving competitors. (http://www.aljazeera.com/programmes/slaverya21stcenturyevil/2011/10/2011101091153782814.html) By paying people more money this helps the corporation immediately by getting and keeping the best workers in the market and making them valued which makes a difference. In the long term at the societal level it raises the demand curve for goods and services which means that more people can afford the goods the corporation makes which increases their demand and means that a stable relationship between company owners, employee, investor, and consumer can develop. This is just good economics from every perspective for the reasons I outline above. As Henry Ford said, “There is one rule for the industrialist and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible.”
Read more Ford quotes at http://www.brainyquote.com/quotes/authors/h/henry_ford.html#UsAPu4ARukU4mAvm.

I also hope I don't have to defend taxing gambling winnings at a progressive rate.

To finish I want to make clear that even if we tax capital gains when they are sold at progressive rates, the best investors will still have more money. Using the tax code I designed I link to at the top, the amount kept for the following withdrawals per year are as follows, assuming cost of living is $20,000. These numbers are gross income from all sources, as I made my plan above to do.

• Someone making $20,000 or less in Capital gains where that is their entire income will pay nothing.
• Someone making $100,000 per year will keep $92,500 after taxes, 4.6 times the cost of living, and pay only 7.5% of their income.
• Someone making $500,000 per year will keep $402,500 after taxes, 20 times the cost of living, paying 19.5% of their income.
• Someone making $1,000,000 per year will keep $722,500 after taxes, 36.1 times the cost of living, paying 27.8% of their income.

Some people would say paying 27.8% is a horrible tax, but when you are keeping 36.1 times the cost of living after your taxes, you are doing well enough in my opinion.

Looking at countries in the world here: http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_as_percentage_of_GDP we see a trend that most developed nations (by every measure) have the highest tax burdens, with exceptions of Taiwan, Singapore, and Hong Kong. What is the difference between these three countries and the countries next to them? I have identified a few:

1. Ease of doing business ratings are at the top of the list. The governments make it easy and people can easily trade while there are high barriers to entry and doing business in the less developed nations with similar tax burdens and much worse Human Development Index ratings. They are heavily involved in health care and education. They also tend to be small.
2. Chile is also developed as measured by HDI and have a low tax burden, along with large markets for exports.
3. They have low barriers to trade with other countries, which allow goods to be exported and goods to be imported at low cost.
4. All countries that are highly developed, except the United States, have universal health care which has no change in tax burden.
5. The connection between tax burden and quality of living is a correlation with a heavy concentration with developed countries (with a few exceptions) at the highest percentage, and a heavy concentration of undeveloped countries (with a few exceptions) at the lowest percentages.
6. The countries with a low tax burden and high growth tend to be trade and banking centers where goods pass through while the countries at the top of the list are highly developed and aren't transit points for international commerce like Taiwan, Singapore, and Hong Kong in their special situation.
7. Countries at the top of the Ease of Doing Business Index http://en.wikipedia.org/wiki/Ease_of_doing_business_index have low unemployment, their GDP growth beats their Population growth, with an exception of Japan which is hard to explain and I think it is something besides a large elderly population which is for another post when I will look at what it could be which at this point I am not certain, while the countries at the bottom of the list tend to be third world, with an exception of Venezuela leading me to detect other factors.
8. Of the top twenty countries in tax burden, only two that look to me like a truly third world country are Zimbabwe and Kiribati, and of the bottom twenty countries are mostly Sharia law countries with high oil exports, followed by third world countries to make the rest of the bottom 40. The top 40 countries by tax burden consists of many of the world's most highly developed or quickly developing nations. The trend is more or less clear with few exceptions to these rules.
9. Most countries at the top of the list have GDP growth that beats population growth and high levels of income equality, meaning high consumer demand and growing wages.

The statistics show me a correlation that is pretty strong with taxation around 40%, a strong health care system, a strong education system, an easy free market for new businesses (which I see as a key part of economic development), and low health care costs. The statistics show me another clear correlation between depressed economies, low taxation, poor health care, poor education systems, low GDP growth, and I feel the most important difference is high barriers of entry for new businesses. The popular correlation between high taxes and poor economic growth does not match the statistics.

To sum everything up, a progressive capital gains tax will help businesses and consumers, it will free up capital for businesses to use to grow, it will reduce the government debt which in the future will free up tax dollars to improve our schools and access to health care or send surpluses back to tax payers, and most importantly will encourage investors to keep their money in companies for a long time so that they can grow better creating more jobs, which will decrease the severity of economic downturns, and provide an incentive to increase wages for workers to reduce turnover and decrease training costs for businesses. This is why I think we should tax capital gains as regular income.