Monday, October 20, 2008

WHY OBAMA MIGHT BE ABLE TO SUCCEED AS PRESIDENT, AND THE WINDS OF ECONOMIC CHANGE

[EDITOR’S NOTE: Behind the scenes at the District Clerk’s Office and the De La Guarza, Limas, Villalobos Affair - Further, I did two special Sunday posts - The HIV outbreak at a high school, and the continuing saga of the blog wars]

Colin Powell on endorsing Obama"Obama displayed a steadiness, an intellectual curiosity, a depth of knowledge," Remember Powell was not talking to die hard Democrats, he was talking to on the fence Republicans and Independents who believe he was being forthright to the UN when he gave his speech justifying the war. When a ship is navigating difficult waters, it takes a steadiness to keep it from sinking. No only is the US economy faltering, but the world economy is faltering. Half if not more of the problem with the economy is perception. Most of the stock market value is a myth. So, it only takes a bad perception of the economy to see the stock market collapse.

My question is, if Obama is elected, and if the perception he gives the majority of the American people and the world is he is guiding the US out of this economic mess with a steady hand, how many points is that worth on the stock market? Perception alone can turn the economy around. It is about people having confidence in the system.

Personally, I normally prefer a government wherein the Congress and White House are not in the same hands of one political party. But in this case, having the White House, Senate and House all under the control of the Democrats may prove fruitful. If Obama wins he will be able to demand a lot of the Congress. The Congress will finally be able to move legislation along without endless bickering, unless they choose to continue with their policies of pork barrel.
The ability of our Congress to move legislation along will also send a perception things are getting done. This could change perception.

ON MONEY - the people right now are receiving a pseudo-rebate in the amount of thousands of dollars a year which they could loose if Congress fails to protect it. A friend of mine calculated that he is saving about $105.00 a month in gas since gas has come down from $4.00 a gallon to $2.23. He only drives a few miles a day. His savings will be around $1,200.00 per year more or less. For people who live paycheck to paycheck a $100.00 a month is a lot. But think, people in big cities drive 45 minutes each way to work every day. Their savings will be thousands of dollars a year.

This influx of money into the economy, other than for gas, is significantly more than another $300.00 rebate charged to our grandchildren. It is too early to know the impact the price reduction in gas is having the economy.

The question is, will Congress finally act to regulate those who speculate on the price of oil. My research shows that oil has to average $70.00 a barrel to make shale oil profitable. We do not want the price of oil to go so low that those exploring shale oil in the US shut down. This will only increase our dependency on foreign oil. It is time Congress mandate that the highest price which can be paid for US originated oil is $70.00 a barrel. (As I am typing this CNN is reporting OPEC will cut production to force up the price of oil.)

If the American people see Obama as having a steady hand, and billions of dollars are being reintroduced to the economy for mortgage and credit card payments instead of for gas, it is possible the economic crisis will turn around. Who knows? Just thoughts for consideration and debate.

FINDING A SOLUTION TO OUR ECONOMIC PROBLEMS

Bush tells us that under normal circumstances he would never allow for the government having an ownership in the banks. This implies ownership is bad. But then he says these are not ordinary times. It becomes good during an emergency? The entire issue of the market is, there is a market. Why is it wrong for the government to be part of that competition? Is not the government making money to fund the treasury better than taxing the people? What the Republicans really fear is the government entering the market as a competitor. If the government can make a profit, then why not. The government making a profit in a free market means another source of revenue other than taxes.

Obama’s healthcare program has always been superior to that of Clinton’s or McCain’s. He has always made clear that if you have insurance you will have the choice of keeping it. What is different is, he wants to create a national insurance pool which anyone can buy into with the same discounts afforded large corporations. Under this program more families, and small businesses will find themselves insured than in any other time in American history. If I can get insurance under this program for $1,000.00 a month I will certainly opt out of the VA system.
My question is, why are the Republicans afraid of competition from the government? Answer, because the insurance companies will be forced to end the greed and really compete. The Republicans are not afraid of government ownership, they are afraid of their backers having to compete in a real free market system. Republicans are not capitalists they are corporatists

3 comments:

Mas Triste said...

With your educational background in Soviet studies, you are probably in a better position than most to explain why redistribution of wealth will fail in the long run.

BobbyWC said...

Kurgan, sorry for the delay in writing a response.

Let's begin with a simple fact and then I will go directly to an answer. With the exception of Obama proposing a third tax rebate, ala Republican George W. Bush style, there is nothing in Obama's plan which is redistribution of wealth. I opposed it both times Bush proposed it, and I oppose it now.

I will clarify this after answering your question.

There was no redistribution of wealth in the Soviet Sytem, beyond the initial years of the revolution. Once they took the assets of the landowners and few factory owners in 1917 - what wealth was redistributed. All means of production was owned by the government. If no one had money beyond what they were paid by the government, whose wealth did they redistribute? The system failed because there was no real wealth.

The US dollar, after it was taken off of the gold standard, became a myth supported only by the world either having confidence in the dollar or being tied to the dollar.

The Soviet Ruble rightly or wrongly did not have this advantage. This is a key factor in their collapse. Although I am not sure it would have made a difference because of the second reason for its collapse.

Secondly, the Soviet model which had nothing to do with socialism or capitalism stifled all creativity and development by people who were not part of the privileged class.

We know that in math, science, the arts, and language they thrived. The problem became unless you were willing to use these skills for the Party you would be stifled.

The average Soviet was never ever allowed to be creative or access the life of the privileged.

The US buys what it needs with mythical money because the world accepts it. If tomorrow the world were to declare the dollar dead - our economy would collapse the same as the Soviets did.

The difference is, we have a strong entrepreneurial class. These people who are poor and rich make our economy run. Our system promotes creativity. This is the key to restoring our economy.

Now back to Obama - Obama's position on capital gains for most small businesses, no capital gains taxes. This will encourage the engine which runs our economy.

You cannot have government without taxes. I grow bored with all of this anti-tax talk -

We have to pay the bills. I do believe before you raise taxes you have a duty to cut the budget and make government more efficient.

Kurgan, you have been following my writings long enough to know I have opposed all Democratic programs which promote dependency on the government. We need to end all of them now. Tax policy should be used to promote growth. How you do this is where people differ. However, regardless of growth some taxes have to be paid - just to run government.

I am convinced most of the dependency programs are why a lot of good people end up turning to the Republican Party and rightfully so. These programs enslave people to the government and they are morally wrong.

Back to taxes - you have to pay for government - no way around it. Many economists agree that people need money to be able to spend money.

Poor people who are working and trying to get an education will never lift themselves up if they are taxed.

What the anti-tax people never say, and then try to make this into an issue of class warfare is, corporations only make money if people buy their products. They only pay taxes if they make a profit. The profit comes from the average American spending money. Under Obama the average American will have fewer taxes and therefor more money to spend - this means small businesses and coporations make more money. This is good.

Poor people at the bottom and middle class people cannot buy computers, cars etc if they are taxed to death.

The wealthiest 5% of this country will continue to spend even if their taxes are raised.

For every 50,000.00 over $250,00.00you earn do you know how much more tax you will pay under Obama? $1,500.00.

Now, some basic economics - if I as a middle class person have a few extra dollars to spend because of a tax cut, then I will spend it. This means more profits for small busineness where I spend my money. Most small businesses will earn more.

If Obama's plan works, (notice I said if - also I am yet willing to bet he will win) people will spend more money. More and more small businesses will have to pay more taxes as their profits go over $250,000.00 - but without the people spending the money and buying the services being offered by the small businesses their profits would not be going up.

We have spent for ever experimenting with the trickle down theory. Would it be so bad to experiment with the trickle up theory?

Now, Kurgan, I am not saying you are on one side or the other. I am speaking to a general readership because I know a lot of people believe the trickle down theory is the only option.

We are a creative people - this is our strenth as a nation and people. The ability of 50 state governments to experiment with social and tax policy is another great part of our system of government.

I am not going to say the trickle up theory will work any better than the trickle down theory.

All I choose to do is explain it and clearly indicate I think we should give it a show.

Today's post was about raising the question of, what will be the economic impact on our economy of this extra money we have to spend at restaurants, shoe repair shops, on the local handyman? It will be to benefit the small business man and help jump start the economy.

Trickle up theory.

Kurgan, thanks for the question - and Kurgan my fruatration is not in your question - it was a great question. I enjoyed using my knowledge of the Soviet System and economics.

I believe in our creativity as a nation and people. I tend to get upset when we seek to destroy that creativity by labeling new ideas as something they are not.

This game playing of labeling Obama's plan as redistribution of wealth is right out of the old guard Soviet Play book - if you try and think out of our box - we will label you in a way which destroys your credibility. This stifles what is best in the American people - creativity.

As to the election - I do not care who wins - I will give them a year to bring about meaningful change. If they do - then Republican or Democrat we should be proud of whomever our president may be.

Bobby WC

Anonymous said...

I share many of your views especially the dangers of dependency programs.
At what point would you think businesses would pack up and do what they do elsewhere if govt costs keep increasing similar as it seems to what has happened to many manufacturing enterprises or would you think normal product maturation would remain the primary reason and increased government costs would not really add a cause?