Category Archives: Social Security

President Obama’s Inaugural Address 2013 — Nothing Short Of Stunningly Progressive

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Each time we gather to inaugurate a president, we bear witness to the enduring strength of our Constitution. We affirm the promise of our democracy.

We recall that what binds this nation together is not the colors of our skin or the tenets of our faith or the origins of our names. What makes us exceptional — what makes us American — is our allegiance to an idea, articulated in a declaration made more than two centuries ago:

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are Life, Liberty, and the pursuit of Happiness.”

Today we continue a never-ending journey, to bridge the meaning of those words with the realities of our time. For history tells us that while these truths may be self-evident, they have never been self-executing; that while freedom is a gift from God, it must be secured by His people here on Earth. The patriots of 1776 did not fight to replace the tyranny of a king with the privileges of a few or the rule of a mob. They gave to us a Republic, a government of, and by, and for the people, entrusting each generation to keep safe our founding creed.

For more than two hundred years, we have.

Through blood drawn by lash and blood drawn by sword, we learned that no union founded on the principles of liberty and equality could survive half-slave and half-free. We made ourselves anew, and vowed to move forward together.

Together, we determined that a modern economy requires railroads and highways to speed travel and commerce; schools and colleges to train our workers.

Together, we discovered that a free market only thrives when there are rules to ensure competition and fair play.

Together, we resolved that a great nation must care for the vulnerable, and protect its people from life’s worst hazards and misfortune.

Through it all, we have never relinquished our skepticism of central authority, nor have we succumbed to the fiction that all society’s ills can be cured through government alone. Our celebration of initiative and enterprise; our insistence on hard work and personal responsibility, are constants in our character.

But we have always understood that when times change, so must we; that fidelity to our founding principles requires new responses to new challenges; that preserving our individual freedoms ultimately requires collective action. For the American people can no more meet the demands of today’s world by acting alone than American soldiers could have met the forces of fascism or communism with muskets and militias. No single person can train all the math and science teachers we’ll need to equip our children for the future, or build the roads and networks and research labs that will bring new jobs and businesses to our shores. Now, more than ever, we must do these things together, as one nation, and one people.

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This generation of Americans has been tested by crises that steeled our resolve and proved our resilience. A decade of war is now ending. An economic recovery has begun. America’s possibilities are limitless, for we possess all the qualities that this world without boundaries demands: youth and drive; diversity and openness; an endless capacity for risk and a gift for reinvention. My fellow Americans, we are made for this moment, and we will seize it — so long as we seize it together.

For we, the people, understand that our country cannot succeed when a shrinking few do very well and a growing many barely make it. We believe that America’s prosperity must rest upon the broad shoulders of a rising middle class. We know that America thrives when every person can find independence and pride in their work; when the wages of honest labor liberate families from the brink of hardship. We are true to our creed when a little girl born into the bleakest poverty knows that she has the same chance to succeed as anybody else, because she is an American, she is free, and she is equal, not just in the eyes of God but also in our own.

We understand that outworn programs are inadequate to the needs of our time. We must harness new ideas and technology to remake our government, revamp our tax code, reform our schools, and empower our citizens with the skills they need to work harder, learn more, and reach higher. But while the means will change, our purpose endures: a nation that rewards the effort and determination of every single American. That is what this moment requires. That is what will give real meaning to our creed.

We, the people, still believe that every citizen deserves a basic measure of security and dignity. We must make the hard choices to reduce the cost of health care and the size of our deficit. But we reject the belief that America must choose between caring for the generation that built this country and investing in the generation that will build its future. For we remember the lessons of our past, when twilight years were spent in poverty, and parents of a child with a disability had nowhere to turn. We do not believe that in this country, freedom is reserved for the lucky, or happiness for the few. We recognize that no matter how responsibly we live our lives, any one of us, at any time, may face a job loss, or a sudden illness, or a home swept away in a terrible storm. The commitments we make to each other — through Medicare, and Medicaid, and Social Security — these things do not sap our initiative; they strengthen us. They do not make us a nation of takers; they free us to take the risks that make this country great.

We, the people, still believe that our obligations as Americans are not just to ourselves, but to all posterity. We will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations. Some may still deny the overwhelming judgment of science, but none can avoid the devastating impact of raging fires, and crippling drought, and more powerful storms. The path towards sustainable energy sources will be long and sometimes difficult. But America cannot resist this transition; we must lead it. We cannot cede to other nations the technology that will power new jobs and new industries — we must claim its promise. That is how we will maintain our economic vitality and our national treasure — our forests and waterways; our croplands and snowcapped peaks. That is how we will preserve our planet, commanded to our care by God. That’s what will lend meaning to the creed our fathers once declared.

We, the people, still believe that enduring security and lasting peace do not require perpetual war. Our brave men and women in uniform, tempered by the flames of battle, are unmatched in skill and courage. Our citizens, seared by the memory of those we have lost, know too well the price that is paid for liberty. The knowledge of their sacrifice will keep us forever vigilant against those who would do us harm. But we are also heirs to those who won the peace and not just the war, who turned sworn enemies into the surest of friends, and we must carry those lessons into this time as well.

We will defend our people and uphold our values through strength of arms and rule of law. We will show the courage to try and resolve our differences with other nations peacefully — not because we are naïve about the dangers we face, but because engagement can more durably lift suspicion and fear. America will remain the anchor of strong alliances in every corner of the globe; and we will renew those institutions that extend our capacity to manage crisis abroad, for no one has a greater stake in a peaceful world than its most powerful nation. We will support democracy from Asia to Africa; from the Americas to the Middle East, because our interests and our conscience compel us to act on behalf of those who long for freedom. And we must be a source of hope to the poor, the sick, the marginalized, the victims of prejudice — not out of mere charity, but because peace in our time requires the constant advance of those principles that our common creed describes: tolerance and opportunity; human dignity and justice.

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We, the people, declare today that the most evident of truths — that all of us are created equal — is the star that guides us still; just as it guided our forebears through Seneca Falls, and Selma, and Stonewall; just as it guided all those men and women, sung and unsung, who left footprints along this great Mall, to hear a preacher say that we cannot walk alone; to hear a King proclaim that our individual freedom is inextricably bound to the freedom of every soul on Earth.

It is now our generation’s task to carry on what those pioneers began. For our journey is not complete until our wives, our mothers, and daughters can earn a living equal to their efforts. Our journey is not complete until our gay brothers and sisters are treated like anyone else under the law — for if we are truly created equal, then surely the love we commit to one another must be equal as well. Our journey is not complete until no citizen is forced to wait for hours to exercise the right to vote. Our journey is not complete until we find a better way to welcome the striving, hopeful immigrants who still see America as a land of opportunity; until bright young students and engineers are enlisted in our workforce rather than expelled from our country. Our journey is not complete until all our children, from the streets of Detroit to the hills of Appalachia to the quiet lanes of Newtown, know that they are cared for, and cherished, and always safe from harm.

That is our generation’s task — to make these words, these rights, these values — of Life, and Liberty, and the Pursuit of Happiness — real for every American.

Being true to our founding documents does not require us to agree on every contour of life; it does not mean we will all define liberty in exactly the same way, or follow the same precise path to happiness. Progress does not compel us to settle centuries-long debates about the role of government for all time — but it does require us to act in our time.

For now decisions are upon us, and we cannot afford delay. We cannot mistake absolutism for principle, or substitute spectacle for politics, or treat name-calling as reasoned debate. We must act, knowing that our work will be imperfect. We must act, knowing that today’s victories will be only partial, and that it will be up to those who stand here in four years, and forty years, and four hundred years hence to advance the timeless spirit once conferred to us in a spare Philadelphia hall.

My fellow Americans, the oath I have sworn before you today, like the one recited by others who serve in this Capitol, was an oath to God and country, not party or faction — and we must faithfully execute that pledge during the duration of our service. But the words I spoke today are not so different from the oath that is taken each time a soldier signs up for duty, or an immigrant realizes her dream. My oath is not so different from the pledge we all make to the flag that waves above and that fills our hearts with pride.

They are the words of citizens, and they represent our greatest hope.

You and I, as citizens, have the power to set this country’s course.

You and I, as citizens, have the obligation to shape the debates of our time — not only with the votes we cast, but with the voices we lift in defense of our most ancient values and enduring ideals.

Let each of us now embrace, with solemn duty and awesome joy, what is our lasting birthright.

With common effort and common purpose, with passion and dedication, let us answer the call of history, and carry into an uncertain future that precious light of freedom.

Safari

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Faustian urGe Manifesto

Ensuring That Serving “Capital” Interests Must Also Serve To Broadly Improve The Lives Of “We The People”

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CORONARE MODESTUS FAUST often bemoans ethical failures while he also attempts to mitigate, in some minuscule way, the social damages he and too many other citizens suffer from “Traditional” American Values (social and business). Inappropriate personal agendas and indifference toward obligation and ethics are significant annoyances that he addresses by trying to learn more — what wags the world and why.

Given the circus of extremes on display in society and within the political realm since President Obama’s re-election, CORONARE MODESTUS FAUST is currently working through the conundrum of how so many intelligent, educated people manage to place their feet in their mouths while their heads are so firmly up their arses.

He’s frustrated, and believes the nation is threatened, by libertarianism — knowing the objectivist/libertarian belief system is inappropriate to a fruitful, functional society. Libertarians disregard a profound reality: We are responsible for the decisions we make, yes, but we’re not responsible for the options we’re given. Thus, CORONARE MODESTUS FAUST believes that we should create that “society we would want if we didn’t know in advance who we’d be.”

He sees that another libertarian delusion is establishment of the fanciful “self-made” individual. The laughable concept discounts external influence or inspiration and exhibits a blatant disregard for the interconnectedness that is the human condition.

He remains convinced that we humans do not have to destroy each other to survive (as in two wars extinguishing 100,000+ lives as revenge for the prior killing of 3000) but that we choose to do so… not the nonsense propounded that genetics or patriotism demands it. CORONARE MODESTUS FAUST knows we have the ability to reason and that too many simply choose the easier way of reactive non-thought.

Though imbued with a simmering cauldron of rage just below his deceptively pleasant (and not altogether unpleasant looking) exterior, he’s always willing to self-examine and learn — yearning for family, friends, community members to take the same ride.

The hope… the desire… the craving… for forward movement and betterment on cultural, political, and individual levels are woven into his personal fabric, with key objectives toward equality/equitability*, liberty, fraternity, justice-for-all, empathy, self-awareness, growth, momentum, compassion, and humor.

(*EQUALITY of advancement opportunity and treatment under the law and social memes — EQUITABILITY of rewards and outcomes [economic and social])

On EQUALITY:

It appears that a large number of citizens seeking minimalist government from the Right are for strong government, though, when it favors their perceived social interests, such as interfering with the reproductive rights of women, the marriage rights of non-heterosexuals, and the civil rights of non-whites.

CORONARE MODESTUS FAUST relishes challenging the authority of political, religious, and societal priests, as he liberally supports marriage for everyone, equal rights for everyone, less poison for the environment, progressive taxation, removal of corporate personhood, financial regulation enforcement up to and including criminal incarceration, the elimination of all “consensual crimes,” and many other positions that lead conservatives to squirm uncomfortably in their seats.

On EQUITABILITY:

The Right will argue that allowing the free market to function will fix our problems. But, the free market doesn’t guarantee social outcomes, merely economic ones. Yes, it may provide more efficiency on the whole and grow the economy faster as a whole, but by itself doesn’t guarantee how wealth is distributed. The Right cannot be indifferent to the consequences of a middle-class life undermined, nor can it be indifferent to half the population’s inability to buy the products and services that businesses sell.

The Left would argue that the solution is for laws to transfer wealth from the rich to the middle class. But, while that would increase consumption, depending on the scope, it could threaten the amount of capital available to investment by the transfer itself and by eliminating incentives to invest. The Left cannot be indifferent to the fact that one can’t invest what they don’t have, and that no one will accept the risk of investment if the payoff is transferred completely away.

CORONARE MODESTUS FAUST understands the take away to be that “reasonableness” must prevail as to the extent, but transfers of some wealth should ensue as a part of the solution. So, let’s avoid extreme redistribution and focus on finding the correct amount that ameliorates the problems at hand (which will improve sales and garner more aggregate profit for firms, shareholders, and stakeholders… alike) while retaining enough incentives to invest and risk take.

As a Social-Capitalist/Social-Democrat**, CORONARE MODESTUS FAUST favors smart government — a government as big or as small as needed to achieve progressive social and capital ends, ensuring that serving “capital” interests must also serve to improve the lives of “We the people” broadly (hence, “Social”).

“Our” government’s job is best done when it benefits all of the people, and not just capital interests — as he interpretes the right favors.

(**Social Democracy is exhibited as an economic precept of Social Capitalism. The contemporary social democratic movement seeks to reform capitalism to align it with the ethical ideals of social justice while maintaining the efficient and wealth-building capitalist mode of production, as opposed to creating an alternative socialist economic system. Practical modern social democratic policies include the promotion of the commonweal, and the creation of economic democracy as a means to secure stakeholders’ rights.)

“This vast number of worlds, the enormous scale of the universe, in my view, has been taken into account, even superficially, in virtually no religion, and especially no Western religions.” – Carl Sagan

Taking exception with the very concept of “American Exceptionalism,” CORONARE MODESTUS FAUST feels compelled to explore these issues in rambling-though-coherent thoughts and an adventurous assortment of arbitrary amusements.

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Liberalism is “Life.”

It is an unrelenting pursuit of freedom from physical dangers that can kill or disable us.

  • The Liberal believes it is a nation’s job to protect its citizens from physical harm, whether from external sources, such as hostile nations, or internal ones, like crime, disease, or hunger. Without the solid ground of physical wellbeing, our nation and its citizens cannot enjoy the benefits of being free.
  • Liberals believe in a strong military, well suited to defend the nation.
  • Liberals believe in good laws, hard-working police, and a just legal system to protect its citizens from crime.
  • Liberals believe in affordable health care for everyone, to keep our people strong.
  • And Liberals believe in the availability of food and shelter for its needy, not as a hand out but as a reasonable step in moving all Americans toward self-reliance and the freedom that comes with it.

Liberalism is “Liberty.”

It is the freedom to do as your conscience dictates without impeding another’s rights. Liberalism established a nation where personal belief and self-determination are protected, not persecuted; where hard work is rewarded, not demanded; and where each person is bestowed with the ability to better his or her life because of citizenship, not class.

  • Liberals believe in freedom of speech to protect us from political oppression.
  • Liberals believe in sound regulations to protect us from economic oppression.
  • Liberals believe in just laws to protect us from social oppression.
  • And Liberals believe in quality education to protect us from the oppression of ignorance.

Liberalism is “The Pursuit of Happiness.”

It is the freedom to create an environment where the individual can excel. What is freedom if it cannot be used to better our lives? A truly free society must be one where its members can rise above their limitations and expand their futures — it is “The American Dream,” and it’s alive and well in the heart of the Liberal.

  • Liberals believe in equal opportunities for all to rise above our means.
  • Liberals believe in equal opportunities to rise above our education levels.
  • Liberals believe in equal opportunities to rise above our social status.
  • And Liberals believe each and every family should have an equal opportunity to make this world better for their children.

Based on these tenets, Liberalism is not the monster it’s made out to be by the opposition.

  • It is pro individual and pro family.
  • It is pro community and pro country.
  • Liberalism is, by its very definition, the heart and soul of what it means to be an American.
  • It stands against tyranny of any kind, whether international or domestic.
  • It works to remove abuse and fight crime.
  • And it strives to eliminate the idea of a wasted life by not wasting resources and opportunities.

Crisis of the Middle Class and American Power

Original Main Content of this Article By George Friedman

Founder and Chief Executive Officer Stratfor, a firm that is a leader in the field of global geopolitical intelligence.

Modifications, adaptations, and additions by Faustian urGe are italicized

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Last week I wrote about the crisis of unemployment in Europe. I received a great deal of feedback, with Europeans agreeing that this is the core problem and Americans arguing that the United States has the same problem, asserting that U.S. unemployment is twice as high as the government’s official unemployment rate. My counterargument is that unemployment in the United States is not a problem in the same sense that it is in Europe because it does not pose a geopolitical threat. The United States does not face political disintegration from unemployment, whatever the number is. Europe might.

At the same time, I would agree that the United States faces a potentially significant but longer-term geopolitical problem deriving from economic trends. The threat to the United States is the persistent decline in the middle class’ standard of living, a problem that is reshaping the social order that has been in place since World War II and that, if it continues, poses a threat to American power.

The Crisis of the American Middle Class

The median household income of Americans in 2011 was $49,103. Adjusted for inflation, the median income is just below what it was in 1989 and is $4,000 less than it was in 2000. Take-home income is a bit less than $40,000 when Social Security and state and federal taxes are included. That means a monthly income, per household, of about $3,300. It is urgent to bear in mind that half of all American households earn less than this. It is also vital to consider not the difference between 1990 and 2011, but the difference between the 1950s and 1960s and the 21st century. This is where the difference in the meaning of middle class becomes most apparent.

In the 1950s and 1960s, the median income allowed you to live with a single earner — normally the husband, with the wife typically working as homemaker — and roughly three children. It permitted the purchase of modest tract housing, one late model car and an older one. It allowed a driving vacation somewhere and, with care, some savings as well. I know this because my family was lower-middle class, and this is how we lived, and I know many others in my generation who had the same background. It was not an easy life and many luxuries were denied us, but it wasn’t a bad life at all.

Someone earning the median income today might just pull this off, but it wouldn’t be easy. Assuming that he did not have college loans to pay off but did have two car loans to pay totaling $700 a month, and that he could buy food, clothing and cover his utilities for $1,200 a month, he would have $1,400 a month for mortgage, real estate taxes and insurance, plus some funds for fixing the air conditioner and dishwasher. At a 5 percent mortgage rate, that would allow him to buy a house in the $200,000 range. He would get a refund back on his taxes from deductions but that would go to pay credit card bills he had from Christmas presents and emergencies. It could be done, but not easily and with great difficulty in major metropolitan areas. And if his employer didn’t cover health insurance, that $4,000-5,000 for three or four people would severely limit his expenses. And of course, he would have to have $20,000-40,000 for a down payment and cl osing costs on his home. There would be little else left over for a week at the seashore with the kids.

And this is for the median. Those below him — half of all households — would be shut out of what is considered middle-class life, with the house, the car and the other associated amenities. Those amenities shift upward on the scale for people with at least $70,000 in income. The basics might be available at the median level, given favorable individual circumstance, but below that life becomes surprisingly meager, even in the range of the middle class and certainly what used to be called the lower-middle class.

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The Expectation of Upward Mobility

I should pause and mention that this was one of the fundamental causes of the 2007-2008 subprime lending crisis. People below the median took out loans with deferred interest with the expectation that their incomes would continue the rise that was traditional since World War II. The caricature of the borrower as irresponsible misses the point. The expectation of rising real incomes was built into the American culture, and many assumed based on that that the rise would resume in five years. When it didn’t they were trapped, but given history, they were not making an irresponsible assumption.

American history was always filled with the assumption that upward mobility was possible. The Midwest and West opened land that could be exploited, and the massive industrialization in the late 19th and early 20th centuries opened opportunities. There was a systemic expectation of upward mobility built into American culture and reality.

The Great Depression was a shock to the system, and it wasn’t solved by the New Deal, nor even by World War II alone. The next drive for upward mobility came from post-war programs for veterans, of whom there were more than 10 million. These programs were instrumental in creating post-industrial America, by creating a class of suburban professionals. There were three programs that were critical:

1.    The GI Bill, which allowed veterans to go to college after the war, becoming professionals frequently several notches above their parents.

2.     The part of the GI Bill that provided federally guaranteed mortgages to veterans, allowing low and no down payment mortgages and low interest rates to graduates of publicly funded universities.

3.    The federally funded Interstate Highway System, which made access to land close to but outside of cities easier, enabling both the dispersal of populations on inexpensive land (which made single-family houses possible) and, later, the dispersal of business to the suburbs.

There were undoubtedly many other things that contributed to this, but these three not only reshaped America but also created a new dimension to the upward mobility that was built into American life from the beginning. Moreover, these programs were all directed toward veterans, to whom it was acknowledged a debt was due, or were created for military reasons (the Interstate Highway System was funded to enable the rapid movement of troops from coast to coast, which during World War II was found to be impossible). As a result, there was consensus around the moral propriety of the programs.

The subprime fiasco was rooted in the failure to understand that the foundations of middle class life were not under temporary pressure but something more fundamental. Where a single earner could support a middle class family in the generation after World War II, it now took at least two earners. That meant that the rise of the double-income family corresponded with the decline of the middle class. The lower you go on the income scale, the more likely you are to be a single mother. That shift away from social pressure for two parent homes was certainly part of the decline in family incomes.

Income stagnation among the middle class and the resulting inequality of distribution are not mere effects of the current crisis. They play an immediate role affecting both patterns of demand and incentives to compensate (for income stagnation and inequality of income distribution) through debt financing. We need a more focused and urgent effort to explore the policy drivers behind the deindustrialization and labor market changes in the US since the 1970s that *are* the principal causes of our current unfortunate circumstances/crisis.

Re-engineering the Corporation

But there was, I think, the crisis of the modern corporation. Corporations provided long-term employment to the middle class. It was not unusual to spend your entire life working for one. Working for a corporation, you received yearly pay increases, either as a union or non-union worker. The middle class had both job security and rising income, along with retirement and other benefits. Over the course of time, the culture of the corporation diverged from the realities, as corporate productivity lagged behind costs and the corporations became more and more dysfunctional and ultimately unsupportable. In addition, the corporations ceased focusing on doing one thing well and instead became conglomerates, with a management frequently unable to keep up with the complexity of multiple lines of business.

For these and many other reasons, the corporation became increasingly inefficient, and in the terms of the 1980s, they had to be re-engineered — which meant taken apart, pared down, refined and refocused. And the re-engineering of the corporation, designed to make them agile, meant that there was a permanent revolution in business. Everything was being reinvented. Huge amounts of money, managed by people whose specialty was re-engineering companies, were deployed. The choice was between total failure and radical change. From the point of view of the individual worker, this frequently meant the same thing: unemployment. From the view of the economy, it meant the creation of value whether through breaking up companies, closing some of them or sending jobs overseas. It was designed to increase the total efficiency, and it worked for the most part.

This is where the disjuncture occurred. From the point of view of the investor, they had saved the corporation from total meltdown by redesigning it. From the point of view of the workers, some retained the jobs that they would have lost, while others lost the jobs they would have lost anyway. But the important thing is not the subjective bitterness of those who lost their jobs, but something more complex.

As the permanent corporate jobs declined, more people were starting over. Some of them were starting over every few years as the agile corporation grew more efficient and needed fewer employees. That meant that if they got new jobs it would not be at the munificent corporate pay rate but at near entry-level rates in the small companies that were now the growth engine. As these companies failed, were bought or shifted direction, they would lose their jobs and start over again. Wages didn’t rise for them and for long periods they might be unemployed, never to get a job again in their now obsolete fields, and certainly not working at a company for the next 20 years.

The restructuring of inefficient companies did create substantial value, but that value did not flow to the now laid-off workers. Some might flow to the remaining workers, but much of it went to the engineers who restructured the companies and the investors they represented.

Statistics reveal that, since 1947 (when the data was first compiled), corporate profits as a percentage of gross domestic product are now at their highest level, while wages as a percentage of GDP are now at their lowest level.

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The problem from restoring profitability in the period of 1970’s to 1980’s was not a question of making the economy more efficient — restructuring did do that, as intended — the problem was a question of where the value from improved efficiencies accumulated. The upper segment of the wage curve and the investors continued to make money. The solid and large middle class fragmented into two: a segment that entered the upper-middle class, while another faction sank into the lower-middle class.

American society on the whole was never egalitarian. It always accepted that there would be substantial differences in wages and wealth. Indeed, progress was in some ways driven by a desire to emulate the wealthy. There was also the expectation that while others received far more, the entire wealth structure would rise in tandem. It was also understood that, because of skill or luck, others would lose.

What we are facing now is a structural shift, in which the middle class’ center, not because of laziness or stupidity, is shifting downward in terms of standard of living. It is a structural shift that is rooted in social change (the breakdown of the conventional family) and economic change (the decline of traditional corporations and the creation of corporate agility that places individual workers at a massive disadvantage).

The inherent crisis rests in an increasingly efficient economy and a population that can’t consume what is produced because it can’t afford the products. This has happened numerous times in history, but the United States, excepting the Great Depression, was the counterexample.

Obviously, this is a massive political debate, save that political debates identify problems without clarifying them. In political debates, someone must be blamed. In reality, these processes are beyond even the government’s ability to control. On one hand, the traditional corporation was beneficial to the workers until it collapsed under the burden of its costs. On the other hand, the efficiencies created threaten to undermine consumption by weakening the effective demand among half of society.

The Long-Term Threat

The greatest danger is one that will not be faced for decades but that is lurking out there. The United States was built on the assumption that a rising tide lifts all ships. That has not been the case for the past generation, and there is no indication that this socio-economic reality will change any time soon. That means that a core assumption is at risk. The problem is that social stability has been built around this assumption — not on the assumption that everyone is owed a living, but the assumption that on the whole, all benefit from growing productivity and efficiency.

If we move to a system where half of the country is either stagnant or losing ground while the other half is surging, the social fabric of the United States is at risk, and with it the massive global power the United States has accumulated. Other superpowers such as Britain or Rome did not have the idea of a perpetually improving condition of the middle class as a core value. The United States does. If it loses that, it loses one of the pillars of its geopolitical power.

The left would argue that the solution is for laws to transfer wealth from the rich to the middle class. That would increase consumption but, depending on the scope, would threaten the amount of capital available to investment by the transfer itself and by eliminating incentives to invest. You can’t invest what you don’t have, and you won’t accept the risk of investment if the payoff is transferred away from you. The take away is that “reasonableness” must prevail as to the extent, but transfers of wealth should ensue as a part of the solution.

The agility of the American corporation is critical. The right will argue that allowing the free market to function will fix the problem. The free market doesn’t guarantee social outcomes, merely economic ones. In other words, it may give more efficiency on the whole and grow the economy as a whole, but by itself it doesn’t guarantee how wealth is distributed. The left cannot be indifferent to the historical consequences of extreme redistribution of wealth — Correct! So, let’s avoid the extreme redistribution and focus on finding the correct amount that ameliorates the problem at hand (which will improve sales and garner more aggregate profit) while retaining enough incentives to invest and risk take. The right cannot be indifferent to the political consequences of a middle-class life undermined, nor can it be indifferent to half the population’s inability to buy the products and services that businesses sell.

The most significant actions made by governments can sometimes tend to be unintentional. The GI Bill was designed to limit unemployment among returning serviceman; it inadvertently created a professional class of college graduates. The VA loan was designed to stimulate the construction industry; it created the basis for suburban home ownership. The Interstate Highway System was meant to move troops rapidly in the event of war; it created a new pattern of land use that was suburbia.

The most significant actions made by management and investors (the Free-Market Private Sector) can also tend to be unintentional or, too often, just simply not a matter of consideration or concern. Restructuring of American companies was designed to improve efficiencies and available profits; it inadvertently created untethered workers, the loss of a solid middle class, and reduced expectations to the promise of the American Dream.

It is unclear how the private sector can deal with the problem of pressure on the middle class. Government programs frequently fail to fulfill even minimal intentions while squandering scarce resources. The United States has been a fortunate country, with solutions frequently emerging in unexpected ways.

It would seem to me that unless the United States gets lucky again, its global dominance and domestic social peace/fairness are in jeopardy. Considering its history, the United States can expect to get lucky again, but it usually gets lucky when it is frightened. And at this point it isn’t frightened but angry, believing that if only its own solutions were employed, this problem and all others would go away. I am arguing that the conventional solutions offered by all sides do not yet grasp the magnitude of the problem — that the foundation of American society is at risk — and therefore all sides are content to repeat what has been said before.

People who are smarter and luckier than I am will have to craft the solution. I am simply pointing out the potential consequences of the problem and the inadequacy of all the ideas I have seen so far.

Safari


(Thankfully) It’s Almost Over… Obama Vs Romney

The 2012 Presidential Election is nearly upon us, and here’s a thought offered…

No one reading this site will be surprised that I am voting for Barack Obama on Tuesday, despite his clear flaws and failures of the past four years (more a failure of assertive leadership and savvy negotiation skills than the failure of intellect, effort, and ethics we experienced during the Bush II years).

While our emotions often override our rational intelligence during campaigns and we come to a conclusion that is quite facile and against our better interests, I still think the “issues” matter… and that candidates’ positions and plans matter.

Actually, on so very many issues, President Obama is clearly better for the United States than Mitt Romney — better for legal, economic, and health freedoms. Still, given our current Bush-induced economic climate, one of the more important matters is fiscal policy.

On this issue, solid economics makes the case, aside from my liberal leanings. It’s clear to most rational economists, and one need only look to the conservative British publication The Economist to grasp the important difference between candidates on the topic:

“… far from being the voice of fiscal prudence, Mr Romney wants to start with huge tax cuts (which will disproportionately favour the wealthy), while dramatically increasing defence spending. Together those measures would add $7 trillion to the ten-year deficit. He would balance the books through eliminating loopholes (a good idea, but he will not specify which ones) and through savage cuts to programmes that help America’s poor (a bad idea, which will increase inequality still further). At least Mr Obama, although he distanced himself from Bowles-Simpson, has made it clear that any long-term solution has to involve both entitlement reform and tax rises. Mr Romney is still in the cloud-cuckoo-land of thinking you can do it entirely through spending cuts: the Republican even rejected a ratio of ten parts spending cuts to one part tax rises.”


Alt-Erlaa: Architecture That Serves A Social Purpose — Social Housing That Looks & Feels Like Luxury Housing

Click Images For Larger Views

The development of Alt-Erlaa is one of the largest housing estates in Austria and is a city within a city with complete infrastructure representing a showcase of the functioning satellite town of the 70s.

The Alt-Erlaa complex in Vienna, Austria — a social housing complex built between 1973 and 1985 for low-income residents — provides 3,172 mostly family-friendly apartments (65% of homes with at least 3 bedrooms) and 3,400 underground parking spaces to approximately 10,000 occupants.

The arrangement of the apartments follows the concept of “stacked single-family home” in the form of terraced apartments. To complement this approach, up to the 12th floor planters also serve as a privacy screen. Every home has at least one balcony as private open space.

Beyond the basics, Alt-Erlaa also includes 2 clinics, 3 schools, 2 day care centers, 1 athletic facility, a church, an administrative building and a shopping mall. Alt-Erlaa also has its own rail station for traveling on Vienna’s public rail transport

On top of each of the 27-storey cascading blocks, there is an outdoor swimming pool used regularly by 70% of the residents. When too cold outside, they can use one of the several indoor swimming pools. There’s also a sauna, a solarium, and tennis and soccer courts. Of course, there is ample green space lush enough that one might forget they are in a city let alone a housing project block.


This Is How To Fill The Social Security Funding Gap

Social Security Can Be Made Secure For The Next 75 Years

First, adjust contributions to the Social Security trust Fund

Second, make some adjustments to Social Security Benefits

 

 


Denied Access To Health Insurance…Deadly Results

Across the nation, 26,100 people between the ages of 25 and 64 died prematurely due to a lack of health coverage in 2010

    — according to the most recent report from Families USA, Dying for Coverage: The Deadly Consequences of Being Uninsured.

The five states with the most premature deaths due to lack of insurance in 2010 were: California (3,164 deaths), Texas (2,955 deaths), Florida (2,272 deaths), New York (1,247 deaths) and Georgia (1,161 deaths).

In 2010, nearly 50 million Americans had no health insurance of any kind.

  • 2,175 people who died prematurely every month
  • 502 people who died prematurely every week
  • 72 people who died prematurely every day
  • …that’s three premature deaths every hour

All of this ABSURD in an industrialized nation!

We went to war for about 3,000 citizens being killed by terrorists…where is the outrage over these unnecessary deaths?