A House Divided...

"United We Stand, Divided We Fall"

"A house divided against itself cannot stand."- Abe Lincoln
In Springfield, Illinois on June 16, 1858 Abraham Lincoln delivered a speech to the Republican Convention as they selected Lincoln to run against Democrat Fredrick Douglas where he quoted the Bible by saying "A house divided against itself cannot stand." (Mark 3:25, Matthew 12:25, Luke 11:17) in reference to the great division in America at this time.  I am now writing this article to urge the Republican Presidential Candidates to take heed of this warning.

Currently, the GOP has more than 15 formally declared Presidential Candidates.  All of them have the common goal, hopefully of making this nation a better place and all of them, also hopefully, believe that the other Republican candidates would be a better president than the Incumbent President Barrack Obama.  Now, I understand that everyone who is running believes that he or she has the best chance of winning or would do the best job, but the fact is that only one person can win the 2012 election and the Republican Party, as it now stands, is divided against itself.

There are many reason why having so many candidates could crush the Republicans' chance of winning the election.  Perhaps most detrimental to a successful campaign is the fact that all of these candidates are using money for each of their individual campaigns.  This, in itself could result in the reelection of Barrack Obama in 2012.  With so many campaigns running simultaneously, the donors to the Republican party cannot focus their donations into one campaign, which means that for every candidate the GOP supports, the other candidates loose campaign funds.  We all know how important funding is to a successful run to the presidency.

The second, or perhaps even the first example that the party is divided against itself is that the candidates are trying so hard to win the official nomination that they are slamming each other and their policies.  With this type of mudslinging within a party, everyone who is not a straight ticket Republican voter is seeing the faults of all of the Republican candidates, which makes just sticking to the status quo and voting Obama look more and more appealing.  In addition to that, the Democrats can just fly way under the radar and not be spending money to argue why the Republicans are worse candidates than Obama because the Republicans are doing it to themselves!

Finally, if the Republicans trashing themselves doesn't get across all of their candidates' weak points, the myriad of articles on news sites such as fox news and CNN will certainly paint gigantic bulls-eyes on these vulnerable points.

During the founding of this country, a common motto was "united we stand, divided we fall."  If the Republicans cannot remember this vital fact or continue to ignore it, then I fear that the house divided against itself truly will not stand.

Economic Darwinism

Capitalism, "an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market," (Merriam-Webster Dictionary) is, in my opinion, the best and most logical economic system.  In 1859, Charles Darwin published his book On the Origin of Species.  Darwin explained how species today came to be through evolution and natural selection, or survival of the fittest, only allowing the "most fit" individuals in the population survive.  In the Kingdom of business and economics, these individuals are the businesses and corporations that belong to the population that makes up the international, national, or local population.  With the capitalist system, the best businesses are naturally selected to survive.  In capitalism, only the hard-working and well-planned businesses survive.  Capitalism is Economic Darwinism.

Within a capitalist society, consumer goods are regulated by private companies.  These companies compete to offer the best goods, the lowest prices, the greatest variety, the most accessibility... well, anything really to maximize profit.  The way the system works is that the companies compete and whoever has the best business plan or battle strategy wins!  They make greater profits, which they can use to further expand and weed out their competition, and they gain a larger consumer base, leading to an increase in future profits as well.  It also causes failing companies, those who have a faulty business plan, who are not reliable, or who can not be trusted by the consumer population quickly fall apart.  So why is this a good thing?  Well, this enables future companies to learn from the mistakes of their ancestors and to be more dependable and have a better business plan in the future.  It also allows the good, hard-working, and trusted companies to grow more and to provide the best environment possible for the consumer population.

Another reason why capitalism is the most healthy economic system is that it allows for upward nobility, the American dream.  In non-free market capitalist systems, that possibility just isn't there.  However, with capitalism, anyone who has a good idea and is willing to work hard can make just about anything out of his or herself.  There is always room for new corporations and small local businesses.  A teenage boy can teach himself computer skills and make hundreds of thousands of dollars.  Without capitalism, life would not have an many golden opportunities just lurking in behind every corner.

In addition to providing opportunity, capitalism provides incentive to have lofty goals (since they are possible to achieve) and to invent incredible new ideas.  Capitalism allows inventions like computers and ipods to take place!  Without a competitive market, all of the old companies would just keep doing what they're doing and not really have to worry about cranking out new services or products.  With capitalism, it is a necessity for businesses to do this.  Therefore, capitalism has, indirectly, allowed for the creation of most of our current American culture and advances in science and technology!

The truth of the matter is that, unless the entire world became a utopia, the international market is a capitalist market and any national market that already operates with the capitalist system is set up to by more fit automatically.  Capitalism is the best system, and it actually can work for an indefinite amount of time, unlike other economic systems such as socialism, which depend on government and politics to continue to function.  The Economic Darwinism type of system will happen regardless of the wishes of politicians, so let the economy flourish as it naturally weeds out the weak businesses and promotes the good, strong ones.

Social Security... Necessary Safety Net or Ponzi Scheme?

Today the government announced that Social Security recipients will begin receiving a 3.6% increase in their benefits beginning next January.  This increase is the result of a mandate that the amount of money in benefits will automatically increase every year based off of the COLA (Cost of Living Adjustment) which seems to adjust primarily based on inflation.  As we all know, Social Security has been an object of dispute in U.S government recently.  Governor Perry claims that the system is essentially a Ponzi Scheme, while others claim that Social Security is necessary and perfectly viable.  So is Social Security a safety net or a Ponzi Scheme?

As the system is set up now, the current recipients of the Social Security are being provided their benefits from the working citizens of America who pay Social Security taxes.  In the Ponzi scheme, investors where repaid with a profit based solely on money that the next wave of investors would invest.  The issue is that it relies on the next wave being larger than its preceding wave or the scheme just falls apart.  This can certainly be related to the Social Security system because it also relies on the next wave of people to repay the people that already paid into the system while they were working with the expectation of receiving compensation when they finally retire.  It is similar to the Ponzi scheme because it completely relies on the next wave of working tax-payers to provide them with their promised benefits.  However, it is dissimilar to a Ponzi scheme because the government is not looking to make a profit on this system, but to provide a pension for the retired citizens to live on once they no longer have an income from working.

Logically, we can not just leave the elderly and disabled to fend for themselves.  We live in the greatest nation on the planet and a major reason why we are so great is that we never fail to protect our own.  I would hate to see the day when society foolishly turns its back on our parents and grandparents who helped us all as we grew up and who took care of us when we could not yet take care of ourselves.  After all, we will all hit the the same point eventually and a little boost to what we can spend every month would undeniably be appreciated.  Even our oldest ancestors had systems set up in their very primitive societies to care for their elderly citizens.  They simply became "elders" and "witch-doctors", people with a lot of life experiences and wisdom to share with the rest of the community.  This abundance of knowledge and wisdom was enough for them to be provided for.  Today, our senior citizens can still provide us with marvelous gifts of knowledge and wisdom.... AND they have already paid into the system so that they will receive their pensions in return.  To try to strip these people of the service that they have already paid for and clearly need is just a crime against humanity.

There is just one problem...  Our government has already engaged in deficit spending and has created committees to try to find a solution to this problem.  President Obama is even now considering changing the way that the COLA is calculated so that it will have less of an annual increase.  With the national debt that we have already accumulated and continue to accumulate, we will now be adding approximately $26,000 million dollars to our government's annual expenses.  They are struggling enough to make ends meet already! (number of citizens to receive the increased Social Security Benefits. (55 million) and the average increase in dollars per year (about $467), provided by fox news and CNN)

To answer my question that was the reason for this article, I believe that Social Security is a necessary safety net and is NOT a Ponzi scheme because it does not have selfish intentions.  However, it does have the same failing strategy that the Ponzi scheme had, which is bad news for everyone retiring in thirty years or more since they will have been paying into the fund through their taxes, only to find nothing in the jar for them later on.  Something needs to change about this system and the answer is NOT to increase taxes on the working American citizens who are already being burdened by the downtrodden economy.  Instead my challenge to the people who run our government is to find a way to reform the Social Security system so that people are not getting screwed (for lack of a better term).  So to those who want to keep Social Security, what other government services or agencies are less important and that we can do without so that we can fund Social Security?  We are going to have to make some sacrifices.  To those who believe that Social Security needs to be discontinued, is there something else that we can remove to trim the fat off our countries deficit spending without throwing our seniors into the lion's den?

A New Revolution

In the years prior to the American Revolutionary war, which created the great United States, Great Britain continually issued more and more taxes on the colonists after they had enjoyed years of salutary neglect.  The colonists revolted in the face of these taxes.  Our nation was created when it was because the people were being forced to surrender too much of their own earnings to a government that was using the money for its own personal agenda.  The first tea party occured and we fought a war.  The modern Tea Party is "Taxed Enough Already" and the countless citizens who are occupying Wall Street are calling for the wealthy to carry the tax burden.  Both wings of politicians are struggling to come up with a solution that will benefit their consituents and keep the government floating.  As always, I find my solution in our good friend logic.

My plan to make everyone happy, or at least to leave no one room to complain, is to eliminate income tax and to reduce capital gains tax.  In exchange, we must increase sales tax based off of a much simpler tax code.  We could separate all purchaseable items and services into three categories: Necessary Goods, Standard Goods, and Luxury Goods.  The way that this plan differs from the FairTax plan is that we put even less stress on the middle class by increasing the tax more on the items and services included under "Luxury Goods", which would include items such as higher-end automobiles, televisions, and other top- quality items, so that we can keep the sales tax on "Standard Goods", being anything from simple, but unnecesary items from chips to basic computers and laptops, lower.  Instead of increasing the tax on the goods that the average or "99%" of Americans do purchase, we can make the people in Wall Street happy as well as those of us who enjoy some tea with our tax breaks.  Furthermore, this, if anything, would lower the burden on the lower class because they would not have to pay any tax whatsoever if they only stuck to the basic necesities.  The FairTax proposes to increase sales tax to about 23%.  With the separation of goods into these three categories, the "Necesary Goods" can have no tax, the "Standard Goods" could have something along the lines of 18% tax (give or take a point or two), and the Luxury Goods could have something along the lines of a 32% tax.  This should accommodate the loss of income tax revenue at least, since it does not abolish all capital gains, gift, estate, social security, or Medicare taxes (so the suggested sales tax percentages may even be lower!).  Of course, none of these figures are exact, just very rough estimations.  The details, of course, could be worked out be the Bureaucrats who actually get paid to figure all of that out, but the basic idea should not be altered much, if at all.

Let's first take this from the perspective of the average American citizen.  Say Billy makes $80,000 a year.  He would have to pay approximately $16,125 in income taxes (according to moneychimp.com).  This leaves poor Billy with only $63,875 to use for the year.  If he owns a modest house, he has to more into his morgage bill as well as his electrical bills, water bills, and gas bills every month.  At the end of the year, Billy really does not have a whole lot of money to use to try to push himself upward on the economic later and fulfill his American dream.  He could make an investment in real estate, but then has has to worry about a second mortage and, in this economy, what if he gets laid off?  That does not seem like a likely choice, it is too risky.  He could also invest his money in a CD at a bank, but, again, what if he gets laid off and needs the money before he can withdrawl it without penalty?  His other reasonable choice is to invest his money in the stock market, but he could loose value there, and even if he does manage to pick a stock that goes up, he still has to pay transaction fees and capital gains tax.  But, if he had the $16,125 back he would have more money to potentially invest or to just improve his lifestyle.  However, with the increase of sales tax, he would still be giving the government the same amount of money in tax revenue.

Next let's take a look through the eyes of a lower class citizen.  They really do not make very much money at all and would be very upset if they suddenly had to pay more money for the goods that they need to buy.  I say fear not.  Everything that they need to live would be absolutely tax free.  In addition to this, all people in a current lower level income zone could be given a card that excuses them from sales tax on other goods that would not be in the "Necessary Goods" category up to a certain amount.  Then they would actually be paying even less tax than what they are now.  So now the middle and lower classes are happy, and; therefore, so is the Occupy Wall Street movement.

Next, the upper class.  Yes, even the Upper Class should be satisfied with this proposal.  They will understand that there is a clear correlation between how much they buy and how much they pay in taxes.  This will be a relief to them because it will be a change from a correlation between how much money they earn and how much money is taken away from them.  They simply would not have any ground to complain with because if they do not want to pay taxes, then they do not have to!  So for all citizens, this plan would work out well.  However, there is one group that this would not work out very well with.

This new kind of tax code would just be horrible on the student population.  Most college students do not have massive incomes to be taxed in the first place, so they would not benefit from the removal of this policy.  They would also feel the heat very strongly from the increase in sales tax when they are trying to buy all of their electronic gadgets that they use for studying and class projects.  The logical counter to this issue is to exempt all college students from sales tax all together.  This will not pull from overall tax revenue too much and it will help the hard working students, the employees of tomorrow to get through college easier and get into the work force.

Of course there would be other benefits to this policy and if any of these are brought up or challenged, I would be happy to defend them.  Everyone wants a change to our tax code.  This seems to be at least one of the most logical solutions.

Disclaimer: I am NOT trying to start a revolution or revolt, I am just suggesting a new way to implement taxes.

New Blog

Hello, this is my new blog.  With all of the political turmoil going on here in the United States, I have decided that we need a new political view based only on rational thinking.  My views tend to support the conservative end of the spectrum and capitalism, but I am always open to new ideas and will, of course, share some of my own new ideas.  I will also accept and reply to posts asking for advise on pretty much anything and give the most logical answer I can think of.  I will post often and answer comments and questions as frequently as possible.  Enjoy!