Time magazine, in its recent edition, shared a superb article on the complexity of the American Civil War. Its really a must read for those of us trying to maintain a historical grasp of this time in our history.
Among what may or may not be one of the more minor points of the article by Mr. Drehle, was the statement "One of the blessings of being able to set up shop on a new continent was that Americans never had to be defined by clan or tribe or region."
Unfortunately, as we grasp to believe this statement has credibility, the fact is it's untrue and as we will see in a moment, contributes significantly to the dimension of our economic problems.
We no longer argue over the wrongness of slavery of any sort, or about the right to equal education between men and woman, but we do argue incessantly, in subtle and direct ways, about inequality of economic wealth.
Walk down Fifth Avenue in New York, among many other places, and what you find is doorman or two, possibly a security person in the lobby, and maybe even an elevator man. Go down to Florida, and behold the many gated communities which are ostensibly for the wealthy but are significantly upper middle class, and look for the myriads of security men driving around in each community.
We may not be being defined by clan, but we are being defined by other things like wealth, education and expanding rights.
It can be said that if you can afford to live in a better neighborhood or have a bigger boat or whatever, you're barely a welcomed part of society in many places. Very few of the people on Fifth Avenue or in our many gated communities would give up these security amenities. These types of social segregation by, "class", are known to not work in the long term interest of democracy. Let us ask why not...
Jealousy among tribes, clans or economic classes is part of the mosaic of mankind. Unfortunately the jealousy as it exists, requires so much security that it's bad for everyone and does not get to the root cause of why.
Awhile back in one of my blogs, I wrote that no one can argue about everyone having available the so called amenities of living in our type of society. I stated that this could only come about if the thrust of the nations policy was to create wealth and wealth and wealth. I stated that wealth should not be gotten illegally or immorally, but it would be good for everyone if we figured out how to increase it. I've been met with some hostility on my emphasis on wealth. Simply put, the size of the pie has to grow so the slices can be bigger and someday of equal size.
The wealth of this country basically flows through the system. Therefore, other things being equal, the more flow the more volume. It is well known in economic circles that tax policy has been used to incentivize those areas of the economy that the prevailing government deems in the nation's interest. Depletion deductions for resource companies are meant as an incentive to seek more resources. Mortgage interest deductions are meant as incentives for people to buy homes, apartments, create jobs and demand for building products. Charitable deductions increase donations for organizations in need. Taxes on cigarettes are meant to reduce consumption of a very harmful product, and on and on it goes. If these so called loop hole deductions are taken away or reduced, I think it would indicate that the whole concept of targeted tax incentives was counterproductive. Without going into this too deeply, taxes are just another expense, no more and no less, to individuals and corporations. As a general rule, any expense including taxes, can reduce consumption or in a corporate sphere, contribute to higher prices.
The idea is to incentivize wealth creation and then decide the best we can whether the free flow of the market forces or more centralized controls, will push wealth retention in more economically productive directions. It can be argued that allocation of cash flow by corporations to buy back their own shares at inflated prices is a misallocation of free cash flow. For managements to tell their shareholders that they are returning wealth to them from share repurchases, can in many cases be shown to border on the absurd. We all know that the government also makes mistakes. It's real simple because people make mistakes. If we decide the government can increase wealth more effectively than wealth creators, so be it. This is pretty unlikely to occur.
We should always clamp down on the schemers. We have to let it be known that America is a land of equality before the law, a land where prejudices are unacceptable; but not a guarantor of equality of results. In summary, we are on a journey that can only be properly served when the doorman and the gates come down, and the poor and the rich can walk among each other with a feeling of dignity and safety.
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