CNBC had Rep. Eric Cantor of Virginia on as a guest this week. Very interesting to say the least. I know you have to separate substantive talk from political talk when having a conversation with most politicians. But why ? Why would an honest politician offer “political sound bites” , prepared for pliant and biased listeners or their “base” ; with proclamations that may be far removed from candor or accuracy ?
The conversation drifted into federal taxes. Taxes should not go up on anybody, according to Cantor. Really ? Is he implying we have a revenue-perfect tax code ? Does Cantor know that taxes as a per cent of GDP is at modern day lows; probably the lowest in Cantor’s lifetime. Does Cantor know about the national debt ? Now, approaching 16 trillion and counting. I hope Cantor don’t believe the rhetoric about growing our debt away. Furthermore, I hope he does not advocate inflating our debt away, as that is a brutal tax. I wonder if Cantor ever read about the highest top marginal rate of 91% in the Eisenhower and after, years. Back then the economy was clicking out growth of 5-6% a year.
Politicians see taxes as their contribution to the health of the economy, maybe even superseding or pre-empting the market dynamism. That is why we have a voluminous and even chaotic tax code. Politicians need to know that whatever they do with the tax code, other than confiscatory taxes, will be a minor contribution, and often a misplaced contribution to the economy. The material progress of a society is a deep, deep, cultural phenomenon. I remember hearing Warren Buffett discounting the tax element in business expansion. I don’t mean to say taxes are unimportant to business; it’s just they are down on the list. The corporate world would much prefer a good solid welfare program than tax accommodation.
There is a relationship between general freedom and wide-spread material advancement. I suppose you could argue that taxes, at some point, could impede all progress. But, we are not near that dark area.
It should always be remembered that politicians, many of them, may need some honor and above all, they need to be re-elected.
The best part of the interview was Cantor offering his advice on financial abuses and “legality”. Only legal behavior should be tolerated, he says ! If a lobbyist has a plan to give his client an advantage, the first thing he wants to do is make the advantage legal. The lottery is legal in many states. That’s about as abusive as it gets. It worries me a lot more about what is legal, than illegal.
A piece in the Wall Street Journal is accusing the FED of embracing “trickle-down” in spite of the evidence of the last three decades. It says, the FED contributes the the growing wealth disparity and the vanishing middle class by expanding credit to processors to political privilege and economic power.
The FED, says the article, does not expand the money supply uniformly, but rather to the big banks. This makes for a wealth transfer from the middle class to the most affluent or the 1%.
One of the great challenges we have is to make a break from the ideology of “trickle-down”. Not only is political policy and tax policy at fault, but also the Federal Reserve is afflicted with this un-American thinking !
Elizabeth Warren was on the news early Monday morning (May 14) talking about J.P.Morgan. As she pushed her case for more stringent regulations she was asked about breaking up the large banks. But Mrs Warren, who is running for the U.S. Senate is Massachusetts, has skills in talking right through a question without answering it.
The top five banks have approximately 8 trillion of the 13 plus trillion of the other approximately 7,500 banks. That might be a little top heavy. Breaking up the large banks, which now control the dominant share of the nations banking business, opens up the market forces to control not only abuses, but parity of distribution in financing. Without the market forces, banks like J.P. Morgan can become so large they are unmanageable. So, when you are too big and, of course, too big to fail, the government must intervene.
The heavy hand of regulation eventually will devolve into government-run banks. This is back-door socialism. I much prefer the market. As the hearings in Congress begin it will be very curious as to who opposes breaking up the big banks.
Breaking up the big banks will not eliminate government regulation, but is will sustain autonomy for the banking business. Otherwise, the regulators will infiltrate the management to the point that it retards the agility of banks and the economy as well. Banks could become stressed in order to keep market penetration and that could invite more regulator-business corruption. That is messy !
Keeping oligopolies, in the end, is pro-government and creating competition among the top 5 banks is pro-market. If you let the oligopolies operate relatively free you get the undesirable results we now experience in the petroleum energy field.
Mrs Warren did say we should restore Glass-Steagall to the banking business. That could be a very good proposal for the nation. It would again, let a bank be a bank.
A recent British study shows that young people learn their drinking habits, including binge drinking, from the movies. It is recommended that movies refrain from alcohol and start treating alcohol like cigarettes, which is conspicuously absent from the major media. Sounds reasonable, as alcohol is a proven enemy to young people.
What I don’t understand is how the influence of the movies would over-power the refrigerator at home. I always thought that children learned to use alcohol from their parents. Yet, I know external influences are powerful, especially at a vulnerable age. However, I still feel a alcohol-free refrigerator will produce a long term favorable result.
Amendment 1 in North Carolina is a contest of values. They say there is a big divide between the values of rural and urban counties, as well as a generational divide, and this will be revealed in the May 8 election on Amendment 1, to the state Constitution. Amendment 1 establishes marriage as between a man and a woman. North Carolina is the only state in the South that does not Constitutionally protect traditional marriage. If the marriage amendment is affirmed be the voters on Tuesday, May 8 that will fix the will of the people in the Constitution on the subject of marriage. Polls indicate an urban bias to the amendments defeat and it has wide support in rural counties
The urban-rural ethic extends beyond North Carolina, and is very curious, for a lot of reasons. The generational divide may be based or perceived as a narrow “rights” matter. However, same-sex marriage is not a narrow “rights” issue. There is a sharp difference in voting habits of the generations. Young people are historically poor voters.
Billy Graham and his association have come out in recent days in support of the amendment. Any other marriage arrangement outside of one man-one woman violates Bible teaching. This truth dominates the thesis of the proponents of the marriage amendment. Also, traditional marriage is recognized and secure as the primary building block of civilization.
Many of the politicians, both inside and outside of North Carolina are getting involved in it’s defeat. Former president Clinton is saying, in advertisements, that this amendment, if passed, will adversely affect the economy of the state. That is a cheap answer ! I didn’t see any empirical evidence coming from Clinton defending his allegations. What about the rest of the Southern states that have such Constitutional guarantees? Is their businesses leaving in droves? Furthermore, Clinton is elevating “economics” over the ethical preferences of the people of North Carolina. It is probably more accurate to say that economic reversals, like we are experiencing as a nation, is merely a symptom of various and deeper ethical choices.
With politicians, you can never know their thought processes for sure. Maybe they calculate they can take a position against this amendment and reap solid votes without jeopardizing the pro-amendment voters. After all, people are more interested in the “economy” than all this culture stuff. So, taking a position that is affront to nature, might actually keep them in office. This might explain why we are living in an era where well organized minority interests tend to rule.
In recent weeks I have worshiped in the North Carolina mountains. The churches, in this rural setting, are concerned and vocal about securing a firmer legal protection for the ancient and proper definition of marriage.