Is Democracy Unique?

I have had the pleasure of discussing the benefits and costs of Democracy with a few dozen people from countries representing many forms of government across the globe the past few days on a Linkedin.com discussion group.  I was asked what it is that differentiates Democracy.

I know that our system of government has let America down.  All governments have for they are formed by the frailties of humanity. Americans ring true, however, that our government of the people has also picked us up time and time again.  We wear our scars openly, and proclaim the remarkable feats of the delegates who struggled together in Philadelphia to create our freedom experiment.

It may sound cynical to focus on this one issue above others, but I think the very best thing about Democracy in whatever form is that power transfers peacefully.  Every two years, I still witness the process with respectful awe.  

Our political system is influenced by the theory that power corrupts. We can vote corruption of thought out of office. We can impeach absolute corruption. And we can reverse even the will of the masses through our courts if we veer from our constitution.  Anyone wishing to amend our guiding document must pass through the twin guardians of constitutional convention and super majority.

The price of this incredible freedom is the messy, grindingly slow pace of progress that non-democracies find intolerable.  I would not have it any other way.

Can the Job Voucher Plan Create Renewal in America?

A sense of purpose is as important to one’s work fulfillment as the financial reward that work provides our family.  I am reminded of the story where a passerby asks a stone mason who is chipping away at a cornerstone what he is doing, and the mason replies not that I am cutting a block, but that I am creating a cathedral.  Here in Florida, I am surrounded by neighbors who have lived in their homes for 30 years only to turn them over to the bank because of hard times.  Their share of the “cathedrals” they created for our country was stored in their home. When the banks foreclosed on them, they lost the results of their life’s work. 

Losing their home is just one step down the painful road that millions of Americans are enduring during this Great Recession.  With the loss of so many millions of jobs, the difficulties of just one jobseeker can get lost in all the noise.  How do jobseekers cope when they have become part of the 99ers, those whose extended unemployment has run out?

During this Great Recession, as each month passes, the job seeker begins to realize that somehow this recession is different. In the first days after he recovers from the shock of losing his job, he determines to quickly pursue businesses which best meet his career and geography requirements. As the months go by, he realizes that opportunities are diminishing, and he must now lower expectations if he is to cover expenses and keep the kids in the same schools.  As unemployment compensation comes closer to the end, he recognizes he may have to move to open up more job possibilities. He reluctantly lists his home only to find over time that it is competing in a surplus market, and that its value is lower than the mortgage.

Yet he persists, getting up each day to comb opportunities till dusk with a hopeful heart of scheduling a job interview. His efforts pay meagerly because interviews are not plentiful in this stagnated market. Each month, more people transition to the unemployed, and they are being called in before him. He has similar qualifications, but somehow because he has been out longer, employers begin questioning why he has not been hired. Sensing their skepticism on the phone, he shows a lack of self confidence in the few interviews he gets, further lessening his chances for hire. His wife and kids quietly grow anxious with him, and he fears they are wondering what his “failure” will mean to their lives, their friendships, and their futures.

At some point, any job would be better than grieving through this spiraling loss of self worth. Then one surprisingly sunny spring 2011 morning, he turns on the TV to see President Obama, surrounded by leaders of both parties on the White House lawn, announcing the “Job Voucher Plan”. As promised, within weeks, the internet and local papers begin filling with job offers in all areas of employment. His spring is renewed with hope.

After several interviews, he begins working again, and not in some makeshift job, but one with career potential and purpose. The owner of a small business has painted a picture of an innovation in need of an American with the skills to make his dream a reality. Now purpose driven, he sets about to create real value for his employer and his community.

He knows that small business ventures are not always successful and that there are no guarantees this job will turn into something permanent. But the American people have committed for the next two years to give him 25 hours a week to help his employer and product to success.  Each morning seems brighter as he gains control through his efforts to build a career in this new small business venture. Not only is his family experiencing this change; he sees a purpose growing in the entire community. There is a belief that we are all working for something larger, for a renewal in America.

While this spot is not where he had hoped he would be in the years leading up to the Great Recession, he now has a sense that things will get better. He is being paid the same wages as before the recession but with fewer hours. He will help this company with hope and loyalty of purpose, and will have done his part to dig America out of its slump. As the economy improves and competition for employees heats up, his small business owner will compete to keep his new, valuable employee. Nonetheless, the job seeker will diligently use his 15 extra hours a week to once again pursue the American dream.

The above chart shows unemployed broken down by time of unemployment.  It does show a slowdown in newly unemployed.  However, it does not accurately depict all unemployed because many have fallen off the curve and are no longer counted.  Unfortunately, it does show that the mean time of staying unemployed is growing.

For the Sake of America’s Health and Jobs, Congress Must Debate Healthcare Again

As the courts decide the fate of Obamacare, the hard work of congress regarding a comprehensive healthcare policy must begin again.  America cannot afford for Congress to wait when America’s health is at stake.  And waiting also has the foreboding consequence of continuiing our downward economic spiral and loss of jobs.

As a result, Congress must first decide how much of our budget can support healthcare. No more than 10% of GDP is needed for government to support America’s economic growth. Today, we tax America 28% of GDP and borrow an additional 13% of GDP. The additional 31% goes to military, interest, and the redistribution of America’s wealth to improve the lives of Americans.

A consequence of spending more than 10% of GDP is that supplying today’s needs reduces the economic output and social spending of future generations. Our budget now demonstrates both the overwhelming desire of Americans to care for our own, and our inability to pay for our altruism. For every dollar our government spends, we borrow 40 cents from future Americans that will also want to meet the social needs of their citizens. Before we resolve healthcare, we must agree on a sustainable social care budget, the priority of our causes, and the amount available for healthcare. This amount combined with private contributions must meet our healthcare needs.

Then we must set about reducing costs to meet revenues. For instance, government has placed restrictions on revenue aggregation that are unnecessary burdens. Both political parties have advanced methods to reduce these costs. Compromise should float best ideas to the top.

Prevention must be on the legislative table. America’s habits promote peculiarly western major disease processes. Sugar, corn syrup, and processed fats industries promote an epidemic of obesity, diabetes, heart and vascular disease and strokes. Cigarettes help a quarter of our country to die extended, painful COPD deaths. Our dependence on pharmaceuticals precipitates growth of resistant bacteria.

Cultural decisions should not necessarily be a burden to all Americans and need prioritizing in the healthcare budget. Our disconnection with our elderly has escalated institutional costs. Our striving to extend lifespan has led us to spend a majority of healthcare costs on the last few years of life.

Competition must be allowed to drive costs down. Americans are rightly skeptical that capitalism will lead to corporate profits at the expense of our health. We have too many examples such as insurers culling unhealthy persons from the pool of insured, leaving the very people who need insurance without the ability to pay for their care. Much more competition balanced with thoughtful regulations is required. The alternative is a healthcare system marred by cost controls, leading to shortages of quality care.

American healthcare is dominated by a medical cartel that limits supply of doctors, limits procedures that can be performed by lesser educated personnel, and limits information needed for the average American to make good financial decisions regarding their health. To truly have competition, doctors must loosen their grip on access to medical schools, and permit more procedures to be performed by others. In the process, our medical professionals must be protected from our litigious society’s need to blame inaccurate medical science for the natural course of life.

Information must become transparent. We need knowledge of physicians’ capability to manage the health of their constituents just as we need knowledge of school teachers’ ability to teach. Our fractured healthcare industry also needs to aggregate information to increase up front spending that will decrease long term costs and to reward industry participants for achieving this outcome. 

These problems are certainly looming but not insurmountable. However, both parties must subordinate the interrelated goals of their special interests to America’s goal of providing all Americans access to a healthy life, and must work together to put the best ideas of both sides of the aisle to work on behalf of all of us.

Is the Federal Reserve Harming Job Growth?

The Fed originated from a private agreement of the world’s richest bankers in 1910. Reacting to clamors to regulate the “money trust”, leaders of the world’s banking systems came together to create the plan for the Fed, that Congress enacted in 1913.

The plan did not completely turn over the power of the world’s banking system to Congress. It instead created a “partnership” intended to retain power while sharing oversight with Congress. The President recommends and Congress confirms 7 board members to the Fed from banks, and the banks appoint 5 other members from regional Fed banks that are in turn owned by private banks to the FOMC that makes Fed actionable decisions.

The Fed is subject to oversight by Congress. Yet oversight means that the Fed reports a summary of its actions after the fact. Congress cannot dictate to the Fed, and can only change its charter by statute, which has been politically unachievable, even though a bill to end the Fed has 55 congressional signatures. Members of congress cannot attend Fed meetings and cannot audit the Fed. Thus, the Fed has authorization by our government to manage the banking system free from political controls.

Even so, congress has little incentive to place restrictions on the Fed. For every dollar that Congress spends, Congress borrows 40 cents from the Fed, who essentially just has it printed. And Congress needs the banks to get re-elected. 94% of congress persons with the most election funds win their elections. 90% of election funds are given by wealthy individuals, large corporations and the banks.

It is claimed by some “conspiratorialists” that through complex stock ownership in five U.S. banks, the original stockholders of the Fed still maintain control of Fed actions. Whether or not this is true, the actions of the Fed have resulted in great wealth transfer to bank shareholders through Fed actions including engineering inflation. In the 300 years before the Fed, inflation was minimal except for the absorption of wars. In the 97 years since the Fed, inflation has increased 1,900 percent.

When banking investments soured in 2008, many claimed that the Fed acted in the best interests of its shareholder banks over those of the United States. With the great recession, the Fed entered into unprecedented activities. In March 2008, the New York Fed advanced funds for JPMorgan Chase Bank to buy investment bank Bear Stearns. Also, in September of 2008, the Fed gave an $85 billion loan to AIG for a nearly 80% stake in the mega-insurer. In October, 2008, the Fed acquired the ability to pay interest to its member banks on the reserves the banks maintain at the Fed. And quantitative easing has the potential to inflate the U.S. out of losing housing portfolios.

In essence The Fed’s actions have protected the wealth of international investors at the expense of small investors that are nearing retirement with life savings in fixed incomes.  By preserving this wealth, the Fed is also enabling the funding of third world multinational corporation direct foreign investment without consequence.

If Our Debt of Leisure Must Be Repaid, Should We Not All Fish Today?

Two villages grow beside a lake, one to the east and one to the west. The lake is almost paradise for there is no need for shelter or much other sustenance.  The villagers simply must fish the lake each day for food and take leisure.  At the beginning of time when the fish are few in numbers, everyone must fish many hours. But as the fish populate the lake, the townspeople on both sides of the lake find they have more time for leisure.

 The fishermen in the eastern village are a driven clan, choosing not to take leisure but to catch more than enough fish for their own needs, and to offer their excess fish to the western village.  To entice the west, the eastern village offers to give more fish today and to take less fish back from the west at a later date to settle the debt. 

 The people of the western village find the offer irresistible because they can receive many more hours of leisure now knowing that some day when they must repay the fish, they will have to fish fewer more hours than the leisure that they gain today.  They even imagine that the fish in the lake might continue to grow so numerous that when the eastern villagers eventually ask them to repay the fish, the western villagers’ children will have learned to catch many more fish, and may not even have to work more hours to repay the debt.  So the western village willingly accepts the offer of fish from the east.

As the eastern villagers begin to deliver fish, the western villagers learn that some of their village’s fishermen are no longer needed.  When the western village’s catch is combined with the basket of fish borrowed from the east, the western village has more than enough fish.  The western village elders meet by the campfire and decide that their less skilled fishermen must sit on the bank, looking pitifully toward the lake and the other fishermen, and take full leisure.

 The less skilled fishermen take full leisure even as the debt of fish grows ever larger to the village on the east side of the lake. The less skilled fishermen are willing to catch as many fish as they can even knowing that with less skills, they eat more than they catch.  Yet, the less skilled fishermen must take full leisure each day and share in the basket of fish that has been borrowed.   Nonetheless, the elders have spoken.  They must sit out the catch and watch the villagers from the east deliver fish to their shore.  How did the village elders of the west come to this wise conclusion?

We Must Be Bold For America Now

I applaud the President for acting boldly to save America’s economic future. However, boldness must be coupled with the right prescription for our time. Unless we act decisively with the right tools, we will face a decade of languishing high unemployment. If we are to escape the fate of our grandparents, government must partner with American business to create historic advances in innovation and productivity.

A partnered solution can replace extended unemployment payments with a hiring voucher plan. Small businesses can hire voucher employees at their unemployment rate. In return, Voucher employees can work twenty five hours per week and receive the same pay they would have received through unemployment. The Federal Government can then reimburse employers the employees’ wages without increasing the unemployment budget.

A few benefits include: Employees learn new skills and can continue to seek full employment. Employers lower risks of hiring new employees, spur innovation, and reduce prices of goods and services to compete in the global market. Government supports job growth through direct infusion of dollars into small businesses, and lets the free market determine how to maximize resources. This idea can employ all Americans now, and can move many from the sidelines of our economy onto the field of American ingenuity and global competitiveness.