How we got Here
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The following article was written by Phil Longo. Phil will be writing articles for The Daily Conservative on occasion. If you would also like to see your content on TDC you can contact me here.
First I would like to put several stakes in the ground. First stake, we are a country of consumers, if we do not consume, we will wither and die. We are a capitalist country. That is, we have a system that was primarily designed to allow a family to generate income from their work. Initially and ideally there is enough income to be used to pay for a family’s needs, save some money in the bank and have some left over for their wants.
As a society we cannot survive if we only have enough income to pay for our needs. We must have enough income after we pay for our needs to consume the things we want. After all, how many shoes do you really need? How many TV’s do you really need? How many DVD’s do you really need? How much variety in food do you really need? And still have money left over at the end of the day to put some in the bank. This has been clearly demonstrated with the spike in fuel cost. The American people stopped consuming what the wanted to pay for what they needed.
Right now the concern is jobs, what can we do to put the people back to work and reduce unemployment? If there is no demand (consumption) there is no production if there is no production there are no jobs. Without discretionary income there is not enough consumption to keep our people employed. It really is just that simple. It is clear to me that we should be looking at ways to help our families increase their discretionary income.
This problem did not happen overnight. It started at the turn of the century and it is due to human nature and the mismanagement of our country’s business (government) and over time the perversion of the Constitution by our elected representatives, both of which can be corrected.
So, what has eroded our discretionary income? First and foremost, taxes! Second…..Home Loans…..Third Transportation cost….. Energy and last health care. All these things we can address in innovative and meaningful ways without borrowing and putting our country in further debt and at the same time provide significant stimulation to the economy.
To give some perspective, in 1913 50% of the employees in America made less than $800.00 per year. Average income was about $15,000.00 per year the population was 97,225,000. 1913 was the year congress started income tax. The rate was 3% to a top marginal rate of 7%. Income tax collected in 1913 was equal to $.73 per capita.
The only expenses families had 1n 1913 was; food, clothing & shelter for the most part. Henry Ford built his first Model T car in 1908 and opened up his assembling line in 1913. Therefore not many people had cars back at the turn of the century. Basically, after food, clothing & shelter in the form of rent or mortgage everything else was discretionary income. It wasn’t until 1919 the RCA mass produced radios of home use.
Today however it is a different story. We have a population of 301,139,947 people and the income tax collected is equal to $8,534.00 per capita. Now let’s look at our families expenses today; Food, Clothing, Shelter with that shelter comes (insurance, garbage pick-up, water, electricity), Appliances (TV, Radio, VCR / VCR Tapes, DVD players / DVD Movies, MP3’s, Toaster/Toaster ovens, Coffee makers, Ovens, Refrigerators, Computer, virus protection, flash drives, software, phone, fax, cell phone, health care insurance, mortgage insurance, life insurance, auto insurance, and then there is the automobile, not just one but two or three per family-oil, gas, tires, tune-ups.
Our government has increased our taxes without giving consideration to the fact that our population has grown, (more contributors), inflation has grown, (same percent gives a high payout). Let me demonstrate: Realtors get a 7% commission on the sale of a home, it has been that way since commissions have been paid on the sales of homes. If, in 1913 a home sold for $1,000.00 the commission at 7% would be $70.00. If that same home sold today for $250,000.00, the commission would be $17,500.00. The percentage did not change but the price of the house did. Let me ask you a question, what has happened to our incomes and our population since 1913? Income tax collections should be inversely proportionate to our population growth and the increase of inflation, anything else is a windfall profit to the government and they will figure a way to spend it instead of giving it back to those to which it belongs. Clearly our politicians saw this windfall coming to the treasury department. They had to figure out ways to spend it, hence the unconstitutional spending we see taking place today.
As for home loans, at the turn of the century, to get a mortgage, you had to put 50% down and pay off in 5 years. In the 1930’s when we switched form insurance company’s to banks for home mortgages they instituted 30 year loans as they felt that if the workers of America paid off their mortgage, they would quit working and our economy would collapse. Well today even if you do not have a mortgage, the auto expenses alone require you to work and keep a job. Today with the cost of fuel and the car payment it is much greater in many cases than a mortgage payment.
The point is everyday the discretionary income in our country is dwindling and dwindling away. We are told that the price of gas is going to continue to rise, eating away more of our discretionary income the income, by the way that drives our economy and if this is not addressed, that too will cause our economy to collapse.
We are at a critical point and time in history. The actions taken will determine the destiny of future generations. Up to this point we have had a country that was built on the foundations and beliefs of our founding fathers; that hard work, innovation, self-reliance and faith would be rewarded, that our government is based on individual’s right to be free and to pursue happiness. Indeed as it states in the “Declaration of Independence”:
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. - That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, - That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government….
Never did the “Founding Fathers” intend for the “Government” to PROVIDE our happiness. Never did they intend to guarantee our happiness, only that if, again I say, if, you work hard, you may achieve happiness. Your happiness is up to you, not others. Yet we have seen in recent years our leaders both political and professional mismanage both their business and our country to the point of bankruptcy.
President Reagan paraphrasing Grover Cleveland stated the “The Business of Government is Business”. In all businesses there are three partners; Capitol, Labor and the Consumer. Management in not a partner in the business but it is responsible to the three partners. Management is responsible to see that Capitol gets a fair return on their investment, the Labor gets a fair days wage for a fair days work, and that the consumer gets what it wants and needs at a price it can afford and is willing to pay. Management is also responsible to see that Capitol does not take advantage of Labor, that Labor does not take advantage of Capitol and that Capitol and Labor do not conspire together to take advantage of the consumer, because the consumer can walk away form the business at anytime if its wants and needs are not met as it has no stake in the business.
The biggest example of the failure of management can be seen at General Motors where management allowed Capitol and Labor to conspire together to take advantage of the consumer. The management of General Motors, instead of the timely maximization of efficiencies, implementation of innovations, controlling cost and building value, they capitulated to union demands creating a health care system that is bigger than the production of the product they are trying to take to market. As a result of that mismanagement we are seeing consumers are walk away from that business.
Back in 1992 we had Ross Perot tried to shake things up; he too wanted to change things. He said, “Let’s get under the hood and fix it”, which sounded like a good idea but before you pop that hood and tinker around with the engine, you better know what you are doing. Today we have Barack Obama saying he want to change things. He wants to be CEO, the number one manager, directing his management staff of Senators and Congressmen. The problem is he wants to institute the same style “Mismanagement” that is bringing down General Motors. He is going to conspire with labor (voters with special interest/agenda) to take advantage of Capitol (taxpayers). Creating new and broadening existing costly programs, creating a level of spending that will bankrupt, not the government, he is going to raise taxes, your taxes to fund those programs. He is going to bankrupt you and your family. After all your pursuit of happiness must be sacrificed so you can fund your neighbor’s happiness.
This change that has taken place in our Government has been slow and imperceptible, but now we are at a turning point, a critical time in history. Are we going to allow our country, our way of life go the way of past civilization or are we going to address what our “Founding Fathers” said in the Declaration of Independence”?
That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government..
We do not need to remake America as Mr. Obama has stated; we need the America of our “Founding Fathers” back. We need to remove the alterations that have been put in place by our “Management”, or if you will, the “Mismanagement” of mostly liberal and progressive Democrat politicians. They, the Liberals, progressive and Democrats are trying to sell the idea the CONSERVATISM is dead or dying. I believe they are wrong, I believe it is time for you the SILENT MAJORITY, the backbone of this country to take our country back, back to the way our “Founding Fathers” intended it to be.
We now have an administration that has said they are going to fix the problem but clearly does not understand what has caused the problem or if they do, they have their own agenda because if what they are proposing will not increase the discretionary income of the American people across the board it will not work.
Let’s say you have a tooth ache and go to the dentist to fix your problem to make the pain go away. He then gives you an injection of Novocain and the pain is gone and sends you on your way after all the pain is gone, did he fix the problem? No he addressed the symptom. Because he didn’t fix the problem but only addressed the symptom, when the pain returns, it will be much greater. What the former junior Senator from Illinois, Mr. Obama is doing is injecting a numbing amount of cash with little or no effect on the problem.
Our so called leaders keep saying that anything we do should be “Target-Timely & Temporary”. They want only a temporary fix, why not a permanent fix? They do not have a problem establishing permanent spending programs. When did this country stop being a Government of the people by the people and for the people and become a Government of the Government by the Government for the Government?
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