Sunday, January 02, 2005

Well, I just dropped my friend off at the airport (well, not really. I put this in draft and went out). We had to leave here at 6:30 am to get down to the bus stop. While we were walking, it began to snow. Once we got to the bus stop, it was snowing and blowing. It was a good thing that I decided to wear my long john's (thermals) down because the wind was biting. I dropped him off at the airport and right now he should be in Heathrow Airport trying to get to his connection.

I feel a bit sad at his departure. We had a blast in Scotland and he said that he had a good time. Although, I am sure that he was sick of me by the end of the trip but that is normal if you spend this much time with someone. I hope he has some new insights into Scotland and her people.

I want to change the subject for a moment to American public policy. I was thinking on the way to the air port, which is always a bad idea. My first thought was about the impending fight over Social Security. The Republican majority in the US Congress want to privatize it so that everyone can invest part of their retirement into the stock market. Interesting as this may be, they will have to borrow nearly two trillion dollars to do it. Now, I think I have figured out the real rationale behind it. There are two main points. First, since they have this deluisional idea that markets must constantly grow and there are no new markets on the horizon, the fastest way to make a market grow is to move money out of the government and into the private sector. If they can do this, businesses will make more money which in turn creates tax revenue for the government and grow the economy. Second, borrowing money to move Social Security into the private sector will also "stimulate" the economy. What they are hoping for is a wholesale stimulation of the economy such that it will out run the interest payments on the debt that is incurred. The major problem with this is that businesses are constantly conniving to cheat the tax system so that they do not have to pay taxes so the money will just disappear as big businesses will hire tax lawyers to dodge taxes. The economy will be "stimulated" but will not in turn "stimulate" tax revenue. We need a tax structure in place to support this idea but when you hold two competing ideologies at the same time (very low taxes with large economy stimulating tax revenue) as the Republicans do, you are going to end up with a schizophrenic tax policy, which will allow people to dodge the taxes you were depending upon to pay for your budgets.

Another problem that the Republicans often cite is people in the welfare system. They usually argue that they are a drain on the public purse. I was thinking that there is a few good ways of helping them be productive even while they are on welfare. The main one that is prevalent in America is "welfare to work" where you can only be on welfare for 5 years total in your entire life (this is unfair as our economy is boom/bust cycle) and that you have to find some kind of job. As far as I know, welfare checks are not taxable as income. I would make them taxable as income for whatever tax bracket welfare would put them in (even if it is just a flat $50 tax a year). This would make them instantly productive as tax paying citizens and they would be paying into the system that feeds them. Also, I would have a VAT (Value Added Tax; click link for definition) on everything except food and clothing. That way they would also be paying back into the system. As for incentives to leave welfare, make welfare graded so that when someone gets a job, they are not immediately cut off from welfare (or if they are place the money in an account for a while as an instant savings). This would allow them to live at an entry level job so they can build a base to live from (and disasters either economic or natural will not completely destroy them; ie, they just got a job and then the economy collapses and they are laid off). Once they are above a certain income level, begin to reduce the welfare until they are completely self-sufficient.

One of the slogans that was thrown around during the recent American elections was "Ownership Society". If President Bush is serious about this idea, he should create a system that would allow people who move into government housing to enter into a "rent-to-own" situation with the government. The welfare checks that pay for their rent would partly be rent and partly be a down payment on the flat they are assigned (if they move away to buy housing, they could take that money to use as a down payment on that instead of staying where they are). They would also be enrolled in a community council administered by the local housing authority, much like a condo association. If this is implemented with my other welfare reform ideas, they would feel like they are part of society. They pay rent, they pay power and water, they pay taxes, just like the rest of us. Of course, they are being helped by the government to do this and they should be getting job training or going to a proper school (or make the "rent" part of their welfare pay for their student housing if they are in college). In any case, I am sure that all these ideas have been around for a while and that this will not make so much difference.

Never fear, however, I will have my impressions of Hogmanay up soon!

posted by Chris  #9:31 AM | 0 comments |