Friday, June 27, 2008

For Mark

From an email written by Mark Cunningham, dated 19 June 2008:

..You got a good way with words and I respect your opinion and the way you debate Gary. One thing I need clarification on is if you are so proud to be a capitalist then why would you support raising taxes out the ying yang--as if we don't get taxed enough--versus free marketing Democracy around the world? Others in the CC can feel free to chime in.

This is my answer, of course, in typical G. Harrell fashion...

I have to admit that I had almost forgotten about this email and the commitment that I made to respond to it. Nevertheless, while I've got the time now, I guess that I should provide MC with the clarification that he requested. I also thought to share this email with a few oher people who have had the same question.

In the dark aftermath of Hurricane Katrina, while hordes of black religious figures criticized President Bush and his administration for the slow response in New Orleans, TD Jakes was, strikingly enough, not among them. When asked to make sense of his willingness to work with President Bush, the brazen minister answered, rather memorably, "I have never seen an eagle that can soar with only one wing." Though he might not have known it at the time, Mr. Jakes was defining the American experience, from the birth of a small, debt-laden confederation of states to the ambitious global reach of its current national influence--all in one statement. America, that great eagle, has been governed effectively by men and women from varying political hues, usually the left (liberal) and right (conservative) wings of its broad spectrum of political philosophies. Their political approaches might have differed, but beyond their contentious nature, these men and women work together, albeit often pragmatically, to move this nation forward.

Likewise, capitalists have been the Third Pillar of the our modern republic. They built industry and commerce throughout the nation, largely without direct government investment, and their innovative and risk-taking nature defined lives around the world, by setting the standard for modernity. Of course, the capitalists do not always align with the interests of the people, or that of the government, but it is certain that they usually act in the interest of their own enterprises to assure profitability.

Those things understood, it is important to note that, in American business and economic, there are many ideas about economic growth, but for our purposes, there are two prevailing lines of thought. The first is supply-side economic theory, a belief that businesses and investors are motivated to drive growth when the government steps out of the way. That is to say, lower taxes, according to supply-side advocates, provide enough incentive for investment and a trickling down of capital and other resources to other market participants. This is an accepted premise for most capitalists who believe that their potential for prosperity is better when Washington is not hawking over the right shoulder. Here is an even better interpretation from Investopedia:

...[S]upply-side theory has three pillars: tax policy, regulatory policy and monetary policy...[T]he single idea behind all three pillars is that production (i.e. the "supply" of goods and services) is the most important determinant of economic growth.

That seems easy enough to understand, doesn't it? Well, for all of its simplicity and popularity, supply-side economic theory does not allows prove to be the best move. As an example, consider the recent dissemination of billions in tax rebate checks intended to stave off an economic downturn. They did not work, did they? Why not?

The opposing view to supply-side economics, which is called Keynesian theory, offers us some perspective. Keynesian theory, which is named for John Maynard Keynes, postulates that, when the government is involved in the economy, we are afford a sure-fire way to guarantee stability and even economic growth. According to Keynesian theory, when the economy is over-heating, for example, the best way to corner inflation is to raise taxes and reduce government spending. Conversely, when the economy is facing uncertainty, actively-directed governmental stimulus and monetary policy can help to bring things back to where they need to be.

According to an advocate of the Keynesian theory, the reason that those billions in borrowed dollars had no impact on our economy was because government was basically throwing money at the problem w/o taking any serious direction. But that we had taken that money and directed it at a government-sponsored project, which would have produced longtime rewards, and generated lots of indirect commerce as a result. Unfortunately, of course, that is not a practice of this current President, a man who, when faced with multi-billion-dollar recovery needs in NYC or the Gulf Coast or South California, felt it more prudent to leave the matter to insurers and governmental subcontractors.

Taking all of this into account, we now have to look beyond the silly missteps of our current President and think seriously about the man (as we know now) who will replace him. Whoever it will be faces the greatest challenge of his life. Ours is a nation racked with debt and a ballooning deficit. Our economy is sinking under the weight of virtually no expansion and phenomenally rising commodity causes. The population is aging, and social entitlements and pension plans, alike, are deeply under funded. And to top it all off, we are paying for a war (as well as rebuilding) in a country where few can seriously explain why we are even still there...Yes, the challenges of a lifetime, indeed.

As an informed American, as a business owner, as a voter--I take great pains to take all of this into account, and I remember the words of T.D. Jakes, knowing that there are times in our lives when we do not have all of the answers. And sadly enough, I have to admit that this, Mark, is a time when our party, the Republican Party, does not have it right. The dithering and double-speak of the last eight years has not only damaged our political prowess; it has set the party on a course so completely contrary to the reality and needs of our nation. Gone now are the beliefs that made the GOP the stewards of political sanity--limited government, fair taxation, Constitutionalist perspective--and in their stead comes Senator John McCain, a man vowing to continue a costly war (while the economy is waning), a man promising to sustain the Bush tax cuts (though the growing deficit threatens to put us as far as $10 trillion in debt), a man who shunned returning government to its pre-9/11 size, and a man who has admitted that he understands little about the economy as a whole...For those reasons, alone, neither he nor another conservative will ever get my vote.

The gentleman who proffers an alternative is no saint, either, of course. Senator Barrack Obama has talked about some things that make me cringe. But then, so too did Bush and Jindal and Dole and Boasso and so on, and they all got my vote. Why? Because, before all else, I had to admire who they stood for, and I firmly believed that they meant what they said.

First on Obama's list of pluses, for me, is an end to the war in Iraq. The loss of human loss notwithstanding, it does not make good business sense to continue to run up the deficit, in order to fight a war for which few easily have an honest explanation...

Next on my list, after saving those lives and that money, I return to my economic position, and find that, there too, Obama is closest to my perspective. Unlike supply-side advocates who would have no way out of the recession ahead of us, except to say throw more borrowed money at the problem, Obama is more inclined to use the Keynesian model for economic growth--and, man, we can sure use it. Where, you ask? Well, for starters, the country is aging. We have $1.7 trillion in infrastructural needs, from water systems to roads and bridges. A massive effort for this type of renewal cannot be left to private markets, unless you want to pay greater tolls and higher utility rates. What's more, federal help is needed in the funding of the biosciences and alternative energy initiatives. And beyond that, as we speak of energy, the federal government would be needed to help us "embrace" new modes of transportation like those high-speed rail systems. While it would be nice to think that the private sector is capable of meeting these challenges, sufficed to say, we must be honest. Acting alone, capitalists lack the uniform ability to push through some hurdles that would be inconsequential to a government that took the lead. And should the Republicans assume power again, you can be certain that none of these mandates will be met.

Is such governmental intervention always advantageous? Not necessary. However, it has helped in the past, and under the right direction now, the federal government can do more to help pull this country out of its slop and restore our place in the world. It is unfortunate, though, that such leadership has to come from the other side of the political spectrum. But, hey, at least we know that it will get done, and for that, just about every capitalist will have a reason to rejoice, including this one.

No comments:

Random Thoughts

Popular Posts

The Invisible Hand: Management, Economics and Strategy for the Thinking Person (Audio only)

There was an error in this gadget