Friday, September 26, 2008

Financial Crisis: Capitalsim -vs- Socialsim

So you know by now that I am not a fan of the financial bailout. I have a proposal, though, that I think would encourage people to save and invest, and would also give banks the confidence and incentive to give out loans and save the economy from an all out shut down.

I am not a fan of the government buying all the failed loans from banks with the money that belongs to hard working Americans who are not corrupt. Of course the goal here is that freed from the burden of failed loans, banks will stay in business and start loaning again

However, there is no guarantee this will work. Because it is a Socialistic program, if it fails we will not be able to undo it. Yet, if we do the capitalistic solution, and it fails, we can easily undo it.

The capitalistic solution, though, has never failed. And that's why I think we should try that first before we do something stupid. Or, as I like to say, doing nothing is always better than doing something stupid.

Here is my proposal. I think the President and John McCain should get together and propose eliminating the capital gains and corporate tax for two years. Then you just wait and see how long it takes to make the $700 billion Washington is now proposing to bail out failed banks.

I'd recommend for Obama to do this too, but we all know he is a big government and high tax kind of guy.

We do not need more politics, more regulation, and more federal involvement. What we do need is to deregulate and allow these complanies to do what they need to do to stay in business

We do not need to increase taxes on corporations like Obama wants to do when he gets elected because all that will do is slow economic growth and make the American economy more like France.

But nobody in Washington is talking about capitalism here, they are talking socialism -- even George Bush and McCain.

They are doing that because liberals are in charge of the House and Senate. The same liberals who caused this problem in the first place.

And, as typical politicians, they believe that being seen as doing something, even if it is something stupid, is better than doing nothing at all. Because if you do nothing, people are going to think you don't care.

This is the way liberals think. Liberals want to make decisions that make people feel good rather than making decisions that are sound.

We are at a crosswalk right now. We can choose to go backwards economically and solve this financial crisis in a panicked way with socialism, or we can take the capitalistic route.

Still, if this bill passes, I will be gung ho behind it, because as a good American, I want what's best for my country.

That, my friends, is the thought of the day.

3 comments:

Anonymous said...

"I think the President and John McCain should get together and propose eliminating the capital gains and corporate tax for two years. Then you just wait and see how long it takes to make the $700 billion Washington is now proposing to bail out failed banks."

Gosh, if that's all that's necessary, why not eliminate all taxation for five years? No, make it permanent! Just think, the banks would start lending again and we would all soon be rich.

Well, maybe not all. Our people in the military couldn't be paid, so they would have to desert and get private-sector jobs. Same goes for teachers, cops, firefighters, paramedics, forest rangers, weather forecasters, etc.

Come to think of it, our creditors in places like China and Saudi Arabia would probably turn off the money spigot, so there would be no more funds to fight Iraqi insurgents and al Qaeda in Afghanistan. And that's if we still had any soldiers left to do the fighting (see above).

Of course, our foreign creditors would probably turn off the money spigot simply in reaction to your proposal, but what the heck, right?

On a more-serious note, a real socialist response would be for the government to simply take over the financial industry, assuming its bad debts and replacing the greedy idiots that have been running the big banks and investment houses with government personnel. From then on, the industry would be operated in the public interest, with public service becoming a coequal goal with profitmaking.

No, instead we the taxpaying public will be called on to pick our malefactors of great wealth up, dust them off and send them on their way to making more billions — until the next time they let their greed get the best of them and create a mess the rest of us will have to clean up.

It's the American way, you know.

Let me tell you something worth contemplating when you have a few moments. Soviet communists didn't make much sense during their long time in power, but there's more than a little truth in one thing they told us, way back when:

Capitalism bears the seeds of it's own destruction.

A wise person who believes in capitalism will think that over carefully and keep it in mind all his days. That's because it's true and makes clear how important it is to keep capitalism on a straight and narrow path.

Rick Frea said...

I'm sorry you feel so negative about America. But you're not alone. I think when McCain said, "The fundamentals of the economy are strong," he was being optomistic in implying that America has what it takes in coming through the ups and downs stronger and better.

These few people drove down their own companies, and I think we should not reward them by bailing them out. People need to know that if they drive their companies into the ground they will not be rewarded -- in any way. They should get no bailout, no million dollar payout, no compensation whatsoever. I think libs and conserves would agree with me on that.

At the same time, though, America has the highest corporate tax than any industrialized country. Cutting this tax would do wonders for companies trying to make a go at it. It would encourage them to invest.

Likewise, no tax has done more for causing companies to save and invest more so than the capital gains tax. As it goes up, companies suffer, as it goes down (historically) businesses tend to do better, and so does the economy overall.

I would never propose eliminating all taxes. Taxes are good, too many taxes cause economic doldrums. Some regulations and oversite is needed, too much only stalls the economy.

Anonymous said...

Freadom, I feel negative about how people have put their trust in con artists who have screwed up our country, our economy and everything they've gotten than hands on. I feel negative about an administration that, despite voluminous historical evidence to the contrary, insisted voluntary self-regulation was all that was needed for the financial industry.

". . . America has the highest corporate tax than any industrialized country."

In fact, the U.S. has the second-highest rate. Japan's is slightly higher.

But note this: our corporate tax rate could be less if more corporations were actually paying taxes. The following is from an article you might find interesting, "Corporate Tax Avoidance Renders Statutory Rates Meaningless."

"Remember the old Steve Martin routine on how to make a million dollars and not pay taxes: 'First, make a million dollars. ... Second, don't pay taxes.' Turns out Martin's joke is standard operating procedure for corporations in the United States -- only, in comparison, Martin was a piker.

"Wednesday, the Government Accountability Office (GAO) released a study on taxes paid by corporations. In what Sen. Byron L. Dorgan, D-N.D., mildly called 'a shocking indictment of the current tax system,' the GAO found that about two-thirds of corporations operating in the United States did not pay taxes annually from 1998 to 2005."

I agree that excessive taxation and overregulation can stifle economic growth. Anything can be overdone or done badly.

I hope you will agree with this. There are times and circumstances where our corporate tax rate could be the sedond-lowest among industrialized nations, and capital could be plentiful and relatively easy to get, and we could still experience stagnation or minimal growth. That could happen for a variety of reasons, including the business cycle, inflation getting out of hand, war jitters and consumer unwillingness to spend or, more-realistically, to take on more debt.

The bottom line is that there's much more to sound economic policy than cutting taxes and letting businesses do whatever they want, however they want.