Since the election last week, we have seen a variety of reactions from both sides. Most striking are the angry outcries of some neoconservative libertarians who are calling for boycotts, marches, or outright rebellion. Some of these folks are motivated by ignorance and hatred, of course, and there's not much to say to them at times like this. But some others, including friends of mine, truly believe that the outcome of the election was a repudiation of American values: hard work, independence, success, free enterprise, and the Constitution. This is an open letter to those of my friends and relatives who fall into this category.
I am motivated by friendship and gratitude to try to ease your mind. Each of you has touched my life in some positive way. I often wish that I could be geographically closer and able to lend some support to you during your own times of difficulty. And to help you drink your wine to celebrate the good times! You are valued friends, so the hope is that you will receive the following comments in the knowledge that the words are caring rather than argumentative.
A little background for those who may not know my vantage point. I am a businessman, and MBA, and a member of the "investing class" -- strictly small potatoes, of course. I spent most of my career in small entrepreneurial enterprises, and among other things, created, implemented, and administered incentive-compensation systems; I have an idea what motivates. I even taught some business courses at the university level. Since retirement, I've puzzled over the federal tax system and have created some quantitative models to explain how it works in various scenarios. I consider myself to be a progressive, but with a strong libertarian bent. All of this doesn't make me an expert on anything, but it does provide an interesting perspective on the election. So, here's what I think.
Capitalism is alive and well in the US today. So is the entrepreneurial spirit. People who are motivated to succeed at what they do -- and there are a lot of them -- will continue to do well. We are very much a capitalist, free-market economy, and opportunity abounds. I have seen a procession of working-adult business students in my classrooms who were willing to sacrifice family time, leisure time, and sleep just to gain the skills they need to succeed in their jobs -- or in their own businesses. There have always been a few lazy people around, but I believe that enterprising people -- of all ages, sexes, races, economic background, and social status -- vastly outnumber the slothful. It'll take more than universal health care to deprive these folks of the opportunity that's out there for them!
I agree that the federal government is too big. Everybody has their ideas on how to reduce its size, as do I. For example, when the US spends as much on national defense as the next nineteen countries in the world--well, that's a problem we're all paying for. And we all agree that there are inefficiencies at every level of local, state, and federal governments, but most of us don't have a clear solution.
But nearly half of the budget is Social Security, Medicare, and Medicaid. Personally, I'm a beneficiary of the first two, but I don't feel bad about suckling the federal mammaries -- I paid into these programs for decades, and I'm still paying for Medicare coverage today. Starting in 1965 when the programs were integrated into the federal budget, SS contributions were considered a tax. Everybody who earns a paycheck pays this tax, at the rate of a little over 15% of earnings counting the employer's share. People who claim that 40% of American earners pay no income tax are ignoring the payments made by and on behalf of even minimum-wage workers.
Taxes are a problem, and the US tax code is the culprit. The IRS estimates that $300 billion (!) each year goes uncollected because of the complexity in the code and the willingness of many taxpayers to hide in its labyrinth. That's a problem we're all paying for. I'd prefer that this money would be used to pay down the national debt! We agree that tax reform is needed, and I like a flat tax system with no deductions and a generous uniform exemption that applies to all.
A lot of people are getting government benefits, and the President and a liberal Senate are often blamed -- but neither has much to do with the system as it stands today. No major changes have been made in the welfare formula for decades, but unemployment benefits were extended by both parties in response to an economic crisis. This crisis itself is to blame for the large number of welfare and unemployment recipients -- not the President. Remember 2008? The first depression in eighty years was an imminent and strong possibility. That is not to say that the "safety net" doesn't need revamping -- I agree that strong conditions should be tied to all payments. My belief is that the increase in the costs of welfare and unemployment is a result of economic policies that have transferred wealth from working people to corporations and their owners over the last two decades, and that's a problem we're all paying for.
I believe that success is respected as much as ever today -- even by progressives like me! If just over half of 130 million US voters voted Democratic, that doesn't mean that we gave the founding fathers the finger, or that we hate success. What it does mean is that two complex and competing systems of values, rules, and policies -- Republican and Democratic -- fought to a close conclusion, nothing more.
I'll wrap it up. I myself am a non-producer. All I have is a little capital to invest, and I soak up Social Security and Medicare benefits as though I were truly entitled. But that doesn't mean that I am not successful. We SS beneficiaries should all be a little offended when we are accused of suckling the government mammary -- we have paid for the privilege of doing so. In fact, the more successful we have been in our lives, the more entitled we are!
Our country isn't perfect. From the beginning, it's been a work in progress. Even the founding fathers, not being actual deities, couldn't have foreseen all of the unintended consequences of the republic they created. And big government is one of these consequences -- a product of power politics and the money that makes it go. I, like you, am troubled by the complexity and inefficiency of the federal system. And the inequalities and inefficiencies that government tax policies have introduced into our economy are in many cases criminal! But please don't be too discouraged by the failure of a Republican candidate to prevail, and don't give up on trying to make the country a better place for its citizens.
To do this, we'll both have to discount some of the highly-charged words and messages that were intentionally used to scare us during the campaign. Romney is not a fascist, and Obama is not a socialist. Neither Fox News nor MSNBC has a lock on the truth of any given issue. Nobody is going to take away our guns or access to the Internet. There is no movement to gut the US military, and the UN isn't taking over Washington. Somehow we have to get through the noise to identify and address the real issues that we face -- national debt, unequal taxation, unemployment, poor economic growth rates, unreasonable limits on personal liberty, and much more.
Each of us needs to find our own way to move the country to a better place. We should all be voting, at the very least. We should be studying to increase our understanding of government, economics, and world affairs. And we should be actively exchanging political ideas with our friends and relatives, just as our founding fathers did. As for me, I'll continue writing things like this that help me define my own thinking and beliefs and, perhaps, stimulate the thinking of others. I'll stand up for my beliefs in conversation with others, especially when I see hatred and bigotry.
Together -- you as a conservative and I as a progressive -- we need to work toward a government that promotes success, pays its bills, provides for equal opporunity for all, and yet still takes care of its seniors and less advantaged. If you and I can agree on this, that's a pretty good start toward the unity we're all looking for.
Stay well, stay happy, and stay in touch!
Your progressive friend,