Category Politics

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Simple Ways to Address Debt, Create Jobs, and Improve U.S. Financial Credibility

Jul 31, ’11 8:01 PM

When the debt ceiling discussions began, months ago, the country appeared to be split between two contrary opinions.  Most conservatives had become convinced that the U.S. was “broke,” and that only immediate and titanic cuts in spending could possibly save us.  Most liberals were convinced that “debt and deficit” problems were not real, and were simply a ploy for conservatives to cut spending.

Although there still seems to be widespread confusion about the issues at hand, it seems like the general public has learned a good deal in the runup to the Aug. 2nd deadline (if not as much as one would hope).  We’ve learned, for example, that sovereign debt ratings, not just our ability to borrow, are important — and at stake.  We’ve learned a good deal about the sources of our deficits and debt — even if we still disagree about how to handle them.

I find, in talking to liberals and conservatives on this issue, that certain simple — but effective — ideas can appeal to both sides, without being caught up in the “grand narratives” that characterize each side in our Congressional stalemate. One of them, the idea of tying job creation to overseas tax repatriation holidays, I discussed in a previous post (and will simply list here).  But there are others, and I would like to suggest that implementing even one or two would radically change the game, by changing the confidence level of citizens, companies, and the world in our ability to address our issues.

I would further suggest that our largest problem today is not a crisis of confidence about U.S. indebtedness.  Americans and the world at large lack confidence in the ability of Americans to govern their way out of the problem.  The global markets, and the bond market in particular, want U.S. sovereign debt to remain the risk-free benchmark, and despite occasional posturing, nobody is eager to displace the U.S. dollar as reserve currency, given the uncertainty and dislocation that would inevitably create, during a time of sluggish economic growth.

What we need to demonstrate is not, I would suggest, a complete solution to our deficit and debt problems, but a credible start and follow-through.  President Obama has been talking about “significant downpayments” on deficit reduction for precisely this reason.  It’s not a new idea.  It’s also the strategy of every consumer with significant debt — you can’t simply tell the credit card company you’re trying to make payments, you have to establish a track record of actually doing it.

There are reasons, of course, that the party “out of power” would try to block even simple, common-sensical ideas.  Winning the next election means not giving up points to the other side, if possible.  But I hope we’re close to the point where Americans start demanding progress and solutions — not the ultimatum-style “solutions” we’ve seen daily in the debt ceiling “negotiations,” but concrete steps.

Here are a few that seem to have bipartisan appeal, in my discussions with folks lately.

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A common sense idea about “tax holidays”

Jul 31, ’11 7:01 PM

We appear to be on the verge of a deal to raise the debt ceiling, and there seems to be a chance that it’ll contain some things that will horrify many working people and most Democrats.  One of these is a “tax repatriation holiday,” in which corporations who have profits “stashed” overseas, can bring those profits back into the U.S. tax free.

In the last few days, I’ve had conversations with conservatives, and I think there’s a compromise position that appeals to both sides, appeals to patriotism, but “gets something in exchange” for the tax holiday.  Which would be a good thing, because despite the rhetoric, we all know that American companies are not going to automatically turn around and use the profits to hire Americans.

The reason we know this is that they have plenty of profits onshore, and they haven’t used those profits to hire many people, either.  For a simple reason — the economy lacks sufficient demand to require new hiring.  This has been exhaustively covered elsewhere, so I won’t bore you by repeating the evidence.

So, if we want jobs in exchange for a tax repatriation holiday, here’s how we do it.

Under a program which automatically sunsets (say, 5 years, but that’s negotiable), American companies are allowed to repatriate profits tax-free, for each new job created in the United States.  In order to create incentives for full-time jobs, capable of supporting a wage earner and their family:

  1. For each new job created, a company would be allowed to repatriate a multiple (M) of the fully burdened cost of the employee.  ”Fully burdened” means wages and benefits — the total cost of having someone on staff.
  2. Each job would be eligible for the repatriation credit in each year the program existed, perhaps at a declining modifier.  This creates incentives to keep the jobs created, and not lay them off on Day 366.
  3. Attaching the credit to the fully burdened cost, rather than the salary alone, creates incentives for companies to create full-time jobs that carry benefits, which are essential to ensuring that jobs can support families.  Indeed, the better the benefits a company provides, the more profits it can repatriate.
  4. Also, using the fully burdened cost allows the plan to work easily in those industries with union contracts, since it does not specify anything about the structure of compensation.

There are obviously details that need to be worked out.  What is the multiplier?  How long does the program or credit last?  Should we simply keep a program like this in perpetuity as a means of allowing global trade to be “open” but still incentivize domestic job creation?  Should the repatriation by completely tax-free in year one, and at a steep discount off normal tax rates in future years?

The main outlines sound fair, and even patriotic.  And it’s a mix of liberal and conservative ideas.  From my initial discussions with folks, the idea seems to appeal to both sides, and sounds “fair” both to companies and to the country.

Kick it around a bit, share it with friends, and tell your Congressperson about it.

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A belated Towel Day perspective

May 29, ’11 5:13 AM

This year, on Towel Day, I was busy, putting together a fundraising dinner for the UW Anthropology Department and the UW Student Farm.  So I didn’t really write anything, as I have in years past.  But not for lack of something to say.  I’m not sure what it is, exactly, about “Towel Day,” the semi-bogus holiday celebrated by fans of Douglas Adams each year, but it seems to bring out the “long view” in me, visions of civilizations rising and falling.  You’d think such thoughts would be triggered by someone more profound…by a rereading of Edward Gibbon or at least Barbara Tuchman, or even Carl Sagan reflecting on the immensity in which our parochial concerns are lost.

Nope.  Douglas Adams does it every time.  It’s the Golgafrinchans, at the end of Restaurant At the End of the Universe.

Because, of course, they’re us.  They’re our bumbling, over-specialized, incapable of making a living for themselves, useless skills aplenty, useful skills thin on the ground, selves.

And, as an archaeologist and social scientist, the Golgafrinchans always remind me of how fragile our civilization is.  I am a social scientist, and I read a good bit of contemporary social science, of course, but in my work I analyze phenomena at a much longer time scale.  I study societies and social groups as they come and go, are born by fission from some other group of people, flourish, perhaps give rise to social “offspring,” and eventually go extinct.  And what is more emblematic of social extinction than Adams’s portrayal of the Golgafrinchan Ark “B”, carrying the non-essential members of society off to form a new world….

The Golgafrinchans occupy a place in my personal “wax museum of humanity” right next to Danny Hillis’s Long Now Foundation, and their 10,000 year clock.  Although the 24 hour news cycle and the buzz of tweets and instant information would have you believe otherwise, it is over much longer time scales that we can evaluate the success, and equitability, and sustainability of the various ways we humans have, of being human.  Our battles might be fought in days or years or lifetimes, but it is only our descendants that can truly “keep score” and decide how well we did.

The Long Now clock is designed to transcend us as a civilization, and as one of the ways we can communicate some of what we’ve learned with our far-future descendants.  It is designed not to require folks to be close enough to us in time and culture that they can read our writings, or comprehend our ideas, but to draw upon principles that are presumably deeper — not necessarily built into the laws of physics, mind you — but comprehensible to beings who are descended from our kind of minds, our kind of bodies.

Combine the perspective of an anthropologist studying the slow coming and going of societies, and the perspective of a software and systems engineer, and I think you get a sub-genre of futurism and speculation:  what it takes to “recover” the good bits of a civilization, after a collapse or other disaster.  Or simply the slow erosion of deep time.

I think of this problem in algorithmic terms.  If you wanted to maximize the chances of being able to recreate us, down the road after we’ve lost our knowledge, lost this particular set of scientific/democratic values, what is the “minimal instruction set”?

In short, what is the “boot loader” for an open, democratic society  combining expressive freedom and respect for scientific discovery?

This is the closest I can come up with, and I do not claim that it’s a deterministic algorithm.  In other words, starting here, you are not guaranteed to replicate the aspects of our civilization we value.  It’s clearly stochastic, and there’s clearly a lot of noise.  Which means only that I’m giving an “initial condition” and transition probabilities for processes which are in the “basin of attraction” of the product we’re looking for, and that if you follow such rules, “more often than not,” you’d end up with something we’d recognize as an open society.  Assuming you either replicate the experiment a lot (i.e., send LOTS of Golgafrinchans to LOTS of uninhabited worlds), or wait for the experiment to repeat itself over and over (i.e., deep time).

But here’s the algorithm (and I don’t claim full originality here):

  1. Pay attention and observe patterns in the world around you, keeping an open mind.
  2. Bang the rocks together, so to speak, and make things.  Especially new things.
  3. Understand how competition and cooperation work, and why each is necessary.
  4. Study those who are different, with an open mind.
  5. Pass on what you learn, without too much prejudice.

Put this algorithm on an endless loop, and you have something approximating the progressive parts of the last several thousand years of Western Civilization.   Ignore a couple of key clauses, and you have a much wider array of outcomes.  Not all good, and some downright scary.   Do it just like this, and you might, if you’re lucky, end up with an open, tolerant, prosperous, enlightened democracy.

That’s it.  That’s what it takes.  The Golgafrinchans managed it, apparently…and so did we.  But it was a narrow victory, and the question is whether we can manage to keep it up…..

Happy Towel Day!

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Is the United States “Broke”? Reintroducing sanity to our budget discussions

Mar 7, ’11 12:40 AM

It’s fairly common these days to read or hear sometime talking about how bad the deficit is, but “the real situation is far, far worse.”  The discussion then turns from describing a 1.3 trillion dollar deficit and 14 trillion dollar debt, to numbers like 100 trillion worth of “unfunded liabilities.”   The usual point being, of course, that the United States is on the brink of catastrophic fiscal meltdown which — if not fixed by drastic reductions in spending and probably elimination of all pensions and safety nets — will lead to national bankruptcy, hyperinflation, and the specter of authoritarianism and other evils.

It’s a fairly compelling story, and it certainly has managed to scare the living s**t out of many Americans, leading to the rise of the Tea Party movement, attempts to destroy public sector unions, and radical budget cutting fever in Congress.

It’s also a carefully constructed story, which happens to succeed only by comparing apples to oranges.  In other words, while we do have lots of debt and unfunded liabilities, the picture is nowhere near as grim as is being suggested.  I intend to go through some simple numbers below which demonstrate that we can handle both our current deficits, and the larger issue of the social safety net, “within the system,” and that collapse is not inevitable.

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The Solid Waste Debacle in San Juan County

Sep 15, ’10 11:58 PM

(Sent to the County Council and Island newspapers today)

After reading today’s article in the San Juan Islander entitled “SW budget based on OI Facility Only,” I am compelled to comment.  I will attempt to keep my comments respectful and civil, but the ludicrousness of the options being presented here makes that somewhat difficult.

While I understand that we face difficult budget choices, and apparently are going to pay dearly for our past choices in this policy area, the idea that an island county should live with zero or just one point for solid waste removal is alarming.

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An Open Letter to the President-elect On the Eve of Inauguration

Jan 20, ’09 12:52 AM

President-elect Obama: 

I'm an ordinary citizen, perhaps a bit more politically involved than average, and a supporter of yours since the moment you gave that fateful speech in 2004.  You brought the possibility of idealism back to politics after its long slumber during my adulthood.  After a long and grueling primary campaign, during which skeptics daily doubted your ability to secure the nomination, and supporters like me mostly held their breath, you showed yourself to be a serious candidate for this job. 

And on the campaign trail, you confounded the pundits who said you couldn't talk about substance, and could only talk in platitudes and airy phrases.  But your mixture of idealism and pragmatism won the day, as did your competence in fundraising and running a campaign.

And now, you have the job. 

Early indications are that you fully understand the gravity of the situation.  Your speech at George Mason on the economy resonated with seriousness of purpose, and more than a few direct echoes of Frankin Delano Roosevelt's First Inaugural Address, given during the depths of the fiscal crisis as the Depression deepened. 

As an American and long-time supporter of your fitness for this job, I ask only a few things of you.

1.  Clearly and honestly explain the situation to your country.  Demand more of us, as we demand the world of you. 

2.  Be honest about your mistakes.  Don't fear the polls, and keep your eyes on how Americans traditionally behaved:  we admire people more when they can admit their mistakes and then go fix them, than we do any amount of skill in hiding the truth.

3.  Don't lose your principles.  You've got the toughest job on the planet as of noon tomorrow, and the temptation to use your power in ways you yourself deplore and have decried on the floor of the Senate and campaign trail will be overwhelming.  Don't give in.  I can't think of anybody I'd entrust more with this responsibility than perhaps Lincoln or FDR, and they're not available anymore. 

4.  Maintain your idealism, and keep creating it in all of us.  What will get us through the next four years successfully is to not let the idealism fade, especially in the face of all that will happen to us in the next year or two, economically.  We need to believe, and the economy needs us to believe, and we need each other to believe.  And we need you to keep helping us believe.

Do these things, Mr. President-elect, and you'll keep the hearts and minds of Americans.  And as we now know to our pain and chagrin, that bond of trust is critical, and has been missing for far too long between the People and their chosen representatives. 

For too long we've had government of the people, without as much government by the people as we should have, and nowhere near enough government for the people. 

Please, Mr. President-elect, restore the balance.  Thank you.

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