Tuesday, May 5, 2009

Lessons America can Learn from the Panama Election

Here in Panama we just experienced the election of a new president, a new mayor of Panama city and some legislators. While everything is not perfect in Panama, I couldn't help but be impressed with their roll out of this election and the positive signs we are seeing for freedom and democracy in this small country. Compared to the directions the USA government and other Latin countries are going, I predict Panama will soon be a beacon of democracy compared to my home country...and this concerns me greatly. Here are a few reasons why...

First, Panama had 3 parties and candidates to vote for...and they just liberalized the electoral laws for more independent candidates to run in future elections. That means this country is less controlled by moneyed political parties who can easily control the media and therefore the minds of the masses. I think we have become brainwashed in the USA to think that only a Republican or a Democrat can run our country. In today's arena I think there is very little difference between those two USA parties...they both seem to want bigger governments and more socialism.

The other amazing fact was that over 73% of eligible voters participated in the election. Many of these people have to walk or bus for miles and/or hours to vote. Typically, only about half of USA registered voters participate in their elections. I personally witnessed many polling stations as I was out and about with huge lines of voters. I was very heartened to see this...and not only that...people waited more than 2 hours at the polls after they had closed to get the early announcement of who had won. The winner, Mr Martinelli, was announced within 2 hours of the polls closing? Amazing and speedy results. This is pure democracy in action. No "Electoral College" delaying or "representing" the electorate. No Supreme Court interference or "chad" paper ballots being examined or thrown out. If the election had been close, it would have only taken a 1 vote majority to determine the outcome. By all this I believe the people of Panama feel more empowered in their system than we Americans do. A sad era for America.

President Martinelli was elected on the premise of being "pro business", less interference and corruption in government, and going for a flat tax on all corporations and wage earners, with increasing percentages of tax paid the MORE you make...but maxing out at about 23%. And why can't the USA pursue such a plan? I predict if he accomplishes just this, the Panama coffers will be rolling in dough and hopefully more of these public works and help for the poor will be covered by this revenue instead of constantly borrowing from other countries like the USA is doing right now. He also has called for speedy transfer of non titled lands to titled which will do away with much graft and corruption related to government concessions given out on a political agenda, and create more tax revenue for the country as well from land owners who will have a much cleaner system for trading in land values. I think the majority, at least here in Panama, will take to a flat and fair tax system versus the complicated and ever changing tax system here that I swear must have been adopted from the USA.

Finally, one of the most significant changes in law in the USA that I hope Panama never has the audacity to pursue is Obama's new plan to increase taxes on USA corporation's income WORLDWIDE, and abolish almost overnight a whole section of rules and laws that companies spent billions of dollars setting up around. Now believe me, I understand that the precarious position the USA has gotten into economically calls for some drastic measures and sacrifice. And yes, it is probably important that the wealthiest in America do more or pay more, because the poor have nothing more to pay with except their blood. But as usual, the government pendulum swings quickly in an all encompassing arc and in panic mode without thinking about all the consequences this will cause. Here are some core problems with the Obama administration and democratic leadership's plan:

1) Corporate values and profits are already getting killed in the marketplace and because of heavy debt. Because of decreased values and cash positions, USA companies are already falling into tougher competitive positions in the global economy. Now the USA government wants to take MORE from what little remains...and continue to sap funds out of private and public industry to cover their own huge debts and continued bailouts of their insider buddies.

2) The USA already has one of the highest tax rates in the first world on domestic corporations. Also the USA has historically been a TAX HAVEN for foreign companies, directly inhibiting fair competition with their own domestic corporations. They have done this to induce international investment in the USA and to sustain jobs for Americans. Nothing wrong with that agenda...IF it does not mean making my competitor tax free while I remain in a high tax bracket. It is SO hypocritical of my country to criticize other "tax havens" when they have their own version of the same thing. It is the USA's own historic agenda that caused US companies to go international in order to survive and grow in the first place. Now...because of these foreign successes...the government now wants to paint these companies as "dishonest" or even "traitors" for using the USA's own historic laws and exercising their constitutional freedoms to do business and invest anywhere in the world that seems proper and in their best interests. It is VERY scary to me when you have our elected leaders saying that the success of companies or individuals have somehow been off the backs of the poor and disadvantaged and that now these companies or individuals OWE it to society to give it back. I don't buy all the right orientated bashing these days from media people like Hannity or Rush Limbaugh, but Obama's reasoning and some of his actions are looking more and more like Chavez and other leftist leaders in Latin America. Nationalize the banks and major industries, more heavily tax the productive, and if they don't pay, just take them over. This is a scary shift of reason my friends...and I am sorry to even have to write about it...but I would feel less than patriotic NOT to voice my concerns here.

3) And here is the "coup de grace" of this whole Obama plan...the government will have no "burden of proof" to go after international investors or companies they claim are "hiding" international income or business activity. They are making it the ACCUSED burden to prove they are NOT! Obviously this opens Pandora's box for government witch hunts and politically motivated accusations that can cost Americans and American companies billions of dollars per year just in defending themselves legally from their own government! This is the biggest reversal of constitutional rights I have seen my government try to pass yet, and I still have big problems with the "Patriot Act"! All this is saying to me is that the USA does not want to compete globally in the tax arena. They want to dictate to all Americans and the world at large what the tax rates and size of government will be. It's the old "if you can't win the game, just change the rules". I do hope and believe this would go to the Supreme Court before being a reality...but there again I am now fearing what kind of judges our current leadership will put on the court with the upcoming vacancies.

4) And back to little ole Panama. Justice is not pure here and you can pay for access or verdicts...just like you can in the USA. But so far at least, little Panama has rejected the USA's push for lifting corporate and banking privacy. From what I'm reading so far, the reason the USA has not ratified the free trade agreement with Panama is because of this rejection by Panama of USA pressures to join them in taxing the living daylights out of everyone in sight. Panama smartly realizes that without their banking and corporate advantages over the USA, they would just be rolled over competitively by US market makers.

This is a panic play by the USA...and I hope sooner than later calmer, more legal minds will prevail and pursue some better ideas like...

1) Give the markets and free enterprise a chance to sort out the current challenges to productivity and debt. Get the government OUT of the markets.

2) Quit giving all the funds to the failed enterprises and political mucky mucks...and instead give it to small business and individuals to grow more PRODUCTIVITY in order to survive.

3) Yes...let the large failed institutions be cut up and bought out by smaller enterprises and the new leaders of the future America.

4) Please, let the markets find their natural "bottom" so we can start rebuilding on real numbers and factoring instead of supporting false expectations based on government bailout funds...which are on fumes. With the government in the way, there is no way to get a real value on current corporations and/or assets.

5) Most importantly, don't kill the one productive milk cow just because YOURS died. Pay a fair price for the next calf and wait for it to grow. Otherwise you will kill the whole system. America and its government needs to re-build slowly and effectively, not by robbing and stealing from its own people or the international community.

President Obama...get with President Martinelli. It might be good for the whole international community and the future of America.


Bibiana said...

Muy cierto.

Elecciones de Panama para nuevo presidente fueron un muy buen ejemplo de democracia.
Resultados rapidos, civismo en las calles.
Triunfo arrollador de Martinelli, muchas esperanzas puestas en el, despues de periodos presidenciales sin mayores exitos.

Obama, impuestos, vida en USA, cosa bastante complicada de resover, cada quien hace lo que puede. Al final de la carrera se veran los resultados, por ahora estoy de acuerdo contigo Ed, nada mejorando, todo igual.


edward said...

My cousin sent me this response to this blog...


I agree with much of what you've said on your blog (Panama Elections), although the idea that the "rich should pay more" is wrong. The top 2 or 3 percent already pay 50% of the overall tax burden. Further, the top 50% pay NINETY-FOUR percent. That leaves the bottom 50% to pay just 6%. Doesn't sound "fair" to me. Not to mention the fact that the Obama administration wants to give "all but the richest few" a tax cut. Many believe that his ultimate goal is to get 55% not paying any income tax at all, resulting in Democrat control in perpetuity.

Further, the Electoral College was set up to prevent very populated states from being able to always control the outcome of elections and dominate other states. Otherwise, the will of New York and California would always win out over, say, Wyoming. It's a kind of check-and-balance system, like the separation of powers between the branches of government is supposed to be. It's not working very well right now, though, with the Democrats in charge of everything.