Friday, November 15, 2013

Government Pyramids

With the current debacle of "Obamacare" and many other BIG government programs that sap our country's economic and cultural progress...is it time to get real about what I call "government pyramids".

It seems in this "Neo-liberal" political era, most of our western "democracies" are going the way of socialism and extreme controls and regulations on just about everything.  The masses world over have for decades been ceding their personal rights and self sustenance in exchange for "security" and protectionism...often under the guise of "God and Country". Most people would now rather be kept within the borders of police states where there are no risks or cost for personal failure and if anything bad happens they can just sue someone else or get free handouts from "the government".

As I have quoted many times in my writings...our founding fathers of the constitution believed that "those who would give up their rights and freedom in exchange for security and protection deserve neither". Thomas Jefferson and others of that revolutionary era knew then the direction democracy can go if unchecked against the individual rights and sovereignty each citizen should have. We are now living at the tail end of that cycle where our empire is crashing and we individuals who value personal sovereignty are forced to live as rejects and recluses within or without our own country. They say it is dangerous to express our opinions on these matters of state...but I am one of many who have come to a point in life where we can no longer accept being victims of "government pyramids" or keep our mouths shut.

As most people know, a pyramid in financial matters is an organized approach to finance a business or sell products where the "first in" get huge commissions and benefits for getting others to buy and also sell the service or product of the day. These types of programs are usually based on highly inflated priced items or services that are "new" and or revolutionary...but often hard to buy directly in the marketplace. Usually one can only buy this product or service through this defined network of "associates" or agents who redistribute to everyone in their circle huge benefits and commissions for doing so. Towards the end of the "pyramid scheme", the last people in get the lowest amount of benefit and are usually left holding the bag of empty promises and bounced checks.

Modern day governments usually have many laws "protecting" their citizens from these pyramid schemes...but unfortunately what most people don't realize is that these governments themselves are some of the biggest pyramid programs in the world. The USA has the biggest government pyramid going...and the latest nationalized healthcare program is just the latest in a line of many. Unfortunately, this one could be the straw that broke the camels back.

Here are a few brief descriptions of government pyramids that are breaking our economy:

Healthcare Pyramid
As we gave already mentioned briefly, a large percentage of Americans are not embracing the new Government healthcare plan. Perhaps one of the first problems is calling the plan "Obamacare" which quite honestly gives way too much credit to our current president for the currently approved plan by Congress for covering ALL Americans.

While the intent to provide care for all Americans is an honorable idea, the problem is this plan has been falsely represented at all levels of government and overruns any chance for market driven innovation or competition on the healthcare marketplace. Many tried and true plans are being obliterated for SOME Americans in order for the government to provide SOME level of coverage for ALL.

To put American's huge medical and pharmaceutical demands on the back of a bloated, wasteful federal government seems an obvious recipe for disaster. This pyramid approach funnels too much money and controls through the sifter of big government budgets and bureaucracy. If anything, our healthcare system needs LESS bureaucracy and regulation. We need a plan that gives individuals more choices and more freedoms to provide or decide on their own healthcare.We need government incentives for living healthy lifestyles...not reward for continuing slothfulness. The coming wave of baby-boomers leaving the workplace and entering their years of more dependency on doctors, hospitals and drugs is going to overwhelm all the coffers of medicaid, medicare and private insurance plans. It is understandable that insurance companies are having to raise their rates in order to meet these demands. The federal government should be focusing on fixing the broken programs they already have and expanding them to the TRULY needy. Yet, the government now comes along claiming they are going to meet the nations healthcare demands with cheaper plans yet increased benefits...for rich and poor alike. This is just unrealistic.The mandatory participation clauses are particularly disturbing when Congress gives themselves exemptions to maintain their own government "Cadillac" healthcare plan which Congresspeople don't pay for...taxpayers do. This hypocrisy and poor leadership example must end along with this pyramid structure of financing.

Social Security Pyramid
If anything instructs us on the future of the government healthcare pyramid, you only have to look as far as the Social Security system. Social Security in the USA started back in 1935, primarily as a way to force American workers to save for their retirement. Being at the tail end of the country's worst depression ever, it seemed an easy sell to promise workers that their retirement would be secure by putting these funds away where they could not access them. Unfortunately, the government sponsors of this pyramid could...so for decades these various "trusts" were raided by our government to cover various deficits and war debts over decades, leaving empty government securities in place of the cash we Americans all put in those "trusts".

Now the fundamental problems are that our currency has no basis of value that it had back in the gold standard days...and inflation and deficit spending have totally obliterated the estimates and numbers run back then on what it would take to ensure this trust for retirement. That very simply means that the buying power of your social security in future decades will probably be 25-50% less than what you thought it would be. For these reasons for 40 years I have not believed I will get what was promised for all my SS contributions. Either the funds will be denied me...or they will not be at a livable value in true currency.  The younger you currently are, the more screwed you are going to be from this pyramid. Yet, you are legally forced to contribute.  Terrible governance.

Military Pyramid
Ever since the end of World War II, the USA military industrial complex as grown exponentially, If you read the historian William Manchester or biographies of wartime Presidents such as the two Roosevelts,  Woodrow Wilson, Truman and Eisenhower, you can easily follow the government's mentality regarding the early decades of militarism in the USA this past century.  From the Potsdam conference at the end of WW2 until today we see the rationalization and justification in the eyes of our politicians for unlimited spending in most decades since. The rationalization has been that we don't want to see a World War 3, especially in this atomic age (which we started). Therefore most of us have gone along with our government's strategy that to contain the expansionist, tyrannic powers of Russia, China and others, we must control the world through continued empirical might backed by our military. Unfortunately, the consequence of our thirst for global controls has cost us a huge percentage of our country's GNP to where there's not enough tax revenues left to take care of our veterans, widows and orphans...let alone the rest of our booming population that don't seem to be able to get off the public dole.

Wikipedia has a pretty good summary of military spending at this link, so I won't repeat much data here. But just in general terms, our military pyramid spends almost 20% of the total federal budget...PLUS receives 50-60% of Congress' "discretionary budget. That ladies and gentlemen means in general terms that 30-35% of your tax dollars are spent by the military and Department of Defense (DOD) just to maintain our military commitments in over 160 different countries around the globe. This at a time when our country is basically bankrupt and we are LOSING or stalemated in every war we have entered since World War II!  This is a big price to pay for feeling "secure" and dominant in the world arena. I also don't think these numbers include all the collateral healthcare problems and loss of domestic production we pay for maintaining the current strategy of global domination. What would it mean to produce greener energy, more technology and biogenetic research for healthcare in place of all the bombs, missiles and soldiers outfits we have to produce each year?  For defense we could do much more with technology strategies and space oriented systems for more modernization versus foot soldiers, bombs and ammunition for hand to hand combat if we changed and limited the DOD budgets.

I don't go along with pure isolationism and total withdrawal from the international military arena...but we must soon come to our senses that we can no longer afford as a country or peoples to be majority funders and providers of troops and armaments all around the world. The Chinese and other contrary political systems are laughing at us all the way to the bank with the bonds they hold against our currency that goes to defend ALL THE WORLD. It is time to cut back, end this pyramid structure of funding, and get realistic about what it truly means to defend the "interests of the USA" versus maintaining power and influence outside our borders. We are NOT succeeding on this mission...and at great cost.

Federal Reserve System
The FED is the financial pyramid that operates separate from the federal government as the "Central banking" system of the USA. It was created back at the end of 1913 to basically control some market driven financial panics early in the century and was the government's way to try and smooth out the natural ebb and flow of free market currencies, inflation and to control to a certain extent consumerism. Most of the leadership of this organization is appointed by the President of the USA, and the Board of Governors is voted in by the primary national banks. All profits after bank interests are paid are sent annually to the US treasury.

The basic function of the FED has been to bail out or take over failing banks and attempt to keep stability in the US banking system. While not an actual part of the government, the FED has the power to control interest rates, print and distribute currency and be the watch dog over banking laws and policies including defending the value of US currency.

While the original ramifications and goals of this agency were understandable in the beginning...it is another example of a government system that was setup to take care of an temporary emergency...and then uses this emergency to establish itself as the defacto controller of all things financial in our huge country. Since the establishment of this agency we have experienced many gyrations and false evaluations of our national economy.  All kinds of new debit has been established...and that debt has been covered temporarily by simply printing more worthless currency (with no commodity value), creating new debt paper programs that mask the true nature of the national debt via "credit swaps" and various inter-government currency agreements. Through this FED pyramid of monetary controls, our government has been spending and borrowing from this banking system without checks, balances or remorse since its founding.

Many leaders who look at this realistically, such as Representative Ron Paul, have been calling for more accounting and basically limiting or abolishing this "pyramid" so that we can return to more natural market driven economies and growth.  To assume that bankers or government politicians know better how to push or control markets than true business leaders is a huge mistake. What we need in place is a TRUE independent Central bank and a return to the fundamentals of market driven versus politician driven economies and money supply.

Welfare Pyramid
All of the aforementioned "government pyramids" are in one way or another responsible for the "Welfare" pyramid.  Welfare economics once again began in the USA during real times of TEMPORARY need in our country, but the more the government gave the needy...the more needy they became. This is now the major arm of government that provides "redistribution" from the producers to the non producers and has totally turned ethics and morals of economic survival upside down in our country.

I have no problem with having government funds used for disasters and taking care of the truly needy, sick, handicapped and veterans of war and their families. Unfortunately, government has always been the most IN-efficient way to cover local needs and disasters.

While the welfare state approach was originally intended to promote economic and social WELL being of its citizens...it has actually simply encouraged citizens to rely on the government to take care of them financially, socially and medically. With all the promises made during elections, our politicians have turned those promises of redistribution and Neo Liberal "rights" into a mega pyramid of redistribution.  Millions of non incentivized  citizens are now conditioned to live off the welfare and backs of other citizens versus work and push for their own individual sufficiency. It is just easier to live off the pyramid than push for personal success.

Unfortunately, this is also bankrupting the country.
In 2002, welfare payments were 35% of total GDP in the USA. "In 2002, total U.S. social welfare expenditure constitutes roughly 35% of GDP, with purely public expenditure constituting 21%, publicly supported but privately provided welfare services constituting 10% of GDP and purely private services constituting 4% of GDP. This compared to France and Sweden whose welfare spending ranges from 30% to 35% of GDP.The Great Recession made a large impact on welfare spending. In a 2011 article, Forbes reported, "The best estimate of the cost of the 185 federal means tested welfare programs for 2010 for the federal government alone is nearly $700 billion, up a third since 2008, according to the Heritage Foundation. Counting state spending, total welfare spending for 2010 reached nearly $900 billion, up nearly one-fourth since 2008 (24.3%)". The previous decade had seen a 60% decrease in the number of people receiving welfare benefits, beginning with the passage of the Personal Responsibility and Work Opportunity Act, but spending did not decrease proportionally during that time period.
As we continue on this road of pyramidal, deficit spending, we are fostering generations of dependent, helpless Americans who are becoming less competitive in the world, and clueless at home on how to survive, get and keep a job, or create their own products and services for future prosperity.

We need a paradigm shift on the role and funding of government programs. Instead of our government taking money into a pyramidal scheme of taxing and budgeting...building in layers and layers of administrative and macro management personnel and costs...we need to reverse that pyramid to where the "providers" and the truly dependent are more directly responsible to each other.

The following are my macro suggestions on obliterating each of these government pyramid schemes:

Healthcare: I believe we simply need to improve the systems and "safety nets" we already have.  Medicaid and Medicare have already shown the good and bad of government fostered and administered healthcare. To now bring in a whole new pyramid scheme of government controls on healthcare providers, users and costs is just to magnify and repeat the same cycle of insanity.  While the problem and answer is not simple, in general I believe it is better for government to support PRIVATE healthcare enterprise and let markets do the job of controlling pricing and choices of healthcare.  Before you start another healthcare system, fix the ones you have...or get rid of whats not working by replacement....not adding on more of the same. We cannot afford all those programs. There is just no money in the system for this. Who will be the first effective politician to lead us that direction?

Social Security: We need to restore integrity and true math to the Social Security system. People should be able to manage their own tax free retirement funds. This would keep the government from raiding those funds to cover their spending addiction...and the FED must stop printing worthless currency that immediately deflates the value of our future cash incomes. Future inflation is the greatest enemy of this outdated pyramid scheme. It is time for the government to repay those debts and be real with the people on the true future projections of THEIR money. This is not an "entitlement" from the government. It is a DEBT to those who paid in.  As people live longer but not producing...these promises to the people must be kept. Unfortunately, a government doesn't seem to have the same pressures as people or businesses in declaring bankruptcy or paying their debts.

Military: We need to pull back from the expensive strategy of "boots on the ground" in over 160 countries militarily. More focus and investment should be on technology development which will allow us to maintain surveillance worldwide but without the expense of expensive human resources spread throughout the globe. The USA needs to cut back on its "police state" attitudes both at home and abroad. We don't need it and we can't afford it. Bring our troops home to help with the domestic rebuilding or our own infrastructure and economies. These troops can be safer and much more productive at home.  Our military should be used for DEFENSE only...not interventionist and usually unwelcome invasions on foreign soils. Highly hypocritical of a "Christian" democracy.

Federal Reserve: We need to return to MARKET driven fundamentals for adjusting economic factors in our country. For politicos to think they are smarter and better than the markets to determine interest rates or who gets financial bailouts is simply stupid and naive. We need business leaders and true economists not politically motivated to work together for improving monetary policies that promote growth, access to financing to all who DESERVE it and not try to micro manage economic indicators for political purposes. There also needs to be more transparency to the electorate on what the true status is of our economy and where and to whom our banking system is catering to. We either have to replace this organization...or significantly reorganize and clip its wings of unmitigated power and control of our money.

Welfare Pyramid: It is time to reduce American's dependency on the "welfare state".  As a larger percentage of our population becomes government dependent financially, this leads to the worst of political corruption in the world where the voters support any politico who will GIVE them the most.  We need more Americans to "ask what they can do for their country" versus "what their country can do for them".  Yes, government should be there to guarantee rights and provide services they were elected to provide...but not one of. our country's founders envisioned the constitution supported the idea of Federal Government as the great agent of redistribution.  People who want to eat and have a roof over their heads need to WORK and be productive. Those who get handouts have to do something in return if at all able. People on welfare in my opinion should not be able to vote, because they will always vote for more "welfare" at no cost to themselves. If the state pays money to people, the people should provide some service to the state. Only the truly handicapped, disabled or aged should get a free pass on being a productive human supporting their own survival.  Socialism and increased welfare will never build a sustainable, strong nation of independent citizens.  The more united we Americans are in demanding justice and equality for all without catering to leeches and ner do wells...the sooner we will once again become the strongest economy and state in the world.

If we simply get rid of all these government pyramids that are totally unsustainable as well as terrible strategy and policy...we will be able to reduce the size of government by up to 50%.  Imagine what could happen in time if half of our taxes were returned to us to do something more productive than the government does with that money?  Imagine if we had enough money to take care of our own dependents in our families and communities directly versus filtering support to them through a money guzzling machine of Federal Government. Believe me, people would be much more responsible and accountable for the support they would get. What ever happened to personal pride and integrity in America where to take a dime of public support was deemed shameful and only as a FINAL option? Imagine the change that will happen when we all have more discretionary money for opening businesses, getting educations, traveling and enjoying the fruits of OUR labors. We truly can break these chains of Federalist dependence. These changes will not happen if we continue contributing to and living off all these government pyramid schemes.


2 comments:

bewarnered said...

You make some good points, the government is inefficient and the bureaucracy keeps growing. I think it is a unrealistic to think that cutting the government by 50% will not end in tears.

The sloth is not the only reason many people are not thriving, globalization is pushing many unskilled and semi-skilled jobs out of the country. This has accelerated in the last two generations which is too short a time to for many to adapt. It is the best of times, and the worst of times. Highly skilled people in the U.S. are thriving, but the rest are stagnate or worse.

The military is too large and seems to be a mechanism in part to reelect politicians and enrich private enterprise, but without the American hegemony I do think there would have been large wars in Europe, the Middle East, and Asia.

Although, I think it would be better to improve the current system, than tear it down.


edward said...

Thanks for the thoughtful and intelligent comments bewarned. Unfortunately I think that the American "hegemony" has only put off the inevitable of cause and effect. And yes, the gyrations of globalization is part of that cause and effect of our world's current chaotic order.

I totally agree that the military is out of control and I continue to fear the militarization of my country...especially as it prepares to put down civil unrest and revolution. I don't think the current system can survive or be built upon further. There will be major disruptions in our current order of things before sustainability of peace and prosperity can be achieved.

Worse than anything, I fear the silent powers behind who we THINK is in power...and what they have in store for us.