By Peter Bearse

MAY DAY! MAY DAY! – The call of people in distress; also, the name of May 1^st, traditionally more of a “Labor Day” than the one in September.

These days, “distress” and “labor” go together. Workers’ work is earning far, far less, either in real terms [their inflation-adjusted earnings have declined] or as a share of earned incomes [in an economy in which the share of the rich has risen by leaps and bounds]. Thus, rising inequality is a sleeper (read between the lines) issue of this 2008 political year, to become a time bomb of an issue if we don’t start to do something about it now.

What’s to be done? First, try to get to the root of the problem. One fundamental source is that garden-variety wage and salary workers aren’t receiving shares of the profits and other wealth that their work helps to produce. Some firms have profit-sharing plans. Others have “ESOPs” – Employee Stock Ownership Plans. The latter are preferable since shares of stock embrace all company assets, not just profits. Several studies have shown that companies with ESOPs perform better than those without.

Another source is that, while paying through the nose as gas prices rise, American workers are not receiving any shares of the considerable profits being accumulated by “Big Oil” from our nation’s (diminishing) natural resource of oil, nor from any other natural resources whose prices are also rising in the commodities markets. The exception is Alaska, whose citizens receive an annual check from the Alaska Permanent Fund, derived from oil revenues produced in the state.

A third source is the negative rate of return on the forced savings that American workers contribute to Social Security for their own retirement.

Anybody seriously concerned with the ability of American workers to earn “living wages” that can support families will do more than claim an increase in the minimum wage as a major accomplishment. The evidence shows that it “helps” no more than a small minority of the nation’s workforce and leads to a loss of entry-level jobs. The next Congress will need to do much more. A good start would be threefold:

(1) In light of a generation of experience, liberalize and improve laws to encourage and enable the spread of employee stock ownership.

(2) Allow more oil drilling on public lands and increase lease rates and royalties that oil companies would have to pay for the privilege. [At the state level, states with considerable natural resources should look at the Alaskan model.]

(3) Require that workers’ Social Security funds are invested to earn a significantly positive rate of return – by putting the funds into a true, secure trust fund in the form of a public/private partnership that would invest them in a broad spectrum of American enterprise. This would negate the need to raise the already high rate of FICA taxation to maintain Social Security.

The bylines of these suggestions are: “Everyman an entrepreneur!” by broadening the base of ownership, “Spread the Wealth!” and “Let’s hear it for the American worker!”

Yet, these points are but a partial beginning of an effort to deal with a long-run, fundamental issue. Let’s get a discussion going. Comments? Other suggestions? Reply to peterj@peterbearseforcongress.com.

Peter Bearse, Ph.D., International Consulting Economist, author of Mobilizing Capital & Services: The New Economy (co-author), and Candidate for Congress, NH CD #1. Released by Supporters of Peter Bearse for Congress on May 1, 2008.

By Richard H. Olson, Jaffrey NH

Well, FairPoint Communications Corp. has officially taken over Verizon’s “land lines” and DSL services. I sided with New Hampshire ’s Consumer Advocate and the Chair of New Hampshire’s Public Utilities Commission and said that it was not a good fit for New Hampshire residents.

Promises! Promises! I just received my first bill from FairPoint and found out that they do not have a website that is capable of paying my phone or internet bill. I have a choice of using my bank’s “bill pay” or sending a paper check.

The explanation I received was that they needed time to set this up. Hmmmm! Wouldn’t you think that as “technology savvy” company like FairPoint was touted by supporters would already be “on line” to receive payments? After all, part of their deal depended on cash flow to support the acquisition and building the DSL network .

Creepy Politics?

by Peter Bearse

When might our yearning for simplicity lead us astray? – When dealing with the economy. We see this happening now with schemes for tax reform. We recognize that current tax arrangements have become mind-numbingly complex and rather unfair. So we seek a simple tax. Enter Steve Forbes with a “Flat Tax.” Never mind that it fails to address the root of our economy’s failings. Never mind that it’s just another income tax with which Congress can play its social engineering via tax incentives’ games. It’s flat; and since, according to Tom Friedman, the economic world is also “flat,” flat must be good.

And so we have the all three Republican candidates for Congress in the 1st C.D. competing on flatness -- on how quickly and strongly they recommended the Flat Tax. Unfortunately, they’re informed by ideology, not economic understanding. Why would a Flat Tax be good for the economy? What basic economic problem would it help to solve? What good would it do besides providing less business for accountants, lawyers and H.R. Block?

The major source of our economic problems is that we have been living far beyond our means. Savings have been very low and sometimes negative (dis-saving). Consumption has been unsustainably high. We have financed higher spending by drawing down equity in our major asset, our homes. Our trade deficit has been consistently negative, with imports far higher than exports. Our federal deficit has ballooned. Private debt has risen like the flames of a house afire. China and oil exporting countries have supported our excess spending by buying our country’s debt – to the extent that their “Sovereign Investment Funds” are buying our industry. How does a Flat tax address these problems? It doesn’t. It is simply a simple-minded, politically inoffensive expedient.

What would help us get a grip on our economic future? – a Consumption Tax [CT], otherwise (though somewhat misleadingly) called a “national sales tax.” As you can tell from the name, it taxes spending on consumption, not income, savings or investment. Thus, by its very nature, it provides disincentives to excess consumption and positive incentives for higher savings, investment and earnings.It is not nearly as simple as a Flat Tax. Members of Congress can still try to play games with it to favor some interests over others. Yet, it’s better than the current income tax and the proposed Flat Tax in its ability to help us strengthen and rebuild our economy.

Another advantage is that the CT would force our government to live within its means. This is because calculations show that a “reasonable” CT rate (say, 7-12%) would not generate enough revenue to finance the U.S. government at its current, excessive rate of expenditure. So what!, says this economist. It’s about time that Washington has to live within its means. To the extent that this is deemed to be a serious issue, we can consider another so-called tax which is not a tax but a fee on undesirable pollutants – a “Carbon Tax”. This would, in turn, be better than the highly touted “cap and trade” arrangements to reduce carbon emissions and fight global warming. But this calls for more discussion.

PETER BEARSE, Ph.D.
International Consulting Economist
March 16, 2008

by Peter Bearse

The "economic stimulus" package thrown together by the President and Congress has been rushed through the House. It now proceeds to the Senate. The stimulus is analogous to a "quickie." Will the Senate, whose members are enabled by 6 year terms to take a longer-term, sometimes wiser view, improve the quick fix? Not likely, but let us hope for more delayed rather than instant gratification.

Any short-term package needs to be crafted so that it does not adversely affect the economy's long-term prospects. Is it more than Congress' usual over-reaction to events and media hype? What's needed so that the stimulus amounts to more than bribing people to spend their own tax money, adding the bill to the already huge overhang of the federal deficit? What more far-sighted ingredients have been left out?

We live in a new age of entrepreneurship, innovation and science-based economic development an age in which conventional economic approaches may not work. What about more entrepreneurial approaches?, such as:

1)     Treating the economic downturn as an opportunity, not just to spend but to invest  "to begin to work down another huge overhang" of the country's unmet "infrastructure" needs for roads, bridges and public facilities. This would also add millions of jobs to the stimulus mix. Federal dollars should go to state and local governments that have projects ready to go.

2)     Beginning to solve the Social Security problem, also basically an investment issue by beginning to invest some of the Social Security funds into new, growing business enterprises. New, young and small enterprises are the greatest sources of job creation and economic growth.

3)     Providing greater incentives for private investment in new, science and technology-based enterprises, such as:  Further cutting the tax rate on capital gains; and providing tax credits for patient money placed in new or early- stage venture investments.

After all, a fundamental economic problem faced by our country is not consumption; it is investment. We suffer from over-consumption and under-investment. We've let foreigners finance our overspending. We've put our country at risk. China is holding billions of dollars of our currency and additional billions of dollars of our bonds. When you next go to Walmart or Hallmark, look at where the goods you buy are made. Most are made in China. So, when you try to put the Congressional rebates to work, at least try to buy American.

Peter Bearse, Ph.D., International Consulting Economist, Fremont, 1/31/08

by Orion Karl Daley

Did you hear Bush Last Night ? - He mentioned "Tax Free Bonds". How innovative for one who has no understanding of Economics !

In the New Deal published in June 2007 as ISBN 1419670948, part of the Economic Recovery/Reform Plan is in making "tax exempt bonds". I shared this thinking also with some on Wall Street to reach out for their interest, but have also been quite public about it. http://unity2008.org/book/PASpeech.pdf

There is a problem when an lesser known Presidential Candidate's intellectual capital can get scarfed up with out attribution. It is used mostly for the wrong purposes. For our Economy, the future of Wall Street cannot be a sound bite.

Well, none in DC are original thinkers and planners, and even given an idea don't know really what it means beyond a sound bite.

In December 2004, One of the 5 principles crafted in my platform was 'Transparent and Accountable Government'. This also became a sound bite in Congress about 6 months ago, but yet they are not Transparent and Accountable. The future of Government as well cannot be a sound bite, or the future of our nation over all is in question.

For a real 'State of the Union Address', I ask you to know of of http://unity2008.org/StateOfTheUnion.html. It was drafted in Dec 18th 2004.

If you want your nation, please know what is in these documents.

Your Option:

If not interested in the solutions proposed for issues that as a nation we are to embrace, simply say it here: http://unity2008.org/NotInterested.cgi?NHInsider@myway.com

Best,

Orion Karl Daley
Presidential Candidate for 2008
for the Strategic Future of our nation
Author - The New Deal ISBN: 1419670948
Balanced Party http://unity2008.org
New York, NY, USA -