A letter from one of the 2%

They're not all bad. This was written by a friend of mine.


To my friends, neighbors, family, and coworkers:

I usually stay out of political discussions because arguing stresses me out and rarely changes anyone’s mind. In this time leading up to a very critical election, I feel that I need to state my case at least once. All I ask is that you read what I have to say and think about it. I’m sure those of you who disagree will want to reply and I will read and consider your replies, but don’t expect me to rebut your replies. I will have already said what I have to say.

I was very uncomfortable with the George W. Bush administration. I felt that his reflex response to any crisis was to employ America’s military might. He responded out of emotion and fear and not out of considered rational thought. I believe that he felt that the only way to grow our economy was through investment in the financial markets, rather than lowering loan rates, and giving tax incentives to people who start new businesses and hire new workers. And, I believe that he thought that America was a great country not because of what we did or didn’t do, but simply because it is America.

As I watch the Romney campaign, I see him falling into the same traps.

My first disagreement with Bush and now Romney is our paranoid spending on military defense. No other country on the planet spends anywhere near the percentage of their annual budget on defense. Taking this money off the top without question every year has crippled this country for a long time.

We did not win the World Wars by having a large standing military. We won because we had a large standing manufacturing base, and trained work force. We now have a huge military spread all over the world, and too much of our economic might is tied up in maintaining it.

This huge standing force makes it way too easy for our leaders to flex their muscles and bully other countries into doing what we say. This may work in the short term, but it eventually turns allies into enemies, and increases the need for even more military power. And, it is bankrupting this nation. We have to make it harder for the default answer to world policy to be military intervention. Calmer minds must prevail.

This same mindset allows for unfunded wars. During the World Wars, the American people were convinced of the danger and the need. They willingly put up with higher taxes. They bought war bonds. The agreed to rationing. We have spent 1.3 trillion dollars in Iraq and Afghanistan with nobody asking where the money is coming from. And, I can’t see how we are any safer now that we were on 9/11.

Because so much of our economy is tied up in the military industrial complex, we can’t just disband it. We have to find ways to convert it into more beneficial uses while keeping people employed and the money flowing through our economy. If we already have the people and industry employed in rebuilding our crumbling cities and infrastructure, in reducing crime and helping out in disasters, then we will still be able to mobilize quickly in case of true need. But we will be helping our country grow, not starving it of resources.

My second disagreement is the belief that the way to wealth and financial security is through investment. In years past, investment meant keeping enough money in the bank to cover emergencies, and putting money if a stable retirement account with guaranteed benefits when you retire. Nobody got filthy rich playing it safe, but people had money to retire on without relying on the Government. Now the only plans of this type that are left are run by the Government, and they have been underfunded and mismanage for years. Because of this most voters would like to see them done away with altogether.

If you wanted to get rich back then you did it by starting a company, working hard to grow it and provide goods or services that were needed by the general public. For this to work, people had to buy your product or service, and as you grew you had to hire more employees. This gave more people money to buy goods and services. That’s how our economy became strong. If a company wanted the capital to grow, they took out a loan. If a bank or investment firm felt that had a strong plan, they would be loaned the money. If they succeeded, they paid off the loan and received the benefits of their work. If they failed they were still responsible for the debt.

Now, we have a different model. By selling stock, the owners of the original company can divest themselves of some of the risk. If they fail, the price of their stock goes down, but they are not responsible for the lost money. This puts the risk onto the people who bought stock. People whose only interest is in seeing the money they already have bring in even more money.

Unfortunately, this has allowed some investors to take control of a company, and leech off the income in the form of profit disbursements.

Investment firms have been allowed to buy companies, and then instead of investing the company’s earnings in equipment, staff retention (fair wages/medical/retirement), and growth, they are allowed to ignore all of these things and claim the money saved as profit for themselves and salaries for the very top tier of management. This results in off shoring, doing away with medical and retirement commitments, neglecting to do R&D or to maintain and upgrade equipment. Instead of working towards the long term health of the company and the economy, the goal is to collect their initial investment plus a sizable profit before the company tanks completely. When they have weakened the copy beyond repair, they claim bankruptcy, fire their workers, default on their retirement plans, and walk away with a golden parachute for themselves. Then they start over again destroying a different company.

This is how Mitt Romney made his fortune. Unfortunately, it only works if you have enough money to make the investments to begin with.

For most of my adult life, we have been told that making sure the rich can make a profit through investing is the way to grow our economy. To this end, our tax structure favors investing over earning. If it were well regulated, it might even work. But, statistical data over the past 30 years shows that it doesn’t work. The money gets caught in an endless loop at the top. And, it sucks more money out of the hands of the middle class and into the hands of the investment class. The Republicans descry redistribution of wealth, but the systems they have put in place and want to maintain do exactly that.

Every financial crisis that I can think of has been caused by out of control investing. Junk bonds in the 20’s, the .com bust in the 90’s, and the mortgage crash in the 00’s. These all came about by investment bankers siphoning all the money off the top and then allowing the companies involved to crash.

High risk investments are the same as any other form of gambling. The house always wins. And the majority of the gamblers go bust. To base our entire economy on this model has been a disaster.

The sad part is that by taking away any other way of saving for retirement; we have all been forced to gamble our futures on the open market.

I hear everyone on the right is afraid Obama is going to make this a socialist county. I think that Romney is trying to make this country into a financial monarchy. He would like to see the country run by the people who have money, while the rest of the population is forced to work for bare subsistence pay or else starve. I foresee company towns, where everything is controlled by the company overlords and people have no other option but to work the only jobs being offered at whatever scraps the company is willing to pay. It has happened before and it could happen again.

Yes we have too many people in this country who are dependent on Government aid to survive. I deal with people every day who do the minimum necessary to get by. But, I have to ask myself how they got that way.

My answer is that, for most of them: they, or their parents, or their grandparents, tried to do it the right way. They worked hard, saved their money, and tried to succeed. But it didn’t work. If working hard and living frugal don’t pay off, after awhile you just give up. If you have given up, you are going to teach your children that it is worthless to even try. Eventually you end up with a bunch of useless people living on the public dole.

The only way to reverse this trend is to provide more opportunities and hope for people to be able to once again work their way out of poverty and into prosperity. To just give up on these people will only make matters worse.

I don’t know if Obama can do this. I know that he can’t without the support of congress and the American people. (Support he has not had in his first four years.)

I do know that Romney and his backers have profited too much from the current system. They have absolutely no incentive to change it. The more people who are put out of work the more cheap labor they will have. If they can make enough people desperate, and then do away with the minimum wage, they can bring jobs back from overseas and claim to have improved the economy. But it will be a lie. That’s not a country I want to live in.

My final complaint with Bush and Romney is the belief that America is great by default. We are great by the hard work and accomplishments of our predecessors. But we have allowed ourselves to become arrogant and our greatness has been greatly tarnished. If we refuse to acknowledge that, we will never be great again. Obama has shown humility and has started to very long road to greatness again. This is not weakness, it is honesty and a virtue.

Now that I have gotten that off my chest, I expect far too many of you to reply with why you think I am wrong. You may even convince me on some points, but I doubt it.