The Trouble with Democrats
by Fred E. Foldvary, Senior Editor
The Democratic Party of the USA has now selected its candidates for president and vice president. They have given rousing speeches, and now the voters should carefully analyze the substance of their proposed policies.
On Iraq, the democratic party candidate for president says that if he is president, he will bring in allies who have not wanted to become involved. But just because there is a different president is not a sufficient incentive for other countries to send troops. Iraqi terrorists are kidnapping foreigners and threatening to chop their heads off if the country and its companies do not withdraw. Countries are departing under this threat, which induces more kidnappings.
If other countries, including Arab nations, send in troops into Iraq and reduce the burden and dominance of the U.S., that would be very good. But any foreign troops will be seen by the terrorists and rebels as part of the occupation. The violence will continue, and hamper the elections. Candidates as well as office holders in Iraq are being threatened with death.
Extra troops from other countries will not establish order in Iraq. We need to eliminate the political cause, the feeling by many Iraqis that they are still under occupation, and that the allegedly sovereign government is a puppet of the United States. The only effective remedy is real democracy, starting with local elections. With many thousands of neighborhood council elections, the terrorists will not be able to wreck the voting, because there will just be too many elections, and more importantly, they will be seen as coming from the people.
The second problem with Democratic party policy is their proposal to increase the minimum wage. If employers are forced to pay higher wages, the money has to come from someplace. The cost will be passed on to customers. Some of the cost is also imposed on the least able workers who lose their jobs because they are no longer worth hiring, and that cost is in part passed on to taxpayers in paying more for welfare assistance. The more effective way to help the poorest workers, aside from more fundamental changes, is to directly subsidize their wage. Then all taxpayers would bear the cost. The minimum wage is in effect a tax unfairly focused on employers who hire low-skilled workers. It just treats the bad effects of other interventions, and does so badly, by eliminating enterprise and jobs and reducing investment.
The third problem with the Democrats is their policy on trade, especially outsourcing to foreign countries. They want to increase taxes on companies that shift some labor costs to foreign countries. This will do little to stop the outsourcing, because this involves fundamental changes in technology that are creating an ever more global economy. The economies of the world are being restructured to a more productive mix of industries, which is providing great savings in costs and making labor more productive world-wide. The problem with American labor is the artificial costs imposed by taxation and excessive regulation and litigation, problems that the Democrats do not acknowledge and don't want to talk about.
A fourth problem with Democrats is their opposition to privatizing the Social Security system. Young workers today would obtain much more wealth for retirement by investing in private accounts that maximize returns relative to risk. There is, of course, a big transition cost in privatizing Social Security, but it could be handled with direct federal taxes on land value. The U.S. federal government collected direct taxes, mostly on land value, in the late 1700s and early 1800s, and could do so again. A direct tax on land value, apportioned by state population as specified in the Constitution, would not hurt the economy, since the land is not going to flee abroad. The land is not going to hide underground. Land is not going to shrink when taxed.
Social Security is a bad deal for most workers. A few benefit from being forced to have a retirement plan when they would squander their earnings or be too lazy or ignorant to plan well for their future. But why shackle everybody because of the self-negligence of the few? Why punish the industrious and the wise to reward the lazy and foolish?
The trouble with Democrats is that they seek only to treat the effects of social problems, rather than eliminate the cause. They are welfare statists who promise ever more government aid to the poor, the unemployed, the sick, and the old. People support these policies because they are superficially appealing. Folks are mostly uneducated about the economics of social problems. Even worse, they are not educated to ask why. Why poverty? Why unemployment? Why homeless? Why war? Why outsourcing?
Do you hear a dog barking? Well, they say, shoot it. Don't ask why it is barking.
When Henry George asked us to think for ourselves, this involves not just relying on our own reasoning, but also thinking more deeply, asking why. He urged us to inquire as to causes and remedies, not just about ways of treating symptoms and effects. The Democratic Party is mostly made up of welfare statists who only seek superficial treatments of social problems which perpetuate and worsen the problems.
The Republican Party has been no better, but I will await their convention before turning my geolibertarian eye to the Republican guy.
-- Fred Foldvary
Copyright 2004 by Fred E. Foldvary. All rights reserved. No part of this material may be reproduced or transmitted in any form or by any means, electronic or mechanical, which includes but is not limited to facsimile transmission, photocopying, recording, rekeying, or using any information storage or retrieval system, without giving full credit to Fred Foldvary and The Progress Report.
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