There is goodwill and homework type budgeting which includes doing homework on all the things the government does and understanding the more mental work put in by the top, the more efficient the government will run. Resources are allocated according to need and understanding. Appreciation is given to the necessary stress the government puts on society to ensure we are accountable to each other and the world. It is not the government but human innovation and values that increase the size of government.
There is also emotional budgeting focusing on temptation….giving as much money to convenience (tax cuts), over funding pride, power, and security (military, other security) and defunding vulnerable diplomacy, and accountability and stress (regulators), and cynicism to any force of goodwill (safety net, foreign aid). You score “wins” by taking money from these small entities and avoid large budget items that require courage.
Forward thinking companies make an extra effort to hear all ideas, accept risk and failure, and protect the pride of those that think different, but our congress is an institution of high pride fear with many seeking to take down anyone that may argue for change or resources or tell us what we need to hear.
The gold standard, don’t tax pledges, balance budget amendment propositions and even the recent cryptocurrency craze are all forms of trying to force the government’s hand in budgeting. They are afraid of the control the government has with printing money, they understand the unsustainable nature of the debt they created, and they want to control it without standing up for any pay fors.
1. Bind the Government’s Hands
The reality is the government’s ability to control its money has been very important in history to help in recessions, wars, infrastructure initiatives etc. In the case of any fear society faces you want the government to have the levers needed to combat the situation. What would happen if the government literally could not spend what it needed to? The government isn’t going to throw up its hands and stop payments to seniors or cease military operations or going to find tons of money from already underfunded agencies. Probably taxes are going up and instability of the economy in general is going up and fear is going up. The government’s ability to control its money is a benefit to those seeking to have high personal assets.
Many of these are not original but as I think about what is true in an economic system I come up with these points.
The economy is work. In order for us to consume tomorrow what we consume today someone has to work tomorrow.
Wealth in the world is:
The debt of another
The value of an asset
Money printed by the government
Having more people in debt doesn’t help the world and having the world’s assets cost more labor hours isn’t necessarily helpful either. A revenue producing asset doesn’t make the world wealthier, that is someone else’s future labor owed to you. The world doesn’t get richer or poorer via numbers in bank accounts. The governments printing a bunch of money doesn’t make us richer or poorer. Wealth is increased by learning, processes, and the production of hard assets like infrastructure. Limited resources being decreased makes the world poorer.
The economy only knows who is spending, not who is saving or what incomes are. The production of society is determined by spenders. If one entity such as governments keeps borrowing and one entity such as the rich keep saving the economy doesn’t change until that stops. Only then will the economy and what it produces shift (less products per labor hour for others).
The economy can always produce tomorrow what it produces today barring a non-economic disaster or event. There is no fear that we can’t have tomorrow what we have today because there is more debt in the world. More debt means more people are owed as well and the governments can tax how they want. The economy becomes better over time.
For example, after a war when the government is in a lot of debt there is really no reason the world is less rich than before the war. The government can use taxes and inflation to take out debts.
In an austerity environment it is not enough for those in debt to work more, those that are owed must spend more than they are bringing in to create less leverage in the ecosystem. Otherwise the economy shrinks. The rich have less customers during austerity unless they are the customer.
If the government chooses to borrow over tax, the lender does not become richer. They trade in $100 for a $100 bond that usually slightly beats inflation. The government (everyone) is $100 poorer and the person not taxed is $100 richer.
Society is not richer if a $100/year revenue stream trades for $1000 today and then $2000 tomorrow. Now it is harder for the next guy to get a return on investment. We are not richer if property values go up, a burden is placed on the next in line to work more for a dwelling.
If you can’t spend money you don’t have it. You hiding $1 million in a secret account and the government printing $1 million is the same as the government taxing you $1 million.
The more people trading in assets for labor the greater the burden on labor.
Personal Views also Shared by Many
The economy and its currency serve the people and their values. The people do not have an obligation to serve an economic system as if it were a religion. Rewarding hard work, risk, and innovation are eternal human values. So are goodwill to those in need, sustainability, a force for good in the world, and being a counter to wealth accumulation at the top.
The government must have the levers and ability needed for large expenditures such as a war, housing crisis, virus outbreak, or environmental threat including the power to print money and tax.
The growth of the economy such as improvements to processes, technologies and infrastructure is work done by all but not shared by all. Large incomes and stock prices outpacing economic growth isn’t a religious phenomenon, it is the wages not rising that allow it. The government and its tax system is the natural counter.
The cornerstone of implementing values and serving the needs of the people is the government, our political discussions and its tax system.
It is not wise for any sovereign entity to owe debts it cannot pay in a realistic amount of time. This is not good for anyone.
It is not good for anyone to have an entity setup to fail. Others should engage their brains in goodwill in that case.
Competition is a means to motivate but not the only means to motivate a group to work hard and innovate.
Rewarding risk and innovation is great but there is a lot of wealth created from passive investment, and continual upward trajectory of executive compensation that is more managerial in nature. Even if you do innovate and become wealthy, usually that’s at the expense of the market share of someone else and on the shoulders of those that have come before you.
Recently some ideas have come out from goodwill economists about modern monetary theory, the idea that we don’t have to worry about deficits because the government can print money. While this is true, it is attempting to skirt pay for discussions on items of goodwill. If we are going to spend $1 trillion in labor on senior income somebody has to work to create the $1 trillion in goods and services to be consumed. The government does have to make someone poorer eventually through taxation or inflation. It is perhaps better to just stand with your feet planted on values and cold hard truths.
Even if you are rich it is better to set the system up so the needs of all are taken care of through political argument, not the groveling of the needy at the hands of the rich hoping for goodwill.
To be blunt a correction needs to be made for what has happened over the last 40 years. We need to deter this cycle from occurring for the next 40 years. The promises of increased growth to pay for these tax cuts never came true and the fortunes created as a result of these tax cuts are not just. The debt that has incurred never went to some foreign entity we now owe our labor too; it went to the top of the income ladder. We have yet to seriously address tax issues to the increased efforts in the middle east which have cost $6.4 trillion according to the Watson Institute for International and Public Affairs “United States Budgetary Costs and Obligations of Post-9/11 Wars through FY2020: $6.4 Trillion.” 
If for example if we took $5 Trillion of the $36 Trillion in net worth of the 1%, we wouldn’t force them to sell things and crash markets. Their most liquid assets would just go to our treasury. Their stocks, bonds, and real estate would be assets of the treasury. US treasury bonds would obviously just be zeroed out. The treasury can manage the assets as it sees fit from there.
Invoice Coming Due
Reagan Tax Cuts $7.1 Trillion
Clinton Discount $-1.9 Trillion
Bush Tax Cuts $2.1 Trillion
Middle East Wars $6.4 Trillion
Wall Street Bailout $0.7 Trillion
Trump Corporate Tax Cuts: Tab Ongoing
US Debt Clock
$23 Trillion in January 2020 (prior to coronavirus)
$187k per taxpayer?
…depends on how much you think the 1% owe from their $36 trillion in assets
Alternatively, if we actually collected all the taxes owed to the treasury each year and the tax gap was 0 instead of ~2-3% of GDP, the debt would be near 0… 2-3% x 40 years is 80-120% of GDP.
Better rules need to be put in place for government borrowing at federal, state and local levels since it is an obvious temptation and laws and rules are meant to combat temptations.
We are not more or less poor because we under tax ourselves, in fact the economy doesn’t really care as long as the government keeps spending. The economy only knows who is spending not who is acquiring assets and who is acquiring debt. As long as the government spends the same and goes into debt and the rich keep saving the status quo remains. If the rich were to start spending all of their money the economy would try to compensate by devoting more resources to what rich people would buy, prices on other things would go up, the quality of life of everyone else would suffer.
The country actually isn’t going more and more broke if it has more and more money out there it could tax. As our assets grow relative to the size of the economy (work) it puts more of a burden on labor.
Of the National Debt
About 2/3 we owe ourselves
About 1/3 is held by foreign entities
US Individuals also own foreign debt. What’s in your mutual fund?
The net debt or surplus is relatively minor
When we don’t tax ourselves, it is the untaxed getting rich, not the bondholder
Countries get in trouble when they owe other countries on a net basis, especially if they don’t control the currency
All the major governments of the world are in a similar boat (the collective government account owes the individual accounts of the citizens)
All that’s really happened over the last 40 years is we’ve acquired a bunch of debt from the government and given it to the top. If a just tax system was in place much of the wealth accumulation would not have taken place.
Some conservatives call for the federal debt to be forgiven and some rating agencies have called our bonds risky. There is no need for this as the government has the power to tax and the power to print money. It can print money and decrease both wealth and debt or it can tax those that benefited the most.
The problem with just cutting taxes is it’s a slow wealth transfer. It takes time to take the government’s money so they got a little smarter in 2017 with cutting the corporate tax rates. Just like selling a business or some revenue stream you get an instant pay out. Where do rich people put their money? A lot of it in public or private companies. By taking a ~$200 Billion revenue stream away from the treasury companies are able to take home 79 cents on the dollar vs 65 cents, an increase of (79-65)/65 = 21.5% so now your company has 21.5% more profits without doing any work and they are all worth 21.5% more!
Everyone enjoyed the stock market going up over 30% in 2017 leading to Trillions in private profits. Unfortunately, the companies have already appreciated in value, the cake has been eaten and that cut doesn’t help stocks go up in the future. Just a $200 Billion hole in tax revenue remains. Trends in US Unemployment didn’t change after the tax cut.
Unemployment Trends Remained Unchanged After the Tax Cut. The downward trend was mostly because interest rates were set near 0 after the housing crisis.
Donald Trump “I think we can go to 4,5, even 6%” (2017 comment on GDP Growth from the tax bill)
……2 Years Later……
Federal Open Market Committee projects 2% GDP Growth in 2020 and 1.9% in 2021 as of September 2019, below historical averages (before correction for the coronavirus).
It begins with holding America hostage during the last 6 years of a democratic president
Shutdown the government
Use debt ceiling to hold an enemy party president hostage
Convince the public both sides are to blame
Crank government cynacim up to 11
Courage/work to discuss pay fors
Honest discussion of where the debt came from
Then you need to change the congressional rules for taxing by implementing dynamic scoring which says the economy will grow (we will work harder) if corporations get tax cuts.
Then go for the cookie jar once in power
The central item of the tax cuts and jobs act is to take a $200 billion revenue stream (decrease corporate taxes from 35% to 21%) away from the treasury and into corporations (like selling a business you trade a revenue stream for a one time payout), artificially increasing their profits and delivering a massive 1 time bump in stock prices.
Corporate executive pay and buybacks skyrocket. Economic growth not so much. The federal open market committee predicted 2% GDP growth for 2020 and 1.9% for 2021 in the fall of 2019 (before correction for the coronavirus).
Try to pay for it by going after healthcare
The American Health Care Act Fails to Pass by One Vote (2017)
Don’t share anything with your base
Individual tax cuts fade out and become tax increases by 2027
Corporate tax cuts are permanent
Spite the blue states if possible
State and Local tax deduction capped at 10k hurting high tax (dense population) states
What do you do after raking in trillions you didn’t lift a finger for? Complain on the taxes on these gains of course
After your stocks/bonds/real estate go up from corporate tax cuts you pay capital gains tax on them when you sell them.
“To Keep the Economy Growing, Index Capital Gains to Inflation” – Article by Ted Cruz, Grover Norquist
“There is a sore spot” on capital gains – Ryan Ellis
“Tax Cuts 2.0”
Over 80% of capital gains tax cuts go to the 1%.
Try to get rid of estate taxes to ensure rich estates rule for generations to come
The Tax Cuts and Jobs Act doubled the exemption for large estates to over $20 million in untaxed estate income for couples
Put millionaires on the honor system for taxes
Audits of millionaires are down 80% since 2011 (tea party takes over congress) and in line with the audit rate of the poor
(from ProPublica analysis of IRS data)
The tax gap (uncollected taxes) is estimated to be over $500 Billion per year
(According the IRS analysis of 2008-2010 tax receipts in 2019 dollars)
Give mega corporations tax breaks on overseas cash hordes
“The Tax Cuts and Jobs Act creates a historic opportunity for American companies to bring capital back home from overseas to invest in our domestic economy and create jobs for hardworking Americans” – Steven Mnuchin (Treasury Secretary)
Tax on overseas earnings decreased to 15.5% on cash or cash equivalents and 8% on the remainder
In 2004 President George W. Bush allowed corporate cash hordes back with a low tax rate of around 5.25%
Corporations are well trained now to horde overseas cash and wait for the next republican takeover to cash out
Relish in the positive asset “Business News”
(For a year anyway)
Then decide you are going to grade yourself based on how the stock market does as a result of taking money from the treasury
Steve Mnuchin: We “absolutely” view the stock market as a report card (US Treasury Secretary)
Long Term Thinking
Middle Class Incomes
Increase Economic Output
Short term asset pumps ü
Take credit for existing unemployment trends ü
If you lose in 2020 Rinse and Repeat
U.S. Bureau of Labor Statistics. Databases, Tables & Calculators by Subject. (SEAS) Unemployment Rate. More Formatting Options. All years, All time periods. https://data.bls.gov/timeseries/LNS14000000. Accessed June 20, 2020. (Numbered 3 in figure above)
Since the end of WWII the debt decreased relative to the size of the economy until President Reagan was elected because of economic growth and inflation. Before President Reagan there was less divide in the parties on spending and taxes. The failure of conservative hands-off economics in the 1920s led to the great depression. Successes were had in many federal spending initiatives like the new deal, labor regulations like the 40-hour week, social security, the successes of Medicare and Medicaid, progressive taxation, and the debt continued to decline after the war. Even president Nixon raised taxes and the Nixon/Ford administrations presided over the heyday of the EPA with the Clean Air Act, Clean Water Act, Ocean dumping prevention, lead removed from gasoline, and wastewater permitting.
But in time past lessons are forgotten. President Reagan’s message and political identity was the government was too big, it wasted money, and taxes were too high and he was going to do something about the debt. Since then this message has been conservative dogma. It’s a message of achieving moral high ground and simultaneously giving citizens more money and relieving us of authority and change anxiety. It’s also unappreciative of the countless good deeds the government has done, high in cynicism, low in vulnerability, and short on details/intellectual work.
The predictable result is all 3 republican takeovers since then (Reagan 1981, Bush (43) 2001, Trump 2017) have led to deficit exploding tax cuts and democratic presidents trying to reign them in when things switch back. When conservatives are in control fiscal responsibility is ignored and spines are cast aside. When democrats come back the republicans shift to moral high ground, extortion, ride or die, cut the baby in half etc.
The important measure of federal debt is its size in relation to our economy, which is why we get away with ever increasing debt as the economy is increasing with growth and inflation as well. Here is how our debt has changed since the 1920s. Notice the inflection points. That is where something changed.
Because the government borrows money at about the rate of economic growth the debt just kind of sits there once borrowed like a 0% interest loan. So if the government borrows $100 and then the economy doubles and also the interest doubles that debt to $200 we can now say the action that led to borrowing $100 at year X is responsible for $200 in debt at year Y.
We can attribute our debt to past activity by multiplying the percent of the debt relative to the economy by today’s economic size (GDP). This is important in telling the story of our debt and not letting convenience dictate fact.
Presidents Ronald Reagan (R) (40) and George H.W. Bush (R) (41) – Conservative Revolution
President Reagan inherited a stable debt at 31%. The Reagan administration cut taxes in 1981 and 1986 which were in place until 1993. The debt climbed to 64% (a 33% increase). The tax policy was in place for 21T GDP x 33% = $7.1 Trillion of today’s debt.
Inherited a flat debt/GDP trend
Left debt increasing 3% per year compared to GDP
“We don’t have a trillion dollar debt because we haven’t taxed enough; we have a trillion-dollar debt because we spend too much”
(Spending would go up during his administration, the debt would go to $4 trillion by the time the democrats took over the white house again)
“Government isn’t the solution to our problem, government is the problem”
“It just isn’t going to work, and it’s very interesting that the man who invested this type of what I call a voodoo economic policy” (about Reagan’s tax policies)
George H.W. Bush
-George H.W. Bush (later said he was kidding after becoming Reagan’s running mate)
President Bill Clinton (D) (42)
President Clinton was able to enact his tax policy in 1993. He left office with a budget surplus and debt at 55% of the economy and the debt in decline. The 2000 election debate between Bush and Gore was what to do with all the money. His tax policy was in place for a 9% reduction in the debt. 21T GDP x -9% is -1.9 Trillion.
Inherited debt increasing 3% per year compared to GDP
Left with debt decreasing 3% per year compared to GDP
President George W. Bush (R) (43)
President George W. Bush inherited a budget surplus. He cut taxes in the beginning of his term before entering the War on Terror and Iraq War. The housing bubble occurred at the end of his term and he left the office with the country in recession. The Bush tax cuts were in place until 2013 where debt stabilized at 99% of GDP. The tax policy was in place during a 44% debt increase, 21T x 44% is 9.2 Trillion.
Inherited debt decreasing 3% per year compared to GDP
Left with debt increasing 6% per year compared to GDP
President Barrack Obama (D) (44)
President Obama inherited the recession. His early years were spent on the recession and healthcare. The economy wasn’t stabilized until republicans took over the house in part by blaming him for the debt. He was able to pull back the Bush tax cuts in 2013 for wealthy Americans. The debt stabilized at that point at 99%. At the end of 2017, before the Trump Tax cuts, the deficit was 103%. An increase of 4% or $0.8 Trillion.
Inherited debt increasing 6% per year compared to GDP
Left with debt decreasing 1% per year compared to GDP
President Donald Trump (R) (45)
President Trump inherited a stable debt picture that actually decreased in 2017 before he could implement the corporate tax cuts. The debt to GDP ratio is estimated to increase another 66% by 2050 according to the Congressional Budget Office after the corporate tax cuts are in affect (as of 2019).
Inherited debt decreasing at 1% per year compared to GDP
2018 debt increased 2% per year
Temptation Narrative – it doesn’t really matter what the facts are, the temptation narrative for the powerful is the same. Giving the top tax cuts helps everyone because they are in charge and responsible for jobs. Be as cynical as possible toward the poor and the government, and do little or no work to show for it. It gives rich circles a common enemy to unite around, shows no vulnerability, giving themselves tax cuts is the moral high ground. It uses the cynicism tool (you are fool if you think the answer is hard work and buying in) effectively.
Was there an economic boom in the 1980s? – conservatives will often talk about the Reagan recovery and try to justify how great cutting taxes is. What’s the truth?
Average Real GDP Growth 
The heart of the economy (producing goods and services) doesn’t care what the taxes are.
Taxes have little to do with economic growth or unemployment but what they do have a large impact on is who wins and who loses. The right wing will say the government should not pick winners or losers but there is no choice, for a flat tax with no tax breaks means all the money goes to the top, labor loses, the environment loses, elderly lose, education loses, safety concerns lose.
Over time we have set up systems so that the elderly win, education wins, family wins, the poor win, labor wins etc. We have set up tax breaks and subsidies for desirable economic outcomes and it’s been effective. Social security, Medicare, health care for all, public education are all core components of government spending. Getting rid of these institutions does not mean our obligation to the elderly, the young, the sick and the poor go away. It just means it gets shifted to private means which would be much less organized, likely lesser in degree of help, with greater instability and uneasiness.
Our national budget does not operate like my or your budget, a business budget, a city budget or a state budget. On a national scale we can tax who and how we want without much competition, we borrow from ourselves to pay ourselves, we can print money and provide money at will. That is the power of national and global scale politics and our ability to use our voices as citizens to persuade.
No government input means the winners are the rich. As evidenced by corporate earnings, the stock market, and executive pay, even as the economy grows 2-3% the top of the income ladder grows much quicker because very little growth is shared with labor and large corporations continue to take share from small business.
Two problems with capitalism are:
Companies don’t share growth with labor even with labor playing a big part in increased productivity and technological advancement.
Capitalism doesn’t inherently have any values and society desires to have values.
The government is the obvious counter to these issues. A progressive tax system is needed with rules for labor such as a 40-hour workweek and safety rules in order to obtain a nice quality of life for labor. Unions are another counter.
The government wants to focus on excessive wealth (to the right of the dashed line below) that is labor owed to the wealthy but not limit money to the left of the line (business investment). It is also generally desirable to allow mainstreet a decent return on investment.
Making the wealthy pay their fair share allows for less burden on mainstreet which can manifest itself in lower taxes for workers, higher pay, lower prices, government help on things they would pay for, or investment in values such as education, environment, seniors, goodwill etc.
Let us look at the financial picture of an average Joe at the start of his working career, in the middle, and at the end. We will also look at the financial picture of a typical wealthy executive (Dan) and one of someone who would inherit a fortune (Eric) and what happens when the government does something. Similar to meeting a financial advisor we look at how much you will make during the rest of your life, how much you have saved, and how much you will spend.
An important note is you are either making money from your labor (individual tax rates) or your savings make money for you which is affected by corporate tax rates and capital gains tax (tax on gains from an investment). Most people put savings into a business equity which can be dangerous because its skewed heavily to the top and gives the impression that we need to do anything possible to increase asset values. We need to put our security in hard work.
Financial Life Pictures, Winners and Losers
Progressive Tax vs Flat Tax – Labor wins and high salaries lose with the progressive tax, investments and retirees unaffected. This helps Joe and hurts Dan.
Corporate Tax – The higher the corporate tax, the less the share of the individual tax. This greatly benefits Joe starting out as he has a lot of labor to do in his life but actually lessons as he goes through his working career and ends up hurting him during retirement. The rich and their heirs take the biggest hit (Dan and Eric).
Capital Gains Tax – Same winners and losers as the corporate tax. The difference is a change in the corporate tax will immediately increase or decrease your assets and then not affect your future returns. A capital gains tax increase decreases the rate of return on investments.
Wealth Tax, Inheritance Tax – Joe wins, Dan and Eric lose. The less capital from big players in the market means labor has a bigger share and will get a bigger return, plus lower individual taxes.
Limiting Executive Pay – Investors benefit, Dan loses his pay but gains in his money making money. Joe benefits as he acquires savings, Eric benefits. But if you limit executive pay and tax the would be gains on investments then that money goes to Joe.
Inflation – Savers lose, debtors win.
General Tax Cuts – Taking money from our collective account to increase individual accounts doesn’t actually make us more or less rich. It just creates bubbles.
Stock market or Real Estate market goes up – Everyone loves when asset prices go up right? No, young Joe loses big as a future investor. Prices going up also means the return on investment is smaller. Only hard work and innovation increase economic output. If the average house now costs 5 years of average labor to pay for instead of 4 is that good for everybody? No, future buyers lose and its bubble inducing.
Socialism – if the objective is to help Joe then just get rid of the money going to investments, executives and trust funds? Going to the extreme will hurt economic growth and the spirit of competing. We should be careful in dealing with absolutes especially morality ones that create conflict.
In truth, does working the least for the most really make you a winner?
The growth of the gross domestic product (GDP) minus inflation or Real GDP is a good indicator of the growth of the economy. Asset prices are not the economy. Debt is not the economy. The hard work of producing goods and services is. The combined efforts of everyone’s physical labor and brains improve the quality of life year after year. Does that mean it is always desirable to grow the economy at any cost? No, we may desire less work or different work for quality of life or refrain from some production due to environmental impact.
As safety net programs have been implemented, presidents have changed, environmental and safety regulations implemented, and healthcare improved, the economy has not changed drastically. As long as the incentive to work hard the next day is still there the government has a lot of leverage and say on what our values are.
There is little evidence to say people work harder or less when taxes go up or down. Tax laws pick winners and losers or we can add leverage to the national debt in exchange for higher individual net worth.
The other big statistic is jobs. People don’t like threats to their jobs, but that threat is far greater from a dynamic capitalistic system than from government activity. Most job losses are gained elsewhere as humanity developed better transportation, the electricity grid, more tourism, the computer, the internet and so on. Unemployment has fluctuated very little with regulations, taxes, and safety net programs.
The .com, housing, and now the coronavirus have all spiked unemployment. In the cases of .com and housing the economy was positioned around a certain asset and then that asset wasn’t what we thought it was. In time the economy adapts.
The federal reserve has a lot of power over unemployment based on how it sets interest rates. Though there is a lag as businesses have access to more money and then decide to hire. The reason for higher interest rates is to control inflation. Exceptions are usually asset bubbles like in 2000 and 2008. The economy repositions naturally in time.
People will continue to want to trade each other for food, health care, housing, things etc…there is nothing to fear on the economy falling off some cliff as long as the government is empowered to save the day if needed. The economy has transformed itself through many technological innovations, wars, infrastructure initiatives with maintaining consistent growth. Economic growth mostly comes from productivity growth, improving processes, developing technology etc. Once a new technology is developed or a manufacturing process is improved, we don’t lose that ability, we work on the next one. This is not to say asset bubbles can’t happen, but asset prices aren’t the economy. When an asset isn’t worth what we thought it was (.com and housing bubbles) that industry loses jobs but in time the slack is picked up.
The economy is our ability to produce goods and services tomorrow to satisfy our needs. Assets are things that can be traded in for goods and services. In truth, if everyone owns a lot of assets, it puts a strain on labor that needs to work to support those trading in assets for labor. They also have to do more work to buy anything. There is always the temptation for us to create asset bubbles but it wouldn’t hinder our ability to take care of each other. The government can always create demand, deficit spend or print money.
“Competition has been shown to be useful up to a certain point and no further, but cooperation, which is the thing we must strive for today, begins where competition leaves off.”
Peace is hard work. It is great to say you want peace but what does it take? There are naturally discussions among countries and disputes over resources, territory, religion, economic systems that make it hard to have peace.
The Internal Struggle
The major problem with diplomacy is the ability of each country to sell caring about the world, vulnerability and effort, to its own people and against those that would try to usurp them internally using “us first” and “winning” type language. The art of diplomacy, having frank discussions and maintaining respect is an art that is somewhat well understood, but can fall apart from internal pressure.
Value Diplomacy or Tribal (Us vs Them)?
Value diplomacy is creating a culture of agreed upon values upon which the players or tribes agree to. Combating aggression, helping those that need help, global sustainability are some of the values countries come together on.
Tribal diplomacy is about the pride of the tribe. You want to protect the pride of your tribe from any insecurity and you want to win for your tribe by imperialism, winning every deal, and creating a need for spite around every disagreement. In any resource disagreement the other side is on its own.
There is a temptation to use nationalism, racism, religion, economic system etc. to divide and make another tribe the enemy. To ascend the hierarchy in your tribe by putting your identity in vilifying the different and unfamiliar. You unite your tribe around the enemy.
Value diplomacy is central to peace but it requires brainwork and courage. Other countries might call you a hypocrite and point out wrongs in your history. You might get trolled from the insecure. You are creating insecurity among those you are calling to behave and you can’t make it about us vs them but always about the values. Countries may actually prefer a protectionist policy from another that makes it us vs them vs a well-constructed moral argument that makes it about values and drives insecurity about their policies.
Globalism / Protectionism
We are all part of groups or tribes from your family, to your work, to your community, to sports teams you cheer for. In politics we can visualize our political reality as groups within groups.
#1 > Family > Community > Region > Country (where armies are) > Earth / Humanity
Protectionism – doing whatever is self-serving for your group and ignoring the at large collective. A culture of self-serving doesn’t stop at the smaller group, it stops at everyone looking out for #1.
Globalism / Collectivism – each smaller group is a supporter of the larger group. The larger group is expected to both help the smaller groups when they are in need as well as ask of the smaller group when the larger group or others are in need.
What kind of world does each mentality lead to? Do we want to create a culture of coming together in the face of fear or splintering? What kind of unity is it really to bond with another group over a common enemy but if there is any resource dispute with that group you go for each other’s heads?
Some use the term globalist as slander, but in truth most of those willing to give for earth / humanity are of the same mind as those willing to give for country or community.
In moral conflicts globalists are the aggressor. Standing up to aggression, environmental causes, human rights, refugees. In pride, tribal, or resource conflicts protectionists are the aggressor such as wars over religious/economic beliefs, oil, or revenge. The protectionists during WWII were strictly isolationists (no desire to save the world from aggression) until the United States was attacked at pearl harbor.
In a true hour of need we should not look to the allies we have made that push up our pride and play to our fears with us. It is those countries telling us to behave ourselves and that stand for hard values that may be there.
This is not to say a country shouldn’t stand for its own interests, just like in your family you stand for yourself of course, but it is a culture of mental engagement and goodwill.
Countries with transparency into their decision making with active debates and elections will be trusted more than those with a concentration of power, a one party system, a dictator that don’t expose themselves to the vulnerability of public discourse.