Green Dog dem

Saturday, August 04, 2007

Finding the proper balance between: Taxation, Regulation and Business interest,the Free market,Personal Wealth

We as a country seem to have a severe problem with moderation and balance,in general but most explictly in the area of taxation and regulation. Government in the Us tends to either do too much or do too little. This was most explictly shown this week in the collapse of the credit market for the second time in 7 years, and the collapse of the 35w bridge in minn and the realization that 13% of american bridges are on the same condition. As,well as the realization of a week by week erosion of civil liberties and privacy of Americans as came out in House hearings this week, and continued willingness to use tax dollars in ways that most americans don't agree with and are probally not in the countries best interest.

The first credit crunch in 2000 happened because Allen Greenspan quickly lowered the us prime interest rates during the 90's and as a result numberous businesses incured enmorous amounts of debt that could only be prepetuated by more debt. So when the debt (loans) was cut off by increasing the prime interest rate. The whole house of cards collapsed under it. This was caused by a failure to regulate the credit industry so many non doc un-secured loans were created. Collapsing the stockmarket and send the economy into recession. I thought we had learned from this but it seems we have not.
In 2002 and several other times over the past 5 years the republicans cut taxes several times to excessly low levels while the interest rates were lowering interest rates to the point of almost zero by 2006, with no real increase in workers pay. Thereby creating an enviroment that both corporations and individual were living well beyond their means. Crediting the current situation were both corporations and individual are over leveraged, and the finanical institutions that made the loans and organization and investment firms that bought the paper on the loans are having them default on them. Thereby creating a credit crunch and making it hard for even good credit risk individuals and businesses to, great credit, and creating a 8 trillion dollar debt whose interest is hardly being covered by the addition revenues that were created from the cuts, so the increases are simply paying for the interest on the cuts.

Beyond this to cut this the tax cut also resulted in funding cuts such as highway funding and unfunded mandates like no child left behind. Thereby shifting large amounts of extra expreses on the state and local governments. That has resulted in increases of property taxes to fill the gap and states to fill the road funding gap resulting in 13% of bridges and thousands of miles of roads in desperate need of repair and an event like the 35w bridge collapsing because the Minn governor refused to increase taxes to pay for the repairs to the bridge.

As well while this was going on the money that inspite of this could have been shift to these projects was shifted to unnecessary activities like invading and then more or less dumping billions of dollars into iraq. That went to fund the people who were attack us. As well there is unneccary regulation of freedoms in this country as Ben Franklin said people who give up a little freedom for a little security will soon have neither and now we have neither. It is not his or any other government's responiblity to try and protect us from everything nor can they and the amount of freedom we have given up over the past years is much greater than the security we are reciving in return.

We now are probally at more risk from the government than we are from the people who attacked us on 9/11. The point of the constitution and the laws that were created by the founders were not to make us 100% safe but to ensure that there was a balance between security and freedom which has now shift dangerously towards the prior.This is too much government interferance in our lives and much more than the founders would have allowed.

But as i said we need balance too much taxation would not be good either, nor is too much spending nor is too little security. It was ok to cut corp taxes but not to continue the cuts once the economy was capable of funding itself. If you do that the only thing you do is overheat the economy and create a dependence by the corporation on the extra funding. This goes the same for lowering interest rates it's ok to stimulate the economy but if you keep them too low for too long it creates a money glut and bad loans to people and corporations that shouldn't have had them that can collapse the economy. As we are seeing today because there are too many bad loans that are drying up the credit market on it's own by in a much harsher way than if the central bank had raised rates back in feb and slowly raised them. It would have beena shock to the system it could have absorbed but this is now a meltdown.

That is the problem the government doesn't seem to understand when to start and when to stop doing things. It either over does or under does thing that only it can do and simply can not be done by the private sector. The Free market is incapable of completely regulating itself, or has the willingness or ability to regulate, or handle certain thngs. Nor should the government so restrict it that it can't function. The governement always needs to be there to steady the scale but it should be with a light touch not a heavy hand. The Free market will take things to the extreme and the government needs to stop it from doing so, such as the enviroment or ensuring fair treament of workers. But the Government must also not go in the exstreme opposite direct.

The basic point of this whole dicussion is that when there is a balance between the free market, the government, the rights and freedoms and protection of the governed, and security and the public good there is harmony, and no one knows if they are doing anything thing at all. When there is an inbalance between these forces the side that inbalanced is shifted towards fights tooth and nail to keep that inbalance and the other side fights to get it back to balance. Right now the imbalance is shifted towards the freemarket,the government, partually for and against the public good and against Freedoms and protection of the governed. That is why the country is in the state it is now and will be until either Bush is out of office or until congress reins him in.

When there is Balance

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