The Politics of Implementing a National Economic Policy Based on Value Added Wealth Creation

The Politics of Implementing a National Economic Policy Based Upon First Wealth Value Added Dollar Creation An Essay by Alan F. Beane Part 2 of 2

Sometimes simple things are the most complex and elegant to create. The politics of implementing a National Economic Policy based upon First Wealth Value Added Dollar Creation are difficult at best. The reason we must find a way to implement such a polity is that our Sovereignty as a Nation is at stake - an overriding issue of National Security.

The necessity for implementing a National Economic Policy based upon First Wealth Value Added Dollar Creation is grounded upon the following:

1. Without a strong, high value added industrial economy, the domestic economy is the equivalent of an 8-cylinder engine running on 5 cylinders.

2. Absent an economy running on all 8 cylinders, the Government’s sustaining revenue requirements are not sufficient for fighting a protracted world war, securing the Country, and simultaneously providing the domestic social safety net demanded by a majority of its citizens and non-citizens.

3. Without a broad distribution of wealth achieved by earnings, the Country will continue to become more deeply divided politically – a gathering threat from within to the Nation’s national security and sovereignty.

4. The continued secular decline in U.S. manufacturing jobs will not secure an economic recovery that is sustainable; and the outlook for the magnitude of average monthly new manufacturing jobs required to secure an economic recovery that is sustainable is problematic at best.

The anathemas to achieving a high First Wealth Value Added Dollar Creation economy are political and institutional constraints to:

1. Having a highly educated populace capable of competitively leading the world in First Wealth Value Added Dollar Creation.

a. Issue - for 40 years we have systematically “dumbed down” the primary and secondary public educational system in the United States. A “dumbed down” primary and secondary public education system contributes to a workforce that is not capable of leading the world in manufacturing/process related manufacturing operations.

a. Issue - for almost the same 40 years we have discouraged in every way possible the developing of the Country’s natural resources under the theory that such development cannot be accomplished in an environmentally sensible and practical manner, or that depleting natural resources is morally wrong. To make matters worse, we have similarly discouraged the responsible development of renewable natural resources.

b. Issue - Developing cheap and abundant power in an environmentally sensible manner. Our inability over the past 25 years to develop cheap and abundant power has reached the level that it is today a national security issue in terms of our ability to retain, grow and develop a high value added domestic economy.

3. Having a high value added manufacturing/process economy to add value to the natural resources we take out of the ground and the goods we import. Domestic constraints are:

a. Issue - We define domestic industrial “productivity” to include the near term savings created when domestic value added work is transferred offshore.

i. Particularly in the case of industrial First Wealth Value Added Dollar Creation, this trend, which is driven by micro-economic decisions at the firm level, results in data that gives the Federal Government a false sense of the security about our economy. As a result, we see no need, in terms of macro-economic policy, to maximize domestic value added wealth and the broad distribution of the earnings of that wealth by our domestic citizenry.

ii. Near term savings from the offshore transfer of domestic value added work theoretically creates incremental earnings that in turn are reflected in equity value. In the case of China, for example, and to the extent such incremental equity eventually accrues to the China supply source, no one actually believes that after the government of 2 billion people absorbs all the value it can from today’s leading economy that it will allow the source of the value, i.e. the country with 200 million folks, to retain ownership of any significant portion of that in-country equity. While this may be in the short-term micro-economic interest of some U.S. company today, it is certainly not in the long-term strategic macro-economic interest of the country. As we record with pride the short-term “productivity” gains from this activity, we should simultaneously account for the present value of the future equity we will eventually and almost certainly lose.

iii. Today the old saying “what’s good for GM is good for the Country” is only valid to the extent GM is building high value added wealth domestically with broad distribution of the earnings of that wealth domestically.

b. Issue – Being nationalistic in our buying preferences is considered not politically and/or morally correct.

i. Again the “dumbing down” of our public education system is coming to roost. We have failed to educate a very large population of folks today who do not possess the knowledge necessary to make an informed purchase decision that considers both the micro- as well as the macro-economic effects of that purchase.

c. Issue – a political orientation geared to penalizing those who attain commercial success in favor of non-earnings wealth transfer to those not capable of making a net contribution to the economy’s value.

i. The future of our sovereignty as a nation depends not only upon strengthening the creation of value added wealth but also upon the broad distribution of the earnings of that wealth.

d. Issue - Manufacturing/Process operations are considered “old economy” to be discouraged in favor of (i) non-value added service sector activity and (ii) value added operations such as software and drug development that are dependent upon certain skilled scientific and engineering intellectual strengths not widely distributed throughout the populace.

i. Result is that fewer and fewer folks are able to create and thus earn value added wealth; this policy absolutely constrains the ability of the domestic economy to broadly distribute the earnings of First Wealth Value Added Dollar Creation – never mind creating a major threat to our political stability.

e. Issue - An unequal playing field versus foreign competition in terms of environmental and other burdensome government regulations and operating mandates.

i. A presumption in favor of discouraging value added manufacturing under the patently false assumption that industrial operations cannot be undertaken in an environmentally sensible and practical manner that is also safe to the extent practical for those involved.

ii. An assumption that its OK to exploit the human and natural resources of other countries in ways that are not morally equivalent to our beliefs about how we should treat people and the environment.

f. Issue – Lack of aggressive enforcement of intellectual property laws relating to manufacturing and process operations; and a political tolerance for systematic infringement by less developed nations on the basis that it is somehow morally wrong for the U.S. to possess a sustaining competitive advantage in wealth creation attributable to intellectual property.

g. Issue – The new world view that competitive advantage on behalf of the United States is morally wrong.

i. Result includes systematically “giving away” the equity value of domestic intellectual property via outright grant by the Government or via policies that effectively encourage the infringement by offshore entities of U.S. originated intellectual value added effort reflected in intellectual property patents.

There is incredible irony here because on one hand we are domestically discouraging all domestic value added activity except wealth creation via intellect; while on the other hand, we discourage the retention of that intellectual value within our borders, even at the risk of our economic sovereignty.

All of the above defined issues taken as a whole constitute a pervasive and systematic assault (that has been ongoing for many years) from sources domestic and foreign on our economic Sovereignty and thus on our National Security.

From the standpoint of the Republicans and Conservatives, they appear to have three outstanding weaknesses – they have an extraordinary affinity for big business; they have failed to take up the banner of enacting a rational, overall economic policy for the country; and, they have simply failed to communicate the truism that can we achieve world leading value added economic activity, the earnings of which are broadly distributed, and do so in an environmentally sensible and practical manner that is safe for the folks involved:

1. Economically, conservatives in general, and Republicans in specific, are perceived as the party of business, i.e. the paternal promoter of “what’s good for GM is good for the Country.” The result is equating corporations and other business interests as “citizens.” Well, in today’s global economy and “free trade” environment, many businesses and their managements are now “international citizens” from the time they go to work to the time they go home. Building a valuable “micro-economy” and value in some other country, for example, may be good for the business, but will contribute little or nothing to the economic sovereignty of the United States. An argument can be made that the equity value of the company held within the United States can result in indirect value creation; however, that value must be sustainable and widely distributed amongst the citizenry to the extent possible to meet the policy for strengthening economic sovereignty.

In short, the Conservatives and Republicans need to subordinate the agenda of big business to that of building value added wealth within the country and distributing the earnings of that wealth as broadly as possible.

2. Probably because people and businesses lobby the Government based upon their own micro-economic interests, and government policy mirrors those interests, is the explanation for why we do not as a nation have a national macro-economic policy. It is a fundamental breakdown in our political leadership when we place individual interests against the collective interests of our sovereignty as a nation. Maybe we should look to the Italian example. Five to eight years ago, when the conversion to the Euro first became a certainty, the Italians realized that their economy was weak in comparison to the other members of the European Union. Un-repaired, this weakness versus other major European economies would have resulted in a substantial depreciation of the lira versus other major European currencies when the time came for the Euro to succeed the Lira. Somehow, the Italians got religion and dramatically strengthened their ability to domestically create value and keep that value circulating within their own borders. The result was a strong Lira versus the Euro. The example is stark in the Bologna region of Northern Italy – known for their Italian decorative tile making. Tile making excellence brings the money into the Bologna region and that value which is created through the efforts of the work, intellect and capital of the folks who live there is very deliberately retained in the local economy after Federal taxes. All the food you need is grown and raised locally, most of the “things” one buys to live from clothes to toys are retailed through neighborhood, local businesses; and folks are proud to buy Italian crafted goods. The focus for leisure time is on the family and friends gathering at home and in parks, restaurants and cafés in every neighborhood. There are no big theaters, no huge shopping centers, no Wal-Marts, and no big supermarkets. The trucks you see on the highways are all very new, sleek modern tractor/trailers; and folks drive new Volkswagens and Fiats. And most impressive, the average two-bedroom apartment in Bologna costs about 450,000 Euros – all of which makes the standard of living in that region, by my estimation, roughly equivalent to what I see in Boston. For Italy, this is nothing short of a miracle from where they were in economic terms half a decade before the conversion to the Euro.

3. The inherently sound logic underlying the convergence of industry, environmental responsibility and safety involves relatively sophisticated and technical “risk versus benefit” issues about what is practical and technologically feasible at any point in time. For our democracy to function rationally with respect to these issues, we must have a highly educated citizenry today. We do not because we have deliberately spent the last 40 years systematically “dumbing down” our public primary and secondary school educational systems. The result is a large portion of the citizenry who have to rely on what others tell them about what to think about these complex economic issues. Unfortunately, the folks who have been telling those of us, who are the victims of our public education system, what to think, be they in media, leadership or education, have been “selling” an agenda. That agenda has distorted the facts and reality of our ability as a nation to practically reconcile our need for economic leadership in the world, now and in the future, with our responsibility as a people to achieve leadership in a manner that is environmentally sensible and practical as well as safe for those folks directly involved.

For these three issues to be solved, Republicans and Conservatives have to come together to focus on the macro- issues we face which threaten our sovereignty – in other words, they have to put the needs of the Country as a whole, its sovereignty, and its national security ahead of the needs of individuals and business entities that are lobbying the Government for their various and sundry micro-interests.

The more daunting constraint is the liberal and Democratic portion of the populace. Many of these folks, prima facie, do not appear to be fundamentally in favor at all of strengthening the economic sovereignty of the Country. In fact, based on their actions over the years, they would like to substantially weaken it. Thus, I would expect them to find the whole concept of strengthening America’s First Wealth Value Added Dollar Creation an anathema – and this is a tremendous problem for the Country. Our sovereignty defines who we are as a people as well as our sustaining capability to survive and prosper as a free people; and one of the key foundations of our sovereignty is our economic strength. I believe the exercise of free trade by US businesses and individuals acting in a micro-economic way will create economic value throughout the world, i.e. lifting all other boats. Lifting all other boats appears to be their goal; and by itself there is nothing wrong with that. However, the approach appears to be based on the assumption that the world economy is a “zero sum game” where we have to suffer in order for others to win. Regardless, however, whether you believe or not that the world economy is a “zero sum game,” a strong value added economic policy for the Country relative to all other countries is fundamental to putting a strong, concrete foundation under the construct we call our Sovereignty as a Nation. Power is a relative term; and our economic strength relative to all other economies in the world is determinative of our ability for self-determination as a people in the future.

Let’s look at the impact over the past 40 years or so of Liberal/Democrat policies on the elements of First Wealth Value Added Dollar Creation:

1. The domestic value we add by our labor and intellect to what we take out of the ground via developing natural resources, and adding value via manufacturing value-added to such resources.

a. These folks believe that exploiting the Country’s natural resources is both fundamentally and morally wrong as well as environmentally irresponsible.

i. Exploiting our natural resources to the fullest is a fundamental requirement of our economic sovereignty; and doing so in an environmentally responsible way is a necessity.

ii. The same goes for exploiting the natural resources of others that can be imported into the Country upon which to build further value.

iii. The Country must be capable of being energy self-sufficient; as well as sufficiently cheap and abundant to drive a world leading effort to create First Wealth Value Added Dollars.

b. These folks believe that the service economy is “goodness” and the manufacturing economy is to be discouraged.

i. Thus, we find it easy to measure domestic manufacturing productivity by defining “productivity” to include value added manufacturing “savings” accomplished by transferring value from our Nation to the economies of other countries.

ii. On the solution side, the Country has to encourage, with all of the power and creativity the Federal Government can bring to bear, the growth and long term sustainable nature of First Dollar Wealth Value Added manufacturing within the United States subject to four caveats:

1. Business and management has a fiduciary duty of reasonable and practical workplace safety for their employees.

2. Industrial processes must be environmentally responsible to the extent technologically and economically practical.

3. Legal remedies to enforce the above and regulatory interference in the conduct of commerce must be efficient, timely, functional and primarily designed to accomplish specific performance.

4. No product should be imported into the United States wherein the manufacturing of such product is not subject to the same standards of worker safety and environmental responsibility imposed in this Country upon domestic commerce and industry.

c. For the past 40 years the primary and secondary public education system in the United States has been systematically “dumbed down.” Creating Value Added via our Intellect is a key part of the proposed National Economic Policy. A highly skilled, supremely educated (with the tools of commerce and industry) citizenry is a prerequisite for a National Economic Policy that seeks to broaden the distribution of earnings of First Wealth Value Added Dollars. This National weakness has reached the point of threatening our National Security because (i) it strikes directly upon our ability as a Country to strengthen the economic foundation of our sovereignty; (ii) it is a threat to National Security because the economy today is not sufficiently powerful to fight a sustained multi-front war on economic and physical terrorism by Islamic Fundamentalists and others who would threaten our way of life; and (iii) we have created today a population of voters insufficiently educated to drive the necessary changes in the Country’s leadership and policies that can be accomplished via the Vote; the latter being critical because:

i. Fundamentally, the country must shift away from a welfare economy based upon artificial wealth transfer from the few producers of wealth to the many who are functionally handicapped from being producers/generators of wealth. A relevant education is the key to converting consumers of the value produced by others into generators of value.

ii. As this shift occurs, Federal and State governments must grow significantly smaller as a combined percentage of the Nations GDP to allow a greater percentage of the GDP to be subject to distribution via the mechanism of free enterprise that is the most efficient means of broadening the distribution of earnings of First Value Added Wealth Dollars.

iii. The No Child Left Behind Legislation is a start; however, the Country needs a radical effort to define the specifics of a relevant education consistent with National Economic Policy and achieve an educated populace; the effort must be radical because we don’t have another 40 years to turn the situation around. This is now a National Security issue.

d. With respect to two issues relating to our ability to create value via our Intellect:

i. Software and Biotechnology are examples of value created from Intellect specifically reflected in the earnings capacity of resulting intellectual property. Liberals/Democrats have put few of the constraints on creating value from these kinds of businesses as opposed to virtually all other forms of First Value Added Wealth Dollar creation.

1. The problem is that combined with 40 years of dumbing down the public education system, there are fewer and fewer folks relative to everyone else who possess the intellectual capability to create value via the creation of intellectual property. Thus while we are creating value added, we are failing to broadly distribute the earnings of such value.

ii. Ironically, at the same time we are systematically destroying the value in terms of future earnings capability for the Country of our intellectual property. In recent decades, we have systematically allowed countries from Japan to China, from Israel to the Soviet Republics to copy our intellectual property, virtually with impunity. In a sense, it’s the commercial version of failing to control our borders. And it is costing us our lead in technological advantage that equates to future earnings capacity which in turn directly impacts our economic sovereignty.

1. The solution is to strictly enforce our intellectual property protection laws; absolutely prohibit the import of products that infringe on our intellectual property that would have otherwise created value inside the United States; and use our power to discourage those who would infringe wherever they are or import products from sources that infringe.

Lastly, we need to talk about the Politics of Capital. Both political parties and ideologies seem to be in agreement that growth in the value of capital and possibly even the broadly distributed ownership of capital collectively are complete substitutes for either the domestic creation or broad distribution of First Wealth Value Added Dollars. This is akin to trying to walk on one leg. Capital represents the future value of net earnings of business entities. Business entity earnings are earnings after folks who work domestically for those companies get their compensation. The value of capital as reflected in equity stocks, for example, goes hand in hand with earnings by individuals that they receive as compensation for the value of what they work to create. The economic activity of the country is a function of salaries and wages as well as dividends, interest and profits earned on capital. If the value of salaries and wages as well as the value of capital assets such as equities is attributable to Domestic First Wealth Value Added Dollar Creation activities, the result is first order economic activities that contribute to the foundation of our economic Sovereignty as a Nation.

In summary, the political issues, taken as a whole, really do define a pervasive and systematic assault (that has been ongoing for many years), from sources domestic and foreign, on our economic Sovereignty and thus, on our National Security. The nature of the political challenge to effectively address these issues is that the primary source of actual and potential damage to our economic sovereignty and thus our National Security is coming from ourselves. It was our Constitution and the spirit of the Declaration of Independence that provided us with a literal and structural defense to the erosion of our National Sovereignty. However, strong evidence is on the table today suggesting that the framework of our Nation as defined by the founding Fathers of the Country has also been under long-term systematic assault. Thus, I think we are left with the resources of leadership and communications to leverage a solution to the daunting political issues that have to be overcome to build the coalitions and collective political will necessary to drive rationale policy designed to systematically strengthen our economic sovereignty. Unfortunately, the mainstream media is part of the problem side of the equation, not the solution side. Thus, it all comes down to leadership.

I never thought that paranoia was a healthy thing until I read Andy Grove’s Only the Paranoid Survive. Andy Grove is one of Intel’s founders and the book had a lot to say about some of the thinking that drove Intel’s success. So, it is with a “healthy” dose of paranoia grounded in the idea that you look and deal with the bad things, i.e. the threats, because good news can never hurt one, that I offer the following personal commentary:

I am a strong advocate of a National Economic Policy. I find the need for one rooted in what I conclude to be part of an overall pervasive assault on what I always believed to be the “American way of life.” What really bothers me is that the sources of the assault are domestic as well as foreign. I find it hard to rationalize that somehow there is some small or large group of folks within our country who are actively out to destroy the foundations of the Nation, our way of life, and deliberately want to weaken or destroy the sovereignty of the United States. I find it an outrageous and really frightening thought – almost to the extent that I feel it can’t really be true. Except when I think about what has happened to our primary and secondary public education system in the United States. By any objective standard, over the past 40 years, we have systematically dumbed down our public primary and secondary education system. In specific, we have done so versus any objective standard consistent with long-term national economic leadership in the World. The result and its impact on our citizens is criminal. The systematic weakening of the system over such a long period of time has to have been deliberate, and the implications to our economic sovereignty have reached National Security proportions. Now, I’ve got a pretty good idea about the Who. But frankly, I just can’t fathom the Why. And I seem to really want to understand the Why. We seem to be a people that won’t just settle for the Who, but we want to know the Why – the motivation and the intent.

I think its because if I knew Why, somehow that would help me to understand how to reverse the damage – and maybe even redeem the Who. Also, having to first understand the Why makes it somehow more convenient for putting off What to do about the Who.

9/11, however, changed my thinking. Motivation/intent became less significant than action. Maybe someday understanding all the facets of the Why might be interesting and valuable. However, knowing the Who and leveraging to all of the other real and potential Who’s; and introducing all those Who’s wherever they may be to the might of the United States Armed Forces and maybe, just maybe – an informed electorate - is what really matters today to reverse the threat.

A forum writer reminded me recently “A representative government cannot be better than the people it governs.” The implications of this comment, in light of what this Country has been through over the past four decades or so, are truly disconcerting to put it mildly.

I hope this all rings a bell with a lot of other folks. America is Freedom’s lifeline to the world. To be the world’s beacon of freedom, free enterprise and democracy, our greatest strength, not our most threatening weakness, must come from within.

Unfortunately, I took the time to read this article.

The article is filled with inconsistencies and contradictions.

Noting the author is from New Hampshire, kind of explains why there are inconsistencies and contradictions.

The author, on one hand, sounds like a Maoist, then on the other hand, a disciple of Adam Smith when speaking about collectivsm versus individualism.

Then, one hand, the author advocates small, limited government, then again, advocates government action as the solution to his preceived problem.

For example:

"Federal and State governments must grow significantly smaller as a combined percentage of the Nations GDP to allow a greater percentage of the GDP to be subject to distribution via the mechanism of free enterprise that is the most efficient means of broadening the distribution of earnings..." (Adam Smithism)

"The No Child Left Behind Legislation is a start; however, the Country needs a radical effort to define the specifics of a relevant education consistent with National Economic Policy..."(Maoism)

A lot of interesting ideas/thoughts ... bump for further reading.

I was making the point last night to friends that in america we have a trade deficit because of our taxs structure.

Economic activity migrates to where it is untaxed and unregulated. The power to tax is the power to destroy. So, if you notice that Chinese goods are made, exported (and like all mechantilist countries like China and EU, exports get tax rebates), then sent here to US, then bought, there is little or no Federal tax bite. Something *produced* here gets a payroll/income/ corporate income tax bit of 20-30%.
This tax structure causes a shift from production to consumption.

With such incentives built in, it is no wonder we have a trade deficit.

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