Our heroic ancestors shaped America. They created a country built on the strength of a constitution that supports life, liberty, and the pursuit of happiness.
But America is in trouble.
Free enterprise encourages Americans to work hard and live productive, satisfying lives. But when cumbersome government programs add layers of restrictive regulations, individual initiative is thwarted and national energy is diminished.
Natural Governance offers solutions.
Society is complex. For obvious and not-so-obvious reasons, some people are rich and some are poor. That is how it always was, and probably how it always will be.
Few will argue that income redistribution is unwarranted. It is, after all, how democracies attempt to adjust economic stratification and promote social justice. Most, though, will argue the means for income redistribution.
Liberals advocate it as a strategy that leads to equal opportunities; conservatives suggest it robs people of their rightful assets; political theorists discuss it in terms of “fair” distribution; economists ponder its effects on the economy’s structure and performance.
No one, though, addresses the unintended side effects of the Federal Government’s present approach to income redistribution programs.
Individually and collectively they can:
Natural Governance is a better way. Through addressing flaws in the Federal Government’s current income redistribution programs,Natural Governanceencourages collective desirable activities. Thus, it benefits both the rich and the poor.
Capitalismis classic “invisible hand” economics postulated by Adam Smith (1723-1790):
Natural Governance builds on classic economics. In doing so, it recommends the following programs and processes:
The Federal Government will pay each eligible U.S. citizen a limited, tax-free, weekly Tax Share Payment (TSP). The TSPwill go to every citizen—rich, middleclass, or poor. The TSPprogram will be funded by consumption taxes and/or savings recouped via elimination of the government’s current income redistribution programs. It will be administered by the National Registry (see explanation below).
Qualified recipients must be 18-year-old and olderU.S. citizens, who do not hold dual citizenships in any other countries. Naturalized citizens must give up citizenships in all other countries and reside physically in the United States or its territories, where residents pay full U.S. taxes, for a cumulative total of 18 years. (Payment amounts will be reduced pro-rata for days out of approved locations.)
The TSPamount will start small and be adjusted up or down as time passes. TSP guidelines are as follows:
Payments are automatic, meaning they are not contingent on wages, means-testing, or differences in the cost of living associated with various geographic regions. However, under certain conditions and due process, payments might be preempted, meaning directed to other individuals or government agencies. Non-custodial parents’ payments will be shared with custodial parents.
When TSPsare commenced or changed, federal welfare payments, federally subsidized rents, and unemployment compensation will be adjusted to prevent recipient “windfalls.” Arguably, few will choose to live on a small TSPfor their entire lives, but many will rely on it to soften the harshness of unfettered free enterprise.
Some argue that the poor are poor because they cannot handle money. Thus, unconditional “free money” will perpetuate the poverty cycle, destroy one’s incentive to work, or be spent on drugs. This is flawed reasoning in that the government gives money to the poor regardless. Means-tested programs are conditional and reward unemployment. Natural Governance’s TSP is unconditional and even has a mechanism to redirect irresponsible citizens’ payments.
The Federal Government will maintain a computerized National Registry. The National Registry will document all U.S. citizens and aliens who are currently in, or who have been in, the United States. The National Registry will also include people anywhere in the world who wish to facilitate their visa process when they travel to the United States. Such inclusion, however, will not automatically confer the right to enter the United States.
Each person listed in the National Registry will be assigned a Discreet Identifier. The Registry’s contents will be filed according to Identifiers. The Discreet Identifier will initially be cross-referenced with social security numbers, service numbers, and/or other discreet identification numbers. Over time, other numbers will be phased out.
People will voluntarily carry abstracts—cards—similar to drivers’ licenses or passports that record certain information in the National Registry.
A single National Registry card will serve as a passport, social security card, driver’s license, automatic teller cash withdrawal card, universal credit card, and other functions. This makes it very convenient for all registrants.
Information in the National Registry will be factual, simple, and automatic. To protect privacy, information in the Registry will be controlled strictly.
Ultimately, with a registrant’s permission, information in the National Registry can be shared with other governments and the databases merged. Thus, the National Registry has the potential to become a tool that will help manage U.S. security needs.
Some will argue that the National Registry and its accompanying card is an invasion of privacy and one more step toward Big Brother’s prying eyes. However, in this day and age of the computer, vast amounts of “private” data are already maintained and disclosed. The National Registry has the potential to control runaway information.
Natural Governance’s position on replacing income tax with a consumption tax begins with definitions:
Consumption tax: A consumption tax is a tax levied when one purchases goods and services. The tax base is the actual money spent. Consumption taxes are usually indirect, such as a sales tax or a value-added tax.
Income tax: An income tax is a government tax imposed on individuals or entities, a.k.a. “taxpayers,” that varies with the income or profits (taxable income) of the taxpayers. Details vary widely by jurisdiction.
Progressive tax: A progressive tax is a tax in which the tax rate increases as the taxable amount increases. The term “progressive” refers to the way the tax rate progresses from low to high, with the result that a taxpayer’s average tax rate is less than his or her marginal tax rate.
Regressive tax: A regressive tax is a tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases.
Value-added tax: A value-added tax is a type of consumption tax that is placed on a product whenever value is added at a stage of production and a final sale.
A consumption tax is better than an income tax because it is fair, economical to collect, difficult to avoid, has desirable social effects, easy to compute, and is less prone to disputes and litigation.
Still, many argue that income taxes are better because:
These arguments are unfounded. All deductions, trusts, and other loopholes that favor those with high incomes have made the Internal Revenue Code far less progressive in practice than in theory. A prevailing summation among economists is that the Code is “slightly progressive” because the progressive rates are largely offset by the loopholes. Regardless, progressiveness is just another component of income redistribution, and income redistribution can be accomplished more effectively with a direct Tax Share Payment. Increasing the Tax Share Payment has the same effect as making the Internal Revenue Code more progressive, and is simpler and far cheaper.
Pundits have long decried the complexity of the Internal Revenue Code, and observed that it gets longer every year. Congress frequently vows to simplify the code, and then makes it longer. Blaming the legislators masks a fundamental flaw in the concept of taxing income, a characteristic which inevitably leads to special treatment for the favored (actually, almost everyone is favored in some way, so the favors largely even out, leaving everyone stuck with the absurdly high expense of collections). An enormous number of working lives are spent in the collectively sterile occupations of helping taxpayers reduce their burden, auditing the expensively prepared returns, and litigating the differences.
The uncorrectable flaw in the concept is that it is a tax on net income (profit to a business and income after costs of producing the income to an individual). Once it is decided that costs can be deducted, it must be decided which costs can be deducted. This is a formidable task even if it were tackled by high-minded experts with no bias. Page through any accounting text (financial accounting, not tax accounting) to understand the complexity of the subject matter.
If one accepts the net income concept, many deductions are legitimate. For example, a salesman should be able to deduct travel expenses if they are necessary to produce his income. What, though, about restaurant tabs, for meals to please his customers that include his own food? If he buys a car, he should not be able to deduct it in the year of purchase, because it will last several years. But how many years?
These are just a few of countless issues that must be resolved, and that would have to be resolved even if there were no lobbyists or special interest groups. But, there are lobbyists and special interest groups, and many of the points they advance are entirely legitimate. Separating those that are from those that are not is a daunting task. Reasonable, knowledgeable people, without conflicts of interest, disagree on many issues. It is not surprising that questionable or indefensible deductions slip into the code. As lawyers say, “Once we embark on this journey, we start down a slippery slope.” Or, as Bobbie Burns once said, “Oh, what a tangled web we weave.”
Then, there are the “tweakers.” When there is adverse publicity that illustrates failures of a component of a system, the proper correction would often be to replace the poorly conceived component—for example, replacing Income Taxes with Consumption Taxes.
Instead, the tweakers modify the system, ostensibly to correct the defect, but more often to mask it. A notorious example is the Alternative Minimum Tax—the reviled AMT. Its genesis was publicity given to millionaires that paid no tax. Never mind that they avoided tax by making unprofitable investments in subsidized housing or other programs for which the government sought to hide the true cost, and that the government specifically legislated the tax reductions in order to solicit such “investments.” Never mind, again, that these investments may have equaled or exceeded the tax benefits.
The publicity was damaging, and Congress enacted the AMT so that the income tax would seem fair (even though fairness was an illusion). The AMT grew and grew, as Congress used it to recapture benefits given to special interests on the sly. For example, Congress did not eliminate the deductibility of state income taxes, but made that deduction an AMT addback, so that many or most taxpayers received the deduction on the front end and lost it in the AMT calculation. In 1996, the AMT, by itself, collected more taxes than the basic Internal Revenue Code, and taxpayers were required to file two separate tax returns.
Contrast Income Taxes, with all their baggage, to a consumption tax. A consumption tax does not require auditing one’s personal or business financial statement to determine the appropriateness of expenses or deductions. There are no deductions. That makes it far more difficult to manipulate or tweak.
No one can deny that Congress has the authority to tweak consumption taxes. Subject to constitutional limitations, Congress is answerable only to the voters. However, preferences and exceptions to a consumption tax are harder to justify and more visible than those to income taxes. Income taxes have necessary and justifiable deductions, whereas consumption taxes do not. To incorporate favoritism or special treatment into income taxes, Congress need only modify deductions that should be there anyway. In order to modify a consumption tax to favor a special interest, Congress must actually create a preference anew. That is easier for the public to spot. Consumption taxes are simpler, and exceptions are therefore more visible. Democracy works best when laws are simple, short, and easily understood by the public.
Compared to an income tax, even a gross income tax without deductions, a consumption tax can be collected almost without cost. For example, if crude oil is taxed, oil companies collect the tax. It does not cost them significantly more to collect $5 per gallon than $2 per gallon, and other than the tax itself, it costs the consumer no more. In addition: no tax return, no sleepless April 14 night, no dreaded audits, and no bills from a tax preparer.
Another major difficulty of income taxes is that they are easier to avoid than consumption taxes. Much income is received in cash “off the books” and is not taxed at all. Some consumption taxes can be avoided more easily than others, but if properly established, consumption taxes are harder to avoid than income taxes.
When establishing tax rates for different consumable products and services, the government should consider the possibility of tax avoidance. Other factors being equal, higher tax rates should apply to products and services for which it is difficult to avoid the tax. Using crude oil to again exemplify: It is almost impossible to avoid the tax. One must pay at the pump to get the gas, and collection is automatic. That is true of most products, although somewhat less true for personal services. It will be possible to avoid some consumption taxes, but avoidance of consumption taxes will be far less widespread than avoidance of income taxes.
Specifically, Natural Governance proposes:
A consumption tax on all goods and services will help right the Federal Government’s tax wrongs by generating jobs and stimulating the economy. Natural Governance proposes that a consumption tax on crude oil (unrefined petroleum) will be especially beneficial.
For centuries, the world has used three primary fossil resources: natural gas, coal, and crude oil. Natural gas and coal are more abundant, and they can be replaced with nuclear power. But crude oil is a finite resource, and although it is the most important of the three, it will be the first to run out.
The Institute of Mechanical Engineers reports that as of 2015, there are an estimated 1.3 trillion barrels of oil reserve left in the world’s major fields, which at present rates of consumption will be sufficient to last 40 years. By 2040, production levels might be down to 15 million barrels per day (around 20 percent of present consumption), and it is likely that by then the world’s population will be twice as large, more industrialized, and, therefore, more dependent on oil.
Crude oil is arguably the most important natural resource in today’s world. According to the United States Energy Administration Association,over the last ten years, the world has used an average of 85 million barrels of crude oil a day—at42 gallons to the barrel, that’s three billion five hundred and seventy million gallons.
Modern life without crude oil is inconceivable. Crude oil is used in gasoline, heating oil, propane, and diesel fuel. It is an everyday component of almost everything people see, touch, and even ingest—plastics, detergents, paints, toys, textiles, electronics, clothing, furniture, flooring, kitchen appliances, pots and pans, insulation, cars, food fertilizers, and even medicine contain crude oil.
A consumption tax on crude oil is a fair tax. It will be shared by everyone, in proportion to lifestyle spending habits. For example, the owner of a private jet plane will pay far more than a minimum-wage earner who commutes by bus.
A consumption tax on crude oil is a socially responsible tax. It will increase the cost of goods, thus, consumption will decline. A decline in consumption will delay the eventuality of catastrophic shortages and give the country time to develop alternatives to massive energy shortages. In addition, pollution will be lessened, which will potentially reduce the problems linked to global warming.
Taxing crude oil is not analogous to destroying wealth. To the contrary, it as efficient and effective as any tax could be. Most industrialized countries already tax crude oil products. The United States does not. Natural Governance’s recommendation will correct this flaw.
Americans for Fair Taxation (FairTax.org) is a nonpartisan grassroots advocacy group dedicated to replacing the current Federal Income Tax Code with a 23 percent national consumption tax on new retail goods and services.
FairTax.org addresses the inherent regressive nature of a consumption tax by providing a small flat payment to taxpayers called a “Prebate.” The Prebate is intended to repay the taxes on a small portion of purchases, with the intended effect that a poverty level total of expenditures would not be taxed. In other words, the Prebate would equal the amount of consumption taxes paid on the expenditures of a poverty level person or family.
The FairTax.org plan is far superior to the existing federal tax code and probably the best proposal on the table. Still, it is no closer to enactment than it was when it was introduced in 1994. The basic problem is this: If the FairTax.org plan were enacted as conceived, the IRS system, along with its employees and other tax industry employees, would be eliminated immediately. Collectively, their work has no net value. However, if the workers’ paychecks were yanked from the marketplace inclusively, the result would be economic disaster.
Natural Governance and FairTax.org both advocate replacing income tax with a consumption tax. They both recognize that the current federal income tax system is unfair, overly complex, and almost impossible for most Americans to understand.
However, Natural Governance is more likely to be advanced for two reasons:
Still, FairTax.org and Natural Governance are powerfully synergistic: FairTax.org has a proven track record of delivering its message to the public. To date, Natural Governance is relatively unknown.
If FairTax.org were to incorporate Natural Governance’s initiatives with its own, it would have a better chance of enactment. Even the public announcement of a major change would be newsworthy. It could, in itself, revitalize FairTax.org and ultimately contribute to the nation’s prosperity.
Certainly, Natural Governance suggests changes to taxation and income redistribution. But it goes far beyond. If Natural Governance is implemented, its benefits will be limited only by human imagination.
Additional Natural Governance proposed changes include . . .
An immigration policy is any policy that deals with the transit of persons across borders. Immigration policies range from no migration to open immigration.
U.S. immigration policies are intermingled with the complexities of:
Immigrants are important to America. They shaped the greatest country in the world. They are the foundation of her values. Their diversity and ingenuity built, and continues to build, her economy.
Why, then are U.S. immigration policies balled into a bureaucratic tangle? Why does Congress enact laws that it does not—cannot—enforce? Why do some oppose immigration so vehemently that they take laws into their own hands? Why do others thwart efforts to enforce laws by condoning employment of illegal aliens? Why do some U.S. presidents publicly abhor illegal immigration and then offer successive amnesties?
Answers are, in part, tied to means-tested welfare. America’s means-tested welfare system has spawned a large and dependent underclass that is incentivized to remain unemployed and unproductive. (According to most estimates, the underclass is 12 percent of the U.S. population.)
This phenomenon results in a shortage of employable U.S. citizens. That, in turn, forces American businesses to employ illegal aliens. Founded on a need for survival, these business owners oppose, thwart, or circumvent border controls. That, in turn, results in immigration policies laden with unresolved issues.
Succinctly stated: If current laws prohibiting illegal immigration were enforced numerous businesses would be deprived of their workforce. Thus, U.S. citizens are paid not to work, while illegal aliens are paid to replace them.
Natural Governance proposes straightforward solutions that break the vicious circle. Natural Governance policies are solid in that they regulate immigration to balance the advantages of controlled immigration with the detriments of unregulated or excessive immigration.
Immigration is, after all, intended to benefit the United States of America, not immigrants themselves.
Natural Governance’s proposed policies:
The critical reader might ask, “Why will people obey immigration laws proposed by Natural Governance, when they flaunt current laws?”
Succinctly, breaking laws is risky, expensive, and time consuming. Via Natural Governance it is not necessary. Natural Governance provides a means for TCNs to enter the country legally and supplies employers with a legal labor pool. If the legitimate objectives of TCNs and employers were achieved legally, the incentive to cheat would be eliminated and all would benefit.
Competition law promotes or seeks to maintain market competition by regulating companies’ anti-competitive initiatives. One of the first examples goes back to 50 BCE, when the Roman Republic enacted Lex Julia de Annona to protect grain trade. During the Middle Ages, England’s King Henry III passed a law to fix bread and ale prices to correspond with grain prices. Violation resulted in a fine and public humiliation, while tied to a clucking stool. If the judge was in an exceptionally foul mood the transgressor was tied to a pillory, taunted, and pelted with rotten food, dead animals, mud, and excrement.
Then, in 1776, the Scottish “Pioneer of Political Economy” Adam Smith published The Wealth of Nations and laid the foundation for classical free market economic theory and practice. Smith asserted that a nation’s economic prosperity is contingent upon a market system in which prices for goods and services are set free, without consent between vendors and consumers.
In 1890, the United States Congress passed the Sherman Antitrust Act—a statute that attempted to outlaw the restriction of competition by large companies that cooperated with rivals to fix outputs, prices, and market shares. The Act initially prohibited certain business activities that the Federal Government regulators deemed to be anti-competitive and required the Federal Government to investigate and pursue trusts. It was then more broadly expanded to oppose the combination of entities that could potentially harm competition, such as monopolies or cartels.
Although it is difficult to disagree with the Act’s underlying intention, the wording is so vague that enforcement is necessarily difficult. The Act is wrought with controversy: How does a court draw the line between vigorous and perhaps brutal competition, which is legal or even encouraged, and actions in restraint of trade? If a competitor “extinguishes one’s rivals,” has not that in some way been in restraint of trade?
Even Federal Reserve “rock star” Chairman Alan Greenspan pointed out the Act’s faults. In a paper delivered to the Antitrust Seminar of the National Association of Business Economists, in Cleveland, on September 25, 1961 he stated, “No one will ever know what new products, processes, machines, and cost-saving mergers failed to come into existence [as they were] killed by the Sherman Antitrust Act before they were born. No one can ever compute the price that all of us have paid for that Act which, by inducing less effective use of capital, has kept our standard of living lower than would otherwise have been possible.”
The Clayton Act followed in 1914. It sought to prevent anticompetitive practices in their incipiency and was the first federal statute outlawing practices considered harmful to consumers. It stated, in part:
“It shall be unlawful…to discriminate in price between different purchasers of commodities of like grade and quality…where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition.”
Still, like its predecessor, the Clayton Act has been debated by the U.S courts, particularly the Supreme Court.
Then in 2006, the 109th U.S. Congress introduced theDecent Working Conditions and Fair Competition Act. To date, the Act’s numerous bills died in committee and thus, did not become law.
Natural Governance proposes it is time for the Federal Government to take definitive action and establish industry-specific rules for acceptable competitive behavior. The rules will not restrict business management unnecessarily, but will seek full disclosure of all material pricing and facts and require that all consumers pay the same price for the same goods and services.
Rules will be enacted only after extensive public comment. Industry representatives will be afforded ample opportunity to review and comment, but will not have voting representatives on any boards or commissions that determine the rules. The clear and only purpose of these rules is to benefit consumers, not industries.
Human needs are innate. They date back two million years to when Homo habilis emerged from the African jungles. They are consistent across all cultures. They are so essential that psychologists and psychiatrists refer to them as “human givens.”
A distinguished cast of characters, including William James, Sigmund Freud, Alfred Adler, Abraham Maslow, and William Glasser explored human needs. Maslow introduced the idea that until basic needs are met, people cannot engage with meaning and spirituality. Glasser went on to argue that distress, depression, neurosis, and even psychosis can spring from unmet needs.
Certainly all human needs are important. To examine each one individually, though, is outside the scope of Natural Governance. Natural Governance focuses on the need for people to feel significant and direct their destinies.
Natural Governance proposes that many government functions work best when they are controlled from the lowest level possible—the level closest to the people. By making decisions that influence their own destinies, people will feel significant.
Admittedly, people are not perfect. But when they make personal decisions about spending their money, those decisions tend to be better than big government decisions. So, instead of spreading wealth inefficiently and destructively by hiring unnecessary federal employees and forcing private businesses to hire extra people to comply with burdensome regulations, why not let people in towns across America make decisions that will put more money in their pockets and create useful employment?
Specifically, Natural Governance suggests: Federalism is instrumental to the United States’ success. Macro initiatives, such as national defense, should be performed at the highest level of government. But micro initiatives that demand sensitivity to local conditions should be performed at the lowest level of government. There, decision-makers, guided by community members, can and will make a positive difference. And everybody benefits.
Bailout is a colloquial term coined to describe dipping water from the bottom of a sinking boat or jumping out of an airplane with a parachute. Economists borrowed the word to describe a situation in which a business, individual, or government offers money to businesses that are sustaining huge loses or are in danger of bankruptcy. Bailouts can take the form of loans, bonds, stocks, or cash. They may or may not require reimbursement.
Typically, these companies employ thousands, which leads to the presumption that they are “too big to fail.” Thus, should they fold the economy would not survive the huge spike in unemployment.
As an example, in 2008, the “subprime mortgage crisis” almost paralyzed the U.S. economy. After much debate, Congress passed, and President George W. Bush signed into law, groundbreaking legislation—the Emergency Economic Stabilization Act of 2008 (EESA). This legislation establishedTroubled Asset Relief Program (TARP). The original three-page Treasury proposal focused on purchasing troubled assets from financial institutions.
As passed, EESA includes two definitions of troubled assets. The first specifies mortgages and mortgage-related assets, including both residential and commercial. The second includes any asset that Treasury, in consultation with the Federal Reserve, suggests would contribute to financial stability.
EESA also includes a troubled asset insurance program to be paid for through premiums. The total amount of assets to be purchased or insured is limited to $700 billion, with a possible congressional resolution of disapproval when the amount exceeds $350 billion. Taxpayers are to be at least partially protected from losses through the provision of equity or debt considerations and insurance premiums. TARP limits the executive compensation of participating institutions. TARP aims to aid homeowners directly through provisions promoting mortgage restructuring and extending tax relief for homeowners who have mortgage debt forgiven.
On October 14,2008, following enactment of EESA, Treasury announced the creation of a voluntary Capital Purchase Program (CPP). Under CCP, up to $250 billion was injected into financial institutions through government purchases of preferred shares. It was undertaken under the broad authority provided in the law to make any asset purchases from financial institutions that promote financial stability. In November2008,the Secretary of the Treasury announced that TARP would focus on capital purchases, although subsequent intervention on behalf of Citibank included support for specific troubled assets.
While it was once feared the government would hold companies like GM, AIG, and Citibank for several years, it was reported in April 2010 that those companies were preparing to buy back the Treasury’s stake and emerge from TARP within a year. On December 19, 2014, the U.S. Treasury sold its remaining holdings of Ally Financial, essentially ending the program. TARP revenue has totaled $441.7 billion on $426.4 billion invested. TARP put money back into the banks.
The financial crisis of 2008 taught clear lessons . . .
When AIG, an enormous insurance conglomerate, and other giant financial institutions were about to fail, the federal government authorized billions of dollars for loans and other financial aid. Although the general public would have been opposed to giving tax dollars to companies run and owned by billionaires, the government explained away the financial assistance by claiming that the companies were “too big to fail.” The implication, never articulated clearly enough for the public to grasp, was that the prospect of one of these giants failing posed a risk of enormous damage to the country—damage that exceeded the risks posed by bailouts. In other words, if AIG or Citibank were to fail, the damage to the economy would be intolerable.
The concept that some companies were so big the government would not allow them to fail was not new. It had been under consideration for some time, and had at least two easily foreseeable results. First, companies that were large, but possibly not too big to fail, went on acquisition binges, intent on reaching that unspecified threshold. Second, companies that anticipated reaching that threshold, or those that believed they had already done so, started taking greater than ordinary risks.
Some of the risks were taken in paying excessive prices for acquisitions made on the way to largeness, and some after having believed they had arrived. If a company president believed that the government would provide a safety net, it made sense to gamble with the shareholders’ money. If the president won his bet, he would be a hero to the shareholders, who would not begrudge obscene corporate munificence (meaning bonuses that would embarrass a Saudi sheik). If the president lost his bet, there was recourse to Uncle Sam, who could be relied upon to absorb the loss.
In other words: The implication is that if Citibank (a prime example advanced in support of the too big to fail concept) failed, so many depositors would lose their money that the entire financial system would go into a tailspin. These are legitimate concerns, and they give rise to less rational concerns (i.e. panic), which can nevertheless add to a general loss of confidence, which in turn can lead to bad times. In the Citibank example, the public’s fear is not that Citibank would cease to exist. It is that they would lose their deposits with Citibank. This is a legitimate fear, even with those that have no deposits with Citibank
Natural Governance contends that TARP was a rip-off, but in order to support that contention, it must provide an alternative. And it does. Natural Governance proposes that, instead of providing funds to corporations that mismanage their affairs, the government simply protect the customers, policyholders, or depositors of those corporations.
Specifically:
A substantial cause of bank jitters is fear of mass withdrawals by panicked depositors, appropriately called “panics” by previous generations. FDIC insurance was initiated in 1933 precisely to eliminate panics, but with a ceiling of $100,000, it is inadequate. The ceiling has not been increased since 1933, when $100,000 had the purchasing power of $1,600,000 in 1997 dollars.
When banks are afraid, they don’t lend, and the economy suffers. Unlimited insurance would reduce bank fear as well as public fear, and quelling fear might eliminate all FDIC claims. Banks could be audited at leisure, and the FDIC could deal with banks that did not meet requirements using the existing FDIC organization, standards, and techniques.
Most people do not have bank accounts exceeding $100,000. However, those who do, include businesses and individuals who have a disproportionately greater influence on economic health and commerce. To promote the confidence that is necessary to prosperity, the government must protect large depositors as well as small. Protecting individual bank depositors is just one purpose of FDIC insurance; generating national confidence in the banking system is actually a more important purpose. That requires a far higher cap.
In summary, the underlying philosophy of Natural Governance is that government decisions are based on the reasonably foreseeable outcome of proposed actions, not on what proponents of those actions say they intend to accomplish.
Gift matching is a potentially beneficial way to encourage individual gifts to worthy causes. Currently, gift matching exists in the private sector by companies that want to encourage their employees to support non-profit organizations of their choice. Employee matching gifts (also known as “matching funds”) are grants an employer makes to match its employees’ charitable contributions. Usually associated with corporate grant makers, employee matching gifts often are dollar-for-dollar, but some companies will give double or even triple the original donation. Some companies may also give matching gifts for employees’ volunteer efforts.
Natural Governance proposes a phased elimination of the federal income tax, replacing this tax with a consumption tax. This action may be opposed by nonprofit organizations that fear a drop in the contributions they receive from individuals. Why? Because the elimination of the federal income tax will also eliminate the deductions that certain individuals receive when making qualified contributions. Natural Governance seeks to avoid this unintended outcome. Natural Governance also wants to encourage individuals to continue to support their chosen charities and non-profits. How? The answer is simple:
Nature Governance will require the Federal Government to match certain designated beneficial gifts and charitable contributions from all individuals that are made to qualified charities and non-profit organizations, regardless of the dollar value of the contribution and the individual’s annual income.
The Federal Government’s match will be any percentage of the individual’s contribution, equal to the contribution, or larger than the contribution. Different match levels will be established for difference categories of gifts or contributions.
The Federal Government’s match will be funded from designated federal funding sources. Individuals will no longer deduct the value of their contribution or gift or receive a tax credit from their federal tax. This approach to gift matching is consistent with Natural Governance’s overall philosophy that individuals make better decisions about what charities and nonprofit organizations they want to support, rather than making the decision based on the tax benefit they will receive.
This approach to gift sharing will work in concert with existing gift sharing efforts used by the private sector. As an extension of corporate philanthropy, matching gift programs are designed to be the means by which companies support employee charitable giving. Companies match donations made by employees to a wide range of nonprofits. For charities and nonprofit organizations, matching gifts are free money that is often overlooked. Charities and nonprofit organizations have already done the heavy lifting of attracting individual donors and receiving individual donations. Corporate gift matching offers an easy, additional funding source.
Natural Governance’s approach to gift matching represents a win-win-win for charities and non-profit organizations:
The Sherman Antitrust Act was passed by Congress in 1890. It prohibits certain business activities that Federal Government regulators deem to be anti-competitive and requires the Federal Government to investigate and pursue trusts.
It has as since, more broadly, been used to oppose the combination of entities that could potentiallyharm competition, such as monopolies or cartels.
The Act was not intended to impact market gains obtained by honest means, by benefiting the consumers more than the competitors. Senator George Hoar of Massachusetts, one author of the Act, said, “… [a person] who merely by superior skill and intelligence…got the whole business because nobody could do it as well as he could was not a monopolist…(but was if) it involved something like the use of means which made it impossible for other persons to engage in fair competition.”
An analogy to sports events makes the point: Suppose a hundred years ago, an authority attempted to write a guideline that would serve as the complete body of rules to govern all sporting and similar competitive events. One rulebook controlled baseball, football, soccer, and boxing.
Now fast forward to the introduction of, say, gymnastics and diving without expanding the rules. This is exactly what the Sherman Antitrust Act sought to do. It applied to steel production, petroleum, railroads, and other major industries of the day. Now, albeit antiquated, it is cited to regulate new businesses such as airlines and computers—businesses that didn’t even exist when the laws were enacted.
Why should company presidents, who have to make decisions in real time, be required to guess which decisions will later be challenged by Department of Justice (DOJ) lawyers, who have 20/20 hindsight and no real world business experience?Why should courts bear the burden of deciding cases based on nebulous rules?
As an example, on May 13, 1999, in a surprising move, after over a year of public negotiations, DOJ filed an antitrust lawsuit against merger of U.S. Airways and American Airlines, saying that the move to create the world’s largest airline would pose “substantial harm” to consumers. The lawsuit was unexpected, because in 2012 DOJ approved the merger of United Airlines and Continental Airlines. After all was said and done, DOJ filed papers in U.S. District Court in the District of Columbia avoiding trial and announcing settlement—the merger was allowed, given that the combined airlines give up slots at key airports across the country to low-cost competitors.
DOJ’s claims might have been valid. They might have been spurious. Or, they might have landed somewhere in between. Regardless, it would have been better to establish rules first and then determine if said rules were violated. Courts do a good job deciding if a company’s actions broke rules, if there are rules to adjudicate. It is far more difficult to determine wrongful actions if there are no rules to apply.
Natural Governance has a better way. Natural Governance proposes a Federal Government unit with narrowly defined, strictly controlled, sole-purpose power that will establish industry-specific pricing rules initiated by citizens. For purposes of discussion, this unit will be called the “Pricing Rules Department.”
Members of the department will be respected, “middle-of-the-road” citizens who are not allied with activist consumer or industry groups. They will be appointed by Congress and approved by the President.
Businesses will be free to make their own marketing decisions, unless it is established that customers were disadvantaged by said freedom. The Pricing Rules Department will not be free to establish minimum or maximum prices, warranty requirements, minimum quality standards, or other similar conditions of commerce. Instead, the Pricing Rules Department’s rules will establish (1) full price disclosure, (2) prices that eliminate unanticipated penalties to consumers, (3) favorable prices that do not require consumers to buy other goods and services, (4) the same prices to all consumers for goods and services of identical quality.
In order to create a rule, the Department will need a petition executed by a substantial number of citizens. The petition will propose language for the rule and provide a brief explanation of supportive reasoning. If and to the extent that the petition is so authorized, the Department will be able to modify the rule’s proposed wording, with approval of the sponsor named in the petition. Wording modifications will only eliminate ambiguities, not change the intended effect of the proposed rule. Petitions will be submitted electronically via email.
Upon receipt of a qualified petition, the Trade Rules Department can either deny it on its own volition or open the proposed rule to a comment period. After soliciting and responding to comments, as the Federal Government does now, the Department can either approve the proposed rule or deny it for a stated cause. If the Department concludes that it favors a different version of the denied rule, it can so indicate in its statement of cause for denial.
Denial will be final, although sponsors are free to submit similar petitions without limits. Presumably, subsequent petitions for the same rule will be modified to address the stated causes for denial. If the Department decides that petitioners are abusing the process denials will become perfunctory. If Congress concludes that a denied proposal should be enacted, Congress can enact it as a law. Nothing in the proposed action (or elsewhere in Natural Governance) weakens the constitutional power of elected officials.
A proposed rule that is approved by the Department will become effective after a minimum 90-day wait period. If necessary, the period of time can be longer. During that time, either the House of Representatives or Senate can revoke the rule in a single bill passed for that exclusive purpose.
A rule should normally not be revoked as an amendment to another bill, although the powers of the Congress are established and limited only by the Constitution. Either the House or the Senate can revoke a rule on its own volition as a separate bill, but combining revocation with another bill will require passage of a law under all required procedures.
When considering rules, the Department will apply judgement and discretion. It will give weight to the size and competitive advantage of businesses, and the extent to which they receive subsidies or competitive protection from the government. Many rules should apply only to companies above a certain size, and not to smaller competitors.
Practices of airlines and telephone companies should be regulated more closely than small, independently owned retail shops. Airlines get substantial subsidies in the form of air traffic control and publicly owned airports, and telephone companies are, to some extent, limited in number.
Possible airline rule:
Each airline must publicly disclose the price at which it will sell (and has sold) any seat on any flight, and, by website, the number of seats reserved at all times. Airlines are free to set prices and change them, but “bundling” is prohibited. The price for any seat must be stated in currency and cannot vary because of other travel on that airline or another favored airline such as a “code-share partner.” Nor, can prices vary because of stays at favored hotels, use of car rentals, or any other basis. Prices may vary from seat to seat, from flight to flight, or even from time to time for the same seat on the same flight. Airlines cannot, for example, use “through fares” to charge passengers less for a two-leg flight than separate passengers on the two legs would pay. Nor, can airlines charge passengers that do not stay over a Saturday night more than passengers on the same flights that do not.
Possible cell phone rule:
Cell phone providers cannot charge a customer a different amount because of a rate plan based on the usage the customer stated. Providers may charge a base rate per month, plus a set charge per minute. Charges for minutes may vary depending on time of day or day of week, but providers may not base charges on usage-related calling plans. If a plan requires customers to provide estimated usage, the provider must still bill at the amount that would apply if the customer had provided the optimum estimated usage. The most prominent rate quote sheet must include all taxes and government charges, and must show the amount the customer will actually pay.
The government must proceed cautiously with establishing the Pricing Rules Department, because it has great potential for abuse. That is why Natural Governance places many obstacles to enactment of rules. It is better that the Department develops good rules than to risk passing bad rules. Competition must be restrained, but not excessively or without due diligence.
The entire field of business regulation cries for specific pricing rules, clearly written and easily understood. Pricing Rules will simplify the task of competition, by enabling beneficial competition without permitting destructive competition, by leveling the playing field, and by making compliance understandable both to businesses and consumers.
Natural Governance’s position on foreign wars is based on the adage Don’t Shoot the Messenger. In other words, people can, and should, step up and provide needed services, even if the need is flawed—destructive. The essence of the adage is this: Never disparage those who participate in such services as long as they perform competently and with integrity.
Two examples: (1) U.S. citizens are required to submit annual, lengthy, complex income tax forms, and that requirement created a need for taxpayer assistance. (2) The government elects to utilize private companies to provide subsidized housing, and that created a need for real estate developers, property managers, and other industry-related professionals.
The accountants and lawyers who assist taxpayers and those who take part in subsidized housing are providing necessary services. They should not be criticized (“shot”) just because the programs that generated the need for their services are fraught with deplorable consequences.
This same philosophy applies to deplorable wars. The Vietnam War (1954-1975) is a prime example. The war was a protracted conflict that pitted the communist government of North Vietnam and its allies in South Vietnam, known as the Viet Cong, against the government of South Vietnam and its principal ally, the United States. It was also part of a larger regional conflict (Indochina Wars) and a manifestation of the Cold War between the United States, the Soviet Union, and their respective allies.
The heart of the conflict was North Vietnam’s mission to unify the country under a single communist regime modeled after the Soviet Union and China. The South Vietnamese fought to preserve a Vietnam more closely aligned with the West.By 1961, large numbers of U.S. military advisors were deployed to help formulate South Vietnam’s strategy. By 1969, over 500,000 U.S. military personnel were stationed in the country.
Time passed. U.S. troops and equipment continued to pour into Vietnam. America’s commander, General William Westmorland, determined that U.S. forces, with their enormous and superior firepower, would be most effective fighting the enemy’s strongest units in the jungles and mountains, away from the heavily populated areas. Behind the American “shield” the South Vietnamese army and security forces could take on the Viet Cong and proceed with the job of reasserting government control in the countryside.
As the war escalated, and General Westmorland’s orders were implemented, he announced his attrition strategy—the U.S. would track progress by recording the number of enemy killed. But the “body-count” was notoriously inaccurate and exaggerated. Americans back home called it “pointless,” and questioned the military’s effectiveness. Then, when news of the infamous My Lai Massacre—a mass murder by U.S. soldiers of several hundred civilians in Quang Ngai—was released to the public, the military’s efforts and standards of conduct were further diluted.
By the late 60s, more and more Americans opposed the war on moral grounds. They believed that large numbers of civilians in both the North and South were the chief victims and the United States was in reality supporting a corrupt and oppressive dictatorship in Saigon. Campus protests were common. Youthful picketers ringed the White House chanting, “Hey, hey, LBJ, how many kids did you kill today?”
Many more Americans opposed the war because of the rapidly increasing number of American casualties. Still others believed that President Lyndon Johnson was ineffective—he obliged the military to fight “with one hand tied behind its back.”
Finally, during the early hours of April 30, 1975, South Vietnamese President Duong Van Minh delivered an unconditional surrender to the Communists.Vietnam emerged from the war as a potent military power within Southeast Asia. But agriculture, business, and industry were disrupted; large parts of the countryside were scarred by bombs and defoliation; landmines still exploded; cities and towns were heavily damaged. A 1975 mass exodus of people loyal to the South Vietnamese cause was followed by a 1978 wave of boat people—refugees fleeing the economic restructuring imposed by the communist regime.
Meanwhile, Americans, with its military demoralized and its civilian electorate deeply divided, began a process of coming to terms with defeat in what had been the country’s longest and most controversial war in history.
Certainly, America lost the war in Vietnam. Certainly, over 58,000 personnel were killed and thousands more maimed. Certainly, it was a futile war. But perhaps its cruelest aspect was America’s treatment of her returning troops. Unlike their veteran predecessors, who were respected and welcomed home as heroes, Vietnam veterans were portrayed as baby killers, psychos, drug addicts, and war mongers. They were commonly confronted at airports by protestors carrying signs with anti-war slogans. They were attacked, insulted, refused service in restaurants, and even sprayed with urine.
Famous anti-war activists such as Jane Fonda, who legitimately opposed the war, cruelly and tragically abused those who fought for their country. Ms. Fonda was accused ofvisiting POW’s, and accepting messages she promised to deliver to their families and U.S. military authorities. Instead, she handed them off to the prisoners’ captors—an unconscionable act that resulted in further prisoner abuse and torture. The war was wrong—tragic. But military personnel patriotically followed orders that originated with their commander in chief. They were “messengers,” doing their jobs. The public was wrong to “shoot” them.
Historians cannot document conclusively anti-war activists’ role in hastening U.S. exit from Vietnam. However, in retrospect, Americans can, and do, remember the unconscionable hostility toward their troops, which brings us to current day: Countless U.S. citizens believe that the United States had no business initiating the second Iraq invasion or engaging in the War in Afghanistan.
However, taking actions to oppose such wars does not insult or belittle military personnel. They did not make policy decisions. They are doing their jobs as loyal, courageous Americans, willing to risk their lives as directed by their commander in chief.
Natural Governance proposes that Americans should elect a president and other leaders who will commit to ending terrible and hopeless wars. Further, Americans should recognize that opposing wars is, actually, patriotic. The wars are the problem, not the troops.
From the very day our apelike ancestors crossed the hypothetical line and became what we call “human,” civilization has depended on each generation replicating itself. If a culture missed a generation and the next one did not make up for the omission, the culture died. Over the course of history, much of which is unwritten, countless splinter cultures expired without their stories told.
If civilization is to survive, generations must continue the cloning process via nurture and knowledge. In that one’s character is more important than one’s knowledge, nurture is more important than education. However, knowledge is indispensable. Thus, Natural Governance takes a position on education.
The Federal Government is the most efficient and effective revenue collecting machine ever. Its monies fund schools. Its power eclipses that of states. Thus, the Federal Government has far more power to dictate school policies than a simple analysis of laws and regulations indicate. A school board that questions federal policy cannot pursue a dispute without risking its federal funding.
That is not right. If the Federal Government wants to establish a certain standard for local schools, it should be required to pass a law to that effect. The public would then have an opportunity to comment on the proposed law and influence its modification, passage, or even failure. If the bureaucracy can surreptitiously enforce its policies through controlling the purse strings, democracy has been thwarted.
Natural Governance asserts that the Federal Government will collect revenues. Then, based on a formula, distribute them to the states. Compliance with federal regulations should not be a factor in revenue allocation. Faceless bureaucrats should not be allowed to dictate school policy, just because they control the money.
This does not mean that the Federal Government should abdicate its right to control education policy. Subject to the Constitution, it has that right and should apply it vigorously. But Natural Governance posits that the Federal Government should exercise its control openly and be subject to public oversight.
After all, revenue collected by the Federal Government from state residents belongs to state residents. If the Federal Government returns those revenues for education (or any other purposes) it is simply returning the money to its rightful owners. And in the case of education, it is advancing nurture, knowledge, and, ultimately, civilization.
As in other advanced countries, the United States government acts to improve people’s quality of life, as it should. One way is to provide access to a minimum level of health care. The problem is this is traditionally downloaded on employers.
Along with providing unemployment compensation, offering a minimum wage, and paying overtime, some employers (depending on the company’s size) are required to offer employee medical coverage. This is a poor public policy. Costs of improving quality of life are social costs that should be borne evenly by the entire public and not just a few employers.
Employers are America’s source of economic prosperity. They should not be saddled with unnecessary costs. ObamaCare (Patient Protection and Affordable Care Act (PPACA), or Affordable Care Act, for short) is an example. The PPACA was signed into law on March 23, 2010 by President Barak Obama and upheld by the Supreme Court on June 28, 2012. Its stated purpose was “to reform the health care industry by increasing the quality and affordability of health insurance, lower the uninsured rate by expanding public and private insurance coverage, and reduce the costs of healthcare for individuals and the government.”
It is documented that many employers maneuvered to legally avoid this health care obligation by reducing the number of employees or by forcing remaining employees to substitute part time employment for their rightful fulltime jobs.
Succinctly, requiring employers to bear social costs inevitably reduces employment and/or pay and benefit levels. Additional costs incurred to comply with government mandates generally result in higher prices, meaning that a subset of the public pays more than its rightful share of the forced costs.
Natural Governance proposes that the Tax Share Payment is a far better solution to health care. It is a means to improve quality of life without evoking negative side effects.
Natural Governance is a change. Its specific programs replace undesirable programs with programs that reject destructive actions and obtain beneficial results. But all changes start somewhere.
And YOU can help.