Episode 2: Foreign Help

Being a good citizen to the world is one of the aspects of America that makes us special.  Whether it be military aid or just cold hard cash, we are there for the world.  Our government is very generous, with our money by the way, to a tune of over $40billion a year.  I understand and believe in helping the less fortunate, but only when I can afford to.  It is hard to justify our generosity when we are trillions of dollars in debt.  I also do not believe that throwing money at a problem is a solution, which is exactly how our government likes to do things. 

 I believe in the “give a man a fish or teach a man to fish” adage.  The best way for Americans to accomplish this is by investing.  Not only do you care more when you got a little stake in the game, you are doing the recipient a better service. 

  Let’s do a little thought experiment for a moment.  Billy brings home $5,000 a month after taxes.  After bills and other expenses, he has about $1,000.  He could put that money away for a rainy day or college fund for his kids.  Instead, he starts thinking about the poor.  It is a noble thought.  So, he donates $2,000 to charity.  But wait, he only had $1,000 left after all his own bills and expenses.  How does he do this?  He takes out a cash advance on a credit card, which he ends up paying an obscene amount of interest.  

As noble as that sounds, does it make much sense?  No, it doesn’t.  That is pretty much what our government is doing.  They have given zero thought to our kids and their future.  Now I know that $40billion is just a drop in the bucket when compared to the $26trillion debt.  

Yet, a few drops make a cup, and a few cups adds up, and so on and so on. 

 Here is my alternative to helping the needy of the world.  We become partners with them.  We do so, not by sending our factories over, but by helping them utilize their own resources and helping their economy.  Now instead of a burden on us, we have developed a new trading partner.  

The stronger we make our allies, the stronger we become.  This is not just a philosophy to be used abroad either; we should be doing this here at home as well.  This is not a novel idea either; China is already doing this in Africa.

 As we create good working partners in the world, we need to sever ties with the bad ones.  Right now, it is popular to both criticize and defend China.  I will wait for history to determine the extent China had on the Covid19 outbreak.  For now, I want to discuss their unfair work practices.  

First and foremost, I want to make it clear that is not a disparagement of the Chinese people.  They are a strong, hardworking people.  It is their government we need to keep in check.  

It is hard to be critical of a country that owns much of our debt, but I will try anyway.  The use of sweatshops in China as well as other countries we do business with is not only unfair but also immoral.  If we continue to trade with them, we are in fact condoning sweatshops. 

Some economists will claim that sweatshops are vital in a country’s early economic development.  They will state that England’s and America’s economic rise was the result of our use of sweatshops.  While that may be true, does that make it right?   No, and neither did slavery justify the wealth it created.  The ends do not always justify the means. 

Let’s go ahead and do another thought experiment.  Lisa has a racehorse and wants to bring it to the track.  The horse is a beautiful three-year-old chestnut named Yankee Doodle.  Lisa is excited because her neighbor Ric also has a horse he plans on racing at the track, also a chestnut, named 5 Stars.  Lisa is very competitive and cannot wait to see how Yankee Doodle will compete against 5 Stars, but when she gets to the track, she finds that her horse is going to have added restrictions.  

While Ric can use a 50-pound jockey, Lisa’s jockey must weigh at least 300 pounds.  It does not stop there either.  Yankee Doodle must also pull a loaded down cart during the race.  

After Lisa still agrees to race her horse, she is then informed that her horse must stay in the outside lane that has been watered down and muddy. 

 Needless to say, Yankee Doodle ran hard, but was no match for 5 Star.  Feeling dejected, Lisa decided that in order for her horse to have a chance, she needs to partner with Ric and move Yankee Doodle into his stable.  Ric, of course. says yes; Yankee Doodle is a tremendous horse after all, but he wants 50% ownership.  Lisa begrudgingly accepts because she knows Yankee Doodle is a great horse and deserves a shot. 

As ridiculous as this scenario is, that is the world we live in.  If there is an advantage of communism over capitalism it is this: while we let anyone with the cash have ownership in America, we must become partners with the Chinese government in order to have some ownership in China. 

 For decades we have sold our great country to the highest bidder.  We have also regulated our factories right out of our country.  I am not suggesting we deregulate to an extent that we sacrifice safety for profit.  I am saying that we should take a hard look at the hoops we force American businesses to jump through.  

American Made used to be the standard, and it still can be if our government got out of the way.  If there is a bright spot in this Covid mess it is this, we have a great opportunity to increase manufacturing here at home.  With the global supply chain in disarray, America is poised to becoming a world leader in manufacturing again. 

The caveat is taxes, specifically corporate taxes.  By now we can all agree that I have an extremely limited knowledge of economies of scale and even less of a grasp of logical thought needed in running a lemonade stand.  

So, I am pretty much on par with the majority of politicians.  I think it would make sense to have a corporate tax rate of 20%.  I would rather 20% of many companies over 30% of a few companies.  

Not only would the government collect more tax revenue, the workforce will be larger, which in turn provides not only more tax revenue, but more income to purchase goods and services.  

The more money individuals have, the less of a burden they are to the government.  In theory, that would give more money to schools and roads.  But theory and reality are two different things.

             That’s all for this week folks.  Let me know what I got wrong. 

 Remember Jimmy V’s 3 things and have a great week.