November 7, 2010

Fiscal Sanity?

Dear Editor of Time Magazine,

Fareed Zakaria's article, "Restoring the American Dream" (Time, Nov. 1, 2010), revealed that "American" S&P 500 corporations generate nearly half (46%) of their profits outside of the U.S., which explains why I put the term "American" in quotation marks. He says than 80% of Coca-cola's employees are in foreign countries. Why should these U.S. corporations continue to receive the full privileges and benefits afforded by our government of the people without having to give back more? Aside from massive corporate subsidies, their off shore operations depend on U.S. foreign consulate services and benefit immensely from the U.S. military that ensures access to and stability of foreign markets.

With that in mind, consider Zakaria's advice entitled "Fiscal sanity." Zakaria has explained the structural reality that corporate profit generation has left the US along with significant tax revenues. Yet, just when Americans need social safety nets, Zakaria recommends cutting "entitlement programs", a loaded term these days*. Just when we need skilled state and local civil servants to help the ballooning population of Americans who are struggling, Zakaria recommends doing away with state pensions that attract capable people to government jobs that pay lower salaries than the private sector.

That's not a "sane" fiscal policy. It's group-think that will likely lead us further away from the American Dream. A sane policy would condition the privileges and benefits of U.S. corporate charters on supporting America; if a corporation wants to call itself "American," then it needs to support America. A sane fiscal policy must also address runaway military spending. One might ask, "Where will all of those tax-payer supported soldiers now stationed in foreign lands find work if we draw down some of the 600 foreign military bases? For starters, shift some of them, along with their federal funding, to work at home. As civil servants, they can help our communities maintain a glimmer of hope in the American Dream during these hard times while spending their income locally rather than abroad.

* Aside: Part of the "American Dream" includes feeling a sense of national and civic pride. This pride factors into the choice of many people who choose to work in state and local government despite the lower pay relative to the private sector. The choice to work in government also factors in stability summed up by the thought that, "I won't get rich, but at least I won't be destitute in my old age." Finally, the notion that government workers only soak up tax revenues is simplistic. The private sector, for instance, has little incentive to protect the environment as the Gulf disaster attests. I was in a recent meeting in which private sector participants said, "We will gladly do our part, but the government has to set up and administer a system that makes it easy for us." That takes tax-payer support, which supports the common good AND enables the private sector to thrive. Despite his broad knowledge, Mr. Zakaria appears to have some critical knowledge gaps that lead to recommendations that are more likely to do more damage than good to our society.


First published on Challenge the Establishment Blog.


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