Or a second or third date. But this isn’t a date, and I couldn’t resist. I came across a great quote from Elizabeth Warren, an attorney and Harvard Law School professor who is running for Senate on the heels of her role (as chair of the Congressional Oversight Committee) in the clean up and bailout of the American financial system following the economic crisis that began in 2008. Time magazine dubbed her in May of 2010 as one of the “New Sheriffs of Wall Street.”
She said: “There’s nobody in this country who got rich on his own. You built a factory out there? Good for you. But I want to be clear: you moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did.”
She continued: “Now look, you built a factory and it turned into something terrific, or a great idea? God bless. Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.”
Any way you look at it, Elizabeth Warren’s words make sense and are difficult to debate, from any perspective or party affiliation. Her quote is rational, and full of American pride, evoking sentiments of famous essays and speeches made by the likes of Thomas Paine, and more recently, John F. Kennedy.
I agree with her words and the meaning behind them. To disagree would be ridiculous, ignorant and just plain silly. Elizabeth Warrant is right; no matter how far “left” her platform leans.
But to truly evaluate the merit of Warren’s quote, one must understand why she made it in the first place. Political strife and disagreement is dominating our headlines as our nation drifts deeper into one of its most difficult economic recessions in its history. Our nation is divided on every issue imaginable, across party lines, and in order to motivate all branches of our government to act to help solve the economic problems, which pose the most immediate and salient threats, our president and most of our populace are forced into making unfathomable and deal-breaking concessions and compromises that challenge our moral fiber to its core and could have lasting negative effects for our children and all future generations of Americans that are, well, unacceptable.
An overwhelming majority of noise, on both sides of our economic debate, centers on raising taxes on the very wealthy (the top 1% of annual incomes in the US) as well as eliminating loopholes and increasing the net tax income from corporations. This debate is the impetus for Elizabeth Warren’s quote, and how the debate and subsequent tax revisions play out will shape the economic landscape of our nation for years to come.
While Warren’s words are 100% true, and should be taken to heart by all Americans, I urge people to recognize that just because something is true and meaningful, does not mean that there are not valid and important arguments regarding the spirit of said quote that must be considered as well. I define and discuss two “theories” below that may help explain some of the more complex hot-button issues in terms easier to understand.
Our government as a landlord theory – In any real estate project, such as an office building, an office or industrial park, a shopping mall or lifestyle center or even a residential community or apartment building, the property owner or landlord tries to maximize revenues by minimizing vacancies and bringing in as much rental revenue as possible. To do so, landlords employ a number of incentive-driven programs and policies in order to maximize profitability. These include: giving tenants free rent for a period of months and even years when signing long-term leases; lowering rents, providing visibility (through signage, preferred location and advertising efforts) and increasing allocated fit-out dollars to high-profile or anchor tenants, with the idea that these tenants will attract additional, credit-worthy tenants that would be willing and able to pay higher rents as long as those high-profile anchors remain in place; and adding state-of-the-art amenities to attract residents, employees and customers to the site.
Our government wears the hat of a landlord or property manager when trying to attract or maintain corporate headquarters, manufacturing plants and distribution centers on American soil. A lot of criticism has recently been raised by the “Tea Party” and the conservative right as a whole, pointing out that the U.S. is losing many of its companies and a large number of jobs due to management decisions to move companies, facilities and most importantly, JOBS, overseas. These decisions include actual physical relocation as well as outsourcing. The right argues that America’s corporate tax rates are among the highest in the world, and raising taxes on these corporations and their rich C-level employees and management would serve to de-incentivize them even more.
It is unfair to expect companies, whose management makes decisions solely based on the bottom-line and shareholder expectations, to act any differently than prospective apartment renters, retail stores or law firms do when looking for a new home, storefront or office space. All try to maximize benefits while minimizing their rent payments. Our government must act to incentivize corporations to remain on American soil, and also lure foreign companies to open plants, facilities and offices here as well. Existing jobs need to remain and new jobs must be created here, for our citizens, not shipped or outsourced overseas. Our government must do all it can to ensure companies want to do business here in America, maximizing job opportunities and revenues from taxes, both at the individual and corporate level. Incentives are one of the keys to finding a balance that is best for everyone.
Funds put away for a rainy day theory – Be it a coffee can, a cookie jar or just under a mattress, everyone is familiar with the idea of socking away money for a rainy day. That rainy day may play out as a loss of employment, an unforeseen accident, a death in the family, an illness or a natural disaster. Or a rainy day may take the form of something good that was simply unexpected, such as an unplanned second or third child, an educational or cultural opportunity too good to pass up but that costs a great deal more than expected, or a celebration (marriage, graduation, rite of passage, anniversary, second honeymoon, etc.)
It is clear that our government has failed to put any savings away for a rainy day. And for nearly four years, it has been pouring out there…everywhere. Our financial system is broken, and the world financial stability around us is crumbling as well. For perhaps the first time since the Great Depression, our citizens have very little faith in our government’s ability to manage our national finances – a sentiment echoed loudly by Moody’s unprecedented lowering of our nation’s credit rating.
Rich people such as Warren Buffett and many celebrities have publicly pleaded for our government to raise taxes on the rich, which selflessly includes themselves. That sentiment is good, and should be appreciated. But the larger, more pressing problem that actually exists in our nation’s capital right now is not HOW to bring more money into its coffers (it has an abundance of options there, beginning with its omniscient and unique power of printing more money) – our governments biggest challenge is the fact that it clearly has no clear plan of what to do with the money once it gets it. Our government has grown way too large and bulky in the past 60 years, and does not have the ability to be nimble and flexible at times of crisis, or when multiple threats or challenges emerge simultaneously. Moreover, the bi-partisan nature of our government has grown into such extremist caricatures of what two parties should actually represent, that it is highly unlikely that compromise can ever take place in a manner that will actually solve any problems without creating 3 more in their place.
But perhaps the largest challenge of our time is the fact that our nation has arrived at a very critical and unhealthy point it its development and maturation cycle. Our citizens, from the top down to the bottom, are unwilling to get our hands dirty and perform the often painstaking tasks of driving progress, rather than the much easier road we have slipped onto, the road of least resistance, where we coast off of the hard work, difficult decisions and life-risking actions taken by the generations that came before us. We all figure that the incredible technological developments of the past ten or twenty years are enough for us to sit back and watch the world around us as we become more and more physically detached from reality and what it really takes to make our world prosperous once again.
We live in a world where people would much rather criticize than actually lead from the front. It is so much easier to find fault in something, and then write or blog or squawk or tweet or argue or go on a reality show and demean it and everything we stand for than it is to come up with a better way, find some passionate people who agree in principle and then invest the 15-20 hour days required to make it happen, to effect positive change.
Social Security IS a Ponzi scheme. Not in theory, but in the way it actually has evolved, because of horrible decisions and mismanagement of the system by our leaders of today, yesterday and those before them. If we can’t find a way to bring back the confidence of our own citizens, who worked their whole lives and paid a tidy sum into the government kitty so that their retirement from living the American Dream would not become an American Nightmare, then all is lost. Washington is and has always been full of some of the best and brightest America has to offer, many of whom make more money annually than the average US citizen will earn in 10 or 20 years. These people knew that the average lifespan of Americans was rising, and would continue to rise steadily as medicine and technology and basic COMMON SENSE (about smoking and fatty foods, for example) improved. It is no excuse that people are living longer and getting sicker and we just don’t have the money to cover it. The truth is, we would all have plenty of money if the funds were invested and secured properly in the first place.
Bottom line, our government’s rainy day fund is empty, and the jar that housed it is broken beyond repair. Furthermore, the discipline necessary to implement the fund in the first place has eroded long ago, and every new “regime” that gets elected to office spends more time, energy and money UNDOING the efforts of those before them than actually solving the problems we face today. And those who disagree with how to solve today’s problems simply filibuster and create enormous barriers to all efforts made by our elected officials. The system is broken, and we all are paying the price, with our retirement funds, our pensions, our Medicare, our health care system, our financial system, our housing market, our ability to borrow money, the number of years we need to work in order to retire, and the value of our dollar when we travel or conduct business overseas.
And don’t even get me started on our system of unions, which in theory, again, are an incredible and indispensable innovation to American labor. But like our government itself, they have grown fat, inefficient and lazy over the years, and currently cause far more problems than they solve in today’s economy.
These are trying and difficult times for our government and the American people. Elizabeth Warren fired a salvo off the bow of The American Right. Her words should not be ignored. But they must be heeded with care, as there are mitigating factors to the spirit of her message. I urge everyone to educate themselves as best they can on the challenges facing our country. Though I do find merit in Orwell’s message that Ignorance is Bliss, we are all responsible for what comes next, be it through action, inaction or ambivalence.
I apologize for getting political, and for being so verbose. But if I am going to write, I might as well discuss important, difficult and polarizing topics every now and then.
Til next time,