Sunday, January 08, 2012

Asking Some Right Questions


Note: special thanks to Shannon Skousgaard, Ph.D.; Professor Emerita, Associate Professor of George Mason University, and private consultant on ethics in business, for suggestions.
Part of the great divide in U.S. politics centers on economic matters and what are appropriate expectations of the people and of the government.

From Friday's post:
Critical thinking doesn't first seek the right answers; it seeks the right questions.  The right answers follow....
Current estimates of the national debt are in the $15 trillion-plus range; current estimates of the percent of people not paying federal income taxes is approaching 50%,  Clearly, something is wrong... if the goal is zero on both counts; clearly the answers being given to correcting the situation are not so clear.

The first question we should ask is whether the numbers are correct.  In the case of cumulative budget deficits [spending more than receiving], the number appears to be reasonably well agreed upon.  In the case of income tax avoidance [legal or not], the number may be misleading [image source].

While it is certainly correct that a large portion of those living in the U.S. do not pay income taxes... after filing and receiving refunds... everybody pays "payroll taxes" [why isn't it referred to as Social Security taxes? ... because it doesn't necessarily go to Social Security since Lyndon Johnson raided that piggy bank].  And everyone pays federal gasoline taxes and the myriad federal surcharge fees.  Rare is the person who escapes the grasping fingers of the U.S. government.  Of course, it is wholly reasonable to ask if anyone should avoid all federal taxes.

The argument to increase federal income tax rates on all or some taxpayers is somewhat of a red herring given that would have minimal impact on the revenue stream from which the government spends.  It is more of an emotional "share the pain" cry.  This is a case of providing an answer without asking the correct question which is: what is needed to run the federal government efficiently, effectively, and appropriately?

Notice that the question did not ask:

  • how can the government increase revenues?
  • who should pay more taxes?
  • which programs should be cut?
  • what government programs should be privatized?
... among others.

No, the question that has not been answered is: what is needed to run the federal government efficiently, effectively, and appropriately?  It's that last bit that gets ignored by most of the answers being offered... what is appropriate?

[image source] There is an obvious disconnect between the legislative process that determines budgets and spending and taxes and programs... and establishing an efficient, effective, and appropriate government.  Most of the answers regarding determining what the government should be doing and how it should be doing it boil down to: any way we want and any way we can.

This seems to be satisfying very few people and certainly does not answer the question of what is appropriate much less how the government can be run efficiently and effectively.

Perhaps the underlying cause of the inability to answer that seemingly simple question is that, as Americans, we no longer have an overriding vision of what America is and what it means to be an American.  Are we the land of the free and the home of the brave?  Are we a "melting pot" where everyone adds to the strength and vigor of the nation?  Or are we a "cultural mosaic"... a new Europe... living in the same large geography, but in separate enclaves with separate values and concepts of what America and its government should be? [image source]

Or are we a fragmented free-for-all where cultural values have no value, diversity is conflict, and where law has ceased to have the force of law and political views determine which laws will be enforced and how they will be interpreted?

If, as the Washington Post wrote, our Supreme Court, arbiter of the law of the land, is to be populated with judges who are swayed by their own personal experiences and feelings rather than critical evaluation based solely on the law, then those judges are bringing their own answers, before raising questions dictated by the law itself.
"Together with Justice Sonia Sotomayor, Elena Kagan's confirmation would represent a shift toward a younger, changing court, one that values experiences outside the courtroom and emphasizes personal interactions as much as deep knowledge of the law." The Washington Post [emphasis mine]
If you combine a contentious Congress that votes on, without reading, legislation changing the basic social and power structure of the country... with predisposed Supreme Court justices... and on top of that, a President who chooses which laws should be enforced and which should be ignored or when he will abide by the Constitution and when it is simply too inconvenient, then the framework within which the right questions can be asked is broken... and any answers regarding the efficiency, effectiveness, and appropriateness of the federal government become meaningless.

Instead, we get un-elected "czars", unmanageable laws, overbearing regulations, and massive special interest giveaways... all of which go unchallenged and unabated.

It is altogether likely that our federal government is an excellent reflection of who and what we are becoming as a nation and what has become of our culture... a reflection of ourselves that most people... when asked... do not like, but can't quite understand why.  The people and politicians have a lot of answers, but just not the right questions.

Indeed, if this is the case, it would seem the first question should be: "How can the constitutional and legal framework for the federal government be restored?"   Then the questions regarding efficiency, effectiveness, and appropriateness can be addressed.

Related post:
FRIDAY, JUNE 05, 2009Diversity Or Fragmentation
Update - From the U.S. House Of Representatives:

2012 IS HERE


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“The Divine Afflatus,” A Mencken Chrestomathy, chapter 25, p. 443 (1949)
... and one could add "not all human problems really are."
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Tracking Interest Rates

Tracking Interest Rates


SEARCH BLOG: FEDERAL RESERVE for full versions... or use the Blog Archive pulldown menu.

February 3, 2006
Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."

December 11, 2007 Somehow the Fed misses the obvious.
[Image from:]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

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Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)