stuck-on-stupid.us

Government gridlock. Corporate greed. Social injustice. What's happened to us?

“Welcome back my friends to the show that never ends…………Come on in the show’s about to start, guaranteed to blow your head apart.”

Reading the news the other day, I was reminded of these lyrics from the early 1970s recording by Emerson, Lake & Palmer. What prompted the recollection was an article about the latest GMI CEO Pay Survey 2011, one of the largest surveys of CEO compensation in North America. It reports the total annual and total realized compensation of CEOs, for fiscal year 2010, of the Standard & Poors 500 largest corporations in the United States, as well as those of the broader Russell 3000 index.

Well, the issue of health care costs is fresh in my mind, once again. No doubt because my wife and I have been hit with another exorbitant increase in our annual health insurance premium. That and the ongoing struggle in the courts and the media over the efficacy of Obamacare bring to mind several key variables that the proponents of free market capitalism — either through intention, oversight, or ignorance — conveniently overlook in their argument that the traditional free-market pricing model is the cure for our health care cost dilemma. Consider the following:

After the latest round of partisan theatrics in Washington over the current level of federal spending and the deficit issue, I was reminded of the observation by Sam Clemens (a.k.a., Mark Twain): “Suppose you were an idiot, and suppose you were a member of Congress. But I repeat myself.”

I presumed the childish bickering and finger pointing, the inflexibility on any kind of compromise, the pandering to special-interest constituents was simply a stubborn insistence on maintaining ideological purity. But after pouring over the plethora of analyses and insights by independent minds much more astute than my own, I’m beginning to wonder if the real problem is simply a genuine lack of competence on the part of those responsible for finding an effective solution to our dilemma.

I suppose if you say something long enough and loud enough, people eventually will come to believe it’s true, even despite pesky little things — like facts — which suggest otherwise. So it’s no surprise that the Republicans, in the latest round of debates over the economy and the size of the federal deficit, continue to push their prescription of cutting taxes and slashing government spending as the one true cure for all that ails us.

But what is the evidence that U.S. corporate taxes are unduly onerous, that they stifle job growth, and that tax cuts are the best path to reviving the U.S. economy?

So, champions of the conservative right keep insisting that the onerous corporate income tax is the big, bad bogeyman thwarting the creation of much needed new jobs in our current economy. The cure, they proclaim, is simple: Lower the corporate tax rate and jobs will grow. Perhaps. But, a quick review of the historical data suggests the “lower corporate taxes equals more jobs” proposition simply does not equate. There is no direct causal link between the two. Which calls to mind the popular aphorism, generally attributed to Daniel Patrick Moynihan, that while everyone is entitled to their own opinions, they are not entitled to their own facts.

You might think so, given all the misinformation and “sky-is-falling” hysteria surrounding it. But one thing seems indisputable: government is stimulating economic growth and helping people in need. And while not without flaws and certainly not sustainable over the long term — after all, the federal government depends on private wages to generate income taxes to fund its programs —
the current stimulus package seems both a reasonable and necessary stop-gap measure until the private sector steps up investment in job creation and starts paying wages sufficient to encourage consumer spending without inordinate reliance on consumer debt. This is key to a sustainable recovery. And make no mistake about it, historical data from the Bureau of Economic Analysis (GDP and Other Major NIPA Series, 1929 – 2009) suggest our economy is driven principally by consumer spending.

If you’re old like me, you probably recall this narrative lead for each weekly episode of the “Outer Limits”, the early 1960s black-and-white, science-fiction television series that explored the nature of man and his relation with the universe. It popped into my mind while listening to the Republican victors of the recent midterm elections assure us all would be well with the world now that they have regained control. And while substantive change is long past due, their rigid party ideology posing as recuperative elixir begs several intuitive questions deserving of thoughtful consideration.

In following the differing perspectives animating the current national debate over healthcare reform, I’m struck by the oversight of what surely seems an obvious structural defect crippling our healthcare system: Our contemporary free-market business model is not — nor, in its present form, will it ever be — conducive to providing affordable, quality healthcare to the consumer. If the central axiom of free-market capitalism is on point — that the best allocation of resources is achieved through consumers having free choice, and producers responding accordingly to meet aggregate and individual consumer demand — then our current industry model, with its lack of transparency and readily available substitutes, clearly misses the mark.