The welfare state, taxation, and deindustrialization

This will be filled in at a future time.

The start of a draft:

As I write this, in mid-2010, topic A in America includes the following:
the economy, its gloomy future prospects, the lack of jobs,
now and in the foreseeable future.
Proposed answers to these issues/questions from the “elite”
are, as usual, the need for growth.
As to how to obtain that, the “elite” are as usual infatuated with immigration,
Tom Friedman in particular asserting that you dumb WASPs (goyishe kopfs)
need more smart immigrants to boss you around and get the economy moving again.
Tact (if that is possible for me) requires that I avoid giving the specific examples of past immigrants he gives.
How America was so successful in nineteenth and pre-PC twentieth century
is sort of ignored.

All of this seems to avoid doing what seems to me to be the obvious:
Noting that at one time American had jobs a plenty,
and then asking the obvious question: “What went wrong?”
I think the reason the elite quite evidently avoids asking that question
is because they are afraid of what the answer would be,
and what it says about what we should do next.

So let’s try and examine the question of what caused that job loss
without the “preconditions” that seem so popular
in the feminist/Zionist foreign policy negotiating arenas.

Here is, I believe, a fact:
America and Europe pride themselves on being “enlightened”,
which means, among other things,
having a well-developed and well-funded welfare state.
In America, that really got rolling with Social Security in the 1930s,
took a quantum leap forward with Lyndon Johnson’s “Great Society” in the 1960s, which introduced Medicare and Medicaid at a basic level,
and has only expanded ever since.

Now, we all can appreciate the benefits of this program,
but we need to also be aware of its expense.
We also need to be aware that
our economic competitors in Asia and Latin America
have not chosen to fund any equivalent drag on their economies.

Currently, practically all of the funds necessary to support
the welfare expenses of the government
are raised from taxing production,
either taxing the workers directly through income or payroll taxes
or by taxing the companies.
Thus the expense of the welfare state falls upon U.S. workers,
but not those in our competitor countries.

As Patrick Buchanan wrote
(on pages 220-21 of his 2007 Day of Reckoning):
In the auto sector,
the total U.S. trade deficit since 1991 exceeds $1.5T (trillion).
The U.S. share of the U.S. market,
98 percent fifty years ago, has fallen below 50 percent and is sinking.

Mexico and Britain now export to the United States
three times what they import from us in trucks, autos, and parts.
Germany exports to us four times as much as we export to her in autos.
With Korea and Japan the ration of sales to us,
over U.S. truck, auto, and parts sales to them,
is 16 to 1 and 20 to 1.

Are these folks that much more efficient?
Are American autoworkers simply unable to compete with
Japanese, Germans, Koreans, Mexicans, Brits?

The problem is not the American autoworker.
The problem is the American politician.
Taxes are factored into the price of goods.
Half the price of a U.S.-made car goes for taxes—
the Social Security and Medicare taxes,
state and federal income taxes withheld from
the wages of workers and salaries of executives—
and to pay the company’s corporate tax, property taxes
on offices, factories, and dealerships, and state sales taxes.

As Ronald Reagan used to say, companies don’t pay taxes,
they collect them.

When we buy U.S.-made cars, we contribute to
Social Security, Medicare, homeland security, and national defense.
We pay for roads, schools, teachers, cops, parks.
When foreigners buy U.S.-made cars,
they help underwrite the cost of American government.
But when we buy foreign cars,
we pay taxes to the governments of the nations
where those cars were produced.
And when we buy goods made in China,
we subsidize the regime in Beijing.

So what is the solution?
Well, clearly one solution is
to scale back the welfare state
to make us more competitive with China, et al.,
but of course that solution will bring
too many anguished screams to be practical at this time
(but if things get bad enough in the future, don’t bet against that alternative).
But even without scaling back
all those Social Security, Medicare, and Medicaid benefits,
there is another way to level the domestic/foreign producer playing field.
Note that right now, so far as I know
all the Social Security, Medicare and Medicaid programs
are paid by wage-earners, i.e., producers,
either directly by taxes levied on their income
or indirectly by payroll-dependent taxes on their employers.

But there is an alternative:
Taxing consumers, nor producers.
Take the tax load off wage-earners’ backs and put it on consumers.
Thus all Social Security and Medicare taxes
would be eliminated from wage-earners,
including the company-funded part.
The expectation would be
that companies would then keep take-home pay constant
by lowering the gross salaries paid to their employees.
The further expectation would be that
they would take the lowering of their costs caused by that,
and the ending of the company-funded part of the payroll tax system,
and lower the prices they charge to their consumers,
thus making them more competitive in the international marketplace.

From the government’s point of view,
the revenue stream eliminated by the cut in payroll taxes
would be replaced by a national sales tax,
which of course would apply equally
whether a product had been made in the U.S. or abroad.
Thus imports would lose the cost advantage they now have
due to the lower social-service taxes paid by
countries in Latin America and Asia.

This would seem to eliminate some, indeed a considerable part of, but not all
the cost advantage those countries now hold.

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