Written by Frank Li
This post was triggered by a news story a few months ago: Obama Takes Aim at ‘Unpatriotic’ Corporate Inversions, although I had been planning an article on this subject for some time, as a part of my series “the America that can no longer think” (Politically, Diplomatically, and Militarily).
The foundation of a country is its economy. Without a strong economy, a country is irrelevant to the rest of the world, just as China was from 1949 to 1976. With it, you are significant, just as China has become today. With the strongest economy on earth, such as America from 1945 to 1999, you are powerful, with many problems, from race to democracy, being easily manageable.
How has America been doing with its economy throughout its entire history?
1. America: yesterday
From its start in 1776 to the late 1920s, America did very well, thanks to the free enterprise system (e.g. rugged individualism and unfettered capitalism)! Around 1890, America became the largest economy on earth, replacing China. America has remained # 1 since then.
The Great Depression did cause many problems in America, but prosperity eventually returned, primarily thanks to WWII! For more, read: Karl Marx and John Keynes.
After WWII, America thrived even more, because of its economic monopoly status! In other words, America’s chief competitors either destroyed themselves through the war (e.g. Germany and Japan) or continued/adopted a fundamentally flawed system called communism (e.g. the Soviet Union and China). As a result, as the last man standing, America invented and made virtually every new thing and named its price!
What about thought leadership? America produced several good economists after WWII, with Milton Friedman being the most outstanding!
2. America: today
America has been deeply in trouble since the Great Recession, at least, with its two biggest problems as follows:
Unemployment: Although the official unemployment rate has been coming down lately, the labor force participation rate is now the lowest since 1978! For more, read: Civil Rights Act: 50 Years Later.
Debt: Our national debt has sky-rocketed from $9 trillion in 2009 to more than $18 trillion today, rising rapidly!
Worse yet, there is no way out! Why? Because there has been no real diagnosis and hence no real solution, except for mine (Diagnosis for America: Cancer! and Solution for America: Term Limits and More!).
What about thought leadership? It’s no longer there in America! More bluntly, America has come down to two tricks:
Energy in general and “fracking” (or hydraulic fracturing) in specific.
Money printing, which is also known as Quantitative Easing.
Very dangerously, some American politicians and intellectual taboos have simply resorted to China bashing, blaming China, our chief economic competitor, for everything, from labor practice to currency manipulation. Three examples:
Americans must be vigilant to this kind of bad tradition and Nazi-style propaganda, in order to avoid a Nazi-style madness and peril!
3. Why such a huge difference between yesterday and today?
It’s American democracy, stupid! Specifically,
“Getting re-elected ad nauseam”! In addition to incompetency, our politicians, including the American Presidents, have done anything and everything to get re-elected, even if it means destroying America ultimately (e.g. tax, spend, and debt).
“Democracy leads to socialism, and socialism leads to communism”. Who said it? Karl Marx, more than 150 years ago!
Stupidity: A Sixth Similarity between Communism and Democracy.
Very worrisomely, some American politicians and intellectual taboos advocate a totally stupid proposition: national debt does not matter, because America is a sovereign country with a sovereign currency, which allows us to print money at will – any time, in any quantity!
How dumb America has become! Two points:
There are many sovereign countries with their own sovereign currencies. They all can print money at will.
What distinguishes the U.S. Dollar from the other currencies is that the U.S. Dollar has been the world’s major reserve currency since 1945! The continuance of this distinction depends on two factors: world trust and the lack of availability of an alternative major reserve currency. With China’s RMB quickly becoming a viable alternative, and with the way we lose world trust by massively printing money, the U.S. Dollar’s days as the major reserve currency are definitely numbered! How long will it last? 20 more years, at most! In contrast, the last major reserve currency, the British Pound, lasted for about 200 years.
4. Dumb and dumber
Aside from politics, what do these two top American politicians know? Do they really understand capitalism, the cornerstone of America, at all? Or for that matter, do they really care? Apparently, they care more about their personal interest than about America’s interest!
Specifically, what is Senator Durbin’s top personal interest? Getting re-elected again and again, as he just did in the recent election!
What was President Obama’s top personal interest prior to the 2014 elections? Obama’s Top Goal: For Dems To Win The House In 2014!
Everything else is secondary, including America’s long-term well-being!
For now, Walgreen is to stay (Walgreen CEO: Leaving U.S. wasn’t in best interested of shareholders), for which Senator Durbin and unions applauded, without realizing that we may be winning some battles here and there, but we are losing the war! In other words, unless America changes to become more business-friendly, Walgreen is not the first, nor will it be the last! Here are three examples:
Wonkbook: Burger King and Tim Hortons, with a side of tax reform.
How, then, can America win the war? How about listening to Ben Carson? Specifically, read: Ben Carson: Instead Of Demonizing Firms, We Should Be Fixing The Tax Code.
Unfortunately for America, our politicians keep addressing symptoms while ignoring the root cause (e.g. U.S. Senate Democrats propose exit tax for inverting companies). As a result, American companies keep leaving America. Here is a recent example: Deerfield drugmaker defies Democrats’ anti-inversion effort.
No capitalism, no prosperity!
Capitalism is about making money, not about charity or even patriotism per se. In today’s global economy, when country A has a lower tax rate than country B, business tends to move from country B to country A. Plain and simple!
Capitalism requires work! There is no substitution to work – More Americans need to work more, smarter and harder! For more, read: Civil Rights Act: 50 Years Later.
Capitalism is imperfect, requiring major adjustments from time to time. Here is an example: Bill George on rethinking capitalism – “The Harvard Business School professor and former Medtronic CEO explains why the market’s obsession with short-term performance ultimately hurts investors, companies, executives, and consumers.”
“The political system does not matter, as long as it supports capitalism” (“Saving America, Chinese Style”).
A government must support capitalism by creating a business-friendly environment. Unfortunately, the U.S. government has been increasingly anti-business. Why? Because democracy and capitalism have been on a collision course, and democracy is winning over capitalism day by day! For more, read: Pyramid Theory I.
Wake up, America!
Capitalism is not everything – Capitalism is the only thing! With it, we can afford many things, including democracy. Without it, we are finished!
I believe I have the most accurate diagnosis for America (Diagnosis for America: Cancer!), as well as the best solution (Solution for America: Term Limits and More!). For more, read my book: “The GOP Bible for 2016”!
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