It Can't Possibly Come Down to a Bush-Clinton Fight, Can It?

The dance of the seven veils has begun. No, I'm not talking about Salome's performance for Herod Antipas, I'm referring to the drawn-out unveiling of candidacies for next year's US presidential elections. On the red side, we have confirmed candidacy announcements from Ted Cruz, Rand Paul and Marco Rubio; and euphemistic 'exploratory committee' announcements from Jeb Bush and neophyte former doctor Ben Carson. Jeb Bush is the frontrunner in the early polls. On the blue side, we have...well, Hillary Clinton. If you're anything like me, and take an interest in US politics, you're probably already groaning, "No, no, no, it can't possibly be coming down to a Bush-Clinton fight, can it? Hasn't this country of more than 300 million people got two decent presidential candidates who don't belong to one or other of these two families?"

I think it is unseemly in a democracy to be ruled by political dynasties. It's unseemly because it demonstrates democracy is not working. It is the sort of thing that happens in countries that are democratic in name only, countries like the Democratic People's Republic of Korea. The frequency with which dynasties have arisen, even in democracies are that are worthy of the name, can only be down to two factors - either the name recognition is, in itself, sufficient reason to attract voters to the candidate, or there is some form of favouritism or nepotism built into the political system. If it just comes down to name recognition, that suggests the voters are too shallow to consider real political issues. If it is favouritism, that means the voters don't really get a choice between the best candidates. Either way, it indicates democracy is not working.

Now, it may surprise you to learn I'm not a doctrinaire democrat. I believe, like Winston Churchill, that democracy is the least bad system for selecting our political leaders, and like Thomas Jefferson, I believe democracy only works effectively when it is tightly constrained. The unconstrained will of the majority is nothing but mob rule and the tendency towards this must be tempered with strong constitutional checks and balanced with strong protection for individual rights. One of the important constitutional checks in most Western nations is regular, fair and openly contested elections. The growth of political dynasties suggests that the 'fair' and 'open' criteria are not being met.

The United States desperately needs fresh political blood. That great nation is, I believe, on a path towards mediocrity. It is the most heavily indebted nation in absolute terms and has the biggest government expenditure deficit. Even in relative terms it is one of the most heavily indebted nations in the world. Unlike similarly indebted countries like Greece, the United States gets away with it because its dollar is the world's reserve currency, which means the value of its currency is inflated by demand for it as a unit of exchange. This suppresses the effect of all that debt on other economic indicators like interest rates and inflation and that means the US Government can continue to fund those deficits by borrowing and printing (electronically) more and more money to pay its debts. But sooner or later reality will catch up with America and that comparison with Greece will start to look a whole lot more real. At that point, or hopefully before it gets to that stage, Americans should hope they have better political leaders than the current crop.

And I really don't think they will be wanting a president named Bush or Clinton.

The True Cost of Election Bribes

We have an election campaign underway in New Zealand. You would need to be a blind and deaf hermit to miss all the bullshit the media have been spouting about it. But in between the wall-to-wall coverage of the petty name-calling and downright lies, we are beginning to see some policy announcements from the parties and almost every one of them is trying to bribe voters with promises of more government spending. Even the so-called centre-right National Party thinks it can bribe first home buyers into voting for it (and Not PC gives a very good account of why that is a silly idea in this blog post). 

Unfortunately, many voters are too gullible to question where the money for these bribes comes from. Every dollar has to come from some hardworking taxpayer's pocket. In fact, every dollar of government spending means that around $1.25 has to come from a taxpayer because there is a transaction cost in collecting and spending the money. It costs to run the tax department and it costs to run all the government agencies that spend the loot the government extorts from taxpayers - and despite the ease of the task, they're none too efficient at spending the money because they have no incentive to be efficient (unlike businesses who have to compete with other businesses to be ever more efficient at producing the products and services they produce). 

But, in reality, it's even worse than that. The true cost of the government spending one dollar is much higher because the taxpayer's $1.25 probably would have been invested in a business (either directly by buying shares or indirectly via a bank) and that $1.25 of capital might have enabled the business to produce an additional $20 worth of products or services. That $20 worth of revenue to the company would have been spent on, say, $10 in wages, $5 of supplies and $3 in rent. And the workers that earned the wages would have spent their additional $10 on food at the supermarket or put it towards an Air New Zealand flight to see grandma, and the supplier would have spent some of his $5 on wages, and the landlord would have spent some of his $3 on paying a contractor to get the roof fixed, and so on and so forth.

Now you start to see the true cost of that one dollar the government is promising to spend on you. Talk about cutting off your nose to spite your face.

A New Form of Proportional Representation

New Zealand, like many countries, has been living beyond its means in recent years. Our government is borrowing $300m per week to make ends meet and we are headed for an economic oblivion similar to that currently being experienced by the "PIGS" countries - Portugal, Ireland, Greece and Spain (a very appropriate acronym).

The problem is our form of democracy and in particular our Mixed Member Proportional (MMP) electoral system that gives every minor political grievance party an inordinate influence in our House of Representatives.

Benjamin Franklin said democracy was "two wolves and a lamb voting on what to have for lunch" and this is perhaps truer of 21st Century Western democracy than it was of 18th Century America. In our democracy a diminishing minority of the populace are held to ransom through the tax system by an increasing, unproductive majority.

We need to introduce fiscal responsibility to our system of government and I believe the only way to do this is to give greater political power to those who pay the bills.

I would like to see a revision to our electoral system, call it a new form of proportional representation if you like, where you get to vote in proportion to the taxes you pay. Under this system, taxation could become voluntary but if you wanted to influence the political system you would have to pay taxes to, in effect, buy votes. Each $1000 you paid in taxes would buy you one electoral vote. The average of your tax contribution over the three years prior to the election would be taken to avoid stacking the votes in the last year of an electoral cycle. If you paid no taxes, you would get no votes. I see no reason why corporations shouldn't be given votes in proportion to the taxes they pay as well.

This system would solve our nation's fiscal problems in short order and would ensure policies that promoted the economic well-being of the country.

This Country is Poked

So, we now have an emissions trading scheme that will cost the country over $100B. We have residual ACC claims of $24B. We have leaky homes liability that ratepayers will have to pick up of tens of billions of dollars. We have rapidly rising health and welfare costs. And we have a Government that was elected on a platform of economic growth whose flagship project is a cycleway. Does anyone else see the pattern here? This country is facing huge increases in Government spending in years to come to support all these profligate schemes and that spending will not be supported by increased growth and earnings.

I am already planning my early retirement to some warm and peaceful tax haven. I intend to make damned sure I'm not around to foot the bill for all this foolishness.