-Caveat Lector- from: http://www.cafrman.com/main.htm Click Here: <A HREF="http://www.cafrman.com/main.htm">CAFRMan</A> ----- Conclusion - Section VIII Are the Rich Getting Richer? The Wealth Gap and Communism The Other Deficit Interest Rates Political Rhetoric Extensive Refund Plan Are the Rich Really Getting Richer? It has been reported that company executives at major companies brought home average compensation packages of $10.6 million in 1998. That was an increase of 36% over 1997. Did you get a 36% pay raise in 1998? No you probably didn't. Worker pay averaged a paltry $29,267 in 1998, only 2.7% more than in 1997. If the workers' pay had increased at the same rate as executive pay over the decade, the current hourly rate would be $22.08 an hour instead of $5.15. The Wall Street crowd and many economists want you to believe that if wages increase, that's bad; but if company executives pay increases astronomically in comparison to wages, that's not bad. Returning the surpluses to the people will cause such an increase in jobs that companies will have to pay higher wages in order to get and keep employees. Maybe then they will not be able to give themselves a 36% pay increase each year by keeping employee wages down. The threat of companies closing their U.S. operations and moving overseas, encouraging illegal alien m igration to the U.S. and not enforcing trade agreements, all have discouraged employees from receiving adequate wage increases commensurate with the supposedly booming economy of the '90s. The booming economy has benefited the top 10%, not the rest of us. (See the beginning of Section III - Economic Impact Analysis) The Wealth Gap and Communism Another Wall Street Journal article was entitled, "Wealth Gap Grows: Why Does It Matter?" It stated in summary: "…Yet, the gap in wealth-which includes investments in addition to paychecks-between the richest Americans and everyone else has continued to widen…" "…Only 43.3% of all households owned any stock in 1997… Of those, many portfolios were relatively small. Nearly 90% of all shares were held by the wealthiest 10% of households. That top 10% held 73.2% of the country's net worth, up from 68.2% in 1983." (Emphasis added.) The article stated "households", not governments. Now add to the 73.2% the surpluses held by governments and the amount owned and controlled by the wealthiest 10% will probably exceed 90% or more of the wealth of America. Remember, communism is a concept or system of society in which the major resources and means of production are owned by the community (governments and a few individuals who control governments) rather than by individuals. In theory, such societies provide for equal sharing of all work, according to ability, and all benefits, according to need. Some conceptions of communist societies assume that, ultimately, coercive government would be unnecessary and therefore that such a society would be without rulers. Until the ultimate stages are reached, however, communism involves the abolition of private property by a revolutionary movement; responsibility for meeting public needs is then vested in the state. The special elite decide on how the wealth will be distributed among the people. All life styles, standard of living, actions, thoughts, and even life itself is decided by the state because the state owns and controls everything. Is it possible that communism could be created within a capitalistic society without a revolution? Have we already reached that point? Returning surpluses to the people will reverse the trend of wealth transfers and increase the percent owned and controlled by 90% of the people. This increase in people-control could greatly assist in restoring the "Republic" form of government outlined by the founders. Although this not a cure, it is a step in the right direction. The Other Deficit In an August 1999 issue of Barron's entitled "The Other Deficit" describes another problem in our economy that is set to cause many problems. "Forget about the budget - worry about the current-account gap." The current-account is "…the broadest measure of the U.S. external accounts, including trade and financial transfers. It shows Americas balance with the rest of the world; it also indicates by how much U.S. consumption exceeds production, and the amount that domestic savings fall short of financing investments." The current-account gap will reach $300 billion in 1999. What happens if the gap continues? Well, the normal approach is for the Federal Reserve to raise interest rates to induce foreign investments in the U.S. because of the low U.S. savings rate. When interest rates increase, 90% of Americans loose. Returning surpluses to the people will supply the necessary capital to help overcome the $300 billion current-account balance deficit. This is especially true if the refund plan outlined below is initiated because the savings rate would increase. Interest Rates Just think of how far credit card interest rates would fall if millions of Americans started paying off or paying down their credit card balances. This by itself would provide a tremendous savings to all credit card users and savings on mortgage loans, home equity loans, auto loans, etc. The current usury rates would no longer exist. Increases in interest rates hurt 90% of Americans' standard of living and increase the profits of financial institutions that lend money. Whenever inflation is a potential problem, interest rates are raised in order to discourage increases in economic activity. But raising interest rates also helps lenders and the top 10% but not the 90% of Americans. Did you know that the Federal Reserve System is not a Federal agency. The President does appoint the Chairman of the Federal Reserve System, which implies to the public that the Federal Reserve System is a government agency. Actually, the Federal Reserve System is a privately-owned banking monopoly owned by member banks. So when the Federal Reserve raises interest rates affecting 90% of Americans are they doing this to assist Americans or their member banks? Under the plan proposed below, paying-off or paying-down debt will provide credit card companies, banks and financial institutions a tremendous increase in cash which they will have to invest somewhere, a large portion which will probably go into U.S. treasuries. The debt reduction plan will accomplish the following, all of which are good news for the 90% of Americans, even businesses: * Cause interest rates to decline, especially usury credit card rates. * Provide investments in the U.S. to offset the current-account gap providing less dependency on foreigners to affect our economy and future. * Lower the interest rates on the national debt because of large purchases of treasuries and lowering the taxes required to make payments on the national debt. * Lowering the interest rates on individuals will also lower rates on businesses, which will reduce the inflation effect on prices. * The lowering of taxes on businesses will also reduce inflationary pressures because profit margins would increase without the necessity for price increases. Political Rhetoric No need for politicians to argue over tax increases or reductions. The tax reductions are automatic in the trickle-up approach, with a proper budget process. Social Security/Medicare, 44.3 million Americans without health insurance, etc., etc. are moot issues if the surpluses are returned to the people. In fact politicians and bureaucrats should be smiling because governments will receive far more revenue than they are currently receiving. The only problem is how to prevent the politicians from spending the increased revenue before it gets to the people. Under our assumption of $7,000 in surpluses per capita, State and local taxes, excluding Federal taxes, could be reduced approximately $1,488 per capita after the first year. Extensive Refund Plan It is commonly preached by Wall Street and the news media that wage increases for 90% of Americans is bad because it can create inflation and erode the purchasing power of the earnings of Americans. "Inflations results when actual economic pressures and anticipation of future developments cause the demand for goods and services to exceed the supply available at existing prices or when available output is restricted by faltering productivity and marketplace constraints. When the upward trend of prices is gradual and irregular, averaging only a few percentage points each year, such creeping inflation is not considered a serious threat to economic and social progress. It may even stimulate economic activity. The illusion of personal income growth beyond actual productivity may encourage consumption; housing investment may increase in anticipation of future price appreciation; business investment in plants and equipment may accelerate as prices rise more rapidly than costs; and person, business, and government borrowers realize that loans will be repaid with money that has potentially less purchasing power." ("Inflation and Deflation," Microsoft® Encarta® Encyclopedia.) There is a basic principal prevalent among economists that when demand for goods and services increases substantially and supply cannot keep up with demand price increases are certain to follow causing inflation. But they agree that this can be a temporary situation because when profit margins reach a certain level competition will increase thereby providing the supply necessary to meet the increased demand and prices will stabilize or be lowered, especially when supply starts to exceed demand. Granted in the short run if surpluses are returned to the people, prices would increase because of increased demand. But with the free market having so much more investment capital available competition and supply will increase in those areas where the profit margins have increased substantially, and prices would begin the stabilize as supply meets demand. We believe the "wolf" cry and "the sky is falling" about inflation would be short lived. Dr. Donald Ratajczak, Director of the Economic Forecasting Center and Professo r of Economics at Georgia State University is a nationally and world known economist. His credentials cover a couple of pages of type. In his June 24, 1999 article in the Atlanta Constitution he diluted some of the myths on wage increases and inflation. He said "...While some linkage exists (pertaining to the Phililips curve), wage changes can be absorbed without price changes if productivity is strong. Also, economic growth will lead to more employment, but more people may also be pulled into the work force. Furthermore, better tools in the hands of existing workers rather than more workers may account for most of the gains in output. In other words, any relationship between inflation and economic growth is tenuous at best." Conclusion: Wage increases do not mean automatic inflation pressures. [Note: Some economists are required to be spin doctors. On the above statements they will probably have a field day attacking every word. You will hear such terms as "Elasticity of Demand and Supply", "Price Elasticity of Demand", "Marginal Utility", "Diminishing Marginal Returns:, etc., etc., etc. You will be very impressed with their credentials and their presentation on how stupid we are about these matters.] Reread the beginning of Section III - Economic Impact Analysis to fully understand what history has shown versus what spin doctors will probably state. The Gross Domestic Product is a measure of the market value of all goods and services produced in the U.S., regardless of asset ownership. The 2nd quarter of 1999 GDP was $8.893 trillion [U.S. Department of Commerce, Bureau of Economic Analysis (BEA)] If the surpluses average $7,000 per capita for State and local governments, that will mean a $3.82 trillion increase in GDP or a 42.43% increase in economic activity the first year after the surpluses are returned. In addition, an October 1999 article in the Wall Street Journal stated that 44.3 million Americans do not have health insurance. Senator Bill Bradley proposed a $65 billion plan to provide affordable health coverage. At $6 per billion (15% tax bracket), this $65 billion will cost every taxpaying American in the 15% tax bracket $390 or $1,560 for a family of 4. That's quite a bite for 90% of Americans. Why don't we give refunds as outlined in this site and suggest that all of those that do not have minimum health insurance to use part or all of the refund for health insurance. If they don't then that is their problem. Why should 84% of Americans pay for the health insurance costs of 16% of Americans, when a lot of the 16% have elected not to have health insurance. This is just more socialism. They say communism is only one step away from socialism. In this country we have been following the historical society cycle: Republic - Democracy - Socialism - Communism or Dictatorship- Revolution and the cycle starts over again. To counteract the effect of demand exceeding supply and igniting inflation, which might occur in a national-wide or State-wide surplus refund program (State, counties, cities, and school districts), we propose consideration of special refund provisions or similar approach be part of any large refund program. As stated above a massive refund could disrupt the economy in the short run causing inflation pressures and shortages in the job market. To provide an orderly national refund plan that will benefit most Americans and still reduce inflation pressures and employee shortages, and help the problems mentioned above, we recommend the following be considered: 1. The refunds would be provided in 6 installments over an 18 month period. 2. All recipients/families would have to demonstrate before receiving any installment that the preceding refund was used as follows: * A certain percentage of the refunded amount would be required to pay-off or pay-down debts, preferably starting with the debt with the highest interest charges, which probably would be credit card debt. There would be no exemptions or special provisions for the elite classes (top 10%). The percentage figure could be something similar to the requirements in obtaining a mortgage for the purchase of a home. The refund would have to be applied until a certain level in relation to income of an individual or family was obtained. * A certain percentage of the remainder of the refunded amount would be required to be deposited in a savings-type account (a refund IRA) and could not be used during a 36 month period following the last refund installment. These funds also would not be eligible to be used as collateral of any kind for establishing new or adding to existing debt. * A certain percentage or the remainder of the refunded amount would be considered discretionary and could be used for any purpose. 2. Penalties would be imposed on non-compliance with the above rules. Of course, there are other approaches and this is just one, but any approach that returns the surpluses to the people and out of the hands of governments is mandatory. Get the people's earnings back into the hands of the people. Can you think of any other item that could do more in our society or provide as many benefits as returning surpluses to the people?" When we asked one person this question, he responded, "Yes - declare Washington, D.C. a foreign country with its occupants having no immigration rights." To beat the bureaucracy, make your problem their problem. (PRINCIPLE OF DISPLACED HASSLE.) ----- Aloha, He'Ping, Om, Shalom, Salaam. 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