Chapter 3-Economic System

by David Michael Beachwood
Small Town even here THEY LIVE
Sometimes greed could have a subtle beginning, without one even thinking about it somehow it appears. Some insight might be garnered though looking at Small Town USA. Let us say this town has a population of 5000 people mostly employed by the area’s small family farmers of one sort or another. One day, a mining company announced that it planned a mining operation south of the town. Soon after, a developer came to town to announce plans to build a subdivision just north of town. The mayor announced that the town might have to make some improvements, in order to support the subdivision and the mining company. He said that he would most likely have to raise taxes on the existing citizens in the town to make the necessary improvements. Now he thought to himself, growth is good, right, I have been taught this all of my life, and it has to be the right thing to do. Besides, if there are additional homes, there will be additional taxes coming into the town to pay for future growth so that we can always grow. Therefore, he encouraged city council to change the zoning on the farmland, where the subdivision and mine were being planned. Some citizens were not too happy about these zoning changes, because the land involved was some of the best farmland in the county. However, there were other farms in the area, so they agreed. They then found out that the old mud roads leading to the proposed subdivision and mine would need to be upgraded to a paved highway code. In addition, the water treatment plant needed enlarging. The highway also needed a newer and larger sewer system, which would also have to be paid for. It happened that most of the city council members were business owners as well. They agreed with the Mayor that, from their point of view, growth is good. So on behalf of the citizens most of them tentatively agreed to raise taxes to make these improvements. However, the local real estate dealer who was selling the farmland to the subdivision developer had to meet with one last reluctant city council member to remind her how growth is good for the community. This council member was thinking that the bulk of citizens that were paying for the improvements were getting the short end of the stick. She claimed that the farmland that the real estate developer had purchased was now being sold for several times what it was worth, yet the real restate developer would only be paying a small contribution toward the improvements. She claimed that he, the real estate broker, was also doing the same. She also said that the business owners, who were just a minority of the citizens in the town, would stand to gain far more from this growth than the rest of the citizens. She stressed that, politically, the taxes from the additional homes would give the mayor and council more power, and this was another reason why they, the mayor and the council, favored the improvement taxes. This power would be in terms of control over more people and over more money. The realtor argued that growth meant employment opportunities for the sons and daughters of the town’s citizens. Their children might work at the new mine and live in the new subdivision. This seemed to make sense, so the councilwoman reluctantly agreed to approve the request. The roads were widened and paved, the water treatment plant enlarged, and the sewer lines extended out of town to both locations. This was all done at great cost to the citizens, far greater than almost anyone had imagined, because most of the workers for the improvements came from outside the community. Then when the mine opened, a good part of its work force was brought in from outside the county. The company stated that it needed skilled workers, but what it really wanted was to reduce wages. The excessive abuse of H-1B visas workers and illegal workers over the last thirty years had already lowered wages below a living wage scale. Most of the local people with the skills would not work for such reduced wages, but the imported H-1B workers and illegal labor could. The companies position, on the surface, seemed to be validated as it could not find many local workers, because of this the company asked the federal government for and was granted work visas for a number of employees. [1] Now the mining company had already talked the city officials into giving them a tax break for the next 25 years and it was too late to stop this. Some of the new mine workers were able to purchase homes in the new subdivision, but high loan payments, high property taxes and low wages caused a few to lose their home to the bank. To make matters worse, some of the lots sat vacant not collecting a house tax for the city. Those workers that did purchase a house had little money to pay for other things so they tended to use the local social aid programs. The cities social aid services became stressed, too many people asking for help and not enough resources. While the real estate agent, the developer, and the businesses of the town did better because of the growth, the majority of the citizens lost. They lost in terms of higher taxes, jobs for their families and in terms of quality of life due to the loss of farmland, reduced social programs, reduced resources, and a more stressful environment due to the additional congestion brought about by the growth.

While this scenario might be playing out across America every day, I do not mean to suggest that every business owner is one of them, our enemy. On the contrary small businesses provide very valuable services in our community and they deserve to make profits. My complaint is that when a business prospers by manipulating others into paying their share of the expense, then this becomes excessive greed on their part. In my view economic systems such as these ultimately end up looking something like the following: See Figure 1

Unfettered Capitalism based on The Population Growth Scheme

Figure 1
Is this where our current form of capitalism is taking us, and could it even be worse than this?

Why unfettered growth is not all it’s cracked up to be.
If we use a little common sense and think about this issue we can understand who really benefits from the current “Growth Policies” of our country. To do this we need to break growth down to its basic level. Let us say that a family has one child and now learns that they are about to have twins. While you might feel blessed for having more children, your next thought, if you’re a responsible person, would be to figure out how you are going to pay for this blessing. From the wealthy individual’s point of view, this, of course, is not an issue. However, let us say you are a member of a much larger group in our society, that of the lower wage earner. You work at a fast food restaurant as a counter worker. Your wife is already working a part time job at one of the larger discount chains. This growth in your family means you need to; one, find a better job; two, work a second job; or three, win the lottery. If we view growth as a responsible person views it we are much more cautious and we would prefer to plan ahead for how we are going to pay for it. It is also wise to understand how it will impact our lives and those that follow. Will the existing child have to do with less? Will all the children be able to find work when they grow up, if they do not have a college education? Will they have to go on some form of welfare? Will welfare even be available in the future? These are just some of their concerns. In this example the family secured a second job in order to make ends meet. But the growth here, for this family, was not the great economic benefit that the growth promoters want us to think it is. They, the entire family, had to work harder and sacrifice more to accommodate it.

The current growth policies, it seems, are not really designed to benefit the common man, they are designed to benefit the wealthier individual in our nation. While wealthier people are supposed to pay higher taxes, these taxes are not substantial enough to pay for the increased strain; they created, on our social programs. The strain they bring they ignored due to their desire for the growth in cheap labor that their businesses use. Existing social programs such as Schools, hospitals, penal institutions, police, waste disposal, water treatment, roads and on and on all require additional taxpayer support to accommodate the larger populations. Unfortunately the social programs end up trying to use the same limited funds to handle more people. The wealthier people exploiting this loop hole tend to be the large and medium size business owners who are looking for lots of cheap labor. While there are several methods a business employs to improve profits, they have keyed heavily on lowering the wage of their workers. Gross Domestic Product has gone up in the favor of these wealthier people. The Gross Domestic Pay of the average worker has gone down, because benefits have been reduced or eliminated and social costs have risen. Because the nation’s Growth Policies add millions of poorer workers to our country, there is a need for our social programs to grow. Where is the money to pay for it? While far too many businesses are busy skimming the wages from their workers they are not looking at the damage they are doing to our country’s economic stability. The new low paid workers are not in a position to pay enough taxes to make the system work and the businesses are not offering to make up the difference.

Think about this, if the trend for cheap labor continues, the bulk of workers in the United States will become peons, no disrespect intended, because the wage level in the United States will fall to that of Mexico. Businesses here will have to sell their products to a nation of poor people. I think this will mean some downsizing for all businesses; this is something that you business owners should think about.

I don’t believe I have ever seen a beautiful poor city, I think that you have to agree, money helps make life better. In order for wealthier people to enjoy living here, in this country, they need to think about what they are creating. What they are going to witness as they travel within this country? Will it be as unsafe as some places in South America?[2] Will it be as poor as Mexico? Or will our citizens become illegal immigrants trying to get into some other country? Growth! Should we think about stepping on the brakes, at least a little bit?

If we created 2 million jobs a year in the US how does it help if 2 million illegal people a year enter the US? [3] I’m not saying these are the figures, but I am saying that when our government gives the jobs reports, we should be subtracting those jobs lost to illegal workers to get a better picture of the growth scheme. We should also be aware that many of the jobs are in the building sector, if building stops, those people that are here illegally will help add to our possible third world condition. Basically, when viewed this way the growth system is a kind of chain letter scheme, where the people already entrenched at the top are the recipients of the bulk of the rewards. Of course these people will do all that they can to keep this system going. Their scheme works better on Cheap Labor. Growth is not an answer, at least when it promotes excessive populations. If Growth is the answer, why then do so many corporations downsize?[4] More employees on payroll certainly must be better?

Yet our leaders want growth. They say they do not want urban sprawl, but rather that we should live in high-rise buildings. This is a good way to pack in a cheap labor force. Funny thing however, urban sprawl is truly growth of the most lucrative form. It generates the need for roads, water lines, telephone facilities, electric facilities, sewer lines, and real estate sales. While some up-front costs are absorbed by the interested parties, a major portion of the cost is placed on taxpayers. Since there are numerous projects, these projects combine to create a great expense to middle class America. Working-class citizens are told that they have to contribute taxes to “the cause.” Increasingly, “the cause” makes a much smaller number of citizens richer and provides fewer benefits to the majority. Apartments and condominiums are less lucrative for the lucky few who benefit from growth, but none-the-less still windfalls. Apartments and condominiums seem like a good solution for the landlords and developers, but are a poor solution for the average citizen. Even if the middle class could expand and continue to afford “Growth”, we still need to ask ourselves the following question; what do you do when there is no more space to grow? After you run the grow scenario through to the end, you can see far more problems than you started with. These problems will not make the lucky few proud of themselves. Yet I do not wish to demonize these people, because most of them haven’t taken the time to think about the consequences, and besides, they have always been thought of as doing a noble job, at least by most of us. Unless we all wake up to what is really happening right in front of us, we are leaving a terrible legacy to our children and our grandchildren. We are leaving them to deal with issues such as social security, health care, clean water, clean air, nuclear waste, overpopulation, and energy resources to name a few. Growth, by the way is causing these problems. Growth is only a short-term economic answer, which currently favors some citizens in this country at the expense of the balance of the population over the long run. We should look to an economic solution which benefits the whole country and the majority of its citizens. Let’s find a solution which limits the impact on our country or tries to improve it. Managing our country’s resources more wisely is one way to do this. Parks, farmland, clean water and open spaces are what our grandchildren would really like, not parking lots, superhighways, rows of buildings, and infinite apartments or condominiums. They do not want a dwindling land resource, nor do they want to witness the growth in lines of the unemployed. Imagine the dismay of finding out that you were one of the humans being created for a cheap source of labor.

Recent news of global warming or pollution may convince all of us that we need to change.[5] If this news is substantiated through further evidence, we will have more cause for concern. These potential problems are so alarming that we may now be faced with an ultimatum which could be, ‘Give up on this kind of growth or the entire planet will suffer the consequences.’ No, growth as we know it is not the answer. One thing for sure is that the forces for growth will certainly want to argue that global warming is not real, as it would kill their scheme in a hurry. This will bite into their bank accounts and take away the easy money. Of course advocates of the environment will certainly want to enhance global warming effects. This might certainly increase the value of any conservationist- type holdings they may have. Each side has their own reasons to push these issues. We should realize that there is another side, not only to this issue but many other issues. This side is that of the common citizens of the United States of America. This side, in my opinion, overrides all. Not because the common citizen is any better but because what secures their future also secures a brighter future for our country and our future generations.

The Economy is improving
When ever I hear our national leaders say our economy is improving I cringe, mostly because this is true. But like many truths, you have to think about whose truth it is. For corporate America the economy is improving, but for the middle class American it is not. For example, there have been many news reports of companies planning layoffs to slash costs.[6] There have also been reports of companies making agreements with the trades unions to reduce the company’s health care costs. These cost reductions run into the billions and this is a direct loss to the middle class laborer. Most of us can recall the numerous headline news stories, which deal with downsizing, plant closings, health care benefits being reduced, or pension plans reduced or terminated.[7] We are also aware of the fact that while most of these companies are lowering labor cost for their general employees, the wages for the executives have been going up and up. This is why the economy is improving. At least it is improving for these folks. The Democrats and Republicans, during their tours in office, have each reported that the economy has improved, so I guess we are in for more of the same. Many of us continue to deny that these two parties, in the end, serve their benefactors. Now I ask you, how much did you send in, or better yet, if you where downsized, how much did you contribute to these groups? Under the campaign finance system that these two parties have in place, it should be getting more and more obvious to us that the system isn’t working for us. To our disappearing living-wage earners who cannot compete with business groups who are better able to contribute to this corrupt system, it should be getting even more obvious. Middle class wage earners continue to see their wages eroded and more and more of them fall off into the living wage sector. In turn the living wage earners see their wages eroded and more and more fall off into the minimum wage earner sector. Meanwhile, executive wages are up and where did that money come from? Next time you hear that the economy is improving you will know; it’s true although it may not be a truth for you.

The demise of the common citizen has been occurring for some time now. It is kind of like a story that your Science teacher may have told you about back in Grade School. Remember the one about slowly boiling a living frog? The frog doesn’t realize it is boiling until it is too late. The process has been slow, but none the less it is happening to more and more of us. It doesn’t seem like it is life threatening, but then the frog thought so too. I believe we should take steps now to correct the problems, because coming out of these problems will take some time to achieve. The longer we delay, the harder it will be to recover. The delay would also lengthen the pain and suffering involved.

It seems our politicians only have two weapons in their arsenal when in comes to solving problems. One, raise taxes and two, grow the economy. They are both inferior solutions. Of course, these are the easiest ideas to come up with. I child could do this. It seems most of them are not in politics to work, but only to fatten their bank accounts. There are other ways to address our problems, they are not as easy and will not be popular with the current elites in charge. However, in the end, a greater amount of people would be better served with the results, and our founders, I believe, would approve.

Back to Basics Capitalism
Consider a system based more on the ideas that our founding fathers had in mind. While we cannot read their minds, from what I have read and heard about them I believe they favored a different kind of Capitalism. This system I think would look something like the following: See Figure 2

Capitalism with Moral Restrictions
This model allows for a greater number of individuals to be elite and reduces the number of people living at or below the living wage. It encourages the American Dream instead of destroying it. Our goals should be to try to add as many elite citizens as we can, and at the same time reduce the number of poor citizens.

Figure 2
This model, in my view, is based on concepts our founders encouraged. It is something we should work toward and improve upon if possible.


Strangely, this chart looks like the Washington Monument and appropriately so, because I think George Washington and the other founders would have wished for as many citizens as possible to share in the wealth of our nation. This model would require efforts from all sectors of society. It would require a new understanding of the impact of overpopulation on our standard of living. Somehow, most people think that adding more population will make our standard of living better. The more the merrier, while this is a nice concept to work toward, we should not work toward it blindly. The evidence of overpopulation’s detrimental effect on society needs to be explained before we continue making our conditions worse without most of us understanding how.[8] If after most of us understand where overpopulation is leading us, and we agree that we are okay with living under such conditions; then we should proceed, but not before we understand the impact. My hope is that we would come down on the side which plans on a better life for future generations.

We are born naked, wet, and hungry get slapped on our bottom, and then things get worse. Author Unknown

Of course this is just a joke and things do not have to get worse. Remember, we are supposed to be the smartest creatures on the planet, right? If we start using some common sense, most all of our problems can be answered. Many of our problems come from those that want to live off our hard work, but not just live a pleasant standard of living; they want to live like kings and queens. This means someone has to suffer. The schemes developed to ensnare us are there for all to see, if we just wear the glasses of the skeptic. If we would just choose not to vote for the candidate they pick. If we would just choose not to sell out our family or our neighbors, we would help ourselves in the end. This is because in doing so we save ourselves in two ways; first, by restoring our moral convictions; and second, by restoring our self respect. Instead of implementing growth projects, let’s work on renewal projects. Without special interest lobbyists to prevent them we could start projects which will benefit the masses. For example mass transit systems are long overdue. Alternate energy systems have not been given proper attention; we need to make sure they are addressed with the support they deserve.

Access to our Market
Our nation, as a market place, has value. Those who want to sell their goods for their own profit should be paying a fee to have access. Of course, we should pay a fee if we want to sell our goods in foreign markets. The purchasing power of our market place needs to be considered as a national resource. On a small scale this compares to a small business located on a rural corner, verses a small business located at a major shopping mall. The small businessman at the shopping mall would expect to pay more for rent on his store than the rural businessman would; this is because he is paying for location. There are many more customers with money to purchase his products so he expects to make a good profit. The free trade agreements seem to ignore that our market has value. These agreements appear to give our market value away free, without the forethought that this is going to deplete our economic resources. This national resource is being drained to other parts of the world. Since wealthy business owners helped to create these agreements, I would guess they don’t really care, because they are making a bundle selling cheap foreign merchandise. These businessmen are using our national resource, which belongs to us all, to make their selves wealthy. In the process, the middle class of America is suffering, but more importantly America is suffering.

Illegal Immigration is part of the Globalization agenda
Illegal immigration is often referred to as simply ‘migration’ by some globalization representatives in an attempt to turn the nature of the issue into a benign discussion. Each South American country has two main reasons for wanting to have mass migration. Both reasons have to do with money because by decreasing their populations, they improve their economies. First of all, by reducing demand on their social structures at home they improve their economy. Second, many of their citizens who work in the United States send money back home to their families which further bolster their economies. Some rough estimated figures say that 3 billion dollars leaves our country for El Salvador and 5 billion dollars leaves for Mexico each year.[9] I am not sure as to the extent of the other country’s take, but it all hurts our middle class United States citizens. This money is leaving the United States and thus is not here to be spent in our economy. One might call it an economic rape, except our leaders seem to have given their consent. Globalization groups such as the Council on Foreign Relations and the many lobbyist groups have helped create the conditions which make this possible. Lobbying however is the cornerstone of how campaigns are financed. Lobbying allows for the best government money can buy. Put another way, it allows for our government to be bought.