How to fix a broken America in four easy steps
“A great civilization is not defeated from without until it has destroyed itself from within.”
-Ariel Durant
I’m finding it increasingly difficult to scroll through most US news platforms without feeling thoroughly exhausted. Political divisions are deepening and the poison in the rhetoric is reaching toxic levels. Almost everyone, regardless of their political affiliation, is either angry or depressed. I can’t help but feel that America is poised on a dam that is about to burst. I’ve always had a great fondness for the American system as it once existed. I’ve built a business in the US and some of my dearest friends are American, which makes it heartbreaking to watch the current environment.
One wonders if America is a nation in decline. As famed investor Ray Dalio points out in his best-selling book, A Changing World Order, nations have experienced a cycle of rise and fall throughout history. The rise of a nation is characterized by technological innovation, good education, creativity and rising standards of living. But nations eventually mature. As people get used to the good times, they increasingly bet on continued prosperity and increasingly borrow to do so, eventually leading to a bubble. As wealth increases, the wealth gap widens. Eventually, the debt bubble bursts, leading to money and credit printing and increased internal conflict. Eventually, a sort of redistributive revolution takes place, which can be peaceful but is often violent.
The 2008 financial crisis was the turning point. The first really big bubble to burst, but certainly not the last. Inequality was already on the rise before the crisis, but has grown exponentially over the past decade. This wealth gap has helped fuel the current era of discontent.
How things play out from here is unclear, but if the story is true it won’t be pretty. I doubt there’s an easy solution to America’s woes, but I have four suggestions that offer an obvious starting point.
1. Take the money out of politics
In the 2010 case Citizens United v. Federal Election Commission, the court lifted the ceilings on “independent” spending by corporations, wealthy individuals, and unions. Limiting the amount of contributions to groups supporting candidates went through the roof. In the US, one percent of donors contribute 90 percent of the money candidates receive.
In the decade since its inception, Super PAC’s spending has skyrocketed after spending nearly $3 billion on federal elections. Additionally, political spending in the 2020 election totaled a staggering $14.4 billion, more than doubling the total cost of the record-breaking 2016 presidential election cycle. (By contrast, Canadian political parties raised just $30 million during the last federal election.) That’s an obscene amount of money to spend on an election and virtually ensures that wealthy and powerful groups can buy any politicians who they need to protect their interests.
To make matters worse, the source of much of these donations is now hidden behind anonymity, shell companies, and shadowy political groups. America is long overdue for an overhaul of its political disclosure laws, and overturning Citizens United’s ruling is probably the most urgent solution needed.
Adding to the problem of money in politics, there are approximately 12,000 lobbyists in DC representing mostly corporate and foreign interests. In 2021, total lobbying spending in the United States was $3.73 billion. Lobbyists ensure that legislation works in their favor, and there is ample evidence that the results are not always in the public’s best interest.
In 2020, the pharmaceutical and healthcare products industry spent the most on lobbying in the United States, totaling approximately $357.85 million. No wonder America’s healthcare system is one of the worst in the developed world. The US spends more on health care as a percentage of the economy – almost twice as much as the average OECD (Organization for Economic Co-operation and Development) country – yet has the lowest life expectancy of the 11 nations.
The United States spent $754 billion on national defense in fiscal 2021, which was 11 percent of federal spending, more than the next nine countries combined. And guess what? The defense industry spends about $120 million a year lobbying in Washington. No wonder the US is locked in perpetual wars.
The same is true for many other industry groups, including the fossil fuel industry. The five largest oil and gas companies alone spend around $200 million a year lobbying to monitor, delay or block binding climate policies. A severe throttling of the lobbying industry and a reversal of Citizens United would help direct funding to where it is really needed, as both phenomena widen the gap between rich and poor.
2. Eliminate the infinite election cycle
There is a tacit understanding in politics: say what you have to say to get elected, and then rule within the confines of the real world. Promises made do not always match their delivery. With presidential elections every four years and congressional elections every two years, politicians are in campaign mode 365 days a year. The 24-hour cable news cycle ensures the public is inundated with every moment of the campaign process, from the primaries to the autopsy on election night. How can anyone govern responsibly—and make difficult, informed decisions—while endlessly raising funds and running for election time and time again?
The United States does not have an official campaign season. For example, Ted Cruz announced his presidential candidacy 596 days before Election Day. A typical Canadian campaign now lasts about 11 weeks. In southern Mexico, general election campaigning begins 90 days before Election Day. The simple solution is to introduce laws mandating the length of electoral campaigns, as many countries are doing. As an added benefit, reducing campaign time would also go a long way in reducing the gargantuan amounts of money needed for the run.
3. A flat tax of 15 percent for everyone
In 2018, the year Trump’s Tax Cuts and Jobs Act (TCJA) went into effect, 91 of the top Fortune 500 companies paid no federal taxes. The list included corporate giants like Starbucks, Amazon, IBM and Netflix. Worse, 26 companies with combined earnings of $77 billion not only didn’t pay taxes, they received nearly $5 billion in rebates, resulting in an effective negative tax rate. This is by no means a new phenomenon. From 2008 to 2015, 100 major US companies avoided paying federal taxes for at least one year while their combined pre-tax income was $336 billion. How is that fair versus the average working stiff? He pays his taxes because he can’t afford the expensive tax lawyers and accountants who manage to find loopholes no matter what the rules say?
Enter the idea of a flat tax. Simply put, everyone pays a lump sum — say 15 or 20 percent — on all earnings earned. No deductions, credits, exemptions, rebates or other loopholes. It’s simple – when you earn, you pay. A level playing field for everyone and much less resentment towards the so-called elites.
4. Reform of the Federal Reserve
Fed policies over the past two decades have created the worst debt bubble in history, the worst inequality in the developed world and, more recently, punitively high inflation. Gone are the days of Paul Volker, when the Fed was truly independent of the government. Since Alan Greenspan’s tenure as chairman, the Fed has evolved into nothing more than a government-backed cartel protecting only Wall Street interests. They have been consistently wrong for the past 20 years, which would lead one to believe they are at best incompetent, or worse, knowingly complicit. I personally tend towards the latter.
How to solve the Fed problem is difficult to solve. There is a common misconception that the Fed is part of government. It is not. It is a group of bankers who have a legal monopoly to control money granted to them by the government. I would suggest nationalizing the Fed but am not sure if the government would be more competent or not make politically motivated monetary decisions. What is really needed is a monetary system that has some form of hard money discipline. Returning to a gold standard (or any other commodity-backed system) would prevent the Fed from creating the chaos we see today.
There are other culprits in the current system that deserve dishonorable mention, but space does not allow me to discuss them in detail. So I’ll be brief.
Americans would benefit if Section 230 of America’s unique Communications Decency Act were repealed, which effectively shields social media companies from lawsuits for being the purveyors of misinformation and disinformation, causing severe damage to the nation’s social fabric.
Finally, stricter gun laws are urgently needed. There is no plausible reason why weapons designed for the battlefield should be readily available to the public. I’m not sure how many mass shootings, particularly of school children, will be required for lawmakers to have the courage to address this.
So there you have it. A handful of solutions to blatant injustices and misconceptions. Fixing some if not all of these issues should be common sense. But don’t hold your breath as none of this will ever happen. Constitutional constraints make changing the electoral cycle difficult. More importantly, money is a powerful force in the US and the unfettered pursuit of the almighty dollar is deeply embedded in American culture.
Ironically, this belief system lives on even among the many who have been impoverished by it. Dogmatic worship of “free speech” and the “right to bear arms” are simplistic beliefs that stand in the way of common sense treatment of some of these ills. America may not be completely broken, but its current form of capitalism needs a serious overhaul. According to a recent poll, 40 percent of Americans believe civil war is at least remotely possible within the next 10 years. If that’s not a wake-up call, I don’t know what is.
/https://www.thespec.com/content/dam/thestar/columnist_logos/Giustra_Frank_anotherlogo_2021.jpg)