Mobil Political Ad: A platform in search of a candidate (Mar, 1988)

Huh, this sounds exactly like the platform of a certain political party, no?

A platform in search of a candidate

Many a political pundit has noted that people generally vote their pocketbooks. They tend to elect the candidates they believe capable of steering the nation toward better times—more jobs, a higher standard of living, and the achievement of both personal aspirations and national goals.

Now, in the midst of the presidential campaign, we’re listing some points that are often overlooked in all the speechmaking, but bear directly on America’s economic health—a platform in search of a candidate, so to speak. In a nonpartisan spirit, and with profound respect, we urge that the next President:

• Make it his top priority to bring the budget deficit under control. The deficit poses a clear and present danger to every living American, and to future generations who will have to pay today’s staggering debt. The budget deficit is inexorably linked to the trade deficit. The latter offers clear evidence that America is simply using more goods and services than it produces, importing the difference, and borrowing to pay the bill.

Much of the borrowed money comes from abroad. This requires high real-interest rates in the U.S. to keep attracting foreign funds. As a result, foreign companies often can raise capital in their own countries at cheaper rates than their U.S. counterparts, and use the money for the new plant and equipment that translates into greater productivity. So American industry is placed at a competitive disadvantage in world markets, and fewer jobs for Americans are created.

High U.S. interest rates also mean high mortgage rates, making it more difficult for Americans to afford the homes they want, with enough left over for other necessities such as the education of their children and adequate medical care.

A prime way to narrow the deficit is to curb government spending. Between 1974 and 1987, government outlays rose from 19 percent of GNP to almost 23 percent. A cap on government spending as a percentage of GNP should be enacted to roll back this gradual rise, or at the very least keep it from climbing more.

• Raise levies on consumption—the money people spend—rather than from taxes on money earned, if the need for new revenues proves absolutely inescapable. Such a tax could be written to ease the burden on those least able to pay. Furthermore, it wouldn’t penalize American business, which is precisely what higher income taxes do. A consumption tax would also tap into the vast underground economy, and make taxpayers out of those who now escape the income tax.

• Encourage increased productivity in the private sector. American productivity—output per hour—lagged badly in the 1970s and earlier in this decade. This country is still playing catch-up. In the final analysis, increased productivity is the key to a higher standard of living, and to achieving balance in the nation’s trade statistics.

One way to boost productivity is through more research by the private sector. (Japan spends only slightly more of its GNP for R&D than does the U.S., but, unlike Japan, much of America’s R&D spending reflects its commitment to a strong defense.) The existing tax credit for R&D is scheduled to expire at the end of 1988. It should be extended. We also favor the current proposal to permit the allocation of at least 67 percent of a U.S. company’s research expenses to domestic income, for purposes of the foreign tax credit.

• Take a zero-based look at all existing regulations, including environmental regulation. Some regulation is necessary, but it should also be cost-effective. In the ’60s, regulatory zeal cost the nation millions of dollars that could have gone into plant and equipment, but didn’t. Industry simply can’t afford needless expense that brings minimal benefits, because such outlays act as a brake on productivity and make it more difficult to compete internationally. An Economic Impact Statement should be required before any regulations are enacted. Such a statement should include an examination of international competitiveness.

• Shun protectionism. Nothing would stifle the economy—and turn “better times” into a mockery—faster than trade barriers and global economic warfare. There must be recognition of the fact that America’s economy is part of a vast, interdependent global system. At the same time, we should insist on fair trade—reciprocity—among all trading partners. The current GATT negotiations offer the best vehicle for meeting these goals.

Unfortunately, when a candidate mentions the word economics, eyes sometimes glaze over and a fearful epidemic of yawns may erupt. But “better times is an acceptable euphemism—and the platform we suggest will surely help bring them about.

Mobil

8 comments
  1. John Savard says: August 23, 20116:35 pm

    It’s precisely because people vote their pocketbooks that this kind of platform gets little support.

    Bringing the budget deficit under control? More taxes – less services.
    Taxes on consumption instead of production? A flat tax where everyone pays at the same rate, instead of a progressive tax paid mostly by the rich in higher brackets.
    Shun protectionism? That ensures that if exports lag, the government can’t stimulate the economy, because then the country would be driven into debt as more people with more money in their pockets buy imported goods that don’t correspond to exports that were sold.

    That being said, politicians have been following many of those ideas of late.

  2. Charlie says: August 24, 20117:18 am

    A consumption tax is a tax on the poor. Poor people spend 100% of their income by necessity. Rich people accumulate money. Thus, the poor would actually pay a higher tax rate. So what you are advocating for is a regressive tax rate instead of a progressive tax rate.

    You would think these people who got so rich would want to you know, maybe help out the rest of the country that helped them get there.

  3. Toronto says: August 24, 20118:54 am

    John: As Warren Buffet pointed out a week or two ago, the rich don’t pay the same rate at all, never mind a truly “progressive” tax. Not in the US or Canada at any rate.

  4. Nomen Nescio says: August 24, 20112:39 pm

    “the [national budget] deficit poses a clear and present danger”…

    no it doesn’t. it didn’t then and it doesn’t now. we’ve had nearly two centuries of all but continuous budget deficits with no ill effects, except that serious attempts to reduce these deficits tend to be followed by recessions or depressions with monotonous predictability. ask a chartalist as to why.

    the national economy does not work like a household budget. taxes do not constitute “income” for the government; the government needs neither tax nor borrow in order to have money. taxes are paid in U.S. dollars, after all, which had to come from the government before they could be paid in taxes — and the national debt is also denominated in that very same currency. government spending comes first, taxes and debt only follow after.

    that’s the thing about having a fiat currency, it literally is created at the will of government; it’s in the definition of “fiat currency”. this means there are some rather important differences between national debt and deficits, and any private-scale budgets one might compare those things to. individual households, or corporations even, can’t create the currency they get paid in and issue their own debt in. comparisons that overlook this fact might make for good populist agitprop, but they’re still wrong.

  5. Neil Russell says: August 24, 201110:26 pm

    The consumption tax as proposed as HR 25 better known as the FairTax completely untaxes the lower wage earners in this country.
    By removing the embedded tax in all goods and services and instituting a sales tax at the retail level, people in the lower end of the economic scale will actually be better off since the withholding in their paychecks will go away.
    More importantly it will eliminate the interface everyone has to have with the government every year since taxes will be paid when things are purchased.

  6. Anton says: August 25, 20116:53 am

    Such ads have often been productive for just the lobbies that sponsor them. The job-less, fixed low income, low to medium wage earners and small business owners merely benefit in one of just a few ways: Such ads provide revenue to magazines we all love to read, hard copy or internet.

  7. Nomen Nescio says: August 25, 20117:25 am

    mr. Russell, at #5, probably has not considered just how many people live from paycheck to paycheck or what it means to spend nearly everything one earns (or more!) as soon as one earns it. for reference, this is the case for a very large number of people in the USA at least, the class known as the “working poor”.

    taxation is necessary; it’s one of several essential controls on the economy, and on society at large, by stabilizing (ideally) income inequalities to narrow the gap between rich and poor as well as by helping to give money its value. but making all taxation be sales taxes puts a disproportionately higher burden on those whose income mostly ends up immediately spent, which is to say, the poor. this would be a regressive tax, which would drastically increase the gap between rich and poor, and so exacerbate social injustices dramatically. it would be anything but “fair”, which may be precisely why its proponents label it so. getting to keep more of one’s paycheck is only useful if prices remain the same, which they could not begin to if all taxation were to be levied on retail prices.

    just why it would be important to eliminate one point of contact between the people and the government that is of, by, and for them, quite escapes me as well.

  8. Toronto says: August 25, 201110:08 am

    Hear, hear, Nomen.

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