Bottoms Up for HealthCare Reform
By: Rene Velez Mar. 31st, 2010
Can anyone really explain the economics of healthcare reform? As it stands now only a few people in the entire country have any substantive grasp of the implications in the economic impact of healthcare reform. To make matters worse is that’s these people, if they are in fact talking, can not be heard on top of the noise of the media and pundits. Where is the old fashioned journalism that explains this stuff to the simple folk?
A Basic Premise
Supposedly there are 30 million or so Americans that stand to benefit in some way or another from healthcare reform. That’s a lot of Americans that do not have health insurance today that will be eligible. And of course part of the Miranda rights of healthcare reform are that; “if you can not afford healthcare, the government will provide some assistance so that you get healthcare coverage”. In order for our government to do this they are in effect, or at least partly taxing the wealthy to raise taxes in order to give health coverage to the less fortunate.
Some have called this a sweeping policy change. Some have called it socialism. Some have called it stealing from the rich and giving to the poor. We can not deny any of this. What strikes me as odd is that when it is said the public seems to think that this is somehow new. The fact is that this has been going on for a very long time. How do you think the child care credit, and the earned income credit work. How do you think that people who have paid nothing to very little into the program of Medicare qualify for Medicare? Households that make in excess of approximately. $155,000 know hat a phase out of certain tax preference items are. These are deductions that get taken away because you earn a good living. Or how about the alternative minimum tax? If you are wealthy and have lots on tax preference items you are forced to pay a minimum tax. There is in fact nothing new to this concept although applied in various ways. We have been doing it all over the place and in many different ways within the current tax code. So if healthcare reform is being touted as a socialist program or a wealth shifting program, guess what? You are very, very late to wake up and smell the coffee. This is part of the great capitalist system we have.
Perhaps what might be more appropriate is to call it the Bottom Up Economic Policy. As apposed to Ronald Reagan’s Trickle down Economics. Would it be too much to ask to consider that both may actually have their place in steering the economy in this country?
Bottom Up Economics
I have to warn anyone reading this, I am not an economics major. But I do have a appreciation to its guiding principles. So anything I say here is simply food for thought.
Reagan believed that if you provided tax breaks and other business incentives to the wealthy they would invest in major capital goods, start businesses that in turn would employ people who would pay taxes and spend their earnings thus stimulating the economy. It’s not only a great idea, I think its safe to say that the idea worked. This concept is called Trickle Down Economics. The trouble with this type of economic policy is that it relies on the premise that the wealthy, new wealthy and super rich in fact buy American, invest in America and create jobs in America. Guess what? The world has changed since Reagan was president. The rich buy foreign goods, which in turn create expenditures of capital goods in foreign countries, which employ foreign workers at low salaries, which pay no U.S Income tax, which produce foreign goods that make it to the US and create low margin returns to vast distribution chains that pay marginally low taxes.
The fact of the matter is that this Global recession and the weight of our deficit will in fact create slow and small GDP growth for many years to come. Yet GDP growth in the emerging markets will likely far outpace U.S. GDP growth. What compounds this further is that there is a growing demand for capital to be placed in foreign capital markets. This is to say that the rich, including the rich in America will place their capital in foreign markets in order to get a higher rate of return than they would by placing their money in American industry. Under this scenario Trickle down not only works very slowly, but the trickle will amount less than a drops in a bucket!
Empowering the Masses
Bottoms Up Economic policy has a very interesting component. It gives a very large mass of individuals resources and opportunity to create jobs, to start businesses mainly in the USA that big corporations and the super rich are not interested in because they do not produce enough of a return on investment to provide for shareholders. This basic concept together with scalable technology, efficient and modern micro manufacturing, robotic manufacturing and light industrial trades may have in the long term an underlying value that will have a meaningful impact on helping our economy. Yet, I doubt it will not be enough. The real savings grace to our American economy in an ever encroaching global market place is the export of highly skilled services and labor to emerging markets. In fact this sector is already growing despite a poor economy or maybe even because of it. This needs to be better measured, better understood and covered. Our understanding of Bottom Up Economics maybe the key to turning our economy around. The real danger is to believe what you get paid to believe and not forming your own conclusions based on your own observations and your higher sense of intellect.
Bottom Up Economics has at its core the concept of creating jobs in America, that invests in America’s future. These jobs create wealth both at the individual and corporate level and they pay taxes. They consume other goods and services. In large part they consume many goods and services that are of USA origin which is a further boost to the US economy.
Here is the proof. America is ripe for major infrastructure changes. From highways and bridges to metropolitan transit systems to major distribution and warehousing systems. We need better communications systems, wider access and availability of high speed internet access. We need better dams, we need better flood control systems. We need better schools and create more efficient homes, appliances and we need to retrofit energy wasting infrastructure, homes and transit systems to more energy efficient technology. Doing this creates a whole host of industry jobs and investment. Many of these jobs will not be done by CPA’s or Lawyers or Doctors. They will be done through skilled trades, construction workers, engineers, scientists and architects, surveyors etc.
If we fail to recognize that we as a wealthy and rich civilization, do not have an obligation to provide for a fertile ground for prosperity for the human capital that makes our civilized existence possible, we will likely fail and fall behind. How can we expect our work force to feel compelled to excel, or to take risks if they have less in terms of social benefits than those new and emerging market workers have?
Call it what you will, but let’s not be blind to what we are already doing. Let’s not become enmeshed in the propaganda and sensationalism of the evening news or in the tactics employed powerful industries that try to seduce you to the dark side of our national responsibility. Americans are not and do not want a handout. They don’t want a big government. But we need to find the solution to even the playing field so that together everyone achieves more. So that American do not fall behind the global curve and so they can compete effectively.
The Balance
The natural evolution of the global economy requires that we understand and are adaptive to the changing environment. Tax breaks for the wealthy and those that invest in America are good things. They are proven to work. But to steer this economy sometimes we need to change course, just as we have cars that steer in both directions. It simply is part of a good navigating system. We need to learn the inner workings of the flow of capital beyond our own borders just as well as in our own borders and learn that there is a way to make this economy work even when it may not seem logical. It’s like when you have to turn right in a sail boat and make it go forward even when your ultimate goal is to head left. Not at all intuitive, unless you have sailed.
By: Rene Velez Mar. 31st, 2010
Can anyone really explain the economics of healthcare reform? As it stands now only a few people in the entire country have any substantive grasp of the implications in the economic impact of healthcare reform. To make matters worse is that’s these people, if they are in fact talking, can not be heard on top of the noise of the media and pundits. Where is the old fashioned journalism that explains this stuff to the simple folk?
A Basic Premise
Supposedly there are 30 million or so Americans that stand to benefit in some way or another from healthcare reform. That’s a lot of Americans that do not have health insurance today that will be eligible. And of course part of the Miranda rights of healthcare reform are that; “if you can not afford healthcare, the government will provide some assistance so that you get healthcare coverage”. In order for our government to do this they are in effect, or at least partly taxing the wealthy to raise taxes in order to give health coverage to the less fortunate.
Some have called this a sweeping policy change. Some have called it socialism. Some have called it stealing from the rich and giving to the poor. We can not deny any of this. What strikes me as odd is that when it is said the public seems to think that this is somehow new. The fact is that this has been going on for a very long time. How do you think the child care credit, and the earned income credit work. How do you think that people who have paid nothing to very little into the program of Medicare qualify for Medicare? Households that make in excess of approximately. $155,000 know hat a phase out of certain tax preference items are. These are deductions that get taken away because you earn a good living. Or how about the alternative minimum tax? If you are wealthy and have lots on tax preference items you are forced to pay a minimum tax. There is in fact nothing new to this concept although applied in various ways. We have been doing it all over the place and in many different ways within the current tax code. So if healthcare reform is being touted as a socialist program or a wealth shifting program, guess what? You are very, very late to wake up and smell the coffee. This is part of the great capitalist system we have.
Perhaps what might be more appropriate is to call it the Bottom Up Economic Policy. As apposed to Ronald Reagan’s Trickle down Economics. Would it be too much to ask to consider that both may actually have their place in steering the economy in this country?
Bottom Up Economics
I have to warn anyone reading this, I am not an economics major. But I do have a appreciation to its guiding principles. So anything I say here is simply food for thought.
Reagan believed that if you provided tax breaks and other business incentives to the wealthy they would invest in major capital goods, start businesses that in turn would employ people who would pay taxes and spend their earnings thus stimulating the economy. It’s not only a great idea, I think its safe to say that the idea worked. This concept is called Trickle Down Economics. The trouble with this type of economic policy is that it relies on the premise that the wealthy, new wealthy and super rich in fact buy American, invest in America and create jobs in America. Guess what? The world has changed since Reagan was president. The rich buy foreign goods, which in turn create expenditures of capital goods in foreign countries, which employ foreign workers at low salaries, which pay no U.S Income tax, which produce foreign goods that make it to the US and create low margin returns to vast distribution chains that pay marginally low taxes.
The fact of the matter is that this Global recession and the weight of our deficit will in fact create slow and small GDP growth for many years to come. Yet GDP growth in the emerging markets will likely far outpace U.S. GDP growth. What compounds this further is that there is a growing demand for capital to be placed in foreign capital markets. This is to say that the rich, including the rich in America will place their capital in foreign markets in order to get a higher rate of return than they would by placing their money in American industry. Under this scenario Trickle down not only works very slowly, but the trickle will amount less than a drops in a bucket!
Empowering the Masses
Bottoms Up Economic policy has a very interesting component. It gives a very large mass of individuals resources and opportunity to create jobs, to start businesses mainly in the USA that big corporations and the super rich are not interested in because they do not produce enough of a return on investment to provide for shareholders. This basic concept together with scalable technology, efficient and modern micro manufacturing, robotic manufacturing and light industrial trades may have in the long term an underlying value that will have a meaningful impact on helping our economy. Yet, I doubt it will not be enough. The real savings grace to our American economy in an ever encroaching global market place is the export of highly skilled services and labor to emerging markets. In fact this sector is already growing despite a poor economy or maybe even because of it. This needs to be better measured, better understood and covered. Our understanding of Bottom Up Economics maybe the key to turning our economy around. The real danger is to believe what you get paid to believe and not forming your own conclusions based on your own observations and your higher sense of intellect.
Bottom Up Economics has at its core the concept of creating jobs in America, that invests in America’s future. These jobs create wealth both at the individual and corporate level and they pay taxes. They consume other goods and services. In large part they consume many goods and services that are of USA origin which is a further boost to the US economy.
Here is the proof. America is ripe for major infrastructure changes. From highways and bridges to metropolitan transit systems to major distribution and warehousing systems. We need better communications systems, wider access and availability of high speed internet access. We need better dams, we need better flood control systems. We need better schools and create more efficient homes, appliances and we need to retrofit energy wasting infrastructure, homes and transit systems to more energy efficient technology. Doing this creates a whole host of industry jobs and investment. Many of these jobs will not be done by CPA’s or Lawyers or Doctors. They will be done through skilled trades, construction workers, engineers, scientists and architects, surveyors etc.
If we fail to recognize that we as a wealthy and rich civilization, do not have an obligation to provide for a fertile ground for prosperity for the human capital that makes our civilized existence possible, we will likely fail and fall behind. How can we expect our work force to feel compelled to excel, or to take risks if they have less in terms of social benefits than those new and emerging market workers have?
Call it what you will, but let’s not be blind to what we are already doing. Let’s not become enmeshed in the propaganda and sensationalism of the evening news or in the tactics employed powerful industries that try to seduce you to the dark side of our national responsibility. Americans are not and do not want a handout. They don’t want a big government. But we need to find the solution to even the playing field so that together everyone achieves more. So that American do not fall behind the global curve and so they can compete effectively.
The Balance
The natural evolution of the global economy requires that we understand and are adaptive to the changing environment. Tax breaks for the wealthy and those that invest in America are good things. They are proven to work. But to steer this economy sometimes we need to change course, just as we have cars that steer in both directions. It simply is part of a good navigating system. We need to learn the inner workings of the flow of capital beyond our own borders just as well as in our own borders and learn that there is a way to make this economy work even when it may not seem logical. It’s like when you have to turn right in a sail boat and make it go forward even when your ultimate goal is to head left. Not at all intuitive, unless you have sailed.
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