Friday, October 22, 2010

The Government's Role by Kuya Jim

Good whisky and a cigar make for good conversation only so long as at least one person is listening.
I received an email from a good and valued friend today and with his permission am posting it with him as a "guest blogger."  Kuya Jim is an immigrant who became an American citizen and now lives in the Far East.  Always an excellent companion for stimulating conversation over cigars and whisky, he's also a thoughtful thinker and an excellent businessman.  What he's put forward is an excellent read.  Enjoy.


I'm on a plane from Toronto to Hong Kong, so that explains this lengthy email, I thought you could relate to this.

In a speech last week Nancy Pelosi said "...we need to move more people into the middle class ..." and as she spoke her hand moved in a sweeping direction upwards.

From a cultural perspective the USA is more of a classless society than elsewhere in the world, but from an economic perspective its similar to the rest of the planet. There's the "haves" and the "have nots"...there's the rich and the poor. Then this has been further defined into sub segments.

In the UK the classes are defined as the wealthy class, middle class, working class, and dependent class. In economic terms the respective population breakdown would be 5%, 60%, 35%, 5%.

In the USA reality is ignored and only two classes are recognized, the wealthy and the middle class. In economic terms the respective population breakdown would be 5% and 95%. However, I interpret Pelosi's upward sweeping arm motion to mean that an under class exists, but it isn't talked about.

In the Philippines, my adopted home,  the classes are defined as the Elite class, the A, B, and C class, and the Massa. In economic terms the respective population breakdown would be 1%, 20%, 80%. (The A, B and C is the middle class further broken down by salary level for marketing purposes). By the way, the Massa class in the Philippines are very upwardly mobile, working hard to move into their own middle class or migrating to join the middle class or working class of developed countries.

Nancy Pelosi wants to "move" more Americans into the middle class? What's her strategy to do that? First of all the term middle class needs to be defined.

The classes throughout western society have common characteristics.

Middle Class:

1. They own a home that is mortgaged.
2. They own at least one car
3. They are in professional level jobs
4. They are salaried in high tax brackets
5. They have a college education
6. They are in strong family units

Working Class:

1. They rent a home.
2. They make car payments
3. They have manual labor & clerical jobs
4. Hourly paid in low tax brackets
5. They have a high school education
6. They are in strong family units.

Dependent Class:

1. They are in government housing
2. They have older or no cars.
3. They have menial jobs or unemployed
4. Low or no income in no tax bracket
5. They are high school drop outs
6. They are in broken homes

To create upward mobility between these groups for all their people is a shared goal of all governments no matter the political party. The difference is how they want to accomplish it.

Nancy Pelosi summed up the socialist viewpoint succinctly: Democrats want the government to move more people into the middle class. The Republican viewpoint is that people should move themselves upward in the class hierarchy.

Republicans want to influence root economic factors to create an environment wherein people have the opportunity to improve their status. Democrats want to directly provide the benefits of middle class status or make the trappings of middle class status easily attainable.

For example, the Democrats have attempted to expand the middle class by legislation.

1. Lenders must provide mortgages based on race and low income status (to
those who can't afford them.
2. Welfare payments can be included in the loan qualification process.
3. Affirmative action quotas and anti discrimination laws.
4. Union contract support and minimum wage increases.
5. More social workers in schools and public school redistricting.
6. Increased welfare payments to single parents.

As a result of this legislative strategy, the dependent class and working class should be able to own homes, own cars, have better paying jobs, have kids in better schools, and families don't need to stick together to survive and prosper. All thanks to government largess.

Its obvious to me what's happening to that utopia. America is going down a path to bankruptcy. National debt increasing, foreclosures out of control, personal bankruptcies soaring, unemployment increasing, jobs going off shore, retail spending declining, housing starts weakest for a generation.

Bill Clinton famously said "its about the economy stupid!". I'm a Republican and I agree with Clinton; but with the following additions: It's about Jobs stupid! Private sector jobs stupid! Its about creating wealth stupid!  Its about the American dream stupid! Its about the American spirit stupid!  The American spirit to grab a piece of the action, to earn that house by the river!. Immigrants don't come to America expecting a hand out or a bail out.

Business development creates wealth and jobs, but taxes and hand outs create neither. The US government should exit the hand-out business and focus on the basics, they should support business to create jobs and support the people by ensuring equal access to education, job opportunities and financing.

Winston Churchill said "Some people regard private enterprise as a predatory tiger to be shot. Others look on it as a cow they can milk. Not enough people see it as a healthy horse, pulling a sturdy wagon".

As an aside, Tony Blair gave G. W. Bush a marble bust of Winston Churchill, which was displayed in the oval office. Barack Obama packed it up and sent it back to Gordon Brown the British prime minister, with the comment that the "American people don't need this!"

God bless America,

Your rude and tackless return of the Churchill bust was noted by all, Mr. Obama.  I'm sure you did so thinking that it didn't matter but by now you also know that Sir Winston Churchill garners more respect among the American people than do you.  

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