LTE on American Exceptionalism

Below is a letter to the editor that I sent to our local paper.  The paper has not published the letter, so I thought I would put it up here.  The letter was written shortly after the Republican convention.

I am quite concerned about the new Republican buzzword, “American Exceptionalism”.  I have what is considered a serious mental illness and have been greatly helped by practicing the method of Recovery International.  One of the insights of Dr. Low, the creator of the method, is that just about all of us are in the average spectrum of humans, but we all believe we are the smartest, most sensitive person out there.  Much of human conflict can be ascribed to one person’s sense of self-importance bumping up against another person’s sense of self-importance.

I think that the insight applies to countries as well.  Many of the citizens of every country feel like their country is the best country out there, that their lifestyle is the best.  I suspect that much conflict occurs because one country’s sense of self-importance bumps against another country’s sense of self-importance.  Granted, wars over resources occur also.

I see the Republicans trying to push the buzzword of the second half of the 20th century, anti-communism, communism being the far end of leftism.  The 20th century showed us what happens when a country goes too far to the left (3  million dead in Russia, killed by Stalin’s communist government) or too far to the right (over 6 million killed by Hitler’s German fascist government). Our country needs both the left and the right for balance.   

“American Exceptionalism” is on the fascist side of the spectrum from left to right. Hitler came to power in Germany telling the German people he would restore Germany to Germany’s rightful, superior, place.  Other tactics of the Republicans this election hark back to the rise of fascism.  The Republicans’ willingness to put outright lies and distortions at the center of their political advertising indicates to me that the Republican’s are following one of the techniques of Nazi Germany – tell a lie big enough and often enough and people will believe the lie.

We are not in the desperate state that Germany was in after World War I, but I am disturbed by the message of the Republicans.  The Republicans are not politically naive, I suspect they are deliberately, consciously following fascist techniques. Personally, I see us as a good average country in the community of countries, with a special talent for leadership. 

Link to article on US Wealth, Income, and Taxes

In this blog post, I am just providing a link to an article, Wealth, Income, and Power, by G. William Domhoff of the University of California at Santa Cruz.  The article provides an historical perspective on wealth and income distributions in the United States as well as giving information on the proportion of income paid in taxes by income classes.  While those with the lowest incomes in the United States do not pay much in federal taxes, the group pays quite a bit in state and local taxes.  From a graphic in the article linked below, the lowest 20% in income pay about 16% of their income in taxes – mostly state and local – about 1/4 of the class’s taxes are federal taxes, the next 20% income class (20% to 40%) pays about 20%, of its income in taxes, the next 20% income class (40% to 60%) pays about 25% of its income in taxes, the next 20% income class (60% to 80%) pays about 28% of its income in taxes, and the highest 20% income class (80% to 100%) pays about 31% of its income in taxes – about 2/3 of which is federal taxes.  The proportion of  income paid in federal taxes increases with each of the income classes as income increases.  Here is the link.  Enjoy!!!

Money: 6

First, I will write about the three things that money does, which are: (1) acts as a medium for exchange, (2) stores value, (3) provides a metric for exchanges.  The first function of money combined with the third function of money provides people with a way to buy and sell and to have a sense of the value of the exchange in the process.  The second function of money gives a way of saving the value of a sale, to be used in future exchanges.

With regard to money as a medium of exchange, I would think that the ease with which a person can use money to buy things which the person values and can afford and the ease with which a person can receive compensation for labor or goods, greases the wheels of an economy.  With regard to money as a store of value, money is not a good store of value over time unless sufficient interest is paid on the money over time.  Because our economy has had persistent inflation over many years, the value in terms of buying power of a given quantity of money stored in earlier years has been less in the present than when first stored.  With regard to money as a metric for exchanges (a unit of account),  money measures value.  Because of inflation, the measure is not constant over time, but, at any given time, money measures the value of an exchange.

Next, I will write a little on to the neutrality of money.  According to my introductory economics book, early theorists in economics thought that money was neutral.  That is, if the money supply expanded, the expansion would not affect the quantity of goods produced, but would increase the prices of all goods by the same proportion, until all of the excess money was absorbed.  I believe that we now know that changing the money supply affects the economy.  I think that we have found that increasing the supply of money of money increases economic activity, which produces growth.  Certainly, the population is growing, so the money supply would need to grow just to stay even.  Also, the goods and services available for sale are always changing, so neutrality of money does not make sense with respect to a constant set of goods available.

Last, I will write a little on the velocity of money.  The velocity of money is a measure of economic activity (for example, the Gross Domestic Product) divided by a measure of the money supply (for example, M1).  The velocity of money is the number of time the money turns over within the economy within a time period.  In a day, say I buy some juice, the grocery store pays my friend, partly with the money that I spent at the store.  My friend buys some socks.  The money I spent on the juice has been spent three times during the day.  So the economic activity depends on both the money supply and the velocity of money.  If the velocity of money is higher, not as much of a money supply is needed for the same amount of economic activity.  See the Wikipedia entry, Velocity of Money, for a more complete explanation.