"I'm Not Sure..."

A cousin of mine recently questioned of himself, “if I’m a liberal or conservative”.

Shocked, I answered his question in the best way I knew how. Assume your personal income tax rate was cut in half. And assume the same for your state wide sales tax. Feel better?

Of course you do. So that means you’re a conservative right? I was so fixated on this for the past couple of years that I kind of got rolled up under the wheels of my own train of thought.

I used to think it all didn’t matter. Abortion. Gay marriage. The Iraq “war”. Gas prices. The environment. And a number of other “issues”. They all didn’t matter because they hardly affected me. What has affected me though was my tax rate. And I thought that being conservative meant that I was paying too much for a government that did too little for me. Which meant I should pay less because the government should be able to do more with less.

I’m not sure. I thought it meant that, but then I realized we’ve had a republican dominated executive, legislative and judicial branch for how long now? And how have my taxes been affected? Not at all. No change whatsoever. Maybe for billionaires like Warren Buffet, but for me? Sure, the economy has flourished since the bust of 2001, but we’re just now reaching peaks that we were seeing in 1999-2000 (although way overvalued at the time – even in today’s market cheap debt is the wobbly 4^th leg waiting to break us).

By the way, I only know what I know. I only know what I read, I only gather what I understand and can keep, and the best I can do is spit it back out here. This is my blog. So if I’m “wrong” in anything I say, past and future, you’ll just have to deal. Leave me a comment if you feel so inclined, even one disagreeing with me! I rarely get any of them.

So realizing that, I get back to square one with what I’ve always thought. The government is too large and we need major reforms. I don’t vote because I don’t believe in our current system and I don’t think my vote would change anything. It’s selfish, but I am here to get mine, get as much of it as possible, be as happy as possible while I’m alive and hopefully look back before I die and say I lived a good life. And maybe leave enough for those after me to enjoy their lives more than I did.

And I’m sure there are plenty of blogs out there, bashing the president, bashing the system, bashing anything. But how many of them provide solutions? Great! Impeach Bush! Hey! You hate Bush too because he’s stupid? Let’s make out! Seriously.

Enough.

The more I’ve been getting in to investing I’ve realized something. For now, capitalism works. The economy works. Even with all the recent changes over the past 10 years, we still continue to drive forward. And huge, multinational corporations continue to drive us forward with growth, shareholder value and quality products all while giving to their local communities and trying to cut back on environmental impact. (Some of them at least).

For every dollar I put in to a company’s stock, I expect returns. I don’t care how they do it. I want my one dollar to be worth one dollar and twenty cents a year from now when I ask for it back. And companies give that to me. The government however? I’m just going to leave that question open ended…

Look around. If you pay 24-28% of your income to the government like I do, you are basically investing in your government. What kind of return are you getting on your money? Assuming my wife and I paid roughly $30 thousand dollars (spelled out for effect) in tax last year and only received $6 thousand dollars (20% for home gamers keeping score) back at tax return time that’s not a great return. In fact, that’s an 80% decline on my investment.

And what can I say my government gave me for the $24 thousand dollars I sank in to it? Let’s see. I got harassed by the cops a couple times this year. One even forcefully held my arm down and threatened to take me in and book me. Other than that, I got roads to drive on to my job so that the government could take that money from me. Other than that, nothing. Absolutely nothing to hang my hat on and say, “here’s what the government gave me for $24 thousand dollars in 2006”.

Enough ranting. Here is what I am getting at: The government should go public. Yes. They are already public. I understand. But instead of having thousands of corporations traded on daily basis on NASDAQ, NYSE, AMEX, etc. let’s create a National Stock Exchange. (Not saying we should get rid of the other markets). Each country will be valued on their GDP, and the top 10 countries can set average earnings per share rates/expectations quarter over quarter and acceptable price to earnings multiples for each country. Because really, isn’t that what it’s about? After the world wars, the true battlefield became the business world? We’re not going to continue to be the “#1 country in the World” if we continue down this path.

What would change if we implemented this? (It will never happen, but just let me dream and run through my theory). The government would move to being run like the largest corporation in the United States. When they weren’t creating shareholder value for its investors (us – and those across the world interested in making returns) they would slash and burn and cut the fat just like all good companies do.

It would drive down margins. Why do I want a job with the state? Because state workers are lifers. You get in, you’re set. They pay a 10-30% premium in salary in comparison to the corporate world. And the benefits? Fantastic! Guess what? That’s all of OUR tax money…our investment being wasted. Not anymore in my fantasy world.

All of those “paper pushers” that have been doing their jobs for 20 years and are 5 years away from an excellent government pension? Not anymore. Sorry Jane, looks like little Bobby is going to have to finance his MBA instead of having mommy pay for it. We’re moving your job to India, because guess what? We get labor there at 1/10^th the price we’re paying you, and they’re 5 times more willing to do it. They don’t get sick. They don’t take vacation, and best of all? We don’t have to pay the ridiculous amount of real estate costs to have your body sit here and push paper for us anymore! Well maybe that’s not the best of it but enjoy early retirement, and make sure to bring in that home made ice cream cake we all love for your last day.

I know. It’s mean. It’s a bit over the top. But really, this is how the world of publicly traded companies works. Across the hall from me, plenty of people were informed that mid-July would be their last day with the company. Some who have been with the company for years and have mouths to feed and a mortgage to pay. Well guess what. If this company didn’t survive? None of us would be eating or paying our mortgages. Oh and if those people wanted to stay with the company? Reapply. Prove to us you’re worth it. You might not be. We’re barely surviving as it is, let alone it still could get worse…

Shit would get done. Fat would get cut, and thousands of people would lose their jobs. It wouldn’t cost $650 to replace a toilet seat. It would cost $21 from Lowe’s and they would install it for us (our country). Suddenly large scale projects done by the government in your area would be finished ahead of schedule and within budget. Millions, possibly billions would be saved. We could rid ourselves of so many archaic processes for automation. Hell, every company in the world moves towards faster, smarter work. Why not our government? Oh that’s right, we don’t want to lose the cushy legislative job that pays $200 thousand dollars a year to the ivy league graduates so that they can show up fifty two days a year to “represent us”. No! What about Senator so and so’s country club membership! What would he do without it!

…

Shit would get done. Repeated for effect. Cheaply, more efficiently, and with better management. Because there is no way in hell we are letting the US stock drop below the EU or China’s. I don’t want to have to move my money out of this country. And I don’t want our country to be de-listed or go bankrupt. I am an investor in our country along with everyone else paying their taxes, and we should see solid returns on our investment if nothing else.

And all that savings? We’d pass to along to you. Just like Wal-Mart destroys its competitors by using razor thin margins, the US would dominate all other countries. And just like Wal-Mart rolls back its prices, we’d be rolling back the amount of tax you owed. Imagine what a 30% raise year over year could do for you!

*Sigh*

It’s nice to dream sometimes.