Archive | March, 2010

Cardoza on Cap and Trade (Cap and Tax)

4 Mar

Understanding the Context of this Discussion

A good friend of mine made a good point that complicated and technical phrases in current discourse are being made, but that those things aren’t always being explained.  So I decided to write a simple but not simplistic overview of the current “Cap and Trade” discussion going on in American Government.

In the following video, President Barack Obama says that he is in favor of a Cap and Trade system but that such a policy “will necessarily cause energy prices to skyrocket.”  Listen to him, then read what “Cap and Trade” is in Plain English.

http://www.youtube.com/watch?v=HlTxGHn4sH4&feature=related

The Background

In an earlier blog post (https://freddycardoza.wordpress.com/2010/03/04/cardoza-on-civics-understanding-whats-going-on-in-america-and-why/) I discussed the background to understanding how politics and economics relate—and I’d encourage you to read that post first.  With that as an introduction, let me get into how Cap and Trade works.

I’ve described earlier the fact that “Big Government” proponents (i.e., Democrats-Socialists-Liberals) have an agenda to use the government as a means to minimize the freedom and responsibility of individuals and privatized corporations (private industry or “businesses”).  That is because the government needs money to pay for entitlement programs to “take care of people” in the Nanny State that it has become.  This is no exaggeration, as over ½ of the US budget is now spent on entitlements (http://www.usgovernmentspending.com/us_budget_pie_chart).

As money comes into the US Treasury, it feeds its ever-larger bureaucratic self and it takes care of those who do not want the responsibility of taking care of themselves or who have an entitlement mentality.  Such people are willing to trade their own freedoms away in exchange for the government taking their personal responsibility.  In this way, the government becomes a safety net and, as I’ve said, a ‘nanny.’

In a “Progressive” government like the one Mr. Obama is attempting to build, the government penalizes companies and the people who built them through years, decades, and generations of hard work by forcing them to support all government programs in ways that are grossly disproportionate than other people who have not earned as much income.  For example, in the upcoming budget plan, it is estimated by some that the upper-level earners in the US will pay up to 42 cents of every dollar (42%) of their income to taxes, while some US Citizens who can (but refuse to) work, pay no taxes or even receive refunds from the government, even though they have not paid any taxes.

The strategy of Progressivism being espoused by Barack Obama and many Democrats today is to identify (a) individuals who have or make significantly more than others and (b) the companies they have built by creating laws and regulations (imposed by government agencies like OSHA) that are designed to take the money people have earned (through fines, fees, tariffs, corporate taxes, personal taxes, sales taxes, property taxes, consumption taxes, payroll taxes, capital gains taxes, penalties, and other red tape) in order to forcibly redistribute that wealth to those who did not earn it in ways consistent with Socialism-Marxism described in an earlier post.

 

What is Cap and Trade (also called “Cap and Tax”)?

Cap and Trade is one type of (many different) government-imposed wealth-transfer plans.

To Understand Cap and Trade, You Must Understand the Basics of Economics and Politics

Cap and Trade (like all other such wealth-transfer plans related to Green Economics-Environmentalism, Government Health Care, etc.) is designed to forcibly redistribute money more evenly throughout society, and especially lower income people, in order to eliminate classism (the economic differences between upper/lower classes) and to usher in an ideal society (i.e., “social utopia”). In such a society, most people would comprise a very large lower-middle class, and virtually all authority would rest within those who run the government, since it would have eliminated the power of all other persons and entities.  This, in a nutshell, is the agenda of Socialism (a political philosophy) and it uses Marxism (an economic philosophy) to do it.   

Cap and Trade Basics

The basic argument of Cap and Trade goes this way.

The developed world (the U.S. and other countries) is better off than the rest of the world.  It has more money and more things and a higher standard of living.  Other people in the world have less and a lower standard of living.  Much of this is because of our consumption of stuff from money that we have that some countries don’t have.

As a result, extreme liberals and even the US President, believe that two things are wrong with this: (1) We need to redistribute wealth to those without it and (2) the way that should be done is by giving them money from U.S. tax payers and businesses. So, Cap and Trade is actually a wealth transfer (Marxist) idea cloaked in Environmentalism.

 

Point By Point Through Cap and Trade

The logic is that the things Americans enjoy aren’t enjoyed by many other people in our world and while they do without, we have these things and, in doing so, we pollute the planet more than they do. Examples: Our cars, boats, trains, buses, motorcycles, air conditioning, heat, hot stoves, etc. are things that give us a higher standard of living than everyone else—and this creates us, Americans, as a higher socioeconomic class of people.   The argument then goes that we should be ashamed for having a great society and for being blessed by God and through the industry of the American people, since it is those very things that are causing the world to hate Americans in their arrogance.

Blame America First. So the “blame America” group wants to PENALIZE us for what we have and enjoy because, in doing so (they argue), we pollute the planet through our extra energy use—and our greed causes the rest of the world to live in pollution and climate change (global warming).  Subsequently, if we were to be more concerned with others who “don’t have what we have,” then we would be more generous to them rather than spending our money on things for ourselves and our own consumption.  So America “owes” the world.  And we should (as we saw in the recent Copenhagen Summit) give the poor nations of the world our money from the US Government’s taxpayers as a sort of payback for our excesses and to provide their governments money to enact the same Cap and Tax policies so that they can also redistribute the wealth of their countries, leading to a Socialist (utopian) world.

Think I’m Crazy? People who are unfamiliar with the Climate Change discussion and extreme Environmentalism and Cap and Trade probably read what I’m writing and think “He can’t be serious.”  But, in fact, this is the main thrust behind much of the Cap and Trade controversy.  The government sells the problem as an Environmental one, but it’s actually all about “Green ECONOMICS” and the redistribution of wealth, using environmentalism as the reasoning behind it.   Carefully researching these issues will clearly show what I have written to be true.   But let’s continue.

 

More Cap and Trade Basics.

So Americans are obsessed with stuff (materialism increases carbon footprints).  Our materialism and consumption cause us to trash the planet, and this hurting of the environment—leads to global warming, etc.   They then argue that, if it isn’t stopped something catastrophic will happen—because the future of the planet is stake.

What “Cap” Means.

The government is telling people that we must reduce carbon in the atmosphere in order to avoid climate disaster. That means we should reduce our carbon (like burning or using fossil fuels like gas, petroleum products, coal, and using products that require energy), by more than 80%.   THAT IS THE “CAP.” Certain types of ENERGY USAGE IS CAPPED.   It begins with setting limits on our use of energy.  The recent Copenhagen summit was an attempt to do that—Obama wanted to get the world to agree on the top limits of ‘unclean energy’ they would allow, so we could “CAP” the carbon and energy usage.

 

What “Trade” Means.

The problem is that everything uses energy to run (cars, businesses, ships, semi-trucks, transport trucks, trains, etc.) and all of these things emit carbon.  In addition, nearly everything we do in life is a release of energy this is largely powered by those sources of energy (like to heat homes, cool homes, cook food, eat out, take the car to the mall, using energy for lights, the energy for lighting a movie theater, etc.).  So how are we going to reduce carbon? By starting a carbon stock market (“trading”), so companies can “buy and sell” the ability to use energy that pollutes the environment.  And as they do this, government can then control and monitor energy consumption by government policies/restrictions and taxes.

The problem? Most countries use it like we do and don’t have money to do research and development to develop other forms of environmentally friendly or “clean” energy.

To keep carbon and emissions to a minimum, the government would begin (over a period of years) to set these goals for reduced emissions of carbon from all these energy sources—and then SELL PERMITS to companies who would pay taxes for the ability to “pollute the atmosphere” (use energy).  Each year, less and less energy would be used and ‘unclean energy’ (oil, coal, gas, etc.) would be paying very high taxes and could get fewer and fewer permits to use their energy (“to pollute”).

Enter Clean Energy and Government Contracts. Meanwhile, the government would choose winners and losers again, by paying companies money to do research on ‘clean’ energy and by giving grants, government contracts, and tax breaks for those who promote and empower the Green Economy, namely… more energy-efficient windows, weather stripping, energy sources, wind power, solar power, etc.

Over time, because taxes would crush other energy companies and because they could buy fewer and fewer permits to use their sources of energy, the ‘clean’ energy companies would flourish because they advanced their businesses on the government dime.  So traditional businesses (the energy companies mentioned earlier, and companies who didn’t get government money and contracts to produce these ‘green’ technologies would also be taxed because their products ‘hurt the environment.’  In addition, standards would continue to tighten, driving many out of business since they couldn’t compete any longer with government funded businesses.

“Trade” One More Time. So, another way of describing it, is that the “Trade” idea is that those companies who become ‘greener’ would be able to take their pollution permits and ‘trade’ them on the energy stockmarket—to companies who couldn’t become greener—and with each ‘trade’ the government would get a cut of that tax revenue AND the green companies and their employees would get more money (WATCH THIS: creating “new money”) while the “OLD MONEY” groups like Coal Company Owners and Oil Men and Gas Company Executives were taxed and legislated out of business—leading to massive reallocation and redistribution of wealth away from those who traditionally had money—into the hands of new people awarded government contracts, all in the name of the “environment” and to stop “global warming” and “save the planet.”

Summary

So then, anyone that PRODUCES OR USES energy would be taxed and prices would rise—significantly.  Consumers of these things would be penalized—by paying higher prices and taxes on energy and things that used energy.  Note—everything uses energy!!  So every use of energy or emission of energy would cost you (gas for car, carbon emissions of your car, energy for home or business, restaurants who produced your hot food, appliances that you use to cook or cool food), and the government would regulate all of those things through regulation—hence CAP (energy limits) and Tax companies/people using energy.

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Cardoza on Government Intrusion: Obama’s Bailouts and Regulations

4 Mar

I think a big problem with what is going on in the US Government today is that most people don’t really understand what’s happening.  That’s because it’s complicated and because lots of jargon (technical language from different fields) is used that further complicates things.

One issue that is going on today is that of Government Intrusion– the government getting involved with things in the wrong ways.  I’d like to use the recent financial bailouts in the US and the issue of “deregulation/regulation” to explain why this matters.

Understanding “Regulation” and “Deregulation” (Big Government Intrusion)

Whereas Republicans and Libertarians and many Independent voters are in favor of SMALLER government, Democrats and Socialists are for BIGGER government—that is a crucial distinctive to understand.  Let’s first look at Capitalism.

Capitalism and Deregulation in Plain English

In Free Market Capitalism, the government allows supply-demand (business) to govern whether companies win or lose—whether they succeed or fail.  In other words, in Free Market Capitalism, the government’s job is to create laws that ENABLE businesses to succeed and that “deregulate” them so no artificial barriers cause businesses to fail.  That way, if a business fails it is because the idea was wrong or the leadership was poor, or the timing for the business idea was wrong: They win or lose on their own, and they bear that responsibility for their success or failure.

Socialism and Regulation in Plain English

On the other hand, in a more Socialist approach, Marxist ideas of economics are used.  What happens is a few things.

(Photo: Karl Marx)

First, the Government chooses winners and losers.  Instead of allowing businesses to fail, government decides who fails and who does not. So it chooses who will and who won’t get bailed out.  So, instead of allowing businesses to fail or to force them to make hard decisions to change course and become successful, the government uses tax payer money to bail the business out.  The companies it bails out then essentially become INCAPABLE of failing because they are funded with limitless supplies of printed money.  But other businesses don’t get that bailout money, and are in danger of going under.  That’s the problem with government bailouts.

Second, the Government begins to control private businesses by ‘owning’ them.  When federal financial bailouts occur, businesses become (partially or entirely) publically-owned (owned by taxpayers or the government).  And when government controls them, because a company needs capital/money, the government gets ‘shares’ of that company and may then have a “controlling interest” in the company.  That’s another way of saying they get to call the shots.

One recalls when the US Government bailed out General Motors recently.  Rival companies Ford, Toyota, Honda, and others got no money—and could have failed. But then, since the government bailed GM out, the President of the United States was able to fire the GM C.E.O., set salary limits, and help decide which brands (Buick, Pontiac, Saturn) died—affecting thousands of US Workers.  So the government chose winners and losers. It controlled businesses by owning them. And one wonders—no matter HOW BAD General Motors might perform in the future, now that it is essentially owned by the government, almost without question there is no circumstance under which the government would even ALLOW GM to fail, but no other car companies have that same guarantee.

The Point? Government was never supposed to get into the business of owning private industries.  When it does, it becomes unfair to other private businesses and the government ends up using taxpayers money to help some taxpayers and to hurt others, which affects persons, families and their futures.  That’s not right.

Cardoza on Civics: Understanding What’s Going On In America and Why

4 Mar

Understanding the Relationship Between Politics and Economics

Politics: To have a society, people must live together.  When people live together in relative harmony, it is called a “civilization.”  For civilization to exist, it must be civil (or you have barbarism).  Civility is based on mutual understandings and boundaries of well-being (“civil order”).  “Order” (Civil Society) becomes a reality when compulsory expectations are expected OF everyone and enforced ON everyone—and this is what we call “Law.”  The need for “Law” is what creates Politics.  Politics is designed to establish order and preserve justice and equity.  Government is the collective body or bodies that oversee the political system to ensure civilization.

Economics: When people live together in society, they can either live in a meager, primitive, and simple existence (usually agrarian or nomadic societies) OR they can seek to live in a more sophisticated society where the standard of living (options, choices, comforts, entertainment, etc.) is higher and comfort is increased.  **Because increased comfort and a higher standard of living creates greater civil stability and well-being, governments seek to enable this higher standard of living in order to avoid chaos and the breakdown of civilization and government (anarchy).  A higher standard of living is accomplished to a large degree through economics. Economics, therefore, is the production, distribution, and consumption of goods and services that creates the opportunity for a higher standard of living just described.  IN THESE WAYS, politics and economics are intertwined.  And it is government that regulates economics THROUGH politics to help ensure people’s well-being and a higher standard of living in order to build the best society possible.

Understanding Economic Theory and Political Theory

So for government to exist, politics and economics must exist.  But there’s not only “one way” to think about politics and economics.  So different “political theories” (often called Political Science) and different “economic theories” exist.  And it happens that, usually, certain political theories’ goals are best accomplished by corresponding economic theories because they are built on common ideals or goals.

That’s why—as a rule—that Representative Democracy (a “Republic” like the US) generally uses Free-Market Capitalism as its economic theory (since it values entrepreneurism as the way to help raise people’s standard of living). Capitalism places responsibility on individuals, as does Democracy. That’s because Democratic Government and Capitalism believes the individual should be motivated to take personal responsibility for their own well-being and that of their family and fellow man.  And when each person with the ability does the same, that creates a surplus—which meets the needs of those who genuinely cannot help themselves.  But those who refuse to work and do not take responsibility—even though they are able—are allowed to do without.  Only those who genuinely need the help are able to get it in this type of society.

Socialism, on the other hand, de-emphasizes the responsibility of individuals and places that responsibility for the welfare of the individual on the government to produce that higher standard of living for the people.  In this way, the government must provide money for the resources needed by the people.   It does so by compelling people to provide the government with the money to do this—and government receives money through taxes.  Those taxes are paid to the central government in order to hire people to maintain and oversee programs that provide for people.  And in a Socialist government, as Karl Marx said, each person gives “according to his ability” and each person receives “according to his need.”  WHAT THAT MEANS is that those “with more” are compelled to give more to people who need more—so that those who do not have all they want or need will have it.

The Point?

In summary, Capitalists and Marxists disagree on HOW to maintain a civilization and provide for its peoples’ standard of living.  And Democratic-Republic Governments disagree with Socialists on the way to build that society—through compelling people to give to the government so everyone will have ‘about the same’ OR through expecting people to take responsibility (if they are able) for themselves… or to do without.

That is why Democracy-Capitalism is about personal responsibility, low taxes, and small government.  And that’s why Socialism-Marxism is about government responsibility, bigger government, and higher taxes.  They are simply two ways of doing things.

The Choice

These completely opposite approaches on the role of government, politics and economics are what is causing the radical disagreements in the United States right now.   The question is “Do we create a ‘Nanny State’ where people are taken care of by the government, even though corruption, waste, and excessively spending tax-payers’ money occurs OR do we create a ‘Responsibility State’ where people who are able to do so are required to take care of themselves and the fruit of their labor takes care of those who cannot take care of themselves until they are able or indefinitely?”

The Fundamental Problem

The major problem that exists in our nation’s politics today is that Democrats are being driven by the extreme left wing of their political party—and that party (led by the U.S. President) is driven by hard left ideologues who are more SOCIALIST as I have described above.  Prior to this time in history, Democrats and Republicans have disagreed “to a degree” but could compromise BECAUSE THEIR POSITIONS WERE RELATIVELY CLOSE TOGETHER.  Now, because “Progressives” in the Democratic Party are more Socialist in their perspective, we have a culture war—and the MEANS and the ENDS are so radically opposite that there is no middle ground. 

Summary

That is why this is such a fierce battle.  And this entire discussion explains why I feel so deeply about these issues: Because the American way of life is being threatened by changes in these political and economic theories.  And if America practices the political and economic theories of Socialism and Marxism, the outcome will be what it has been in EVERY other such civilization: decline and death of those civilizations.

Note: While America has flourished into the greatest civilization the world has ever known in only 200 years under Capitalism and a Republic, since Marxism/Socialism was introduced in the 1800s, no genuinely Marxist economy in history has survived more than 70 years (Soviet Union).  But today’s Progressives want to ‘progress’ past Capitalism to a doomed system.  There is on earth NO NATION under even a Socialist approach whose society is superior to the United States—and that is why I am so forceful in my opposition to it—because I do not want my children and their children to live in a society in decline or hardship after my sacrifice and the sacrifice of all Americans in the last 200 years.