May 4, 1970. The world changed when 13 student protestors were shot and 4 killed by Ohio State National Guardsmen at Kent State University following the escalation of the “Vietnam War” into Cambodia.
Cleveland had experienced civil disorder in the hot summer of 1966 with the “Hough Riots”.
Governor Rhodes, who oversaw the state guard actions at Kent State, served for 16 years as the governor of Ohio from 1963-71, interrupted by constitutional limits, and then from 1975-83.
Like most major cities, Cleveland had two major daily newspapers, many radio stations and 3 network tv stations in the post-war era. Dorothy Fuldheim was a pioneering woman journalist who served throughout this period. She challenged the Kent State shootings.
I grew up in a small town of 4,000 people about 30 miles east of Cleveland, dominated by the Cleveland media. As a youngster, I delivered newspapers for the 2 big Cleveland and 2 local printers. Cleveland saw itself as a very major US city. 5th largest nationally in 1920. 8th largest in 1960. Cleveland was a major industrial supplier of the WWII war effort. It’s corporations greatly benefited from the post-war global industrial expansion. They struggled to face the 1970 challenges from international (Japanese) competition, environmental regulations, labor power/regulations, technological changes (IT, process), and consumer/retailer power changes.
The Cleveland economy was stagnant in the 1960’s and declining in the 1970’s. Locals supported the civil rights movement but recoiled from the Hough riots. The world was changing faster than the local economy and thought leaders could digest in 1969. With Kent State, the population and political leaders turned inward. The students were wrong. The guard did its job. A majority agreed. A substantial minority disagreed.
As a country we remain very divided, 54 years later.
The film “Network” expressed this passionate viewpoint in 1976. Economic and cultural changes were so great that people could not digest them. The difficulties of the 1960’s revolution continue 50 years later. Left and right both struggle with our situation today.
Donald Trump won. He improved in many demographic segments. The Republican Party won. The Democratic policies, politicians and messages lost. Democrats seems to be in denial.
Most are blaming someone or something: Biden’s late withdrawal, Kamala’s tight link with unpopular Joe, American sexism, Trump’s magnetic hold on the country, the media’s unwillingness to hold Trump and Republicans accountable for lies, plainly inaccurate or misleading claims, an uninspiring centrist platform, too many far-left positions that can be exploited by the opposition, billionaire dark money, Trump’s undermining of any normal frame of reference for character or policies through his years of speaking and acting that would have never been accepted before him, the thumb of the Supreme Court on political activities that benefit Republicans, Trump’s reassembly of the Republican Party into a personality cult where no opposition exists to provide options, discussion or pressures, the Republican news media’s amazing power to shape beliefs of Republicans, independents and Democrats, the undercutting of all institutional frames of reference (media, universities, FBI, DOJ, courts, churches, intellectuals, movies, civic organizations, business, schools, government), Republican manipulation of the state election systems to create a built-in advantages, the lack of a charismatic Democratic leader, polarized politics turns out politicians and their party every 4 years, a lack of belief in any politician or political party, a “what have you done for me lately” transactional politics from many voting blocs, the transition of minority groups from being solidly Democratic to better reflecting a normal distribution of left to right views, the global embrace of populism in a post Western, capitalist, democratic, human rights, global trade and development consensus, the inherent disadvantage of progressive parties who must deliver on their promises rather than oppose and check the misguided, unrealistic opposition. The list is unlimited.
There may be important content in many of these explanations. But, overall, they fail to focus on the two core issues. What policies, politicians and messages COULD be attractive to persuadable voters, either from the base or the middle? How does the Democratic Party reestablish itself as a credible voice to be considered?
The Center or the Edge?
This election once again confirmed that the US is an individualistic, capitalist, local, independent, freedom loving, patriotic, culturally moderate society. Economics and culture both matter. A supermajority of Americans wants moderate policies. They don’t really want revolution. This is a real problem for the idealistic wing of the Democratic Party which has grown from 5% to 20% of the country and 10% to 35% of the party. The national American electorate does not support policies that can be framed or challenged as extreme, costly, risky, uncertain, elite, cosmopolitan, global, socialist, irrational, idealist, utopian, etc. Whenever these more progressive policy options are promoted, the Republican Party wins at the national level. To have a chance of winning, the Democratic Party needs to have the discipline to frame policy options that deflect Republican counterattacks yet motivate the base to support the party goals. This is difficult, requiring creative development and communications.
First, take a firm stand as a center-left party and consistently reject “far left”, “new left”, “socialist”, “green”, and “postmodernist” policies that are so easily defeated. Second, focus on pragmatic policies that clearly benefit middle Americans economically. Focus on equal opportunity, rather than redistribution. Focus on basic economic fairness rather than demonizing the rich, the billionaires, the bankers, Wall Street, the 1%. See my RESPECT proposals. Focus on the middle class, not “the poor”. This strategy maximizes consideration from the persuadable voters at all income levels, in all locations.
What Do Citizens Really Expect from Politicians? Not Much.
There was a time when Americans required presidential candidates to meet high standards. Goldwater was thrashed because he was considered unstable by many. McGovern could not recover from his association with “acid, amnesty and abortion”. His running mate Eagleton’s mental health history was a big issue. Muskie could not recover from his public crying about one of Nixon’s dirty tricks and withdrew from the campaign. Bush Sr’s broken “no taxes” promise was fatal. Dukakis could not overcome the “Willy Horton” released prisoner crimes or the comic picture of him in a tank as a military leader. Kerry could not overcome the “swift boat” attack on his military career. Most importantly, Bill Clinton was elected because he convinced Americans that “I feel your pain”. His impeachment raised questions about presidential character that still resonate today. Democrats argued that personal matters are not all that important. This opened the door for Newt Gingrich and a purely “ends justify the means” approach to politics.
In a “postmodern” world, we’ve lost objective knowledge, truth or morality. We are wrestling with the loss of this agreed upon reality among our citizens and leaders. The 1960’s opened the door for a radically “relative” world view. The shift was jarring. As commentators noted about the Clinton campaigns in 1992, 1996 and 2016 we were still arguing about the 1960’s cultural revolution and the politics of the Vietnam War. The bottom line is that many citizens, left, right and center, no longer believe in a fixed, objective world defined by science, religion or natural law.
Hence, our expectations of politicians are very low. Solid truth, honesty, and objectivity are no longer required. I think what we see from Trump is that “authenticity” has been elevated to become the premier value. “I don’t agree with him but at least he is authentic. He does what he says. He is not a phony”.
We may be at a place where all we can expect is for them to keep “most” of their “largest” promises.
Political Grey Zone
We have a complicated situation regarding political ethics. We either believe there are core objective ethical values or not. In general, I see most Democrats of both left and center perspectives as ethical idealists. There is an ethical standard. We know what it is. We ought to follow it. I agree with respect to personal decisions. I’m not sure this is the best practical rule for politicians and political parties. I think that there is an element of “the end justifies the means” that applies to real world politics. We see the same tension between idealistic and pragmatic politics at the international level (real politic). I think that pragmatism must compete with idealism in real world politics.
One Very Important Hillary Clinton Debate Question
I’ll never forget when Hillary Clinton was asked what was either a “softball” or a “gotcha” question in a 2016 debate. “As president or secretary of state, are there times when you must lie or ‘manage the truth’?” Hillary gave the George Washington response, “I can never tell a lie”. I screamed at the television. Really? As Secretary of State? Our chief international negotiator? As a leader? As a motivator? As a communicator? As a politician? Trying to appeal to diverse coalition partners? As a presidential candidate, trying to engage both the base and the undecideds? As president, trying to lead the whole country? I think that my “in-authenticity” button was pressed.
I thought about salespeople, negotiators, purchasers, supply chain managers, account managers, marketers, persuaders, speakers …. The whole capitalist system is driven by these kinds of communications that blend facts, history, relations, cultures, promises, implied threats, incentives, short-term and long-term, risks and rewards, opportunities, possibilities. It’s complicated. That’s why we collectively invest so much in managing these relationships.
Politics is the same. International politics is the same. Why do we want to claim that our politics are perfect, pure, above board? They are not. They cannot be. They should not be. When political leaders pretend to be “holier than thou”, they lose credibility with a majority of the electorate.
We’re stuck in a moral grey area. We want to think of ourselves as ethical. But, to achieve our desired ends for society we cannot be perfectly ethical. I don’t have an answer as to where the line is, or the exact tradeoffs, or a perfect example of what to do. I am sure that there is a need to consider ethical ideals and political reality when making political decisions.
Don’t Compromise on Core Values
Don’t hold the country hostage to approve an increase in the deficit ceiling.
Don’t manipulate the election process to win.
Don’t embrace special interest groups to attract funding and votes.
Don’t use the judicial and administrative regimes to win political battles.
A party that can establish credibility here will possess a major asset.
Political Parties Must Deliver on Their Promises
LBJ as senator and president is exhibit #1. Whatever it takes.
Laws are like sausages, it is better not to see how they are made.
Ideals are “nice”, but I elected you to deliver. In a pragmatic, transactional world, results matter more than ever.
Some “Delivering Results” Examples
Inflation was growing rapidly in 2021. Biden needed to address it. Lower government spending. Pressure the Federal Reserve Board to raise interest rates. Apply “bully pulpit” pressure on corporations to not raise prices. Implement excess prices or excess profits controls under emergency presidential authority.
Immigrant volumes increased after Biden took office. Engage the military and national guard to “secure the borders”. Reallocate federal appropriations to “solve the problem”. Use the finances and political power of the US to intercept immigrants at the southern Mexican border.
Aggressive antitrust reviews and enforcement, given expressed Republican support.
Consolidate all welfare spending into a single bill to increase benefits while “solving” the problems of earned benefits and equity. Invest in “welfare fraud” investigators together with IRS agent funding.
Make a $15/hour minimum wage bill a top priority. Organize strikes to support it. Engage corporate supporters. Fine-tune the details to deal with teenager and agriculture exceptions.
Israeli PM Netanyahu wishes to wage war in Gaza and expand West Bank settlements. Provide a clear set of support and limits. Enforce the limits up to complete withdrawal of military support.
Create a “blue ribbon commission” on Social Security funding structured to ensure that the compromise recommendations will be approved.
Engage with Republicans to support policy proposals that benefit middle Americans.
Biden followed this “deliver results” strategy to cancel many varieties of student loan debt. A majority of Americans opposed this. it is only effective if most Americans agree. Delivering for the base or individual constituencies is inherently suspect.
Rapidly deliver visible “pilot project” results from the 2 large infrastructure bills that were passed.
Resolve the “temporary” status of the 2 federal home mortgage guarantee agencies.
Determine a long-term solution for the US Postal Service that provides some local mail delivery and reduced costs and employment.
The key to providing credibility is proactively finding solutions that meet the needs of the general public even when party supporters must incur some of the costs or risks of the solutions.
Summary
Democrats need to take a hard look in the mirror. They have lost the support of the American people. To recover, they need to refocus their policies on the economic opportunity needs of “middle America”. They must convince “middle America” that they have no extreme economic or cultural policy agendas. They need to deliver results that match their promises. There are no “moral victories” in politics. Parties must win elections in order to deliver results. When in power they must use all of the levers of power. Pragmatic means for progressive ends.
According to some on the left (and some on the right), the “wealthy, capitalists, billionaires or 1%” are evil, irredeemable, “vampire squids” only interested in making, keeping and growing wealth, power and influence. They say that the only solutions to this situation are to tax, regulate and publicize their finances and influence. Any number of laws should be enacted to fight against this force against the public good.
History shows …
The wealthy and powerful actively invest to protect and expand their wealth. In the United States, they have repeatedly “captured” the political system with two interludes of effective opposition during the progressive era and the New Deal from FDR to LBJ. Their tools include political contributions, network influence, legal actions, administrative agency capture, media control, social influence, lobbying, contracting, funding political parties and thought influencers. They can easily hire the most effective professionals to pursue their goals in all areas.
Wealth Will Find a Political Way
The American political system generally undermines centralized governmental power. [Although the imperial presidency under Trump with possible Supreme Court support will be a big test]. Federal agencies, the Senate, Congress, the President and the courts jockey for federal power and compete with state and local governments. Focused investments by a relatively small group of wealthy individuals have a strong chance of finding the weakest spots in “the government of the people, by the people and for the people”. If this group makes good choices in setting goals, investing in politics, selecting strategies and showing that they are willing to do “whatever it takes” to win, they attract political supporters and greatly leverage their relatively small investments and very small voting numbers.
Repeated Failures of Their Opponents
Progressives have tried to legislate their way to victory. The wealthy have fought back and reversed many of the gains in limiting their power to pursue greater wealth without limits placed upon them by other stakeholders: labor, consumers, investors, nations, nature, religion, or local communities. There have been some permanent gains in labor conditions/rights, consumer safety, environmental protection, progressive taxation, public education, public infrastructure, monopoly regulation, anti-discrimination, etc. There are some real changes between 1850 and 2020. No one wants to turn back the hands of time.
Yet, on the enduring core political issues, the wealthy have successfully pursued counter-offensives. Lower taxes of all kinds. Undermined support for government and government services. Judicial challenges and rulings. Weakened regulations.
They have maintained effective control of the Republican party for 175 years. They have partnered with middle America, urban elites, WASP America, industry, corporate America and small business/entrepreneurial America, mainstream and fundamentalist religion, anti-slavery and states’ rights groups, Main street America, rural America, southern America, sunbelt America, isolationists and pro-traders, anti-communist hawks and America firsters, assertive neo-conservative foreign policy wonks and inherently defensive thinkers, promoters of American power through international relations and doubters, international free traders and mercantilist tariff warriors, libertarians, the professional class and the working class, skeptical protestants and conservative true believers, farmers and bankers, philosophical conservatives and political pragmatists, fiscal conservatives and political idealogues, preserving and restoring American culture, separation of church and state versus promoting one religious group, liberal and conservative social policies, the mainstream media is authoritative or fake. The end justifies the means. Some coalition of voters and interests can always be assembled to support their core financial interests.
The defenders of wealth have effectively shaped political debates by prioritizing issues, framing positions and policies to be considered, crafting favorable and unfavorable language and stories, shaping debates against extreme strawman positions, and polarizing positions. Democrats have attempted to use the same techniques but have been much less effective. Democrats have also shifted their positions on issues and reassembled their coalitions through time but been unable to secure a solid base of support in the last 50 years. They repeatedly point to a demographic “emerging majority” and the “rightness” of their causes and hope for more success soon.
Root Cause Analysis
Why does a small group of wealthy individuals consistently capture one political party and oppose efforts to reduce their wealth and power? Are they unusually evil? Is there a “class interest”? Don’t they care about our country and those less fortunate? I think there are two key factors. First, we have lived in an individualistic, relatively equal opportunity, relatively meritocratic economy for two centuries in the US. The economic winners can honestly look in the mirror and say, “I earned this”. [note the Obama buzzsaw around “you didn’t build this”]. Like each of us, they exaggerate their own merits and discount chance, privilege, inherited assets, opportunities, and ethical choices. Second, they have such great assets that they must protect them. The scale of accumulated wealth in the US is almost [or actually] beyond comprehension. Current GDP is nearing $23.4 Trillion, up 10 times in real terms from $2.2 Trillion in 1947. Stop for a minute to let this sink in. The US was truly the savior of the world in 1947. We now have 10 times as much wealth, resources, assets, power. Real $ GDP in 1850 was only $62 Billion. Real GDP increased 35 times in that century, perhaps the most amazing century of growth in world history, despite the Great Recession and WW II.
America has grown its population, its productivity/per capita GDP, and its corporate profits by at least 350 times in the last 175 years. A million here and a million there, and pretty soon you have real money. This is the power of compound interest. Wealth begets wealth. This is Thomas Piketty’s point.
A well invested portfolio provides 3-5% real returns per year. It accumulates to infinity sooner than you might imagine.
So … America has 350 times more annual economic output than in 1850. The wealthy have captured more than an equal share, so their wealth per person has grown 500-fold. Digest this ratio. There are more wealthy individuals. The winnings are divided across a larger population. Wealthy individuals control 500 times more assets per person than they did in 1850.
Average incomes have also increased. The reported $144/month for farmhands with board in 1850 becomes $5,800 today with 40X inflation. The current median income is $37,600, so the “typical” worker is 6.5 times better off today than in 1850.
The bottom line is that wealthy individuals or families have tremendous wealth to “manage” or protect. Some will highly value the other factors that produced their wealth and their obligations to society. Others will discount them and be the leading investors in political actors to preserve their wealth even though they too will face the “free rider” dilemma. Why should I invest to protect my wealth if others will do so for my benefit? As wealth has grown, a greater share of wealthy individuals has rationally invested in the political system to protect their wealth.
What is the Greatest Risk?
Wealthy individuals and families have much to worry about. If you have a billion dollars of assets, there are many risks and obligations, duties and responsibilities, social obligations, political interests, generational interests, black swan risks, portfolio effects, opportunities, and legacies. I would argue that the greatest risk is posed by democracy. Plato, Socrates and Aristotle all pointed to pure democracy as a threat to the wealth of the ruling class. This was clear when extreme wealth was a mere 1/1,000th of the level today. The individuals with the lowest incomes and wealth could use the power of the state to capture a greater share. Everyone thinks that they deserve more. This is human nature. The many outnumber the few. In a pure democracy they will “take from the rich”. They might reduce the top quintile by 20% to benefit the bottom 3 quintiles. They might flatten incomes. They might confiscate wealth. They might confiscate ALL wealth. This is the greatest fear of the economic winners in our society. The political system might “take” more than half of their income and all of their wealth. Wealthy individuals are “highly motivated” to prevent these outcomes. This is not spoken of “in polite company”.
Removing the Greatest Risks
Although most Democrats, liberals, leftists and progressives have an intuitive sense that they must fight wealth and power because it is right and fair, I argue that we ought to agree to permanently remove the risk of significant confiscation of wealth and income from the economic winners in our society. As those who claim to look at the big picture and the long run, we should set limits on how much income and wealth redistribution is required to meet our goals of a fair and prosperous society.
We should agree to set permanent structural limits on these areas. Enact constitutional amendments to clarify the redistribution limits of our society. We are so much wealthier today as a society.
JK Galbraith in 1958 was way ahead of the people in 1958 with his Affluent Society argument.
The wealthy can “make do” with a lesser share of our continually growing wealth. But no one wants to lose or give up what they have. This is human nature. I think the time has arrived to stop fighting the economic redistribution war that has never been won and find a solution that can gain support from a majority of wealthy individuals.
Federal marginal income tax rate shall not exceed 50%.
Combined wealth or property taxes shall not exceed 3% of value per year. Zero tax rate on the first $50 million of assets.
Any inheritance tax rate shall not exceed 15% of net assets received. First $5 million of assets is tax free. 10-year interest free period provided to pay inheritance taxes in excess of $100,000.
The tax rate on long-term capital gains shall not exceed 75% of the tax rate on earned income. Any long-term capital gains tax must include a deduction for at least 50% of the inflation rate during the asset holding period.
Any tax on financial transactions shall not exceed 0.5% of the transaction amount.
Fix the independence of Federal Reserve Board to pursue its joint goals of minimizing inflation and unemployment.
Limit the federal workforce to no more than 1% of the US population.
Require Congress to pass a budget each year that reduces any prior year budget deficit by one-third whenever the unemployment rate is 5% or lower.
Require the Treasury to pay any legally incurred debts of the government in a timely manner (no government shutdown crisis risk).
Limit federal government net spending to no more than 25% of prior year GDP, which restriction may be waived by the President with concurrence of at least 50% of the Senate in times of war or national emergency.
No limit on charitable deductions for donations to governments as an offset to earned income for federal taxation purposes.
Maximum corporate income tax rate of 30%.
Corporations are not considered persons. They do not have “free speech” rights with respect to political contributions.
State and federal election campaign communications shall be funded solely by the government and the active period of campaigning and voting shall be limited to 6 months or less.
If citizens do not agree with 100% government funding of political campaign communications, then individual or corporate contributions to any political organization shall be publicly reported each quarter.
Summary
Wealthy individuals and families have great wealth to protect. As a nation and society, we have an obligation to eliminate this concern from being a primary role in our political decisions. We can set reasonable limits on the maximum contributions required from prosperous individuals in our society. Many left-leaning individuals are focused on increasing the share of taxes paid by wealthy individuals on an equity basis. I argue that the nation would be best served by setting maximum taxation limits. Wealthy individuals might prefer lower tax rates, but they will be able to relax knowing that there is a limit on what political groups might choose to extract. Fewer would be highly motivated to invest extraordinary amounts in our political system if their greatest risks were already protected.
I encourage national Democratic Party leaders to quickly acknowledge that the American people have chosen to support candidate Trump’s policy proposals. They need to find areas of agreement and work quickly with the new president and his party to support and implement policies where agreements can be found. Democrats ought to fight against other proposals that they cannot support.
Support proposals that help the working class and middle class.
Eliminate taxes on tips income.
Eliminate taxes on social security income.
Increase the child tax credit from $2,000 to $5,000.
Eliminate taxes on overtime pay premiums.
Cap credit card interest rates at 10% – 15%.
Fix an earlier attack on states’ rights.
6. Eliminate the $10,000 federal tax limit of state and local income tax (SALT) deduction.
Take reasonable steps to pursue American foreign policy goals.
7. Negotiate a settlement to Russia’s invasion of Ukraine.
8. Negotiate a settlement to Israel’s response to being attacked. Leverage world opinion to impose a settlement that creates a Palestinian state that is better for everyone.
9. Negotiate a trade deal with China that promotes “fair trade”, environmental equity, labor equity, and protects American intellectual property.
10. Pressure NATO allies to commit to 3% of GDP commitment to national defense spending by 2030.
Protect American borders.
11. Pass the compromise border security bill negotiated in 2024.
Control government spending.
12. Appoint a “blue ribbon commission” to identify systematic ways to reduce federal government spending. Include Democratic members.
13. Support a “balanced budget” constitutional amendment. Find language that forces Congress to reduce spending or increase taxes when material % of GDP budget deficits exist in a “full employment” economy. For example, “When Federal Budget deficit exceeds 2% of GDP and unemployment is less than 5%, Congress shall reduce the deficit by at least 33% in the next year”.
Address the Social Security funding situation.
14. Appoint a “blue ribbon commission” to recommend a combination of tax increases, benefits limits, inflation measures and age qualifying rates that ensures promised social security benefits will be paid for the next 50 years.
Address Health Care Costs
15. Appoint a “blue ribbon commission” to recommend methods to systematically reduce total health care costs as a percentage of GDP by 5% by 2035.
Summary
Democrats and Republicans need to look out for the interests of all Americans. There are big issues where compromise solutions must be found. Democrats should step forward and provide a list of areas where they are willing to work with the new president to serve the American people.
America is often described as an “individualistic” society. Sometimes as a compliment. More often as a criticism.
The positive reviewers note that it incorporated John Locke’s individualistic principles to form the first “classic liberal” democracy which has endured for more than two centuries of geographical expansion, rapid population growth, technological and social changes and foreign challenges. They argue that it demonstrates that a federal system of checks and balances, limited government and preservation of individual liberties can be economically and socially successful. Such a government can be effective even with diverse racial, ethnic, class, political and religious interests.
Only the Individual
The critics say that the society has always balanced individual and community interests, that the government system relies upon a strong culture of shared values and that “rugged individualism” is a myth that has been used to provide political support for laissez faire capitalism.
The heroic, self-sufficient individual has been promoted throughout American history. Washington and the founding fathers were memorialized. Jefferson’s ideal of the independent citizen farmer still resonates. Jackson further elevated the importance of the common man as central to American success. The explorer, pioneer, frontiersman, Lewis & Clark, Daniel Boone, and the self-made man were celebrated. The citizens and leaders who spread the new American individual rights across the continent were hailed for bringing about a new society, an example for the world to follow.
Americans embraced Thoreau’s retreat, Emerson’s “self-reliance”, Franklin’s “common sense”, Horatio Alger, cowboys, private detectives, military, political and superheroes. Proponents of laissez faire capitalism contrasted natural property and individual rights against unnatural government interference during the Gilded Age. Carnegie, Ford and Hoover promoted the same ends at the turn of the century highlighting the progress driven by individual inventors and owners. Hayek, Rand, Goldwater and Reagan argued that FDR style government was illegitimate and threatened the liberty and security of the nation, while praising job creation, technical innovation and entrepreneurs.
The Reagan revolution re-established the intellectual and popular legitimacy of holding conservative social and economic philosophies. Some successors pressed the arguments further, equating taxation with theft, comparing job creators and job killers, questioning the motives and results of government departments and employees, and promising no new taxes under any situation. “The self-sufficient individual is great, government is bad”, they said.
Community Plays a Supporting Role; Not a Leading Role
The role of community tends to get lost in the shadow of the great liberal versus conservative battle over the role of the state in “regulating” the economy and society. Most historians, political scientists and commentators agree that the American political system was constructed upon the assumption that citizens would share a common Christian culture with objective virtues complementing the God-given rights and responsibilities of citizens. The authors of the Federalist Papers, the Constitution and the Bill of Rights understood that this social glue was needed to support a democratic system of checks and balances, especially as the young nation expanded its small population across the Appalachian Mountains. They promoted “freedom of religion” but also relied upon enduring religious belief and participation. The founders held classic conservative ideas about the necessity of individuals to possess a sense of civic duty to participate in government, willingness to sacrifice for the common good and a commitment to the institutions of collective self-government.
Community is eclipsed by individualism in the public’s mind for many reasons. The promotion of liberty-loving and economically productive individuals who require only minimal government. The ease of highlighting outstanding individuals and individual types in the arts, journalism, history and marketing. The complexity, abstractness, variety and organic nature of community functions. The overlap of community and government when contrasted with “rugged” individualism. The soft, feeling, unmeasurable nature of community. The supporting rather than leading nature of community. The limited visibility of many community functions.
Community relations and results are exhibited throughout society. First, in the relations between citizens and their government. In the many voluntary associations that diverse citizens create and join in a nation with limited government and services. In local residential communities. In business, trade and agriculture. In the arts, travel and entertainment. In government organizations. In the country as a whole.
Community Is Essential for Democratic Government
The American government plan is based upon a relationship between the citizens and government. The citizens/individuals exist first and create the government. At the same time, they commit to fulfilling their duties as informed voters, candidates, soldiers, jurors, parents and supporters of the government and its institutional parts. Although the architects of the government warned against it, people soon clustered into political parties, movements and special interest groups to represent their interests. These parties have supported individual human, social and economic rights and the collective interests of classes, geographic areas, professions, industries, religions, ethnicities, sexes and races. Self-government requires a balance between the community and the individual.
The framers of the US Constitution were looking to the future. The US population was less than 3M in 1776, reaching 5M in 1800 and almost 10M in 1820. In today’s terms that’s the same as the states of Mississippi, South Carolina and Michigan or the metro areas of Charlotte, Phoenix and Chicago. This was a collection of 13 small states making sure that the central government would not become a tyrant. In 1780 the UK had 10M people, Spain 14M, Italy 16M, Germany 23M and France 28M. The US was about the same size as Sweden, Netherlands, Switzerland, Portugal and Belgium.
Community Through Voluntary Associations
The large role of voluntary associations in filling the services gap between citizens and limited government was a distinct feature of the early USA, described by Tocqueville in his famous 1835 “Democracy in America”. He noted that class was absent, no religion denomination was dominant, people were preoccupied with economic affairs and the government’s role was small. Religion actively shaped lives. Citizens created voluntary organizations to fill every need: universities, fraternities, sororities, professional associations, libraries, fire companies, hospitals, seminaries, prisons, missionaries and schools. In a sparsely populated new world composed of immigrants or their descendants the “rugged” individualism required for survival was paired with a deep commitment to community based upon necessity, civil and religious beliefs.
America experienced an explosion of new associations between 1880-1920 in response to the challenges of urbanization, immigration and industrialization. YMCA, civic organizations, social organizations, scouts, Chautauqua institute, women’s movement, professional organizations, conservation organizations, mutual aid associations, settlement houses, service clubs, prohibition clubs, cooperatives, social gospel services, community funds, credit unions and unions.
Community Through Religion
America was a very religious place from the start. The Puritans, Quakers and other Christian denominations practiced their faith in congregations, even if sin and being saved were deemed individual matters. Religious groups impacted civil society. The Great Awakenings were communal events leading to the modern era crusades of Billy Sunday and Billy Graham. Colleges and universities were mainly founded by religious denominations with religious influence extending into the late 20th century. US religious membership and participation declined 50 years after such changes in Europe.
Residential Community
The New England township model of direct democracy and the Northwest Territory same-day horse ride county government model that followed encouraged participation in local government. This engagement together with funding and delivering government services created a deep sense of local community even as the model spread across the Great Plains to the Rocky Mountains. We still see the county seat, county square, county courthouse model. This local community model continued in urban neighborhoods, suburbs and housing developments with HOA boards and services. Urban machine politics were based on the local precincts. Urban immigrants clustered in ethnic neighborhoods with familiar faces, languages, customs and churches. Conservative philosopher Edmund Burke praised the “little platoons” of family, kinship and neighborhood as the basis for teaching social skills and holding the larger community together. The individual was complemented by a meaningful local social and political community for most Americans through time.
Community at Work
America began as a farming nation with a few urban traders. Jefferson emphasized the importance of maintaining a high proportion of land-owning farmers who would be incentivized to take care of their families and participate in managing the shared resources of the community. Land was inexpensive, so agriculture was able to expand for more than a century.
Even agriculture was never solely about the individual. Family farms, shared harvest time, barn raising, going into town. Land grant universities developed agricultural science and local extension agents shared their knowledge. Grange organizations. Coops. Farmer-labor populist political parties. Farm banks. Political influence and programs. Rural electric coops.
Business and manufacturing were small scale originally. With access to natural resources and transportation, American manufacturing grew rapidly starting in the 1840’s. Many inventors and capitalists. Much wealth was created in the 19th century.
Manufacturing grew and organizations developed more effective administration. The railroads, steel, coal and limestone required social organization on a larger scale. The automobile and electricity spawned even greater innovations including vertical integration and the assembly line. Unions formed to balance the owners’ power. Industrial and trades unions viewed themselves as brotherhoods. Large economic organizations became the daytime home for most workers. Professional and industry associations grew to serve the needs of their members. New community ties were formed.
Further corporate growth through 1930 and then another boom after WWII. “The business of America is business”. “What’s good for GM is good for America”. Although it is rarely recognized today, the development of effective businesses that employed thousands and even a million people was and remains an historic social achievement, overcoming the different interests of those individuals. Corporations also developed social innovations such as R&D teams, joint ventures, outsourcing, project management, functional departments, divisions, cross-functional and lean teams to balance individual and collective interests.
Community in Leisure
Americans were always sensitive about being less cultured than their European peers. They invested in seminaries, universities, libraries, printing presses and theatres. They applauded American writers and artists. Itinerant preachers shared news and thoughts. Public lectures, pamphlets and news editorials were consumed. Theatre and orchestras expanded in the cities. Leisure time brought sports. Magazines boomed and circulated. Circuses and lecturers visited. Universities offered public lectures. Radio and movies greatly increased the consumption of high and popular culture. Orchestras and big bands entertained. Movie stars and lead singers gained fame. American jazz, swing, blues and rock and roll grew. Large attendance concerts began. Community was built and reinforced.
Community in Government
US government organizations were quite small historically. Mostly import tax collectors and judges. The government’s role grew with Hamilton’s national bank. The government began to invest in infrastructure like roads, ports, canals and railroads. The military grew and established forts to protect the settlers. It developed its own strong collective culture. Land grant universities and the continental railroad started in Lincoln’s time. The post office and pony express grew. Rivers were managed to provide reliable transportation, electricity and recreation. Interstate highways and airports were built. The government grew dramatically under FDR as a service provider, regulator, research sponsor, investor and owner. Although the 3 million Federal government employees get the most attention today due to the impact of their work, state and local governments employ 19 million, more than 6 times as many. Government employees are more likely to be unionized, serve long careers and view their work as serving the community.
American Community
The idea of a distinct and important American culture dates to the country’s founding as a breakaway republic seeking to preserve “the rights of Englishmen”. The country’s government, economy, immigrant citizens, diversity and shared war efforts shaped its self-image. Many saw the United States as a special country created to be a positive example for the world. “American exceptionalism” was described by both its citizens and Europeans. The individual based political system, the role of churches in shaping daily life and the large number of voluntary associations all played a role in describing the character of everyday life, hopes and dreams. Given its location between 2 oceans, the US mostly followed an isolationist path until WWII. Since then, it has seen itself as a global defender of democracy against communist and totalitarian states. The US has maintained elements of its individual, religious and associational character to this day.
The Role of Community Changes Through Time
Robert Putnam’s series on “Bowling Alone”, “Our Kids” and “The Upswing” documented how American social institutions have evolved through time to address new needs and how participation and engagement have risen and declined across long periods of time. During the Great Depression soup kitchens, potluck suppers, community gardens, small scale retail and personal donations complemented government programs. During WW II victory gardens, scrap collecting, bond sales, rationing, black outs, civil defense clubs and female factory workers contributed to the war effort. The post-war era saw a boom in sports, civic, neighborhood, professional and religious participation followed by a reversal at the end of the century. During the 2020-23 pandemic the country experienced lockdowns that highlighted our economic and social interdependence and the negative consequences of isolation.
Community is an essential and integral part of modern life. It operates in many dimensions. We need to recognize its critical role in complementing the individualistic view of the world.
The US economy continues its evolution from agriculture to manufacturing to services to information. President Trump was responsible for the US economy from February, 2017 through January, 2020. President Biden assumed responsibility in February, 2020. In order to compare the two presidents, let’s look at Trump for the 3 years of sustained growth deep in the business cycle before the pandemic. For Biden, let’s look at a comparable 3-year period from June 2021 through June 2024, after the post-Covid rebound. Trump benefitted from an 8-year long business cycle expansion. Biden had to deal with a once in a century pandemic driven economic depression.
Inflation: Advantage Trump
The independent Federal Reserve Board responded to the pandemic by greatly increasing the money supply to ensure that profitable, well-run financial institutions would be able to survive the temporary disruptions in the real economy. The Fed increased the money supply by 4-5 times its prior level to ensure the economy did not collapse! The extra money supply had to end up somewhere. It drove up consumer prices and increased asset values in the stock market and for home prices.
Inflation grew by 2% per year with Trump. It grew by 5% per year, on average, with Biden. Overall prices are 9% higher with Biden. Trump’s economic policies extended the Obama recovery for 3 years without triggering an increase in inflation, despite a low unemployment labor market.
The largest cause of higher than usual inflation in Biden’s term was the 20% spike in US and global demand for durable goods. Factories shut down during the pandemic. Demand rebounded within 6 months as consumers chose to spend money on goods rather than in-person services. Consumer demand at the end of the Biden period is 50% higher than at the start of Trump’s term in office.
Corporations were able to capture and maintain a 50% profit increases due to market disruptions of the pandemic. Experts mostly reject Biden’s claims that corporate profits were the main driver of inflation, but they clearly aggravated the impact of the supply chain disruptions.
Obama was able to reduce federal budget deficits by two-thirds by the end of his presidency. Deficits doubled on Trump’s watch before the pandemic arrived. Biden cut deficits from their record highs during the pandemic, but they have been 50% higher than the pre-pandemic Trump era. Most economists consider the budget deficits to be the main cause of the continued higher than typical rates of inflation, accounting for 3%, 2% and 1% extra inflation in the 3-year Biden time we’re considering.
High profile gas prices remined flat during Trump’s period. Global supply and demand caused prices to increase from $2.50 per gallon to $3.50/gallon where they have remained for the last 3 years.
Trump enjoyed historically low 4% mortgage interest rates, a thin 2% above the inflation rate. The expansion of the money supply drive rates down to 3% during 2020 and 2021. They rose to 7% as inflation rose sharply and has stayed there. Inflation has fallen but markets typically require years of data to reset expectations of long-term inflation which drive mortgage rates. The Federal Reserve Bank has hesitated to cut its benchmark interest rates until inflation is clearly approaching its 2% target.
Labor Market: Advantage Biden
Trump reduced unemployment by 1%. Biden reduced it by 2%. Both presided over best in 50 years overall labor markets.
Layoffs have remained at historic lows, with Biden enjoying slightly lower rates.
Job openings in the Biden market have been 50% higher than the Trump market, reflecting a strong economy with growing labor demand, despite the impact of the pandemic.
The Biden economy recovered all 20 million jobs lost in the pandemic within 2 years, much faster than expected. Total employment has continued to grow at the trend rate to a record 159 million.
Core labor force participation is 1% higher with Biden than Trump. The current participation rate was last achieved in 2001.
Median real wages have been slightly higher during Biden’s tenure.
Asset Values: Advantage Biden
Despite the pandemic disruptions and losses, US firms are worth 70% more today than before the pandemic. This reflects the 50% profits increase and continued positive future prospects.
Home prices have nearly doubled since before the pandemic, reflecting the post Great Recession decline in home building, construction issues during the pandemic and general asset inflation caused by the rapid expansion of the money supply.
The US enjoyed a solid 7% savings rate before the pandemic, an extraordinary high 10% after the pandemic, falling to just 4% for the last 3 years.
Human assets increased during Trump’s presidency and resumed growth after the pandemic. As college graduation rates have increased throughout the post WWII years, the cumulative number of college educated individuals continues to rise each year. The growth in masters and professional degrees is noteworthy.
The Economy – Advantage Biden
Population growth has resumed after the pandemic.
The healthy US economy is able to support 3 million more retirees after the pandemic.
Real dollar GDP is 2 trillion dollars larger than before the pandemic disruption. That increase is the same size as the total GDP of Russia, Canada or Mexico. We added the Canada economy during Trump’s time and the Mexican economy during Biden’s time.
Real personal income grew a little bit faster during Trump’s time and more smoothly. Personal incomes jumped up during the pandemic but have been flat since that time with corporations capturing a greater share of the economy’s returns.
Workers have been 8-10% more productive in the Biden economy.
Farm income has doubled in the Biden economy.
Manufacturing employment grew by a surprising 3% in Trump’s term. It is slightly higher in the Biden era.
Real dollar exports increased during the Trump presidency and then again during Biden’s time despite a greatly stronger US dollar which hampers exports.
The world is willing to pay 10% more to hold US dollars in the Biden period, reflecting strong economic realities and prospects despite the risks of higher US inflation and budget deficits.
Summary
The US economy is very strong. Trump was able to extend the Obama recovery for longer than most expected, keeping inflation, interest rates and unemployment at low levels. Biden managed the recovery from the pandemic induced recession better than expected. The economy, asset prices and labor market have recovered very nicely. Inflation has remained the weak part of the Biden economy. It is lower than in comparable global economies and trending towards the 2% target in 2025. Critics point to excess government spending as an avoidable source of high inflation.
The Trump economy built upon the success of his predecessor. The Biden economy overcame the disruption of the pandemic to produce equal or greater results. Both presidents delivered solid results.
In an increasingly partisan world, I look for people, processes, incentives and institutions that can build trust, respect, constructive conversation and an emphasis on our shared interests. For most of the twentieth century, the League of Women voters served this role. In the last 20 years, the league has adopted positions that take sides in “the culture wars” so has lost its treasured status as a neutral collector and sharer of political candidates’ views. This is a true loss for our society.
Inflation is dropping nicely but won’t reach 2% this year. Technical issues in calculation of housing costs which drives inflation a year later than reality. Government spending / budget deficit in a full-employment economy pushes inflation. Physical goods prices are declining. Services prices are stickier, with a smaller wage-price spiral effect. Global economy is weaker than the US, which is helping. Independent Federal Reserve is holding interest rates high longer than required, making up for its prior slow increase in interest rates.
Fiscal and monetary policy matter. Other industry level policies can greatly reduce inflation. The president and congress have not responded to my early 2022 advice!
November, 2022. Inflation fears are high. The data is positive, but mixed and not enduring enough to be confident that inflation is falling, not accelerating.
Corporations took advantage of supply chain disruptions and shortages to increase prices quite dramatically. Prices had been smooth for a decade. Firms increased them quickly. Prices have NOT continued to increase. They have dropped a bit, especially for goods.
I participate in our political, economic, social, and spiritual communities.
I respect the innate human dignity and rights of my neighbors.
I accept that we each think, feel, and act differently.
I work to improve my participation, compliance and civility skills and encourage others.
Candidate Pledge
In Carmel, we seek to promote an environment of civility defined as the disposition to respect every human being we interact with as our moral equal and worthy of respect. Therefore, we encourage any candidate seeking public office and asking the citizens of Carmel for their vote, to agree to the following tenets of civility.
The Carmel Civility Project: Candidates Pledge
As a candidate for public office in Carmel, I hereby commit to the following five essential tenets of campaign conduct:
1. Civility and Respect: I will maintain a respectful demeanor towards everyone, regardless of our differences, and foster an environment of open-minded dialogue.
2. Integrity and Truthfulness: I promise to uphold truth and transparency in my campaign rhetoric and actions, swiftly correcting any mistakes should they arise.
3. Positive Focus: My campaign will highlight my vision and policies, eschewing negative attacks on my opponents’ character or record.
4. Informed Discourse: I pledge to inform citizens accurately about my platform and engage in constructive discussions to promote understanding and educated voting.
5. Democratic Process and Accountability: I vow to respect the democratic process, accept its outcomes, and encourage my supporters to engage in campaigns with integrity and decency in support of these principles.
By taking this pledge, I affirm a dedication to dignified campaigning not just out of respect for each resident of Carmel, but also in admiration for the institutions we cherish in our community.
I encourage us to always “look at the big picture”: across time, nations, industries, occupations, institutions and political views when considering the “state of the economy”.
Recent surveys indicate that many (partisan) Americans believe that the economy is in recession, the stock market is down, and unemployment is up (false). The US economy continues to lead the world out of the pandemic driven recession. I’ve documented the tremendous strength of the US economy in GDP growth, job creation, wage growth, profit growth and wealth creation. Today I’d like to focus on entrepreneurship and new firm creation, where the US once again leads the world.
The US economy led the world in creativity, technology, job growth and firm creation in the 1990’s as it recovered from the global economic challenges of the late post-war era. The deregulation and technology driven changes produced benefits into the “oughts”, the first decade of the new century. Unfortunately, the dynamic pace of new firm creation based on economic, trade, relocation and technological changes did not strongly continue in the first 20 years of 21st century. New firm creation lagged. Larger firms held onto jobs as they consolidated industries and protected their positions. Venture capital firms facilitated the most successful new companies to quickly expand market share and vanquish weaker competitors. Many Schumpeter disciples worried that the engines of “creative destruction” had lost their momentum and effectiveness.
The Great Recession of 2007-10 destroyed wealth, slowed economic growth, job creation and new firm starts. The Obama-Trump expansion was longer than expected by historical standards, but slower growing. Many critics and commentators concluded that the US had “lost its entrepreneurial spirit”.
New firm creation since the pandemic has basically been 50% higher than before the pandemic.
This is an AMAZING and unexpected result for the US. During the pandemic, economic activity ground to a halt. Supply chains stopped functioning. People stayed home. 20 million jobs were lost. 1 million lives were lost in the US. Many firms closed. Global trade and military tensions increased. Trust in governments, corporations and other institutions was damaged. In 2020, there was no reason to believe that the pandemic would be medically controlled soon, or that economic growth would quickly rebound and resume its trend growth rate. But it did!
The IRS tracks new firm tax license applications. Most firms never really do business, but the ratio of initial applications to real firm creations has been stable through history. The Census Bureau has determined which subset of IRS license applications leads to real new firm creations. Both measures show the tremendous 50% increase between the pre-pandemic and post-pandemic eras.
As Wendy’s Clara spokeswoman exclaimed long ago, “show me the beef”. Did the increased rate of tax applications during 2021-22-23-24 result in new firm creation?
The initial surge in new businesses did NOT include the IT or manufacturing sectors which look ready to benefit from AI and government investment policies. Firm creation should continue at its record pace for the next 2-3 years.
Why/how did this happen? US economy did not see wealth destruction during the pandemic as occurred in the Great Recession. Bipartisan government funding during the pandemic protected small businesses and individuals. The US labor market was strong before the pandemic and recovered very quickly to full employment with high quit rates, high job openings, low layoffs, wage growth, high labor force participation, and new immigrants included. There was no “credit crunch” destroying businesses. Venture capital firms were flush with capital, able to invest in the very best prospects. The US economy was mature as an “information age” economy, identifying opportunities. The virtual economy was mature, allowing individuals with minimal technical skills to easily create new businesses, market their services, and engage skilled resources. Individuals experienced being out of work and at home and determined that they could create new firms from home.
The Biden administration claims that its various public policies have leveraged the “natural” rebound.
