BOOK “HOW I WOULD RUN THE
COUNTRY IF I WERE DICTATOR”
by Argus C. Zall
Foreword: I explain why it would be necessary for me to be a dictator in order to get any significant reforms or solution to the country’s problems: our political system has degenerated into a chaotic collection of special interest groups each of which is competing to reserve for itself a deck chair on the promenade deck of the Titanic, vetoing any reform that would damage its own position. In eleven chapters, I outline my dictated solutions to the nation’s major [problems.
(Copyright July 31 2006)
Why should I write this book? For that matter, why should you read it? Because the country is going to damnation and there’s plenty of room for it; hell ain’t half full yet. And the last five presidential campaigns have studiously avoided all of the issues; not just a few, mind you, ALL of them. I have absolutely refused to vote for either the Republican or the Democratic candidates for President and Vice-President in any of them, but have voted for MYSELF, because I thought I was better qualified to run the country than any of the candidates. At least I had a few ideas about how to deal with some of the major problems facing the country, which, on the record, appeared to be more than any of them did. If any of them had an idea in their heads, the handlers in their respective corners wouldn’t let them mention it for fear it would make some voter somewhere mad.
Unfortunately, in our televised politics, it now appears that elections are not won, they are lost. And even sadder, they are lost because of honesty. If anyone really says what the hard choices are going to be, he is going to lose far more votes from people who KNOW THEY are going to be hurt than he will gain from people who THINK it may be best for the country.
The country has become one vast conglomeration of special interest groups, ranging from the smallest, ME, to the largest (at least the largest noisemaker) the National Rifle Association. Everybody is concerned with what will advance his or her own interest, or his particular clan’s interest, regardless of whether it’s good for the country or not. We are each and every one of us going to claim the ideal spot for a chair on the Promenade Deck of the Titanic, so we will have the best view of the unfolding tragedy and will be the last to get our feet wet.
In 1953 (or was it ‘54? I don’t remember) “Engine Charlie” Wilson (president of General Motors) made a terrible gaffe. While being quizzed by a Senate Committee in his confirmation hearings as Secretary of Defense in the Eisenhower Administration, he said that he thought what was good for General Motors was good for the Country. You wouldn’t believe the uproar in the press (the television newsmen hadn’t acquired the status of gurus yet). You’d think he had peed on the Flag. He finally got out if it by alleging in effect that he “misspoke himself” (to borrow another deathless phrase from a later political scene), that he had really intended to say “What’s good for the Country is good for General Motors”.
Today, I wonder what all the fuss was about. Every single special interest, one-issue pressure group not only says but apparently passionately believes that what’s good for their own little corner of the world is good for the country. We have become a country that is so fragmented into special-issue litmus-test clans and tribes that the only way to form a majority to decide anything is to pander to and collect under one umbrella enough log-rolling minorities, which of course has the quid pro quo that everybody gets their own little baksheesh. Everybody gets his payoff. Western cattle-ranchers railing against Medicaid suck up to the public trough for subsidized water. Every religion demands that its own particular version of God’s will be codified into the law of the land. The damn New England Yankees want all the benefits of cheap oil, but they want the mess in Prince William Sound or the Gulf of Mexico, not the Gulf of Maine. Labor Unions want MORE, but they want cheap goods too, so American jobs get shipped overseas.
Public employees protest that they are overworked and underpaid, but every year there appear to be more of them, as if they are multiplying by the table of nines.. The costs of public services that we took for granted a quarter century ago exponentiate by the rule of 78, so we can’t afford them anymore, even though by any measure, the country is infinitely richer now than it was then.
What makes me think I have any business prescribing a way out of the mess we are in? Well for one thing, I’m not running for anything. I don’t have any handlers in the corner trying to execute “spin-control” programs to weasel-word me out of anything I say that is going to cost some pain. For another thing, I’m now retired, with a reasonably comfortable pension, so I can’t be fired if I gore somebody’s ox. If people don’t like what I prescribe, well that’s tough. I don’t care. Take it or leave it, but at least I will have said what I think, and I will have aimed squarely at what I think is good for the COUNTRY, and not for any damned selfish little inbred clan.
But really, what qualifications do I have to prescribe? What makes me think I know something nobody else does that gives me the right to say “do this” or “don’t do that”? The answer is, no qualifications really, except that of many years of living and learning and acquiring a bit of knowledge here, a bit of common sense there. And, in all truth, most of what I will have to say seems to me to be little more than common sense, that nobody in public life has the guts to say.
However, most of my prescriptions, however obvious, are politically impossible to execute, because every last one of them steps squarely on the tits of some sacred cow. Consequently any politician who had to run for election or re-election would rather wear purple pajamas to a diplomatic reception than propose, vote for, or implement any one of them. Besides, I can’t figure out who runs the country anyway. The President certainly doesn’t, as Ronald Reagan found out to his sorrow when he rode into Washington in 1981 with a mandate to cut Government EXPENDITURES and taxes. The Congress is incapable of running anything, not even itself. Half the time, it can’t even pass a budget in a timely fashion, but lets the Government limp along under continuing resolutions until it votes in multi-trillion-dollar packages in one omnibus bill the contents of which that not one single Senator or Representative has a clue about. The nearest thing to an organization that runs the country is the federal court system. It appears to be the only branch of government that can make a decision and make it stick. No wonder we are in deep trouble!
So when I decided on a title for this polemic, the words that I chose were very specific. How I would run the country, if I were a dictator, and didn’t have to negotiate with those well-known foreign powers, Congress and the courts. Having so cavalierly dismissed the Constitution in regard to the organization and operation of the Government, I will still say that none of my prescriptions will violate the letter or the spirit of the Bill of Rights, in which the fundamental rights of the citizenry are guaranteed. Many of the ideas herein are not original; they have been proposed and shouted down before. In every case in which I am using a borrowed idea, I have fleshed it out with considerable detail to satisfy myself that it is indeed practical. Moreover, this is the first place in which all of them are assembled into one coherent program.
Now that I have disposed of my motives (crotchety cussedness) and qualifications (none) for writing this manifesto, I better make a little list of the problems I am going to illuminate with the piercing gaze of my wisdom, if for no other reason than to keep my fulminations organized in some semblance of a priority order. From the list, I think you’ll see that I stand foursquare on the Pogo Platform: “We has met the enemy and it is US” (with a tip of the hat to the late Walt Kelly).
In order, highest priority first: Deficits (Federal Budget and Trade); National Defense and Security including Immigration; Crime and Punishment; Drugs; Health Care; Public Education (or lack thereof); Money; The Environment; American Business.. You will note that the majority of these are either internal problems or are exacerbated by our internal mistakes, and will require internal solutions. The fact that our worst problems are of our own making is a splendid opportunity, because we can cure them entirely by ourselves.
This is a book about how we can do it.
Chapter 1: The Federal Budget Deficit
In this chapter I decree a number of steps to eliminate the
budget deficit as a necessary first step before I can tackle any of the other
problems we face.
THE FEDERAL BUDGET DEFICIT
(Copyright July 31 2006)
You may be surprised that I have chosen the Federal Budget Deficit as the problem to attack first. The reason is that our international problems are made much more difficult to deal with because of it. As we shall see, foreigners own a large fraction of the bonds that comprise the National Debt. Since the prescriptions I will propose in other areas will have a strong negative impact on these creditors, their natural reaction will be to a) stop buying newly-issued bonds; and b) dump at least some of the bonds they already hold. At the very least, this will result in a significant increase in the interest rates required to float new bond issues, interest rates that will percolate throughout the economy, exacerbating the pain that the reform prescriptions will impose. To coin a new “old saying”, “It is most unwise to fart in your banker’s face.”
The first step is to get our own house in order.
Let’s start with some simple numbers. (in TRILLIONS OF DOLLARS)
(Statistical Abstract of the US Census Bureau (Hereinafter abbreviated “SATUS”) (2006) Table 459 (GDP determined by dividing outlays by stated percent of GDP)
and SATUS (2006 Table 706 (CPI determined from 2004, last year given, by adding 3%)
Two problems are glaringly obvious. First, because of the
Bush tax cuts, Federal revenues did not grow at all between 2000 and 2005,
although the GDP increased by 25%. Second, Federal Expenditures
grew 56% faster than the GDP. If the expenditures had increased only as fast as the GDP, they would have been 2.24 trillion in 2005, reducing the deficit by 0.24 trillion.
The Bush tax cuts were supposed to be paid for by allowing the economy to grow faster. However, the economy grew 25% between 2000 and 2005, slower than it had grown between 1995 and 2000, under the higher tax regime prevailing then. One must conclude that the fundamental assumption on which the tax cuts were predicated was wrong. They did not cause the economy to grow fast enough to pay for themselves.
I will start with the fact that there is believed to be $345 billion in income tax that goes uncollected each year. (Stephen J. Dubner and Steven D. Leavitt “Tax Honesty comes not from altruism but fear” Boston Sunday Globe, Business and Money Section pp F1 and F6, April 2 2006) Much of this is in the category referred to as “non-farm- proprietor’s income”, ie a category in which income is reported only by the recipient, (such as small business owners with heavy cash components to their receipts) with no independent corroboration. Addition of just one-half of this amount, $0.17 trillion, to the present income tax receipts would bring total federal revenues to $2.22 trillion, and reduce the deficit to $0.26 trillion
I would politely suggest to all those who have underreported income that they would find it advisable to file amended returns for the previous three years reporting the correct amount; I will waive interest and penalty charges and any criminal charges that might otherwise be imposed. They should note that within a few years, I will be instituting a cashless electronic system of settling all accounts. (See Chapter 9) Under court order, tracers can be put on any account to determine all transactions into and out of it, so that the net income can be verified. Serious discrepancies between actual and reported values for receipts, expenditures, and net income will result in serious jail time. It will be much to every taxpayer’s advantage to correct any prior discrepancies now, and to walk the straight and narrow path in the future, before this day of reckoning arrives.
If the corrected returns failed to provide the necessary income, I would not hesitate to mandate a surcharge on all taxes. The next step will be to require a 10% cut in total expenditures. This will bring expenditures to 2.24 trillion, and revenue to 2.40 trillion; the 0.16 trillion surplus will go into an emergency fund, to cover such things as natural disasters or other emergencies. In future years, the surplus will go towards a) replenishing the emergency fund, and b) debt retirement.
This will be only a temporary expedient, however, to buy some time to make real reforms in how the Federal government budgets and spends. The problems are systemic, and can only be rectified by a complete change in the way it does business.
One of the problems is that the Federal Government makes absolutely no distinction between capital outlays and current expenses. If you tried to run your corner grocery store the same way the Federal Government runs, the IRS would have you in jail for improperly charging against this year’s income the expense of a new freezer cabinet that it claims will last ten years. You have to capitalize it and charge off only one tenth of the expense against any one year’s income. The town where I live routinely issues revenue bonds to pay the cost of a new school over ten years instead of charging it in one lump sum the year it is built. The cost of amortizing those bonds is then added into the operating budget of the department for which the expenditure is made. That is the fundamental purpose of going into debt; to pay for a capital asset over the time it is going to be used.
On the other hand, if the Feds build a new office building (read “Taj Mahal”) for those hard working servants of the people, the US Congress, construction costs are charged in full the year they are incurred, even though with a little bit of luck, the thing will outlast the incumbencies of most of its occupants.
So the next edict I would issue as Dictator is that all budgets must be separated into capital and operating expenses, and I would have an absolute balanced budget. Operating expenses plus the cost of amortization of revenue bonds for prior capital expenditures must be met in full by tax revenues in the year they are incurred. Then it is possible to look in a rational way at the capital expenses and prioritize them the way any business or family would do. How much can we afford in the way of “mortgage payments” on revenue bonds. That will dictate how much we can afford to borrow for needed capital additions and improvements.
Next, I would require that Congress debate no other matter on the floor or in committee from the beginning of its session until the operating budget was appropriated, the capital budget was appropriated, the debt retirement budget was appropriated, and the necessary taxes to pay for these were levied. Then and only then could it debate all those stirring issues that attract so much attention on the national TV news: investigations of executive malfeasance, legislation against every conceivable peccadillo except picking one’s nose in public. To ease the burden on the legislators, they would only have to do the budgeting once for each two-year session of Congress; the budget would be a two-year budget. That way, they will be able to spend the last three quarters of the second year running for re-election (as they do now anyway) without leaving the finances of the Republic dangling in air. The least harmful thing the Congress does is run for re-election. As long as they do the job of providing the funds to meet the budget, the country is far better off if they spend all their time running for re-election.
And, by the way, I would abolish the two-step “authorization” followed by “appropriation” process now in use. Today, one set of committees works out the “authorization” of the budget and its expenditures, and a totally different set of committees “appropriates” the funds, paying only nominal attention to the work of the authorizing committees. With my new system, once the budget is authorized, the funds will automatically considered to have been appropriated. The House of Representatives will have the sole responsibility for developing, authorizing, and appropriating the budget. The Senate will have only line item veto power. Since senators can threaten to veto some representative’s cherished pork, they will still have leverage to get their pork-barrel items included in the House’s budget.
Having developed and appropriated the operating budget and its expenditures, the Congress must then levy the taxes to pay for them in the same fiscal year. There can be no greater fiscal discipline imposed upon a spendthrift politician seeking re-election than the realization that he will have to go before his constituents and explain why their taxes increased during his tenure in office.
With operating budget settled, the attention of Congress could turn to the capital budget, determining the investment of the government in new capital infrastructure, issuing the bonds to pay for it and levying taxes to cover the amortization costs thereof.
Then, I would absolutely prohibit the Congress from attaching any amendments to any legislation that was not fully germane to the purposes of that legislation; such amendments would be ruled “out of order” by the Parliamentarian (as indeed they are in my Town Meeting assembly, and should be today in the Congress). Any such legislation desired would have to be introduced in “stand-alone” form, to be debated and voted on by the full Congress in full view of the public. That, together with the elimination of “earmarks” attached to the budgets of the several departments would essentially break the power of the lobbyists who gather around the Capitol like flies around a pile of horse manure.
In addition, voice votes or show-of-hand votes will be abolished. All votes must be recorded, and I would require every Congressman and Senator to swear under penalties of perjury that he had read and understood every word in the bill or amendment he was voting on, as part of the voting process. No more hiding behind the skirts of committees, or of non-elected congressional staff. Everything in Congress must be public, and every member will be held accountable. for his votes, or the absence thereof.
And finally, I would retain for myself as Dictator a line-item veto to use to eliminate the vast majority of “pork-barrel” items and earmarks.
You may ask why I would even allow Congress to exist; after all, I have said I would be a dictator. But there still need to be some checks and balances in the system. My intent is to prevent single–issue, special-interest minorities from blocking all progress and reform. So I will have to reform Congress as well. First, I will abolish all political parties. Second, I will decree that all cash raised by any candidate for election or on his/her behalf must be raised within the electoral district or state. No outside money will be allowed to influence the election. The job of Representatives and Senators is to represent the interests of their districts and states to the nation, and the interests of the nation to their districts and states, not the interests bought and paid for by cash-rich litmus-test super-minority groups.
Then, I will redistrict the entire country by computer, subject to the constraints that all districts must be equal in population within ten percent, and that the ratio of district perimeter to the square root of district area can be no greater than 5. (The values of this ratio for a circle, square, 2:1 rectangle, and equilateral right triangle are 3.54, 4.0, 4.24, and 4.82, respectively.) No consideration of ethnicity or race of the populations within the district are allowed. Provided the above conditions are met, district boundaries may conform to municipal or county boundaries.
Since there will be no parties, there will be no primary elections. All candidates will run in the general election. If no candidate achieves a majority, the top candidates whose votes in the general election totaled more than 50% will face a run-off election two weeks after the general election, If no majority in the runoff election is achieved, runoff elections will be repeated at two-week intervals until one candidate receives a majority vote.
Congress shall have the right to veto by a two/thirds majority in both houses (of the total membership, not merely those present and voting) any of the programs I dictate. I will then call for a general election to override the veto, to be held within two weeks. Registered voters will receive in one envelope a document from me giving the arguments in favor of my reform plus a document from their representative and senator explaining the reasons why he/she vetoed it or supported it. No other information or argument pro or con will be allowed before the election. Since there would have been ample public debate before the Congressional-veto vote, there is no need for any strident posturing before the override election. Voters wishing to vote on the matter will be required to show at the polls that they have received the informational materials and demonstrate that they have understood it by reciting from memory at least one argument pro and con, before they will be allowed to vote. A two-thirds majority of the national vote will be required to sustain the veto; otherwise it is overridden. Any member of Congress whose district or state fails by simple majority vote to ratify his vote in Congress will be deemed to be unrepresentative of his/her district and will be removed from office. A replacement will be elected in a general election two weeks later (in which the removed member of Congress is free to run).
Thus, Congress and the people will have the right to overrule a dictatorial ukase that is vehemently opposed by a majority of the country. My dictatorial powers will be limited merely to prevent noisy minorities from buying opposition to correcting the ills that beset our nation.
So, how am I going to cut expenditures by 10% without leaving the Nation defenseless, or turning old people out into the street? Watch, and I will show you. First of all, let’s look at where the majority of the money goes. (SATUS 2006, Table 463) It turns out that 75% of the expenditures are in just a few major categories. See below (billions)
If we are going to cut expenditures, by $240B, these are going to have to be cut to the tune of $180 billion, because in the deathless words of Willie Sutton, when asked why he robbed banks, “That’s where the money is!”
Like I said, it’s really going to take a dictator to do this job, because I can hear the screams already. “Social Security is Sacred”; “you can’t cut Health and Human services, it’s already bare bones”; “the country will be naked before its enemies” etc., etc., etc.
I will postpone the discussion of the Defense and Homeland Security budgets until a future chapter, because I have some major changes to make in the operation of these departments.
Social Security I would cut by admitting what everybody knows already. It is not an actuarial retirement system, but a transfer system taxing working people to pay income to people who have retired, whether they need it or not. Therefore, I would institute a means test for social security. We presently do not make social security payments to otherwise-eligible people who earn wages or salaries or other personal-service income, on the very rational grounds that “they don’t need it”. At the same time we do pay people with very comfortable pensions from their former employers, as well as millionaires with investment income so big they can’t spend it all.
There are 31 million persons in the US aged sixty-five or older who are collecting social security retirement pay (SATUS 2006, Table 530); 11 million of these also have other pensions, 19 million collect property income (interest, dividends, rent, royalty, estate, trust fund). The wealthiest of these receive higher social security payments than average, because they mostly paid in the maximum during their employed lives. With a means test eliminating 2 million (7%) of the present recipients on the average, I would save 10% of the present outlay, $52 billion.
Approximately 15 million out of 130 million Federal tax returns in 2002 (SATUS 2006 Table 474) reported an adjusted gross income above the cutoff limit for social security taxes ($84,900 in 2002). At present, only wages and salaries are taxed, and only up to the cut-off limit. First of all, I would abolish the cutoff limit, and I would tax all classes of income except for tax-exempt municipal bond interest. These changes would easily increase the total social security tax collection (approximately $490 billion in 2005 (SATUS Table 536, value for 2005 estimated from last year given, 2004) ) by 10%, or $49 billion.
There are 139 million people in the US who were employed in 2004, say 140 million in 2005 (SATUS 2006, Table 576) Of these 21 million were employed by federal, state, and local governments (SATUS 2006, Table 451) These pay no social security tax, on the grounds that “they have other pensions”. However, virtually all of them will work for five quarters in a social-security-taxed job after retirement from government service, and thereby qualify for the minimum social security benefit in addition to their public-sector pensions. This practice is as old as the social security system itself, and goes by the very descriptive term of “double-dipping”.
I would bring these workers into the social security system, raising the tax income to the system by 15%, or $73.5 billion.
All together, these changes in the social security system increase its income by $122.5 billion, and reduce its outgo by $52 billion. Although together they achieve a major fraction of the goal of deficit reduction at present , they merely postpone the ultimate problem into the future; those 21 million government workers will eventually retire with full social security pensions.. To save the system completely we will need “private accounts”. However, these will be financed not with a diversion of present taxes (7.5%), but with an additional 2.5% levy. Funds generated from this assessment will go into a personally-owned account in the earner’s name, which will be invested in an age-appropriate mutual fund, managed by expert financial professionals. The stock portion of this fund will be invested in a portfolio of index equity funds, while the bond portion will be invested in a portfolio of Treasury Bonds, of laddered maturities.
Medicare I would treat the same way, with a means test eliminating the wealthiest 7% of the present recipients. This will probably only save 5% of the outlays, because this fraction has been able to afford better medical care all along, and is probably healthier than average. However, that is still $11 billion. I would, however, require that these persons only pay Medicare’s price for any services they receive which would otherwise be covered by Medicare. That this is a non-trivial benefit is illustrated by an example I recently experienced. I recently had a pelvic and abdominal CAT scan for which the billed charges were $3029; Medicare paid $437.
When I deal later with the entire medical-care industry, I will be able to make further savings here (See Chapter 7). I would act immediately, however, to end a major abuse of society’s willingness to help those in need. This is the dodge to offload onto Medicaid the job of taking care of the elders, used by families who can perfectly well afford to do it themselves (either with paid help at home or in nursing homes). The old folks give away their houses and other assets to the kids, call themselves paupers, and check into a nursing home with the taxpayer picking up the tab. I will extend the means test for Medicaid paying nursing home bills to include the assets of the offspring as well as the old folks. I mean, give us break!. Parents are expected to support the kids when they are young and not economically self-sufficient. In my system of values, the kids should reciprocate and support the old folks if necessary in their declining years. To beggar the oldsters and dump them in a nursing home paid for by the taxpayers is an abdication of that responsibility. I would deny Medicaid support to families who really don’t need it because the kids can help out. This change will not really save all that much money now, maybe a billion or so. However, it will nip in the bud a growing trend, and head off much bigger costs later on. If the few who are doing this now get away with it, millions will do it in the future; they would be suckers not to.
The interest on the national debt might seem quite inflexible, and not amenable to reduction at all. However, the contrary is true.; taking the federal government impact on the capital markets of the world from a $450 billion withdrawal to $160 billion deposit, plus the injection of billions of dollars of Treasury bond purchases by social security private accounts should permit long-term interest rates to drop. A ten percent decrease would reduce interest payments by $18 billion.
I will lop all federal subsidies out of the $69 billion transportation budget. Every system of transportation has to pay for itself. Automotive transport (roads, bridges, traffic control) must be paid for entirely by taxes on fuel, and possibly on the vehicles themselves. Air traffic facilities and control have to be paid for by surcharges on tickets. If these subsidies are eliminated, rail traffic may become more competitive, and not require subsidies to exist. I think an easy $7-10 billion can be achieved here.
Another area where I will get savings will result from the elimination of the cash transaction system, and putting the whole economy on an electronic debit card basis. As I will explain more fully in Chapter 9, this will make it a lead pipe cinch to garnish wages or other receipts, regardless of where the individual is. I will use this to force runaway fathers to pay for supporting their children, thereby eliminating the need for a substantial fraction of the aid to dependent children.
I won’t quantify the savings here until the reform it depends on is in place., but I would guess that I ought to be able to save $10B without reducing the income of a single poor person (except the irresponsible fathers)..
Another area of government that is also a prime candidate for financial amputation is the Department of Agriculture. It spends around $26 billion a year in price supports, raising the price of food, while Health and Human Services spends another $53B to subsidizing the poor so they can afford to buy the food at the artificially inflated price. (SATUS 2006, Table 463)
This is a somewhat difficult area, because there is a real problem for farmers in the economics of farming. As the agricultural market is presently structured, the farmer bears all the risk and shares in very little of the profit. The agricultural subsidy system is a Depression-era invention designed originally to push some of the risk onto the taxpayers.
Look at it this way. The farmer must estimate how much crop he can sell nearly a year before he sells it, and he is flying blind as to reliable information about what the price will be. He has better odds at Las Vegas. He has to borrow money, usually from the Farm Home Loan bank (insured by the taxpayer), mortgaging the only asset he has, his farm, to finance the planting and harvesting. The total income he gets from the crop depends on two things: how good his crop is, and how high the price is.
If he has a great crop, chances are all the other farmers growing the same crop had a great crop too, and the price drops to absurd levels, and he doesn’t make enough to pay off the loan. Two or three years of great crops, and he is bankrupt. If it was a terrible year, due to drought or hail or other calamities, he has a lousy crop. Probably everybody else had a lousy crop too, so the price is high, but he hasn’t got enough crop to sell. He still doesn’t make enough money to pay off the loan. At both extremes, the farmer loses his shirt.
The only time the farmer makes a profit is when everybody has a sort of mediocre year, so that the price doesn’t collapse, but he still has a reasonable amount of crop to sell. This might happen one year in three. The agricultural subsidy system was originally designed to put a floor under the price by having the government buy surplus in good years, and selling it back in poor years when the price was high. You would think this would be a profit center for the government because it would always buy low and sell high. However, for political reasons, the floor price has always been set too high, so that the big farm combines found it profitable to get into the business of producing enormous surpluses solely to sell to the government. In very few instances has the government ever been able to sell high. It usually gives the surpluses away: cheese, anyone?
In the meantime, the processing of farm crops has increasingly been taken over by giant agribusinesses: Archer-Daniels Midland, General Mills, Kellogg, Ralston-Purina, Conagra, and their ilk. These people make money in good years and bad. I know; I have been an investor in this business area, and I have read their annual reports. When crops are poor and the price high, they tack on not just the crop price increase itself, but the increase plus their “traditional mark-up” on that increase, even if none of their other costs have increased at all. Their profit increases in poor crop years. When crop prices go down in good years, they drop the price of their food products to the customer by the amount of the crop-price decrease, but leave the previously-added mark-up in place. They bear none of the risk inherent in the agricultural gambling with nature, and they make far more profit than the farmers. So the farmer has only the taxpayer to turn to.
It would be unfair and unsound to get the taxpayer out of shouldering the farm-risk by dumping it back on the farmer. As Dictator, I would make the agribusiness giants shoulder a big share of the farm risk; after all, they get the lion’s share of the profits.
Here’s how it would work.
Prior to the start of the crop year, the agribusiness food processors would be required to estimate their total demand for each major food crop for the coming year, and to contract in advance to buy 80% of that requirement. These contracts would be sized in amounts convenient to a majority of the farmers, and would be sold by silent auction, through farm cooperatives in the growing states. Farmer A, who knew what his costs were, could estimate how much he could grow at what cost, and bid on enough contracts at a price to make a profit. If Farmer B had lower costs, his bid could be lower in price, and he would be more likely to sell all he could grow than Farmer A. Of course, both of these are in competition with all other farmers across the Nation in bidding for these contracts, but each one would know about how much he could sell before seed one was planted. For its part, the agribusiness would buy some crops at very low prices from the most efficient lowest-cost farmers; it wouldn’t be able to satisfy all its requirements in that way, and would have to buy other crop at higher and higher prices. In practice, therefore, crop contracts would be bought over a wide spectrum of prices to make up the eighty-percent of total requirements. Hopelessly inefficient farmers would be unable to bid low enough to capture any contracts, and would have to grow other less-competitive crops or get out of the business entirely.
The agribusiness would have to make a down payment of 75% of the purchase price at the time of writing the contract, the balance to be paid on delivery. Thus the farmer has his financing in hand at planting time, and doesn’t have to mortgage the farm to get a crop in.
Of course, the smart farmer, knowing that only eighty percent of the market has been bid for, will plant a little extra to try to cash in on the spot sales needed to make up the difference. Suppose it is a great crop year, and the harvest is bountiful. The spot price drops, because there is a surplus of crop planted on speculation. But the farmer still collects the balance of the contract price for the contract crop. He will probably not be able to sell all of his extra crop, and that which he sells will be at a rockbottom price. However, this was incremental production, and anything he gets for it is gravy. The only role of the government in this market will be to store the unsold speculation crop for him at reasonable cost (but not at a loss!).
However, the farmer still makes the profit he figured when he bid on the contract crop, even though there was a great crop surplus, and he gets some of the incremental gravy. Unlike the result in the present system in the absence of price supports, a great crop year is a benefit to the farmer instead of a financial disaster.
If it is a poor crop year, and the farmer does not get enough yield to meet his crop contract commitment, he either withdraws from storage some of his surplus crop from a previous year, or buys the shortfall at the spot price to add to his yield enough to meet the contract commitment. This is not the ideal situation, but if he has figured reasonably conservatively, he probably won’t be destroyed by a bad crop year.
This system will tend to be fairly self-correcting. After a great crop year, when every farmer will have in storage unsold surplus speculation crop from the previous year, the contract bids will all be lower as farmers bid first to move the surplus to market, perhaps even to the extent that some farmers sell only surplus from storage, and don’t plant a crop at all. Not necessarily the ideal for them, but- and it’s a great big but- they will know before touching a plow to the south forty whether they should plant or simply let the field lie fallow for a year. They will know the major fraction of their own market situation before planting time, not at harvest time. At least they won’t bet the farm on a mortgage to plant a crop they can’t sell.
The risk to the agribusinesses will come in deciding whether to bid out more than eighty percent of their requirements, to protect themselves against shortages and high spot prices in the event of a bad year. The risk is, of course, that in a great year they could buy the balance of their requirements at a low spot price. They are in a lot better position with their market intelligence to estimate these risks than the individual farmers are. The agribusinesses also bear the financing cost of the 75% down payment. Again, they are in a much sounder financial position to do this than the farmer; they don’t have to bet the farm to get the financing.
Since a major fraction of the market risk and all of the financing costs have been offloaded from the farmer to the agribusinesses where they belong, there will be no need for the government to set floor prices and buy surpluses to assume some of that risk. Consequently, the Department of Agriculture budget can go down by $26 billion a year: not a vast sum in the present situation, but as Tip O’Neill once said “A billion here, and a billion there, and first thing you know, it adds up to real money.”
So, let’s do a little addition: More effective tax collection, $170 billion; Social Security, $52 billion saved by a means test; Medicare, $11 billion by the same means test, plus $1 billion from elimination of beggaring the old-folks so that Medicaid pays for their nursing-home costs; Interest, $18 billion by reduction in the interest rates; Transportation, $7 billion from elimination of subsidies; Garnishment of absent-father wages for child support, $10 billion; Agriculture, an average of $26B. Total, $297 billion savings, without any real damage to the poor, or to oldsters for whom social security is the only lifeline. On the plus side income of the social security system is increased by $122.5 billion. The total net swing from these changes in reducing the deficit is $419.5 billion, eg almost wiping it out.
The balance, I am going to get by introducing efficiencies in operation of all government departments. First of all, I will abolish all public sector unions. Public sector employees are protected under civil service laws and do not need unions to bargain for their wages and working conditions. These employees may form associations to lobby for their own particular points of view, but they will not have any say in the wage structure or working conditions, such as staffing of the various bureaus and agencies.
Second, I will change the way budget overages and shortages are managed. At present, no agency or department head wants to see his organization spend less than the budgeted amount. It is considered a colossal mistake to return any unspent funds to the Treasury; hence in any bureau with an unspent balance, at year-end there is an orgy of purchasing all possible supplies that might remotely be needed in the future. Moreover, there is a huge bias toward overstaffing. A Civil Service manager’s pay grade and salary are determined by how many people report to him. Therefore, he does not look to see how efficiently the job can be done and with how few people, but how inefficiently it can be done, and how many more direct reports he can claim to need. Finally, there is no independent feedback process to determine how well the organization does its job.
I will change all of these factors. First, each agency will have to identify those who are the customers for its service. Those customers will at fiscal year end be surveyed to rate the agencies’ performance as Outstanding, Acceptable, or Not Acceptable (Guess where FEMA would land on this scale). If an agency’s performance is outstanding, 75% of any budgeted funds remaining would be distributed among the employees, to each in proportion to salary. If performance is acceptable, only 37.5% of surplus would be distributed as bonus. If performance is not acceptable, the staff would all take a 10% cut in pay.
Since salaries constitute a significant fraction of an agency’s budget, there will be an impetus for the manager to minimize staffing: to reduce total salary costs, and to stimulate his subordinates to work particularly hard, in order to achieve the coveted outstanding rating at minimum cost. Since every member of the organization shares in the resulting bonus, they will have the incentive to deliver maximum performance as well. To remove the civil service bias toward overstaffing, I will make every manager’s pay grade depend on the achievement rating from customers rather than the number of direct reports.
With this change in the way the government operates, I will save enough more money to complete the job of balancing the budget, $10.5 billion. I will also reduce government employee head count, and perform all the government functions better
Having reduced the costs of government to bring them closer into balance with current income, I would then have a moral basis for telling the citizenry. “Read my lips! your taxes are going up to finish the job. But a good fraction of the increase will be earmarked for one and only one purpose, to reduce the National Debt.” Having seen that a hose clamp has been put on the umbilical cord of the government, the citizenry will not grumble too much, I think, about being asked to do its share in correcting the excesses of the last five years.
As a temporary expedient, because I don’t want to fight battles on too many fronts at once, I wouldn’t tackle at this time the abomination known as the Federal Income Tax. Reform won’t save it; nothing less than abolition and starting over will do. However, I would postpone action on this subject until later in my Dictatorship (and later in this book) until I got a few other things straightened out first. So for now, I will simply levy a surtax on every tax the Federal Government collects,
Now that I have rammed through an American Perestroika to get the economy back on course to generate the wealth that makes the country great, and to produce the funds with which to solve social problems, I will turn my attention to some of those problems.
Chapter 2: Trade Deficit
In this chapter I would solve the trade deficit by decreeing
that we can buy from abroad only for cash, not credit; ie only to the extent
that we had earned the money by selling abroad. I provide a simple
freely-tradeable “export credit” method of accomplishing this.
(Copyright July 31 2006)
The US has run a persistent deficit in its trade with other nations since the 1970’s. Beginning in about 1981 the trade deficit resulted in our current accounts exchange with the rest of the world going into deficit. We have had a current accounts deficit every year since then except 1991. Post-1991, the current accounts deficit has increased every year, reaching a record $618 billion in 2004 (SATUS 2006, Table 1287) Sustaining this imbalance for this long has been possible only because the rest of the world believes that our dollars will retain their value, ie, it is putting its trust in the full faith and credit of the US government. The value of our exports, about 60% of that of our imports, amounts to a “down payment” on our foreign purchases. The rest is on credit, in effect, creating a “virtual” debt. Because of the persistent deficit in current accounts, our position as a creditor nation reversed in 1986, and we have become the world’s largest debtor nation. Between 1986 and 2004, our cumulative current accounts deficit with the rest of the world totaled about $3.5 trillion. In 2004, our cumulative real and virtual debt amounted to about 30% of Gross Domestic Product (GDP), up from around 12% in 1999.
These dollars have been recycled back to us through the sale of our assets to foreign individuals and entities, in the form of investments in US securities and properties, including Treasury Bonds. This finances our trade deficit by converting “virtual” debt into real debt, paying interest and dividends. If those investments earned only 5%, we would pay $175 billion per year, requiring us to achieve a trade surplus of $175 billion just to get even. Even more to the point, foreigners now own an increasing proportion of American businesses. Decisions affecting those companies, their employees, and the communities they do business in, are made in foreign locations, for the benefit of foreign interests. In addition, our foreign policy may be constrained in the future by the necessity to avoid offending foreign creditors.
Let me calibrate rather clearly for you the magnitude of our sales of the family jewels. In 2006, Lucent Technologies, a telecommunications company was bought by a French company, Alcatel. They called it a “merger”, but the combined company will be incorporated in France and headquartered in Paris, with 60% control in the hands of the Alcatel fraction. (If it waddles like a duck, quacks like a duck, swims like a duck, it is a duck regardless of what other euphemism you wish to use to refer to it). Lucent Technologies is the corporate home of the world-famous Bell Telephone Laboratories. Scientists at these laboratories invented the transistor, the basis for the entire solid-state-electronics revolution, including the ubiquitous personal computer and cell phone systems. We have long since sold off much of this industry, which had created enormous wealth for us, and is now doing similar wonders for the economies of Asia. Now we are selling off the goose that laid that golden egg.
If we continue with business in this mode, the day will soon be here (if it isn’t already) when the rate of the sale of our assets exceeds the rate at which we can create them Then, we will eventually not have enough assets to sell. That is, we will be bankrupt, just like the family living beyond its income on credit cards. When the cards are maxed out, take out a home equity loan, pay off the cards and repeat the whole cycle. Eventually, the family gets to the point where it can‘t remortgage the house, can barely pay the interest, and has no hope at all of paying off the principal.
We better change things before we get there, while there is still time.. In order to get out of this mess, we need first to take a minute to analyze how we got into it.
Unlike most other players in the international game, we have always been on the side of free trade. Again, that’s part of our heritage. The touchstone of the American Revolution may have been “No taxation without representation”, but the real root cause of the conflict was Britain’s hundred-year attempt to stifle and control the trade of the colonies to its own benefit. We have been determined free traders ever since. Other nations have incredible restrictions on trade. Tariffs, duties, regulations, standards, you name it, they use them all.
It is widely understood by those selling electrical products in Europe, for example, that a fundamental duty of the German VDE, the equivalent of our Underwriter’s Lab (except that it’s a government agency), is to set standards so that only German-made goods can be sold in Germany. The Japanese have an even better dodge: a homogeneous and brainwashed populace, educated to believe that everything Japanese is so superior that any foreign or Gaijin product is worthless in comparison. The only thing they will buy from abroad is that which they cannot produce themselves, and that only until they can copy it. Once the Japanese version is on the market, the demand for the foreign-made article quietly disappears. The Chinese are even more xenophobic, if that’s possible
Other nations subsidize exports and penalize imports. The Value Added Tax “VAT” used by most European nations is an ideal tool for this. It is really nothing more than a complicated sales tax, which is ultimately paid in its entirety by the final customer. All VAT tax is removed from exports, which makes the article 15-20% cheaper on the dock headed overseas than the locals can buy it in their own emporia. The citizen trying to buy an imported item in any European country of course must pay the full VAT on it. Imports subsidize exports in every country in the world except the US.
We, of course, charge the manufacturer of export goods an income tax, whether the goods are exported or not, and this tax is built into the cost of the product on the dock being shipped overseas. So the poor foreigner trying to buy our product as an import must pay our tax plus his own VAT. He has to want it pretty badly for us to make that sale.
There is a great incantation among the so-called trade experts in our Department of Commerce and our Department of State about negotiating “level playing fields”. I’m not sure what that means, other than the Japanese will let us sell all the oranges we can ship that meet their standards for color, sphericity, texture, taste, sugar content, etc., if we let them sell all the cars they can ship. They can’t grow oranges, and they love them. We could ship them rice for one tenth their local cost, but you would think from the hullabaloo that we were asking them to surrender their manhood by even thinking about it. We try to jawbone the Chinese into revaluing the yuan to make our goods cheaper there and their goods more expensive here. Why would they want to? The status quo suits them just fine, and since we no longer make many of the products we buy from them, we are pretty much stuck with the situation.
The shining example of this type of negotiation is, of course, the famous “NAFTA” agreement, which was supposed to create the world’s largest free trade zone, create vast new markets for our goods, and provide jobs to keep the Mexicans at home. Here’s how well it’s working (SATUS 2006, Table 1293) : In 2000, our merchandise trade deficit with Mexico was $24.5 billion; in 2004 it was $45 billion. Our exports to Mexico didn’t increase at all over that time span, while their exports to us went up some $20 billion. Corresponding deficit figures for Canada were $51 billion and $65 billion. All in all, I don’t think it’s been a winning hand for us. We hand the Mexicans $45 billion to keep their people at home, and they send us a million illegal immigrants a year in exchange.
So, multilateral tariff reductions, bilateral negotiations, regulatory bars to free trade, whatever, all work to favor the rest of the world, and leave us increasingly naked. Incidentally, the first thing I would do when I became Dictator would be to fire the entire US Department of State, and close down the striped-pants spawning ground, Georgetown University. Then I would hire union negotiators to staff the new Department of American International Interests. That way I would get people who knew that their job was to represent American interests to the rest of the world, not serve as the Ambassadors of the rest of the world to the US.
A big factor in our slide was, of course the energy crisis, and OPEC raising the price of oil from $4 a barrel to $16-30 a barrel., and now up to $70. Given the fact that we are importing umpty-ump million barrels a day, that has a huge impact on our balance of payments, about $187 billion in the red for 2004 (SATUS 2006, Table 1288) We did cut back for a while, in the ‘80’s but the SUV generation has kicked our current consumption to record levels. A major factor in both Gulf wars was our absolute dependence on foreign oil. If Saddam Hussein had grabbed a hammerlock on the world supply of broccoli by invading Kuwait, I doubt if we would have taken such righteous umbrage.
But there were a couple of other factors too that need to be considered about our economic fall from the pinnacle. After all, 2/3 of our $617 billion tab in 2004 was from other causes than importation of oil.
First of all, after World War II, we rebuilt the industries of the world, most especially these of our former enemies. It has gone into the record books as the ultimate generosity of a victor to the vanquished. Be that as it may, if we took away the weapons with which they were shooting at us in World War II, we gave them a good start with the weapons of World War III. For we rebuilt their plants with the newest technology at the time, better than the vast majority of our own.
That wouldn’t have been so bad, except that American business began to be run by people who had never been in a factory, by investment portfolio managers. Faced with a choice between investing in newer more modern automated manufacturing facilities, or shipping work overseas to low labor-rate areas, they chose the latter because it didn’t take any investment. Reducing cost without investment increased profit and return on investment, the Holy Grail of every portfolio manager. But even worse, when the demand for this lower-cost product increased, and automation was required, they built the automated factories over there instead of at home. Why? Because it was more profitable, that’s why! Automated facilities plus lower labor rates equals still lower costs.
This is how the electronics industry got exported overseas. It was TV set manufacturer A, trying to get a leg up on B by lowering manufacturing costs with cheap Asian labor and B retaliating by shipping overseas both the work and state-of-the-art automated printed-circuit inserting machines. It was semiconductor manufacturer C shipping first chip mounting and packaging facilities overseas to eke out an edge over manufacturer D, who retaliated by shipping the chip fabrication itself over. So, for the noblest of corporate motives, to make a bigger profit, American manufacturers shipped our know-how to their foreign subsidiaries and suppliers. For their part, these worthies learned very well, and soon began to produce higher-quality ware than the increasingly outdated facilities of their mentors were capable of. And then of course, the students discovered that they no longer needed their former masters, who had become little more than middlemen merchants. There was far more profit to be made in selling direct and cutting out the middlemen.
Much has been made in the media about the problem stemming from unionized American labor, with high labor costs and low productivity, resulting in high manufacturing costs for American made products. I fault American management for failing to recognize that our markets were the target for the entire world, for failing to invest in more modern technology, and for failing to invest in more efficient manufacturing facilities,. They managed strictly in the short term, to maximize profit in the current quarter. I shall have much more to say about the failings of American business and industry in a later chapter. For now, let us leave it that we got into the shape we are in because American business saw it as a way to make more money. They made money selling the country down the river, because there was nothing in the Constitution or the law of the land that said they shouldn’t.
In recent years, not content with shipping American manufacturing jobs overseas, we are now shipping service jobs and engineering jobs overseas. The Internet and the incredible proliferation of computer power has made it possible for nearly any knowledge task to be done anywhere. This started with the “work-at-home” concept, but because knowledge workers as well as factory workers are cheaper overseas, there has been an exponential explosion of outsourcing jobs that used to be the backbone of design and engineering, the one area where we claimed to be the best in the world. The one bright spot in our trade balance has been a positive balance in “Services” However, between 1997 and 2004, the positive balance decreased from $91 billion to $48 billion (SATUS 2006, Table 1287) a direct consequence of our outsourcing service and knowledge-based jobs to low wage areas like India.
Lenin was wrong when he said “When it is time to hang the capitalists, they will compete for the rope contract.” Capitalists are smarter than that. What he should have said is “When it is time to hang a capitalist’s grandmother, he will compete for the rope contract.” Thomas Jefferson said, “Merchants have no country. The mere spot they stand on does not constitute so strong an attachment as that from which they draw their gains.” (Familiar Quotations, John Bartlett, Little Brown & Co, 19th Edition, page 389)
This then is the key. If the unfettered application of the profit imperative got us into the mess, the unfettered application of the profit motive will get us out. We will make it unprofitable to ship American jobs overseas, and unprofitable to import goods we can perfectly well (and ought to) make for ourselves. And by my dictatorial decree, we will do it the same way the near-bankrupt family has to do it: adopt a policy that we can only buy goods and services from abroad to the extent that we have already earned the money by selling goods and services abroad. STOP BUYING ON CREDIT!!!
How can this be managed? First, designate American-owned banks subject to the Federal Reserve System as the only agencies allowed to transfer dollars out of the US to exchange for foreign currency. Require that to send a dollar out of the country, a dollar’s worth of “export credit” must be surrendered. A dollar’s worth of export credit is earned when a dollar comes into this country from abroad in exchange for goods and services. All importers would be required to be licensed, and to have two accounts in the exchanging bank: one in dollars, one in export credits. To buy goods from abroad, they would have first to surrender from their dollar accounts the amounts to be exchanged into foreign currency; second, they would have to surrender an equal amount in dollars of export credits, which are erased in the transaction.
Those companies in the export business would also have similar accounts. Foreign currency received for goods and service sold abroad would be converted to dollars and deposited in their dollar accounts; a corresponding number of export credits would be created and credited to their export credit accounts.
Those requiring export credits to do business will not, in general, be the same as those earning export credits. Therefore, establish a free market in export credits, perhaps operated by the major security exchanges, where those having excess credits may sell their surplus, at whatever premium the market may dictate, to those needing export credits for foreign purchases. Factoring organizations could serve as brokers for small businesses and individuals to facilitate their transactions.
This change is not directed at any one trading partner. There is no requirement for accounts with any individual foreign country to be in balance, and a dollar of export credit will be the same, no matter where it is earned. It will not be necessary to negotiate “level playing fields” with any foreign power or potentate. The system will be self-leveling, and is not in any way a retreat from free trade. It is merely paying the full cost of imported goods and services up front, instead of putting 40% of the cost on credit. In fact, this change should be accompanied by unilateral removal of all customs duties and tariffs, as well as a withdrawal from the World Trade Association, elimination of the “Most Favored Nation” nonsense, and abrogation of all foreign trade agreements. Our borders will be completely open to foreign goods and services; the only difference is, we have to pay for them in cash on the barrelhead. The customs function will be reduced to verifying that incoming goods are accompanied by an invoice stamped “Paid in Full”, and to receiving the importer’s certification that all goods have been produced in compliance with US environmental and labor laws. False representation would result in automatic loss of the importer’s license, and confiscation of his export credits.
Dollars received from abroad for investment would be treated separately, as “Investment Credits”, rather than creating export credits. Income and capital gains traceable to specific investment credits can be repatriated at any time without surrendering export credits, subject to payment of the usual income and capital gains taxes. Repatriation of the original investment would require surrender of the corresponding investment credits.
US citizens traveling abroad would not be permitted to carry US currency, and would be required to surrender export credits to convert US dollars to foreign currency. Expenses charged abroad to credit cards would be allowed only to the extent of pre-purchased export credits. Foreigners visiting the United States would would not be permitted to bring foreign currency into the country, but would receive export credits upon conversion of their foreign currency to dollars. They would be free to sell those export credits for dollars in the open market, thus reducing the cost of their travel in the US. Payment of their credit card expenses, upon conversion to dollars, would also earn salable export credits, amounting to a discount in dollars of their expenditures, further reducing the cost of their travel in the US.
Initially, since the dollar value of our exports is presently only some 60% of the value of our imports, there will not be enough export credits to cover all the costs of imports. Export credits will command a premium price on the open market, perhaps more than a dollar per dollar of credit. This will have the effect of more than doubling the cost of imported goods, as well as doubling the cost of services purchased from abroad by “off-shored” American jobs. Similarly, companies who are strong in the export business, and have a large surplus of export credits to sell, will earn a substantial premium to the value of the goods they have sold abroad. This will make US goods much more competitive in foreign markets and increase our export sales. Either the goods can be sold at a correspondingly lower price, or more features and better quality can be sold for the same price. The increased cost of imports will bring American manufacturing and service jobs back home; exports will be increased substantially by the subsidy they receive from sale of export credits. Eventually, when our balance of trade has shifted to approximate equality of exports and imports, export credits will be widely available, at a cost of no more than a few pennies on the dollar. The subsidies and surcharges will effectively disappear,
It will no doubt be argued that this will drastically increase our cost of living and result in tremendous inflation. Without question, it will initially result in a reduced standard of living, because we will be required for the first time to pay the full cost of our imports, rather than putting 40% of the cost on credit. The same thing happens to a family who has had to undergo the painful experience of cutting up its credit cards, and has been forced to live within its income. The inflationary effect on our economy and the deflationary effect on foreign economies will be ameliorated by a phased introduction over, say, five years. In the first year, export credits equal to 65% of the dollars sent abroad would be required. The second year, the fraction would increase to 75%; the third year 85%; the fourth year 95%, the final year 100%. Thus, there will be ample time for closed-down manufacturing facilities in the US to be reactivated to manufacture goods no longer worth-while to purchase as imports, as well as to ramp up exports to take advantage of increased foreign markets. There will also be time for foreign suppliers to reduce production to accommodate their reduced sales to the US. In full operation of the system, with imports and exports in balance and the cost of export credits being minimal, there will be little or no subsidy to exports or cost penalty to imports; US manufacturers will still have to be cost-competitive against the rest of the world, both for exports and to defend home markets against imports.
A final point deals with the Homeland Security aspects of the importation of foreign goods, which can basically be summarized as non-existent at present. We currently inspect no more that 5% of foreign goods entering the country, leaving a giant hole that terrorists can use to attack us. The stated reason for this head-in-the-sand posture is that it would cost the government (and the taxpayers) too much to provide the number of inspectors and the equipment needed to do the job 100% without unacceptable delays. However, consider that if there were no foreign goods imported there would be no security concerns and nothing to inspect. The cost of proper inspection is therefore a part of the cost of importing goods, and should be allocated to the goods themselves. They have been receiving an unintended subsidy that makes their prices in the US less than they should be. I will discuss in the next chapter how I will use a much expanded military to provide personnel, and build the necessary facilities to accomplish prompt 100% inspection of all goods entering the country through whatever channel, and charge the importers of said goods for the cost of the inspection. A useful byproduct of 100% inspection of incoming goods will be the ability to find other forms of contraband, such as illegal drugs.
To summarize, the prices of foreign goods entering this country have been artificially reduced below their real costs to the nation, both by our buying them on credit and by our failure to inspect them adequately. Therefore, they have had an unfair competitive advantage in our market over US-made goods. The proposals herein, if adopted, would rectify these problems and result not only in drastically reducing our current accounts deficit, but also in bringing many American jobs back Stateside where they belong.
I think you may be able to see now why I have to tame the Federal deficit before I tackle the trade deficit. Some $2.2 trillion of Treasury securities are held in foreign hands. (Federal Reserve Board, Reported at www.ustreas.govtic/mfh.txt) Japan has $673 billion, and China holds $265 billion. When we stop flooding their economies with our trade deficit dollars, not only will they discontinue buying any more, they will have to sell of some of their hoard to finance their continuing economic expansion. Besides, they can make a virtue of this necessity, “punishing” us for our temerity in overturning their gravy train. Other countries may well do the same. The sheer volume of this selling pressure will mean that they will have to sell at a discount, raising the effective interest rate; If we had to sell new bonds into the face of this blizzard of old paper, the interest rate we would have to pay would be astronomical, and cause even more severe upset to our economy.
Another effect of our putting ourselves on a cash basis is that the value of the dollar will rise against other currencies. This will not affect the rebalancing of our trade, because what we buy in dollar equivalents is going to be equal to what we sell. We may sell fewer units of products, and may buy more units, but dollars in and dollars out will be forced to be in balance. A side benefit to us is that such currency revaluation will make our assets more expensive to foreigners, and reduce the sales of our family jewels.
More sinister is the fact that some countries may try to saddle our products with tariffs to try to gain advantage over other countries in trading with us. If, say, France loads a tariff on us while other nations did not, a smaller proportion of our total exports would be to France, and they might retain a positive trade balance with us even though our total balance with the world was neutral.
I would not hesitate to consider such a step to be an act of economic war. I would retaliate immediately by embargoing all products from such a country. They would not be allowed to sell so much as a slice of bread in this country until they removed their tariffs. If this did not work, I would bar all persons carrying that nation’s passports from entering this country, and expelling all of their diplomatic personnel. If they still did not see the futility of their position, I would seize all their assets in this country and use them to pay the tariff for the exporters.
If all other countries were truly rational, they would do exactly what we have done, and put their trade on a cash basis. This would be a good thing, because it would eventually force all trade between all nations to be in balance, with no country getting rich at the expense of another. Thus all trade would be free, and work to the benefit of both parties.
Chapter 3: National Defense and Homeland Security
In this Chapter I decree the reinstitution of the draft of all persons, male and female, between the ages of 18 and 21, with no exceptions or exemptions. With this expanded military, I will secure the borders, and all points of entry into the country including the inspection of all goods, and have enough troops to deal with foreign threats.
NATIONAL DEFENSE AND HOMELAND SECURITY
(Copyright July 31 2006)
My prescription for the Departments of Defense and of Homeland Security reflects the fact that we are in a two-front war: one, a religious war against fanatic Moslem zealots who have vowed to exterminate us wherever they find us; second, an invasion of people and contraband along our border with Mexico. Unless we soundly defeat both of these, we are as finished as the Romans were against the invasions of the barbarians.
To overcome these threats, we need much bigger military forces than we can muster from volunteers. My prescription will be to reinstitute the draft: not just of males, but of females as well, with no deferments for any reason except 100% legal disability. All persons from of 18 and 21 must serve in the military for three years, no ifs ands or buts. In 2004, this age group encompassed some 15,000,000 persons .(SATUS 2006, Table 11). Some would otherwise be attending college, others would be in the work force without having established a clear-cut career direction, others would be simply idle. In this age bracket, most of them will not have settled on a career direction, so that a three-year hiatus will be beneficial; it will give them a larger view of the world. Most have absolutely zero concept of the meaning of the word “discipline”, since there is no organization in civilian life that makes any pretense of teaching discipline to the young. All would benefit from the focus and discipline that is the hallmark of every military organization. Although this service will be required as a civic duty, the inductees will paid a salary of $100 per month, for an annual cost of $18 billion.
All inductees will be required to pass a high-school-equivalent scholastic achievement test, demonstrating proficiency in reading and writing English, American and world history, geography, mathematics through algebra and trigonometry, and elementary physics, chemistry, and biology. Inductees with proficiency in one or more foreign languages may volunteer to be tested therein; Demonstrated proficiency may well affect an inductee’s subsequent duty assignments, depending on the military need for the particular language skill. Those failing to pass any section of this test will be assigned to a remedial education unit, to attend school under military discipline until they pass. The cost of their remedial education will be billed to the public school system that failed to educate them. Their military tour of duty will not commence until they have passed the required scholastic achievement test. I will have more to say about reforming the public education system in Chapter 8.
Five million of these troops would be used to seal off the Mexican border, every inch of its 2000-plus mile length. An electrified fence packing lethal voltages will be built five miles inside the border, and the troops would be stationed between the fence and the border, patrolling it 24 hours a day, 7 days a week, 52 weeks per year. All persons illegally crossing the border will be apprehended and biometrically identified. Those who had not previously attempted to cross would be returned to Mexico, and the Mexican government charged the cost of apprehending and returning them. Since Mexico will undoubtedly refuse to pay, the cost will be deducted from the current $45 billion a year (SATUS 2006, Table 1293) balance of trade surplus they presently enjoy with us. Those who had previously attempted a crossing would be sentenced to one year of hard labor for each attempt. The guides or “coyotes” would be sentenced to five years of hard labor. This labor would be in the “no man’s land”: improving the fortifications, building roads, adding to the infrastructure required to support the five million troops in comfort. Needless to say, the troops would be armed, and assisted by electronic surveillance aids, such as infra-red detectors and “Predator” drone surveillance aircraft. Dogs will also be used to help corral the “rabbits”.
Where the border passes in close proximity to a city or town, the “no-man’s land” width will be reduced to one mile; the necessary land will be seized by eminent domain, and any buildings thereon will be razed, to insure that there be no cover to hide trespassers. The one mile is the minimum needed to insure that tunnels cannot be bored under the forbidden zone. Villages will simply be moved back five miles.
Legal crossing of the border will be permitted at selected points, staffed by additional troops whose duties would include verification of the identity and legal status of every person crossing in either direction, and the physical inspection of every item making the crossing. I will have more to say below about identity and visa document requirements. I will have more to say in Chapter 4 about the terms and conditions under which legal immigration will be permitted. In addition to protecting the nation from surreptitious entry of weapons, explosives, or biological agents, the 100% inspection will serve to intercept all manner of contraband that now freely enters the country. Sufficient staffing and inspection facilities will be provided to reduce the delay for inspection to less than four hours, and the total cost of the inspection will be charged to the importer of the goods. A nominal fee will be charged for inspection of personal effects of legal entrants.
To minimize boredom and to eliminate the possibility of bribery and corruption, troops will be rotated from border sector to border sector and legal crossing to legal crossing every month.
It will do no good to thus seal the Mexican border if unregulated entry to the US can be made at airports and seaports. Verification of identity and legal status of entering persons and inspection of entering goods will be performed in exactly the same manner at designated ports-of-entry (air and sea) and at designated crossings of the Canadian border. I estimate that one million troops will be required to staff these facilities.
As of 2003, there were 631,000 civilian personnel employed by the Department of Defense (SATUS 2006, Table 496) at a cost of $35 billion/yr. The vast majority of these are clerks and other supporting types. I will replace 90% of these by 1 million military personnel, mainly female or persons with minor disabilities. The larger number of military replacements is needed because the six-fold increase in the number of active duty troops will require more support personnel.
Although illegal crossings of the Canadian border have not been a significant problem to date, it is quite certain that they will become so once the Mexican border is secured. I will detail another five million troops to patrol it.. For the present, I would not require an electric fence, and would employ only a one-mile no-man’s land; Depending on the future course of events, more stringent measures could be adopted, if necessary.
The 3 million or so personnel available after these assignments will constitute a powerful army and navy available to meet with overwhelming force Islamic intransigence anywhere in the world. No more of the Rumsfeld “do-it-on-the-cheap” philosophy. First, I will address the religious wars we seem to be involved in. I will start by saying that the Iraq war was a colossal mistake, and the manner of its execution has been abysmal. It was world-class incompetence not to have foreseen and planned for the anarchic chaos that followed the overthrow of Saddam Hussein, and even worse to leave our troops dangling on the string of insufficient force to accomplish the job. We have succeeded in alienating most of the rest of the world by our blundering. However, a worse fate than loss of “friendships” is at stake if we don’t finish the job; we will suffer the far greater damage of loss of respect and fear. Our “street cred” is on the line.
The first thing to do is to triple the number of boots on the ground. Then, starting in Baghdad, secure the country; expand the “Green Zone”, one block at a time. Each block brought into the Green Zone will be thoroughly and completely searched, and the price of the safety of inclusion is to surrender any and all weapons of whatever sort. Any occupants of any building that do not wish to surrender weapons will be evicted, and replaced by qualified others from outside. Only military vehicles and supply vehicles under military escort will be permitted to enter the Green Zone from outside.. Persons wishing to enter the Green Zone will do so on foot, dismounting from their vehicles one hundred yards from the check point, walking through a radio-frequency “hot zone” to detonate any explosives they may be wearing. Inside the Green Zone, frequent and inexpensive public transportation will be provided. Security within the Green Zone will provided by Iraqi military and police. When Baghdad is secure, repeat the process in all the other cities, towns and villages. Remote-controlled aircraft will patrol the perimeter of the Green Zone. Detection of any projectile launched toward the Green Zone from outside will trigger immediate rocket response, computer-directed toward the launch site.
If the Iraqi “government” interferes in any way with this pacification process, it will be expelled from the Green Zone, and left to fend for itself in the midst of the chaos outside.
Second, an idea first proposed by Steve Forbes (Forbes Magazine, May 3 2006, pp 33-34) will be expanded on and implemented. The entire Iraqi oil enterprise will be privatized and registered shares therein distributed in equal measure to every RESIDENT Iraqi man, woman, and child: Kurd, Sunni, or Shiite. These shares will entitle the owner to collect a royalty on every single barrel of oil pumped out of the ground, as well as to receive dividends from the profits of the enterprise. To avoid the disaster of a similar distribution in Russia (where con men persuaded financially-naive peasants to sell their shares for a fraction of their worth), these shares will be NON-TRANSFERABLE. They belong to the holder for life (except that those of convicted criminals will be revoked), and revert to the Enterprise on the death of the holder. Reverted shares will be available for distribution to newly-born children. Expatriate citizens who move back to Iraq before the deadline will qualify for shares.
Royalty and dividend payments will be made electronically to an interest-bearing bank account in the shareholder’s name. The bank accounts of minors will be held in trust until they reach majority; withdrawals can be made for serious emergencies, or to pay for higher education, upon application to the Trustees. Adults are free to withdraw from their own accounts at their discretion. Refusal of a wife to turn over her royalties and dividends to her husband shall not be considered a cause for divorce.
The shareholders will elect the Board of Directors of the enterprise, and the board will appoint the management. The management will operate the enterprise in a financially-transparent manner, using generally-accepted accounting principles. The operation of the enterprise will be totally separate from the state, but will be subject to environmental regulations created by the state. The state will share in the oil proceeds through taxation of either the gross receipts, or of the individual distributions.
This policy will give every Iraqi a direct financial interest in the stability of the country, and in preventing the sabotage of the oil-production and shipping facilities. It will place the populace on the side of providing actionable intelligence on the whereabouts of the bandits that presently disrupt the country, instead of sheltering the brigands from the authorities. It will also guarantee that the Sunni minority will receive a fair share of the oil wealth, which they would not receive if the country partitions into Sunnistan, Shiastan and Kurdistan. Equally importantly, it will prevent the type of rampant corruption of the authorities that appropriate for themselves the oil wealth of Nigeria, for example..
With these tasks accomplished, we can safely withdraw from Iraq, leaving it a much better country than it was when we started. We can then turn our attention to the balance of the Islamic world.
The foregoing idea looked good in January, but events on the ground have deteriorated too much since then for it to have much of a chance. I would therefore advise all foreign nationals to leave Iraq immediately, and assist them with evacuation. Then I would move my troops to the border, sealing it against ingress and egress. A land, sea, and air quarantine would be established to prevent the entry or exit of any persons, ammunition, foodstuffs, or any goods whatever. Refugee camps would be set up at the major border crossing, secured by my troops. The vast majority of the border would be patrolled by air, piloted aircraft as well as drones, equipped with night vision apparatus. Any traffic, pedestrian, horse, camel, or motor, observed within ten miles of the border headed toward it would be fired upon. All communication, postal, banking, telephone, telegraph, internet with Iraq would be cut off; wireless or satellite communications would be monitored and jammed.
Unarmed families with children would be welcomed in the refugee camps, which would be supplied with necessary foodstuffs by US military, and protected by US military. No attempt would be made to segregate sectarian factions. The political organization of the camps would be refugee-controlled, by majority vote. US Military Police would provide internal security as well. Facilities would be provided for religious services. Sermons would be monitored by Arabic-speaking police; any Imam preaching hate would be arrested and exiled back to Iraq. Sectarian violence within the camp would result in arrest and banishment as well. Banished Sunnis would be deported to Shia-controlled regions of Iraq, while Shia would be banished to Sunni-controlled regions. Thus, both would be able to enjoy to the fullest extent the consequences of their sectarian hatred.
Then, with the warring factions remaining in Iraq isolated from reinforcements, war material, and any imports of foodstuffs or other goods, they could proceed to carry out undisturbed their religious war without harming any foreigners. One of three things would eventually happen: they would run out of ammunition and explosives for killing each other; they would all die of starvation; or, they would come to their senses and discover that they had much more in common than in difference, and reach an accommodation that would permit them to live in peace, together if possible, separately if necessary. Once a treaty of peace was signed, they could apply for reinstatement in the civilized world. The blockade would be lifted and everybody could go home. (End of 12/11/06 addendum)
I would certainly continue the diplomatic outreach to Iran, since bribery is always cheaper than war, and most Middle Easterners will sell their principles, or their grandmothers for that matter, if the price is high enough. To insure that once they are bought, they stay bought, I would openly present them with a framed large-scale map of Iran showing the target points of some 50 -60 nuclear weapons. I would then caution them that if a nuclear weapon traceable directly or indirectly to them is used to kill anybody in the Western world (including Israel), their country will disappear from the map. If they wish to acquire nuclear weapons, they better use them only on other Islamic nations.
North Korea will get a similar map, with warnings not to inflict nuclear weapons on any country in our Asian sphere of interest, with the exact limits thereof intentionally left vague.
The majority of terrorists in the world seem to emanate from countries who are major suppliers of oil. These nations apparently think that gives them immunity from any serious repercussions of their clandestine support of these nefarious activities. I would note that the vast majority of the oil they sell is transported by sea, at least at some stage of its distribution. Interesting, since the oceans of the world are “maria nostra”, our seas; that oil is transported with our sufferance and consent. I would suggest to these nations that they keep their terrorists at home, suppressing them however ruthlessly they see fit (don’t bother us will the details). If we are harmed by terrorists from their bailiwick, the oil they ship will not reach the intended customers. It will be seized on the high seas, and sold at a market price. The proceeds after deduction of our costs of seizure and selling will go into a trust fund to make reparations to the parties injured by these acts. Any terrorists we catch, either pre- or post-commission of their crimes, will be returned to their countries of origin with a demand for their immediate public execution. Failure to comply will result in blockade. This strategy will become much easier to implement once I have weaned the country from its dependence of foreign oil (See Chapter 10).
The Department of Homeland Security spent $33 billion in 2003 (see table below). Most of it was misspent a) fighting the last major terrorist act, b) shamelessly treated as a pork-barrel slush fund by Congress, each member of which demanded distribution in his own district, whether there was any remote terrorist threat or not. Billions have been spent upgrading air-travel security; baggage on Amtrak is not inspected. Only 5% of cargo incoming at our ports is inspected. If I were a terrorist I would chortle with glee; I would attack the new vulnerabilities and leave the airplanes alone, while we spend billions to secure an industry that is no longer a target.
I have already described how I would rectify border and port security using the military. Whatever the Department of Homeland Security spends on these activities would be diverted to military use. Securing the borders to prevent admission of foreign terrorists is the ounce of prevention that is worth a pound of cure. The DHS can focus on home-grown terrorists and those who are already here.
Legal entry into the country from any foreign nation will require a pre-approved visa, which will be issued only upon verification that the individual seeking entry has no criminal record anywhere in the world, and is free of disease. The staffing of consulates will be increased sufficiently to expedite issuing or denying such visas within a week. A simple way of expediting the process will be for the applicant to provide a blood sample, to be used for diagnosis of disease, and to provide DNA typing (for checking against criminal databases). The DNA results will also be permanently embossed on the visa as a biometric identification. However, since it is no use for rapid verification of identity, the visa will also include a fingerprint and an iris scan. The fingerprint will be selected at random by the applicant, from one of his fingers (except thumbs), unknown to the fingerprinting officer. To verify identity, of course, the visa holder will have to provide a fingerprint from the same finger, again unknown to the officer.
Applicants from nations which have spawned terrorists in the past would be subject to particular scrutiny, and will be required to have a certification and indemnification from their own governments that they are good citizens, and not closet jihadists. This certification and indemnification will provide the legal basis for us to take action against that government in the event that the individual commits a terrorist crime on our soil.
It is undoubtedly true that since we will require pre-approved visas from all foreigners, all other nations will require visas from us. For foreign travelers who frequently visit the USA, eg for business, we will provide upon application multiple-entry visas, valid for as long as the national passport is valid. We would expect other countries to reciprocate. We would also expect other countries to provide as prompt and convenient visa-approval services to our citizens as we provide to theirs.
With regard to the process of inspection of airline luggage, I would institute a “preferred-traveler” pass, valid for five years, to those frequent travelers who will submit to a thorough background check. This pass, biometrically-identified in the exact manner as the visa noted above, will entitle the holder and his luggage to bypass the luggage-screening station and proceed directly to the boarding area. Reduction in the quantity of luggage to be searched will permit more thorough searches of the rest.
If it is not already on the books, I would have Congress pass a law making incitement of others to commit a crime the equivalent of committing the crime itself, whether or not the persons incited did so or not. Failure to report such incitement will make the hearer an accessory before the fact to the crime, and subject him to punishment as well. Then I would throw every imam spewing hate into jail, and expel him from the country when his term was served. If his congregation didn’t report him, they would all go to jail too. This law would also be applied to neo-Nazi, militia, KKK, street gangs, and other home-grown nihilistic organizations and individuals as well. We will have plenty of prisoners serving at hard labor to replace the illegal immigrants in the fields.
Lest anyone consider this a violation of the “freedom-of-speech” clause of the Constitution. I quote from the unanimous opinion of the Supreme Court in the case of Schenck Vs. the US (March 3 1919) written by Oliver Wendell Holmes, Jr (John Bartlett, Familiar Quotations, Little Brown & Co, 15th Edition, p 644, item 23)
“The most stringent protection of free speech would not protect a man in falsely shouting ‘fire’ in a theater and causing panic. — The question in every case is whether the words used are used in such circumstances and are of such a nature as to create a clear and present danger that they will bring about the substantive evils that Congress has a right to prevent”
The case in question was particularly germane to my application of the principle above. Schenck was convicted under the Espionage Laws of inciting young men to disobey the World War I draft laws, a direct parallel to my proscription against inciting criminal violence above. His appeal under the then novel, now commonplace, argument that his words were protected under the “freedom of speech” clause of the First Amendment was unanimously rejected by the Supreme Court.
So what is all this going to cost? Let’s start with an examination of what the Department of Defense spends today, as of 2003 (SATUS 2006, Tables 462, 491, 496) in billions
I have already mentioned that my 15 million draftees will cost $18 billion in salaries, but I will still need a cadre of million and a half professionals costing $23 billion, so my total military pay will go to $41 billion, saving about $10 billion out of the 2005 amount of $52 billion or so. Ninety percent of the civilians will be eliminated, saving about $35 billion. The much larger military will impose higher operation and maintenance costs, which will probably consume all $45 billion of these savings.
The place where savings can be achieved is in research and development and procurement, which currently is a rat’s nest of cronyism, and double dealing. Retired procurement officers do not sit home and collect pension checks. They go to work for defense contractors. Guess why?
I would hire all procurement officers from Walmart, and make their pay dependent on how big a price reduction they negotiated for the gee-whizzicators from the last time they were bought. I would abolish the practice whereby the DOD pays for all the development costs of new weapons systems, and then pays outrageous prices for the things when they are bought. There has not been a weapons system developed in the last forty years whose development costs weren’t double or triple the budget. The defense contractors note and complain that this results from micromanagement by the DOD evaluators. One of the best fighter aircraft of WWII was the North American P51 Mustang, which was developed entirely by the manufacturer, and sold in quantity to the Government when it outperformed those whose development was being funded and managed by the Army Air Corps.
I would change this process. The DOD specifies a weapons need for a particular battlefield requirement. Manufacturers develop weapon systems to meet this need, at their own expense, in competition with other suppliers, here and abroad. The DOD purchases in quantity the one which performs the best for the lowest cost, and the manufacturer prorates the cost of development over the number ordered. Re-orders will always be from the lowest bidder; however, if the original developer is not the lowest bidder, he shall have the right to require nominal license fees from the bid winner. Since cost as well as performance enters into the purchasing decision, the supplier has every incentive to minimize development cost. It will be advantageous for the DOD to make a large initial purchase to minimize the prorated development cost per item.
I would expect to be able to save half of the $121 billion we currently spend on R&D and procurement. However, I have already pointed out that I do not need savings from The DOD and DHS to meet my budget targets. My much larger military will require more ordinary weapons, so I will appropriate all of these savings and apply them to this requirement.
In sum, then, military and homeland security costs will not be reduced, but I will get a much bigger bang for the buck, directed toward fighting the wars we are now in instead of the cold war.
Chapter 4: Immigration”
In this chapter I detail how I would close the borders with
5 million troops of a military expanded by a reinstitution of the draft. I
institute a national machine-readable biometrically-identified ID card to
facilitate identification of illegal immigrants; these would be offered an
avenue for becoming legal immigrants and citizens
(Copyright July 31 2006)
There are millions of illegal immigrants in the country (I emphasize “Illegal Immigrants” instead of the politically correct “Undocumented Workers” to make it clear that their presence here is in violation of our laws), and perhaps a million new ones entering every year. I don’t give exact figures with citations for these numbers, because the values I have seen are all over the map, depending on what point the purveyor of the information is trying to make. And in truth, nobody knows!!! The number of how many enter every year is based on how many are caught trying, together with estimates of how many get in for every one that is caught. The number of how many are already here is loosely based on those estimates times the number of years since the last “amnesty”. There are millions more would-be immigrants trying to get in legally, with waiting lists from some countries more than five years long.
The companies and organizations that hire the illegal immigrants proclaim that they all have “papers” which appear to be valid and, as employers, they are not capable of detecting counterfeit documents. Moreover, they say, these immigrants are needed to “fill jobs Americans don’t want.” They protest that the economy would founder without these workers.
Let me translate this double-talk into plain English for you. What they mean is that they can’t hire American workers to do these jobs at the wages they can get away with paying illegal immigrants. Undocumented workers are in no position to complain about wages, working conditions, or living conditions; they know their “documents” are phony, and that if they complain to anybody, the INS is going to learn about them and lock them up to ship back to wherever they came from. They also know that if they quit their jobs to try to find something better, their erstwhile employer will suddenly realize that their documents were fake, and turn them in to the INS.
There is a word for this type of “employment” at subsistence wages with no rights whatever for the worker. It is known as “SLAVERY”!!! Southern plantation owners before the civil war piously proclaimed that without slave labor they could not grow the crops the nation needed (all the while getting rich off the fruits of that labor). It was immoral then, and it is immoral now. It is a shocking indictment of the countries that they came from that the modern slave laborers not only accept these conditions, but consider them an improvement over what they left behind.
We as a people have no right to get chicken for a few cents less per pound because Tyson can chop it up on the cheap using illegal immigrant (slave) workers.
Moreover, these immigrants cannot do what earlier immigrants did, and integrate into the population at large. They have to live in ethnic ghettos hopefully unnoticed by the legal citizenry. Consequently they have to import their culture with them, and create foreign enclaves, in vast contradiction to the traditional “melting pot”.
This situation cannot continue without us becoming a divided nation of English-speaking haves, and foreign-language-speaking have-not slaves. It must be terminated.
I have already described how I would close the border to illegal immigration. The next question is what to do about the illegal immigrants who are already here. The first question to be determined is who they are, and how many of them are there? One answer to this question is to establish a national system of identity cards for everyone, biometrically-identified with a fingerprint, an iris scan, and a representation of a DNA scan. Probably the best agency to manage this ID system is the Social Security Administration, since the present Social Security number is already a de-facto national ID. All my new system will be is a biometrically-coded version of the Social Security Card.
When positive identification of a citizen is needed, the card will be fed into a reader linked to the SSA’s computerized data base, which will verify that the fingerprint, iris scan, and DNA code embossed thereon match those on file in the database for the person named. The person to be identified will then look into an aperture on the machine for a matching iris scan, and put his hands into a second aperture to provide a fingerprint of the appropriate finger. The reader will verify that fingerprint and iris scan of the person to be identified match those on the card. It will be impossible to counterfeit such an ID card. While the fingerprint and iris scan on a counterfeit card will no doubt match those of the bearer, there will be no matching data in the SSA data base, and the card will be rejected. The reader and its SSA connection will not be activated until the hands are inserted; if the card is rejected for no match with the data base, a pair of handcuffs will automatically close on the wrists, and the police will be summoned.
If the iris scan and fingerprint of the person to be identified do not match those of the card, again the handcuffs will activate and the police will be summoned.
The network used to operate this system will a secure dedicated system, totally independent of the Internet. The only access to it from outside will be the ID card readers, each of which will have an internal ID number, pass word and GPS reader. All three have to match in the central computer database before card reading is permitted. No readers will be located in any foreign country. No wireless transmission links will be used. The central processing computers will be located in fenced compounds under military security. Thus the shocking ease with which hackers (foreign and domestic!!!) can penetrate computer systems connected to the Internet will be avoided.
The concept of a “National ID Card” is anathema to all civil rights activists. I do not understand these vehement objections. We all have “National ID’s” now, in the form of social security numbers and drivers’ licenses. The system is deeply flawed, however, since these identifications are presently stolen with impunity. “Identity theft” is rampant, and is rapidly becoming one of the most common crimes. It is, moreover, incredibly easy and profitable. The ID card I propose cannot be used if stolen without the pretender being handcuffed and turned over to the police. Identity theft will effectively become impossible with the new identity cards. Voting, opening a new credit or deposit account, boarding aircraft, etc., are all situations where biometrically-positive ID would greatly increase our security, and will be required once the system is in full operation. In Chapter 9, I will describe an additional use for this card and these readers in a cashless, electronic-transfer society.
In addition, the bleeding hearts among us will piously protest that I am violating “immigrant rights” by instituting an ID system that can track them down. My answer is the philosophical basis for my attack on the whole problem: There is no such thing as a “right” of immigration into the United States. We grant to suitable persons the “privilege” of immigration, a privilege based on the expectation that they will be useful to us.
All persons in the United States will be required to present themselves with their current identifications to the nearest Social Security Office to receive the new cards. For native-born citizens, birth certificate or passport will be required. Driver’s licenses will not suffice, since there is no verification of ID when these are issued. In the absence of birth certificate or passport, an affidavit from a next-of-kin with a valid birth certificate or passport will be required. For naturalized citizens, the naturalization certificate will be required. A verification of the applicant’s residence address from the city or town clerk will also be required. The applicant will then provide a blood sample for DNA analysis, an iris scan, and a print of one of eight (non-thumb) fingers, selected at the applicant’s choice, without knowledge of the processing officer. Needless to say, when the person submits a card to a reader to verify identity, he or she must select the same finger for fingerprinting. All of these biometric identifiers will be permanently imprinted on the card in a machine-readable format for subsequent verifications of identity. The card will also be imprinted with the applicant’s social security number, machine-readable only.
Minors will get a provisional ID card, identifying them as “apprentice citizens”, having a “AC” number. Upon entry into the military for universal service at age eighteen, they will receive in its place a military ID card with a military ID number (“MID”) Upon completion of military service at age 21, they will graduate to full-fledged citizen status, and receive the adult identification card.
Legally-resident aliens will submit proof of their legal status, including passport endorsed with the dated passport-control stamp at the port-of-entry, visa if they have one, and proof of residence from the city or town clerk. They will receive a biometrically-identified ID card identical to the visa card described in the previous chapter. Their numbers for social-security-tax purposes will be coded “LI” for “Legal Immigrant”. Documented minor legally-resident aliens will receive an LIM (”Legal Immigrant Minor”) card in their own names. Undocumented minors claiming legal status by virtue of the status of their parents, will receive a card dependent on the claimed parental card, provided DNA analyses confirm parenthood.
Proof of ID at a reader will be required for registration at elementary and secondary schools as well as universities, for employment, for opening any deposit or credit account, for transferring funds from one account to another, for obtaining a driver’s license, and for receiving any government services.
Illegal immigrants will have none of the necessary documents to receive ID cards. If they present themselves for processing during a grace period, they will be offered two options: either to return to the country of origin to join the queue waiting for legal immigration status; or to be committed to detention centers (completely independent of the prison system) for a period of five years. In detention centers, all families will be kept together. They will be provided jobs similar to those held by illegal immigrants today. They will receive instruction in speaking, understanding, reading, and writing American English. They will have opportunities to learn useful trades so that they will be able to support themselves at more than subsistence wages when they complete their five-year detention. At the conclusion of their detention they will be granted legal-resident status, and be given the opportunity to apply for citizenship. Minors will attend school. Minors reaching the age of eighteen during detention will be inducted into the military, terminating their detention. At the conclusion of their military service, they will receive legal-resident status, and may apply for full citizenship. The cost of operating the detention centers will be assessed on every company found to have been employing illegal immigrants in the past, in proportion to the number of such workers they employed. Once the last illegal immigrant has completed the five-year detention, the centers will be closed, or converted to other uses.
Living conditions in the detention centers will be substantially better than those under which most illegal immigrants live now, and the jobs will not be significantly worse. Therefore it will be to the advantage of present illegal immigrants to elect this option rather than return to native countries and take chances on the legal-immigration queue.
Children born in the United States to legal-immigrant parents will themselves be legal immigrants, eligible to become citizens upon reaching their majority. Children born in the United States to illegal-immigrant parents will be illegal immigrants, and must follow their parents in whichever option those parents choose. Similarly children born abroad to illegal-immigrant parents, but residing with them in the United States are also illegal immigrants, and must follow their parents in whichever option is chosen.
Illegal immigrants who do not present themselves during the grace period will be automatically returned to their country of origin if they are subsequently caught. Any persons providing “sanctuary” to illegal immigrants, aiding them or abetting them in evading discovery, will be prosecuted as criminals. If such persons have legal immigrant status, they will be stripped of this privilege, and will be required to return to their country of origin. Citizens convicted of this crime will be imprisoned for five years. Public officials who provide “sanctuary’ or encourage others to do so, or who fail to enforce the law, will be deemed to have violated their oath of office. They will be stripped of office, barred from ever holding any public office in the future, and imprisoned for five years.
The name of this country is The United States of America, and its motto is “e pluribus unum” (“out of many, one”). The most important unifying bond that people from many different cultures and backgrounds can share is a common language. Therefore, the official language of the country will be English. All public business will be transacted only in English, and all persons seeking to become citizens must demonstrate proficiency in speaking, understanding, reading, and writing American English. All commercial and business transactions will be conducted in English. Private conversations, of course, may be held in any language the parties wish: pig latin, Esperanto, street slang, whatever. Adult-education courses will be provided free of charge to legal immigrants needing to learn English.
Having secured the borders against further invasions, having identified who is here legally and who is not, and having provided an avenue for illegal immigrants to legitimize their status, I will then turn my attention to the question of who, and how many, legal immigrants we should admit. This will be based on the principle that we admit only those who can benefit us. The United States is not the safety valve for the population pressures created by the fertile bellies of Latin America, Africa, the Near East, or Asia. Immigration to the US is not a right, but a privilege we grant to persons we believe can become useful citizens.
The basic question will be, what useful skills does the immigrant offer? We really do not need any more unskilled laborers. We would seek first to admit those whose skills and knowledge and education will be valuable to us. Next in priority order will be reuniting of separated families, regardless of the immigrant’s skills. The legal immigrant kin in this country must sponsor the applicant, and guarantee his support. Parents and offspring of legal immigrants will go to the head of this queue, subject to verification of kinship by DNA test. Siblings and their offspring will be next in line. For all practical purposes more distant kin will probably not qualify, since the quota of unskilled applicants will most likely be filled by the closer kin.
Persons seeking legal permanent-residency status must swear under oath to observe all of our laws, especially anti-discrimination statutes, and especially vow to observe and support the principle of “Separation of Church and State”. If they are of the Moslem faith, they must publicly disavow the intolerant tenets of Wahabbism and similar anti-Christian or anti-Jewish Moslem sects. If they subsequently violate in public speech or deed this disavowal, they will be stripped of legal immigrant status and expelled from the country. Subscription to the principle of separation of church and state will be a stringent point of issue for Moslems and immigrants from Latin America, since it is completely contrary to their culture. For many Moslems, the state exists only to enforce with its police power the “sharia” and other dogmas of the mosque. The Moslem Moors implanted this philosophy in an all-too-willing Spain, which in turn transplanted it to Latin America. Immigrants from these parts of the world will have to demonstrate conclusively that they reject in toto the philosophies of their cultures in this regard.
In Chapter 5 “Crime and Punishment”, I outline how all imprisonment will be at hard labor. Convict labor will be used for the menial tasks that illegal immigrants do now. If there should be a shortage of agricultural labor even after this replacement supply, a “guest worker” system, operated by the government will be instituted. Guest workers will be admitted, ID’d, housed in secure government-operated camps, transported to their labor sites by government transport, paid by the government, and returned to their country of origin after the planting and harvest season is over. The government will then charge the employer for the cost (including shelter, subsistence, and transportation) of the workers provided. The use of private contractors in place of government agencies and workers will not be permitted.
CHAPTER 5 OF BOOK “HOW I WOULD RUN THE COUNTRY IF I WERE DICTATOR” by Argus C. Zall
Chapter 5: Crime and Punishment
In this chapter I describe how I would reform the criminal
justice system by basing it on restitution and revenge rather than the concept
of “reform” of the criminal. The municipality would be required to make
restitution to the victim, and collect from the criminal, who would be confined
at hard labor until he made reimbursement.
CRIME AND PUNISHMENT
(Copyright July 31 2006)
The present state of violent crime and other lawlessness in this country today would make Billy the Kid and Wild Bill Hickock blush. And the government does nothing about it except pass more laws that it cannot enforce. Our inner cities are free fire zones, which except for the absence of heavy artillery are worse than Baghdad. In Boston, there were nearly a hundred murders in 1990, all committed with guns or knives. There were more people murdered in Detroit in the first three months of 1991 than were killed in the First Gulf War. And many of the killers go scot free, because any witness who knows what’s good for him will adopt the “hear no evil, see no evil, speak no evil” posture. The police certainly won’t be able to protect him if he testifies.
In 1998, 62% of all murders were committed with firearms, 52% with handguns (SATUS 1995-2000, Table 333), weapons having no other purpose than to kill people. The first step is to get these removed. One of my first acts as Dictator will be to reclaim the streets for the ordinary citizen. I will immediately declare martial law, nationalize, and place under 24-hour military security, all firearms and ammunition manufacturers and all gun dealers. I will prohibit importation of any weapons or ammunition; a gun without ammunition is only a club. All persons owning licensed firearms will be required to surrender them for storage in a local militia armory.
So, you say, in confiscating their arms, I have already broken my promise to respect the constitutional rights of the citizenry. Not so. The second amendment to the Constitution reads:
“A well-regulated militia being necessary to the security of a free State, the right of the people to keep and bear arms shall not be infringed.”
It is very clear that the framers of the Constitution intended that the keeping and bearing of arms was to be in connection with the service by the citizenry in an organized militia, not the human turkey-shoot we now have. Thus, I would allow a legally-licensed owner to keep his weapon under his name in a secure militia armory. Provided this citizen participated in the regular organized drills of the militia, he would retain ownership of his weapon, and could check it out for hunting (rifles or shotguns only) or target practice. You see, the law-abiding citizenry would retain all their constitutional rights to keep and bear arms in the context of an organized, disciplined militia, which is what the framers of the Constitution intended. Purchase of guns and ammunition could be made only by members of the militias at their local armories. Handguns would receive special treatment, since their only purpose is to kill people. Access to them would be permitted for target practice only on the premises of the armory, or in the event of a declared national emergency.
Persons holding unlicensed firearms or ammunition would be informed that the penalty for being caught with either one would be life imprisonment at hard labor without parole. A one-month grace period would be allowed for such persons to turn in their weapons anonymously at local police stations or armories. All merchants presently selling firearms would have to go into some other business, because the sole vendors would be the militia armories, selling only to their own members in good standing. Most of the firearm and ammunition factories would be closed, because there would be little or no market for their product; the ones that remain would be operated by the government under 24-hour 7-day military security.
It would be a great dislocation, but when it was complete, the only way one American would be able to murder another would be with bare hands, a crowbar, or a baseball bat. Then martial law could be lifted, and the country could get back to dealing with ordinary crime and punishment. And for this, I would dictate an equally dramatic change in the way society deals with the criminal element.
Let’s go back in time to a period when it was safe to walk the streets of every American city at night, back in the thirties and forties, even as late as the nineteen-fifties. Was this because there was less poverty? Hell no! In the thirties, people didn’t have a pot to piss in. Were there more police? Hell no! In the forties, the police were all in the armed services. Were people more law abiding? Hell no! the fifties was the decade of Willie Sutton and his ilk, which robbed banks because that’s where the money was; it was the decade of the Brink’s heist in Boston, which was and is the biggest armed robbery in the history of crime (taking inflation into account). Why was it safe to walk the streets?
For one thing, it was the racket of The Mob (AKA the Mafia, La Cosa Nostra) at that time to sell “protection” to the shopkeepers and merchants. The difference between the Mob and the police when it came to protection was that the Mob delivered the goods. You paid protection to the Mob; if any goof ball held up your shop, he was found a few days later in the river wearing concrete swim fins. Punishment was swift, certain, not interfered with by lawyers or the American Civil Liberties Union or the Miranda Doctrine. What’s more, the Mob reimbursed you for your losses; you didn’t need burglary insurance. All you had to do was pay your protection on time.
When my wife and I were first married, I was a grad student at MIT. We lived on H——-d Street in Boston, across the Charles River, because it was convenient and we could afford the rent (it being what her Dedham uncle referred to as one of the “lower class districts of Boston”). In the building we lived in, eighty percent of the apartments were occupied by floozies who received, for a fee, protective and procurement services from the Mob. When my lovely twenty-year-old bride returned home in the evening from her job on Newbury Street, disembarking from the subway and walking down Massachusetts Avenue, she was met every single afternoon at the corner of H——-d Street and Mass Ave. by the local Mafia soldier, gat bulging in his shoulder holster, who escorted her down the one block of the street to the door of the apartment building. There were no suspicious characters roaming the halls of the incredibly seedy apartment building. Only residents and customers got in. My wife was safer than if she had been in church. The Mob tolerated no problems from bums, muggers, burglars or other common criminals whose pernicious acts would cause the police to enter the neighborhood and clumsily stumble over their profitable rackets.
In the seventies, after the power of the Mob in the protection racket had waned, due to police interference or discovery of more lucrative rackets or both, I knew a man who lived right around the corner from where we had lived that year. In his building, muggers and burglars roamed the halls continually; their favorite tactic was to start a trash fire in the hall to get the residents to flee their apartments. As the occupants came out of the door, the muggers would shake them down, and the burglars would slip in behind them to loot the place. At least few people got hurt. Its gotten worse since then; innocent people now get killed in the crossfire of automatic weapons in the Baghdad-style gang warfare that now pervades inner-city neighborhoods.
What was different? For one thing, presence. The Mob’s foot-soldiers were there on the beat. For another thing, the certainty of punishment, swift and sure, for transgressions against the protected. It just wasn’t a good idea for anyone to mess around with protected stores or to commit violence against the citizenry. If we want to return to the “good old days” when people could walk the streets without concern for their personal safety, we have to bring both of these elements back, this time under the auspices of the government rather than the Mob.
For openers, I would require that the municipalities be the insurers of their citizens against personal injury and property damage or loss due to crime. Taxes, of course, will be increased by the amount of the insurance premiums the citizenry no longer has to pay. Any citizen who lost property because of a crime would be reimbursed on the spot for his loss. Any citizen who was injured in such a crime would be reimbursed for medical expenses plus a generous sum for pain and suffering. The choice of the city then is “pay now” for police presence, or “pay (more) later” to reimburse the citizenry for its losses. It will cost less to put cops on the street as foot-soldiers to prevent crime than to pay for it after the fact.
The second element of my reforms is that the criminal justice system be turned around 180 degrees from the present focus on “reform” of the criminal to the twin principles of restitution and revenge, to make the victim whole. I have already stated that the municipality shall make prompt restitution to the victim; it is merely acting in this regard as the agent of the victim, and must in turn obtain restitution from the criminal. With regard to revenge, the government is again acting on behalf of the victim of a crime resulting in personal injury. It must apprehend the criminal and exact from him the revenge to which the victim is entitled. In this respect, the ancient Talmudic law “an eye for an eye, a tooth for a tooth–” represents a very useful model: the first codification of a wronged individual surrendering to Society his God-given right to revenge, in exchange for Society’s promise to obtain that revenge for him.
For personal injury crimes that do not result in death, I think the cat-o-nine-tails, administered by a brutal expert, could be a very useful instrument of revenge. If I were injured by a mugger, I would derive considerable satisfaction from seeing him get a dozen lashes in the public square before being carted off to jail to work off the restitution part of his sentence.
As I have said, the government must make restitution to the victim, and then collect that restitution from the criminal. The criminal goes to jail to labor, earning a reasonable wage, from which is deducted the cost of apprehending and trying him, and the cost of keeping him incarcerated. (The salaries and the jobs will be those now “enjoyed” by the illegal immigrants we will no longer have.) When the cumulative difference between earnings and cost equals the restitution paid by the government plus interest, the criminal is released. Simple, straightforward, not a lot of opportunity for plea bargains or other legal machinations. Sentencing does not involve any arcane reasoning about the “psychological profile” of the criminal, or his “good behavior” while in the jug. He goes to the clink to be forced to make restitution, and he gets out when he has done so. Interestingly enough, in this mode of incarceration, white collar embezzlers who snooker their employers out of a hundred grand or more will spend the rest of their lives in the clink unless they cough it all back. They can’t earn enough in a lifetime at the going wage for any trade to make restitution of that amount while in jail.
Revenge extends to capital punishment. When the criminal takes the life of his victim, he is condemned to death. Conviction will require concrete physical evidence, including but not limited to DNA evidence. Notoriously unreliable eyewitness identification will not suffice. However, the nearest relative(s) of the victim must be the executioner(s). All executions are to be in public, by the guillotine, to be as bloody as possible. Upon conviction, followed by immediate appeal and prompt decision, the fate of the criminal is placed in the hands of his executioners. If they are squeamish, or otherwise inclined to mercy, the sentence is commuted to life imprisonment. If not, the guillotine is immediately set up, the criminal placed in the stocks, and the lanyard handed to a kinsperson of the victim to exact the revenge of the family. There will be no ten years on “death row” for everybody to forget the horror of the crime and salivate only over the horrors of execution.
It will be very much in the best interests of an incarcerated criminal to be well-behaved, and not try to escape or beat up on fellow prisoners or guards, or trash the prison. Then he can do his time in a minimum-security camp where the cost of keeping him is minimal, little more than room and board. Look at the arithmetic. Suppose he earns $10 an hour at a modestly skilled trade, working a full shift six days a week, about 2500 hours per year. He grosses $25K per year. In the minimum-security prison, the cost of keeping him is $10K per year, and he can generate $15K per year for restitution. If he is a burglar with a couple of scores to his credit before he was caught, he will probably be out in a year or two. Some criminals convicted of crimes not involving personal injury, and whose behavior in jail was exemplary, could be released to a form of “house arrest” under 24-hour electronic surveillance. This would permit them to move around enough to hold down a job, and buy their own groceries, but would otherwise keep them off the streets. The requirement for restitution would not be lifted, however; the criminal would remain under house arrest until restitution was completed.
If, on the other hand, the criminal is a hard-core troublemaker with a record of crimes of violence, who splits at every conceivable opportunity and beats up on fellow prisoners, or otherwise makes all kinds of trouble, he will have to do his time in a maximum-security facility, where it costs $40K per year to keep him. The cost of keeping him locked up is greater than his earnings, and every year he spends there he goes deeper in the hole as far as restitution is concerned.
So much for the business of turning the moral basis of the criminal justice system around from “reform” of the criminal back to where it belongs, to revenge and restitution for the victim. I could go on at much greater length, but you get the idea.. You can argue that there is a whole class of “victimless” crimes, where society as a whole is the victim, but no one individual is: illegal gambling, prostitution, air pollution, illegal dumping, littering, folding-stapling-or-mutilating, pornography, thousands of criminal acts that could not be punished in my scheme. Exactly; these are not crimes in my lexicon. These are merely somebody’s religion, morals, or ethics codified into law. These laws are widely flouted and seldom enforced; when they are enforced, they hopelessly gum up the works of the criminal justice system.
In the hullabaloo after the fatal fire in an illegal social club in New York in March 1990, it was revealed in the paper that the owner of the building had some thirty arrest warrants out on him for criminal violations of the building code. In the same article, it was noted that there were 450,000 such arrest warrants extant in New York, which the police were making absolutely no effort to serve. They couldn’t keep up with the warrants for “serious” (read “violent”) crimes, ie those with victims. They weren’t going to bother with all the others. The courts couldn’t handle all these cases if the arrest warrants were served, anyway. There is nothing that breeds disrespect for the law more than laws that are not enforced, or which are capriciously or selectively enforced.
My system would be much simpler. If there is no identifiable individual victim to whom revenge or restitution is due, there is no crime. All this other legally-codified morality and ethics would be left to the civil justice system to deal with. Let the lawyers have a field day! See Chapter 11 for how I am going to reform that industry.
The next place I am going to stand the system of criminal justice on its ear is in the courtroom. The judge and the jury will have the absolute right to know every fact about the case known to anyone. How else can they make an informed decision of guilt or innocence? Right now, for example, a witness or the defendant in a crime of violence can have a record for violent crimes as long as your arm, but that fact is studiously excluded from the jury: the history of prior convictions is “not relevant” to the case being tried, and “may unfairly prejudice the jury”. It sure is relevant to the credibility of the defendant or of character witnesses testifying that he is as gentle as a lamb, or of the accessory turning state’s evidence under an immunity deal.
Then there is that exquisitely-refined distillation of the legal mind that we are blessed with today, the “tainted fact”. Suppose the police are armed with a search warrant listing the wrong address for the residence to be searched. They bust down the door, search the place, and find incontrovertible physical evidence of guilt. It will not be admissible in court, because of the faulty search warrant.
The facts discovered in the search are “tainted” because the faulty warrant made the search illegal.
Suppose the police bring unbearable psychological pressure on a criminal to confess, without having explicitly warned him of his right to remain silent, in a ritually-codified statement that must be recited verbatim like a catechism. If he capitulates, confesses, and leads the police to the physical evidence that absolutely confirms his guilt beyond any shadow of a doubt, the jury will never see that evidence. It will not be admitted, since the police discovered it as a result of an illegally-obtained confession. The facts that would prove the defendant’s guilt are “tainted” and not admissible.
What absolute nonsense! The legal profession apparently regards a trial as a game, to be played according to rules made by lawyers, interpreted by lawyers, and understood only by lawyers. “The flanker was moving forward when the ball was snapped, therefore the play never took place, the touchdown doesn’t count (it is a “tainted fact” even though millions of people saw it happen) and the offense is penalized five yards.”
It is not a game. It is a matter of life and death for defendant and victims alike. In my dictatorship, The judge and jury will be entitled to know every fact, no matter how that fact was uncovered. If the police committed a crime against the defendant by violating his constitutional rights, then deal with that in a separate trial with the police as defendants and the criminal as victim, entitled to his revenge and restitution. But do not hide the facts, however they were obtained. If a cop knows he will go to jail if he commits a crime against a suspect, even though the suspect is found guilty and goes to jail himself, that cop is going to be very careful about his investigation. I suspect he will be even more careful than if he is “punished” by having the facts he discovers declared to be “tainted”. He will have a lot more personally at stake.
Another point that I would throw out the window is the “tabula rasa” theory of jury selection and service. When Oliver North was on trial they had to find a jury in Washington that was so ignorant or so disconnected from the public life of the country that no members had heard, read, or seen anything about his highly-publicized appearances before Congress. I would hardly call that a jury of Ollie’s peers.
Today, the lawyers playing their cat-and-mouse game over the body and soul of the defendant in a trial that involves some scientific or technological sleuthing (such as DNA identification) would absolutely blanch at the thought that anybody on the jury was knowledgeable in the science or technology involved. Why such a person might know exactly when a prosecution or defense expert was “stretching” his knowledge base to fit his employer’s theories. Such a person might actually be able to tell when one of the experts was a scientific con-man, however personable and credible he might seem to the average juror.
I would turn the process absolutely upside down. If the case is to depend on testimony by expert witnesses of any stripe whatever, there must be jurors empaneled who are knowledgeable or expert in the subject. Because of their outside, in-depth knowledge of the limits of the profession, they would be far better able to evaluate the conflicting testimonies of the hired guns on both sides than the present ignoramus juries. Because the experts would realize that their pronouncements were being scrutinized by a jury of their peers, they would give far more realistic and careful testimony, less couched in the absolute terms so earnestly sought by lawyers.
Finally, I would give the jury the right to ask questions of every witness. After the lawyers had asked all their questions, any juror who had a question that hadn’t been answered by the testimony could ask it himself. The one time I sat on a criminal jury, I thought the district attorney and the counsel for the defense were leaving many loose ends because of the well-known lawyer’s first rule of examination and cross examination: “Never ask a question that you don’t already know the answer to”. Every lawyer in court is trying to get only those facts into the testimony that support the arguments he is going to make, and to rigorously suppress any others. To that end, he raises all sorts of objections to questions by the opposing lawyer that might lead to exposure of a fact that casts doubt on his argument. He studiously avoids some topics in his examination of his witnesses, so that the opposing counsel can’t raise embarrassing questions in cross-examination. Like I said, these people treat the whole thing as a game, with the jury left to guess which shell the pea is under. However, if the jury asks the question, our lawyer friend will have to think twice about objecting because the jury is eventually going to have to buy his argument if he is to win. If he is too obnoxious in objecting, the jury is going to wonder what he is trying to hide.
So you see, in my dictatorship, juries will be knowledgeable, and participants in uncovering the facts at the trial, as well as the final arbiters of the weight of the evidence.
There will be fewer weapons, fewer crooks on the street, more police on the street, faster trials based on more facts, swifter punishment, punishment based on revenge and restitution. If this sounds like the system the Mob ran in the pre-war and post- war periods you shouldn’t be the least surprised. The streets were safe to walk then, even at night. In my dictatorship, they will be again.
You may argue that it will be too expensive to multiply the number of cops, and have them walking the beats on every block in the city. Baloney. The city will have to pay the cost of crime; it will be cheaper for them to have ten times as many cops than to pay the cost of the crime that goes on now. In the steady-state, the cost will be borne by the criminals through the value of their labor, which reimburses the municipality for the restitution it has made plus the costs of the criminal justice system. The savings to society as a whole due to the reduction in crime will be astronomical. My system will save money, no matter how much it costs.
Ubiquitous feet-on-the-ground police presence will also go along way towards eliminating the gang warfare that plagues so many of our cities. The fundamental motivation for much of this is self-protection. Gangs form to protect their members from violence by other gangs. A massive police presence to interdict and punish violence as soon as it happens will defuse much of this internecine strife.
Finally, a very large fraction of the crime that now occurs is drug-related: Addicts stealing to feed their habit, the settling of disputes in the drug-trade business, the intimidation of citizens who have witnessed illegal transactions or complained to police about open trafficking in their neighborhoods. Until the illegal drug trade is choked off, it will continue to be a stimulus to violent crime. In the next chapter, I will detail my ideas for stopping that in its tracks.
CHAPTER 6 OF BOOK “HOW I WOULD RUN THE COUNTRY IF I WERE DICTATOR” by Argus C. Zall
Chapter 6 Drugs
In these chapter I describe how I would deal with the drug problem: Dry up demand, interdict the flow of money, and impede the flow of substances.
(Copyright July 31 2006)
It is estimated than more than half of the crime, and a much greater fraction of violent crime, results from the epidemic of drugs plaguing the country. We will not solve the crime problem until we solve the drug problem.
Usually, in this context, the word “drugs” means cocaine and heroin, and to a lesser degree, the synthetic or “designer” drugs such as “crystal meth”, and marijuana. In fact, however, alcohol and tobacco are drugs that kill far more people than any of the others, despite the fact that they are totally legal. They may not be associated with the violent and other crimes that the illegal drugs are, but their cumulative damage to society is far greater, because of their widespread use. According to the Center for Disease Control, in 1987, the deaths of 105,000 people were attributable to alcohol. They are mute witnesses to that damage. So are the 139,000 people who die every year from lung cancer, 85% of which has been attributed to smoking.
Consequently, the widely-proposed solution of “decriminalization” of the illegal drug industry is a cure that is worse than the disease. Legalizing these substances would simply expand the number of users by reducing the cost, and add impairment of judgment from mind-altering drugs to the shocking total due to alcohol as a cause of fatal auto and other accidents. Similarly, filling the lungs with marijuana smoke may ultimately prove as potent a cause of lung cancer as tobacco smoke.
The other major mantra of the government in the past has been to try to jawbone the countries that supply us with cocaine, heroin, and marijuana into cutting off the supply at the source. “Grow something else, and we’ll buy that”, we tell them. I think our hands are not clean enough for that approach, and anyway, it won’t work. We grow about 1.2 billion pounds of tobacco every year (even providing agricultural price supports for it!) in spite of the fact that we know very well that nicotine is a toxic addictive drug that will ultimately kill most of its users. Ask a tobacco farmer why he grows it, and he’ll give you a very straight answer. He makes more money growing tobacco than peanuts, and if he didn’t use his acreage quota to grow it, somebody else would get that quota and grow it anyway. Do you think a Colombian peasant who can become a rich man in a few seasons growing coca is going to waste his time with coffee? Moreover, the crystal meth problem has been largely home-grown, with basement and garage labs throughout the country turning out tons of the stuff.
There are only three ways that will work to reduce the consumption of illegal drugs in this country. One is to dry up the demand; the second is to interdict the flow of product; the third is to cut off the flow of money.
I would use all three approaches in tandem, but start with reducing the demand. To do this, we have to recognize that there is not one “drug problem”, but at least four, each requiring a different solution: first, the adult “casual recreational user”, (not yet addicted) whose purchases help support the habits of the addicts, and who should know better; second, the neophyte elementary or secondary school child, playing with fire and not realizing it; third, the hard-core addict, who can’t stop without help; and fourth, the innocent victims, the addicted babies born to addicted mothers.
Drying up demand will start with the first category. For openers, scare the living hell out of the casual user. Institute extensive random drug testing to find a significant proportion of them. Make having any detectable quantity of cocaine, heroin, marijuana, or any of a growing list of synthetic designer drugs in the bloodstream a misdemeanor, punishable on the first offense by a fine plus a mandatory 14 days in an “education center”. The education center will include horror movies of the stages of degradation in addiction, plus at least one visit to a “shooting gallery”, and to hospital wards with drug-addicted babies. Education into the statistics of the drug trade will also be included: the numbers of addicts; the way they finance their addiction by becoming dealers and selling drugs to the casual users, as well as through crime; the rapidity with which addiction can occur; the out-and-out wars that are staged over control of the drug trade, and have turned our inner cities into free-fire zones.
The fines will be very substantial, probably a thousand dollars or more, because these fines will be used to finance the random-testing and the education center programs. Those who by their behavior impose a burden on society will have to bear a major part of the cost of eliminating that burden.
After release from the education center, the first-time offender will be required to submit on demand at any hour of the day or night to a blood test to prove that he is drug-free, for a period of five years. A second offense will result in a longer sentence, including mandatory public service in the de-tox centers, dealing first-hand with addicts who are either irretrievably addicted or nearly so. It will also re-set the clock on the five-year period of special surveillance. A third offense will result in the offender being classified as a “Registered Addict”, and his enrollment in the treatment program for this class of users, to be described presently.
Civil Libertarians will insist that such random searches are unconstitutional, being “unreasonable searches without demonstration of probable cause”. I would contend that there is much more probable cause to carry out searches for illegal drugs than there is to search the baggage of every airline passenger for illegal weapons. The proportion of drug users in the population as a whole is much greater than the proportion of terrorists and hijackers among airline passengers, and in total they do more damage to the rest of us. The only difference is that the technology of searching baggage has been developed to be reasonably non-intrusive for most passengers, and the majority of passengers welcome the improved security it provides for them on their journeys.
Given a national commitment to a large-scale random screening program that would include every adult member of the population at least several times a year, I would venture that the analytical instrument industry could come up with a “sniffer” for detecting drugs or their metabolites in an individual’s body odor. Any individual who “sniffed” positive would be required to give blood samples on the spot for later laboratory verification or lack thereof. Roving portable screening stations would be set up in public places, in stores, calling at places of business, and could probably process several hundred people per hour anonymously. A positive reading would result in the person being diverted to a police officer for producing identification, and to a nurse for extraction of two blood samples. The fact of a misdemeanor would be established only upon positive analysis in both blood samples, analyzed by different analysts using different analytical instruments.
All workers in jobs affecting the public safety would be required to pass a sniffer screening at the start and end of every shift. This would be used to detect alcohol as well as illegal drugs. A first offense would result in suspension for six months in addition to the term in an education center; a second offense would result in automatic termination, and a lifetime ban from any job affecting the public safety.
It has already been demonstrated in the US Army that random drug testing via the cumbersome and degrading urine-sample technology has reduced the percentage of drug users among the populations tested from double-digit figures to about two percent. The much wider and more frequent screening that I would mandate will essentially eliminate the casual recreational use of illegal drugs, at least among those with something to lose. The risk of detection is too large, and the penalty significant. The very strong negatives in the educational aspects of the program will have substantial impact for most of the casual users, though not for those whose lives are so impoverished in opportunity and meaning that addiction into insensibility looks like an improvement. I’ll have more to say about this group in a later section.
The second major problem area is the initiation of school children, elementary as well as secondary, into the drug culture. The drug industry looks to this large pool of potential users to become its new market. Hook a kid young enough, and he’s your customer for life (however short that may be). This is a problem in school security and supervision, and unfortunately will require massive amounts of money, especially in the inner cities. There is an opportunity for killing two birds with one stone, here, however. I would mandate that every child spend all day at school, and I would make the schools absolute drug-free zones. Every school will have a wall built around the entire property, patrolled by armed guards. Entry will be at only a limited number of access points, and every person and object entering is to be sniff-tested and searched for weapons.
The school program will have to be significantly expanded to include after-class activities as well as classroom teaching and study. Supervised intramural sports, elective classes, music, art, drama, study halls, hands-on projects, field trips, and other similar activities would be used to keep active minds and bodies busy after the day’s class-room studies had been completed. Parents would deliver children to school in the morning on the way to work, and pick them up in the evening on the way home from work. There would be no “latchkey children” left to fend for themselves in streets and playgrounds without adult supervision. The school would also house the day-care system for pre-schoolers, meeting a crying need in the inner cities, particularly.
This would, of course cost a great deal of money, probably twice as much as we presently spend on schools. In the long run, it will save money, because it will prevent the present cycle of initiation of school children, roping them in as couriers and watchbirds, then making them dealers and addicts. I’ll have much more to say about reforming the school system in Chapter 8, but for now I will use it as a sanctuary to isolate the impressionable from the drug culture until they can be thoroughly indoctrinated into the evils thereof.
Some children, of course, will live in households where there are drug users. These will probably frequently sniff positive from “second-hand-smoke”, although they themselves may be clean. A pattern of positive sniff tests of a child should alert the authorities to require blood tests of members of the household. A parent who is a drug user that re-education does not reform is obviously unfit to rear a child. Such a child should be removed from the household and placed in foster care.
Universal implementation of these two programs should substantially reduce the consumption by casual users, and essentially eliminate the flow of new victims into the addict pool. This will leave the problem of two classes of addicts: the innocent victims addicted at birth because of their mothers’ habit, and the lost generation of present addicts.
The first would be eliminated by never getting born. I would require the abortion of every fetus conceived by a woman with drug or alcohol addiction. I realize that there will be a great uproar about “rights of the unborn”. In my opinion, however, the fundamental right of every child is not to be born with three strikes against it. These fetuses are hopelessly damaged in the womb by their mothers’ consumption of narcotics and alcohol during their gestation. They can never be normal physically or mentally, and would have a totally bleak future existence. As infants, they would become a burden with which their mothers could not cope and would promptly unload on society. They would be better off not born, and I would insure that they were not.
This leaves the hard-core population of present addicts to deal with. These would be required to enroll in a “Registered Addict” program, and treated in resident detoxification programs. These programs would include medically-managed withdrawal, followed by extensive psychological counseling. The staffs of these programs would be primarily former addicts who had successfully avoided re-addiction after detoxification. The structure of these programs, and their duration, would be developed with the active participation and inputs from the recovered addicts, to maximize the probability of success.
Registered Addicts whose disease had been successfully arrested would be released from de-tox centers into a carefully structured work environment for a period of at least two years. This would be operated like the “Civilian Conservation Corps” of the 1930’s, under military-type discipline, with residence in secure facilities under careful supervision. Sniffer screening at the beginning and end of every work shift would be required, as would screening of every person entering into the secure housing facilities. This labor pool would be paid an adequate wage and used in a program of public works to help rebuild the decaying infrastructure of the country: roads, bridges, water works, public buildings and the like. If these arrested addicts had insufficient educational background or job skills, a substantial part of the program would be directed toward training them for useful employment following release.
After two years without relapse, progress toward recovery would be sufficient that the recovered addict could be released to return to his former home if he wished to do so. Placement in a job, and continued monitoring, would be a part of this release program. Periodic submission to blood testing would be required to demonstrate continuing freedom from addiction, for the next three years. At the end of this time, full recovery would be assumed, and the recovered addict would be free of all further supervision.
Despite the counseling, supervision, support, and minimization of contact with the drug culture during the work-recovery program and during the final probationary period, it is inevitable that some of those in an arrested state of addiction will relapse and become re-addicted. They will be re-admitted a second time into the entire cycle of detoxification, work-recovery, and probation. A second relapse will mark the proverbial “three strikes and out”. These victims would be declared “Legally Dead, Incorrigible Addicts”, quarantined in maximum-security facilities, supplied with clean needles and a daily ration of whichever drug they cannot do without, and allowed without interference to destroy what little remained of their lives.
This multi-pronged program within a few years would substantially decrease the market for drug sales to casual users; stop the initiation of children and teen-agers to drug use; separate the addicted from the source of supply; and eliminate the army of dealer-addicts desperately trying to find new victims to sell to, to help support their own habits. The ultimate cure will take decades, however, because some of the incorrigible addicts may take that long to kill themselves off. But at least, after a few years the number of new addicts being created would be drastically curtailed. The reduction in demand just from the first phases of the program will greatly reduce the market for drugs and the attractiveness of the drug trade as a business.
I can hear you saying, “OK, wise guy, even assuming that this program doesn’t produce rioting in the streets from the interference with the People’s right to Life, Liberty, and the Pursuit of Happiness, how are you going to pay for it? You castrated the Federal Budget in Chapter 1 to curb the deficit, and there isn’t any money left for this vast expansion.”
It’s a fair question, because it will be undeniably expensive. But there are several sources of money that can be diverted for this program. First of all, I mentioned that there would be substantial fines for casual users caught by the sniffers and blood tests. I intend to load a good part of the cost of the screening program on to them. The education centers, and the secure housing for addicts will be a cost that may require additional taxation to support.
The great expansion of the school costs I am going to get in part from a greatly attenuated welfare program. There will be thousands of new jobs for paraprofessional adult supervisors, hall monitors, study-hall monitors, day-care workers, and other similar functions, that can be filled by single mothers now on welfare. Their infants and pre-schoolers will be in the school day-care centers all day, their school-age children will be in school all day, so that there is no reason why they can’t work. The American taxpayer would a thousand times over rather pay people to do something useful than pay them for nothing. The welfare mothers themselves would a thousand times over rather have jobs than welfare. They would, of course, have to be trained for these tasks, and would be given the opportunity to train as teachers as well. Because of the extremely large numbers of new jobs and the provision for full-service child care, the only people left on welfare will be the physically disabled and the unemployable incompetents. As a consequence, Federal, State, and Local budgets for welfare can be drastically cut, freeing funds for the expansion of the school system. Moreover, the upgrading of the public school system is something that has to be done even in the absence of any drug problem, as I will discuss in a later section. Consequently, these expenditures will do double duty.
The rebuilding of the infrastructure is also something we have to do anyway. It represents a reinvestment in America’s future, and is something for which we can legitimately issue revenue bonds, amortized by gasoline taxes, water and sewer assessments and other traditional means of payment over the life of the asset. A major portion of the cost of this rebuilding is labor; and a portion of that labor would be the work-recovery program for addicts. Thus, the wages and housing costs for addicts in that program do not represent additional costs.
In the short term, the casual users will undoubtedly shift to increased use of alcohol as the recreational drug of choice. They would be met with a greatly expanded tax on alcoholic beverages, which would be earmarked to provide funds for the drug program. Undoubtedly, the higher alcohol tax and the drying up of drug markets will provide opportunity and incentive for the illegal drug trade to shift to ordinary bootlegging. I will discuss in a later section how to counter this threat.
Since the costs of this program will depend on how many casual users there are, which nobody really knows, and how many of the addicts are truly incorrigible, which nobody really knows, I can’t predict at this time how big they will actually be. But because the long-term payoff in ridding the nation of this albatross is so great, it will be cheap at double the price, whatever it is. If the sources of funds I have outlined above aren’t enough, I would have no compunction in spending whatever it costs to carry out the program and assessing a special surtax to pay for the unfunded balance. After all, I said I would be a dictator.
So much for the demand side of the equation; how about supply? As I mentioned before, there are two ways to prevent trade: one, interdict the goods; two, cut off the money. As I have already mentioned in Chapter 3, my greatly expanded military will seal the borders of the country and physically inspect every item that comes into it. The principal purpose of this will be to squelch the thriving trade in illegal immigration, but as long as the troops are in place, they can open every box and container and seize every bit of contraband drugs and other goodies as well.
Make no mistake, without drying up the demand, this effort would be totally ineffective. If I blocked every single ounce from entering via the southern route, it would simply come in via Canada if the demand was still there. Reducing the demand reduces the sales; even a partially effective blockade increases the costs. Eventually, it ceases to be a profitable enterprise for the scum to operate, and they will find something else to do.
To begin with, all aircraft, general aviation and commercial airliners, could only enter the United States along defined corridors. Any not within those corridors could be shot down without warning. All aircraft entering along the defined corridors would be required to land at designated airports immediately upon entering the US airspace. On the ground they and their passengers would be hand searched by members of the armed forces: every piece of baggage, every parcel shipment, every nook and cranny on the aircraft. For example, the contents of every toilet holding tank would be filtered, and the filtrate examined by closed-circuit TV.
All ships and boats entering US waters would be required to enter through designated channels, and dock at inspection stations for search of passengers, crew, their personal effects, and every enclosed compartment of the ship. It would then proceed to unloading docks, where unloading would be under the supervision of the military. All containers, cartons, crates, would be required to be opened for inspection. Fishing vessels and pleasure craft would be permitted to operate outside the designated channels, provided they carried identifying transponders obtained from the local military headquarters. They would be prohibited from having any contact at sea with commercial vessels in designated channels, except in an emergency. Any vessel not carrying a transponder found outside the designated channels could be sunk without warning. Any fishing vessel or pleasure craft which followed a course (monitored by computer analysis of transponder signals) that provoked suspicion would be intercepted for search.
Auto, bus and truck traffic would be permitted to enter at only certain designated border crossings, and would be subject to similar scrutiny, both of their passengers and of any goods.
I have already discussed how the millions of troops needed for this activity would be obtained by reinstituting the draft. Again, the cost of this operation will be defrayed in part by charging the importers of legal goods for the cost of 100% inspection, and in part by fines levied against owners of cargoes and baggage containing contraband and operators of conveyances carrying it. These worthies will no doubt save money in the process, however. The docks and air freight terminals will be swarming with armed troops, part of whose duties will be to eliminate the thievery and pilferage which is now so common as to be considered part of the ordinary cost of doing business in the import trade. These troops, by the way, will only have this duty for a part of their three-year service, and will rotate from port-of-entry to port-of-entry every month or so; there will not be time to seriously corrupt them.
In order to get a strangle-hold on the money flow as well as choking off the goods, it will be necessary for the government to assume control of the entry of funds into the banking system. At the same time, the use of cash currency for most commercial and retail transactions would be gradually eliminated, as described in Chapter 9. My goal will be to get all transactions onto a computerized debit-card system, with the government owning and operating the electronic point-of-sale registers. The entire system will be networked together nationwide, and can compare in real time debits reported by a payor station with credits reported by the payee station. This will be a part of a much larger tax reform system, about which I will have much more to say in Chapter 9. If there is no cash, and the only way credits can get into the banking system is through the government-owned electronic registers of legitimate businesses, it will be impossible for the drug trade to collect dollars for their goods without much more surveillance than they now face. Continuous computerized audits of credits input to a restaurant or jewelry store, for example, compared with debits for purchases of supplies and payments of salaries would identify money laundries rather quickly.
As I said, such a system will also figure heavily in a reform of the tax system away from an income tax to a transaction tax. Credits for taxable transactions input into the system will automatically result in tax payments diverted to the government before the balance was forwarded to the designated bank. The present tax system misses a great deal of revenue from cash transactions and profits in the shadow economy. The increase in revenue from forcing transactions away from cash into government- monitored and controlled electronic banking will more than pay for the cost of the system.
This cashless electronic transaction system will also be the principal weapon in preventing the drug trade from going into the moonshine business to capitalize on the many-fold increase in alcohol tax I have already mentioned I would impose. I would expect that most of this alcohol would be produced domestically in illegal stills. But without cash from their customers to pay for it, nor cash with which to pay their suppliers of grain, yeast, and sugar, all the transactions have to go through the electronic system where they are subject to detailed scrutiny.
This combined approach, simultaneously aimed at eliminating demand, throttling the inflow of goods, and strangling the cash flow, will within five years of full implementation reduce the drug crisis to a problem. Within a decade, it should be a minor nuisance. Many of the costs, as I have described, can be recovered from fines, and from savings in other costs (not the least of which will be the reduction of drug-related crime). Other costs will be shared with other necessary reforms, so they will contribute to the solution of more than one problem. Once the casual recreational use has been markedly reduced, the random drug screening program can be reduced as well. It would be inadvisable to underestimate the resourcefulness of the drug trafficking organizations, however. The bosses of a multi-billion dollar business will not suffer the loss of their market lightly. A continuous alert must be maintained to spot in the earliest stages any introduction of new mind-altering chemicals, synthetic or natural, so that the screening and blood testing analytical equipment can be modified to detect them as well.
As I have said before, the actual cost of carrying out this program is difficult to predict in advance, because so many of the factors are quantitatively uncertain. Again, however, this is one of those areas where it doesn’t matter what it costs: it’s cheap at double the price. We will simply have to spend however much it takes to do the job.
CHAPTER 7 OF BOOK “HOW I WOULD RUN THE COUNTRY IF I WERE DICTATOR” by Argus C. Zall
Chapter 7 “Health Care”
In this chapter I describe how I would reform the health care system
(Copyright July 31 2006)
The health-care system of the United States is a national disgrace. Over the last quarter century, it has risen in cost at twice the rate of inflation, and in 1999 amounted to an astonishing 13.5% of GDP (SATUS 1995-2000, Table 159, plus SATUS 2000, Table 459 for determination of GDP). It combines the highest-tech care in the world for the rich with an infant mortality rate for the poor that a third-world country would be ashamed of. It combines a surplus of specialists in urban areas with a shortage of primary care physicians in most of the country. It leaves one third of the population unable to afford to get sick, while the rich can buy a replacement part for any organ except the one they need the most, the brain.
It acquires all these characteristics in part as a result of an unholy alliance among the fee-for-service medical establishment, the malpractice lawyers, and the medical/medical-liability insurance industry. Based on what these three groups have to say about each other, it would seem nonsensical to claim that they are allies in the rape of the public. Nevertheless, if not in outright alliance, they at the very least live in a strong symbiotic relationship, to the mutual enrichment and profit of all three.
The threat of suits incited by the malpractice lawyers makes the physicians practice “defensive medicine”, ordering expensive tests of marginal utility in diagnosis. The tests themselves are covered by insurance, for those who have it. “I recommend a CAT scan to confirm that you don’t have a bullet in your brain, although your headaches appear to be from simple eyestrain; after all, it won’t cost you anything, because it is covered by your insurance”. The tests themselves, of course, are extremely profitable to perform; there is a multi-billion dollar industry furnishing equipment and consumable supplies for these tests.
Malpractice lawyers profit from suing the medical practitioners every time there is a less-than-perfect outcome to a medical situation. Most of the cases are settled out of court, because both sides know that if it gets to a jury, the patient will most likely win big bucks. The settlement is paid by the malpractice insurance company, with typically one-third going to the lawyer, and the cost distributed through premiums for malpractice insurance. Neither the lawyer nor the malpractice insurer have any interest whatsoever in eliminating less-competent physicians from the field; most settlements absolutely prohibit any disclosure. Since the lawyer makes profit from suing, and the malpractice insurance company makes profit from selling insurance, the more malpractice there is, the better is business for both of them.
Physicians and hospitals and diagnostic laboratories don’t pay these costs; they simply add their mark-ups to them and incorporate them into their fees. These fees are paid by the patient, or on the patient’s behalf by another party. For two-thirds of Americans, the third party is a medical insurer, who incorporates these costs into the premiums charged. For the remainder of our citizens, the third party is the taxpayer.
Again, the medical insurers have no incentive to reduce the costs; the more medical costs, the more insurance to sell and the bigger the profit. The patient and the patient’s family certainly have no incentive: “How can you talk about money at a time like this?”. Moreover, most of us do not directly pay the medical insurance premium; it is paid for by an employer. American industry and the American economy pays the cost, at the rate of thousands of dollars per car, for example. Meanwhile, Americans buy Japanese cars in record numbers! Their cost is not saddled with this burden.
The lawyers insist that the ever-present threat of malpractice improves the performance of the health-care system by pricing incompetent practitioners out of the market. Their malpractice insurance premiums will be so high if they can get insurance at all, the story goes, that they cannot make a profit at a competitive fee. That may be, but the side effect is worse. It drives practitioners out of more-risky specialties into safer ones. Try to find an obstetrician in a poor community. He/she would treat high-risk cases, unable to afford proper prenatal care. Many of the patients would be uninsured, so his fee income would be attenuated. The malpractice insurance premiums would be sky high, because the probability of unfortunate outcomes to the pregnancies would be high. He/she is much better off as a skin specialist, or dentist, or ophthalmologist, or any one of a number of specialties in which the patients are not at risk of dying or of life-long disabilities.
Do you perhaps see a connection between the unholy symbiosis of fee-for-service practitioners/malpractice lawyers/insurers and the shockingly high infant mortality of poorer inner-city neighborhoods? I do. The system drives obstetricians out of the places they are needed the most.
Meanwhile, the existence of this spiral jack under the health-care industry pushes up the cost of health-care delivery to rich and poor alike. The Medicare-Medicaid system under which one-third of the nation’s population receives its health care threatens to bankrupt the nation. Between 2000 and 2005, the expenditures for Health and Human Services (mostly Medicare and Medicaid) rose from $383 billion to $586 billion , (SATUS 2000, Table 462) 53% in five years. The total increase in the Consumer Price Index over that period was 9.6% (SATUS 2000, Table 706). Moreover, these billions are just the Federal component of the financing; the states contribute comparable amounts.
Part of the reason for the outlandish costs is the incredibly complex system of billing and payment. I had last year a pelvic CAT scan at a local hospital to test for kidney and prostate problems. This generated 9 separate and distinct billing documents. For use of the equipment, from the hospital first to Medicare, then to supplemental insurance, then to me, 3 documents; From the radiologist who supervised the tests, and “read” the resulting images, bills to all the same payors, 3 more documents. From the referring physician who interpreted the results, 3 more bills to the same payors. The procedure took place on 12/27/05, and the last bill was not paid until 6/6/06.
A simple flu shot, administered by the town nurse, took two Medicare billings and payments:; one to the town for administering the shot, one to the state for providing the vaccine. And, of course, each of the entities involved in all of these transactions has to add a markup to cover the allocation of fixed costs, plus a profit. It reminds me of the line in the play “The Madwoman of Chaillot” where one of the characters is complaining about the high cost of everything, created by all the “pimps” in the process: “Ten percent for the glass pimp, ten percent for the beer pimp, twenty percent for the glass-of-beer pimp!” (Those markups, by the way, are early twentieth century; they are all much bigger nowadays).
All in all, this is a system only a bookkeeper could love.
Worse still, the hardest hit by the entire system are the working poor. Honest, hard-working people, working in jobs at the fringes of the economy, trying to improve their lives, and raise their children to be responsible citizens, are outrageously penalized. The employers they work for are usually too marginal to be able to provide medical insurance as a fringe benefit, and the wages received by the working poor barely cover food, shelter, clothing, and transportation. These people will usually have no medical insurance at all. However, if they get sick, they are not covered by the Medicaid system because they are not on welfare. A one-week illness of a child in the family can bankrupt them.
It is positively not in the interest of a family in this situation to work for a living. They are better off on welfare, where at least they will have public-funded medical insurance. Meanwhile, the Medicare system provides publicly-funded medical insurance to well-to-do pensioners who can perfectly well afford to pay for their own. I don’t think this system is fair at all.
Moreover, the vast expansion of medical technology in the area of replacement organs appears to be largely reserved for those who can afford it. Heart bypasses and organ transplants seem to be outside the scope of Medicaid and Medicare and many private insurance coverages, although kidney dialysis is covered in many jurisdictions. Thus the papers are full of heart-rending efforts by middle class Americans trying to raise money for bone-marrow transplants for leukemic children. The poor merely have to get a few hundred bucks together for a decent funeral. Then, of course, politicians keep passing laws requiring insurers to pay for this that and the other expensive procedure; the insurers must necessarily jack up the premiums paid by everybody to cover these costs. The politicians can then proudly congratulate themselves on having mandated a benefit for their constituents “without raising taxes”, while another clutch of middle-class citizens have to drop insurance coverage because it has become too expensive.
To cut costs, the Medicaid system tries to mandate hospital treatment protocols that kick patients out of hospital beds after an arbitrary bureaucratically-determined stay; whether the particular patient is ready or not seems to be irrelevant. At the same time, Medicaid and Medicare will pay for extended hospitalizations for patients who cannot be cared for at home, but will not pay for extended nursing home care. Thus we have patients who could be cared for in nursing homes occupying hospital beds at far greater cost.
I sometimes think that the only cure is to socialize the whole system, and get it out of the fee-for-service mode entirely. Where this has been done, most notably in England, it results in a two-tier system. The vast majority of the population is served by a publicly-funded health-care system widely perceived to be second rate. Those who can afford it are served by a fee-for-service system partly defrayed by private insurance. At least, this system does not suffer as badly from the infant mortality syndrome that we do.
As Dictator, I would abolish this entire payment system and replace it by the following. Abolish the entire present system of medical insurance, including employer-paid insurance. Raise everybody’s salary and wage by 15%. Apply a new withholding tax of 15% to all salaries, wages, and other income, to go into individually-owned Health-Management Accounts (HMA) managed by the government. Require that all persons use these funds to purchase a standard family medical insurance policy, covering emergency-room services, hospitalizations, and a limited number of physician visits. The policies will be at group rates, with all persons residing in a particular zip code constituting a group. Persons living in unhealthy zip-codes will necessarily pay higher premiums. For persons below a certain family income level, this withholding will not suffice to pay the insurance premium. The balance of the premium for the standard policy will be taxpayer-subsidized, but these persons will be treated only in a pro-bono-publico system of health care that I will describe below.
Retirees having only social security income will be treated in the pro bono public system as well, with Medicare defraying a portion of the costs. Retirees with income in addition to social security will be assessed a 15% tax on that income to pay premiums for the standard medical insurance policy, as a supplement to Medicare. If the tax was insufficient to cover the premium, the balance would be covered from general funds as a subsidy.
All bills from providers must be itemized in plain English (no arcane code numbers) and sent directly to the person treated, who will verify that the services billed were in fact provided, and then forward them to the insurer for payment. For every procedure taking place in a hospital, all providers involved will be legally-considered to be employees of the hospital; their fees will be paid by the hospital and incorporated in its bill. Only one final bill will be sent to the person treated. As employer, the hospital will be accountable for the quality of the services rendered by every provider involved. Services not covered by insurance will remain the responsibility of the person treated. The hospital will be required at the time to inform the patient or health-care proxy whether any service or procedure recommended is covered under the patient’s insurance, and what the cost to the patient will be if it is not.
Nothing in this system will prevent those who can afford it from purchasing additional medical insurance covering a much wider range of services, to cover expenses for which they are responsible not paid for under the standard policy.
This streamlined system of payment will save enormous sums by reducing the present incredible paperwork, and the extremely long lag times in obtaining final payment. It will remove from American manufacturers the burden of medical insurance premiums which now increase the costs of every single article manufactured in the United States. It will save billions in carrying costs by the medical industry which now has to finance enormous sums in accounts receivable while waiting for payment. But it is only a partial solution to the problem. The other half, of course, is to reduce the costs of providing medical care.
As Dictator, I would recognize that the American medical care system exhibits most of the characteristics of a monopoly. Entrance to the practice of medicine is severely limited: first by the availability of medical training, and second by the high cost of a medical education. Consequently, the number of physicians is limited far below optimum levels. This permits them to charge outrageous fees.
Some years ago, the major full-service hospital in my vicinity systematically drove all the community hospitals in surrounding communities out of business. It did so by requiring all physicians on its staff to send their patients only to it, or lose their staff privileges. Since all of them had some patients who required treatment available only in a full-service hospital, they had to remain on the staff of the full-service hospital in order to continue to serve these patients. Therefore, they had to send all of their patients to the full-service hospital, even though 90% of them could have been treated in a local community hospital at half the cost. One by one, the patient censuses in the surrounding local community hospitals fell below the minimum level capable of covering the fixed costs, and one by one they closed. Consequently, for the ninety percent of patients who could have received entirely satisfactory surgical and medical treatment in a community hospital, medical costs were doubled.
In any other business, this would have been illegal restraint of trade, and would have been prosecuted under anti-trust statutes. In my dictatorship, this nonsense will be reversed.
OK, let’s start with medical training. I would socialize medical training and the medical schools. I would give qualified students medical training absolutely free, and pay them a stipend for living expenses during their training. In exchange, they would be required to provide pro-bono-publico service to those members of society lacking the wherewithal to provide for their own health care. This would be an extension of their internship for a period of seven years, at a salary, working in clinics and hospitals serving the communities needing them, rural as well as urban. Having completed their pro bono service reimbursing society for the cost of their training, then and only then would they receive a license to engage in the private practice of medicine.
As long as I was running the medical-education system, and controlling the entry into the profession, I would open it up to a much larger number of entrants. At present, entry into the profession is limited by cost, and by the medical establishment itself in the number of educational openings provided. The limited number of entrants keeps the number of doctors down, which in turn limits the competition and keeps fees high. I would double the number of entrants as well as make the opportunity much more widely available to minority applicants. Pro bono service by the graduates would be performed wherever I decided there was need: inner-city neighborhoods, poor rural communities, and other places poorly served by the medical establishment at present. Because these places are relatively undesirable, most practitioners will leave them as soon as their pro bono service is complete. I will need a continuing flow of new graduates into them to insure that the medical needs of the entire population are met. The influx of this large number of qualified practitioners into the fee-for-service practice will have very salutary influence on the fees that can be commanded by the profession for its services.
There is nothing particularly new about the education/service idea. It has been used for decades to provide medical and dental personnel for the military. They get med school education under ROTC, then serve for four or five years as doctors in the military. I would simply extend it to the much larger civilian population and make it the only means of entry into the private practice of medicine. Paramedical personnel would be educated in similar fashion. Their training program would not be nearly as long, and their pro bono service requirement correspondingly shorter.
I have already described above who would be treated in the pro bono system: the unemployed, the working poor, and retirees with insufficient income to cover the cost of the minimum standard medical insurance policy. The vast majority of their inpatient and outpatient hospital care will be in the local community hospitals and clinics which I will re-establish. The cost of their hospitalizations will be covered by the standard policy; the hospital may not charge higher rates than the policy will pay.
All full-service hospitals will be required to establish and operate a network of satellite community hospitals capable of providing minor surgery, routine hospitalizations not requiring intensive care, and basic emergency service. This would be at much lower cost than required at the full-service hospital, because there would be much lower fixed costs. Patients needing intensive care, diagnostics provided by multi-million dollar machines or major surgery would be treated in the full-service hospitals. Moreover, no hospitals would be saddled with the cost of providing free emergency service to indigent patients, since everybody would have insurance.
All licensed physicians will automatically be on the staffs of every hospital within a fifty-mile radius of their offices. Hospitals will be required to publish a schedule of their rates for various services, as well as whatever amenities they offer. They will also be required to publish their success and failure rates for the various procedures. Patients needing hospital services may be able to compare and choose with their physician the hospital which offers the best combination of service, success, and cost. Motels compete for travelers by advertising “Free Internet and HBO”. Hospitals today saddle a patient already paying outrageous prices with additional charges for TV sets and for telephones. Under my system, hospitaals will have to compete for customers on service and price.
A final point about hospitals. It is reported that 2 million patients per year contract infections in hospitals, of whom 100,000 die! .(Center for Disease Control, reported in “Germ Warfare” Forbes Magazine, June 15 2006, p 62) Hospitals do their best to suppress information about infection rates, apparently for good reason. They presently have a financial incentive to infect their patients, and do not incur any penalty for doing so, If a patient becomes infected in the hospital, the hospital gets to keep a bed full for longer, and charge huge sums for antibiotic treatments that the patient, or patient’s insurance pays for. The information is suppressed so there is no adverse consequence to the hospital.
As Dictator, I will decree that the total cost of treating any hospital-acquired infection (including any rehabilitation or relapses) is borne by the hospital, and the patient receive a stipend of $1000/day for pain and suffering during the treatment. Upon admission to the hospital, a blood sample will be withdrawn from the patient and forwarded to an independent laboratory. If the patient becomes infected in the hospital, a second blood sample will be sent to the same laboratory to determine whether the patient entered the hospital with the infection. If not, all the above elements will apply. Hospitals will be required to publish infection rates along with the success/failure rates and costs noted above, for informed patient judgments. The financial burdens of treating infections will force hospitals to take serious steps to prevent infections, and will result in great reductions in rates of infection and death. This will force hospitals to be built with the idea of preventing or disinfecting bacterial and viral contamination in the first place. Any doctor who practiced medicine in the 1930’s, before penicillin, would be absolutely horrified at hospital rooms with drop ceilings that are ideal dust collectors and bacterial farms!!! They can’t even be adequately fumigated.
A particularly egregious one-hand-washing-the-other arrangement that I will abolish is the present practice of ownership or financial interest in hospitals (particularly specialty hospitals), clinics, and laboratories by physicians, surgeons, and their families. This is clearly a conflict of interest, since the physician will always steer the patient to the facility in which he has a financial interest, whether or not it offers the patient the best combination of favorable outcome and lowest cost. In recommending a facility for any patient, the physician must always be acting in the best interests of the patient, not himself.
More than ten percent of medical costs are for prescription drugs . (SATUS 1995-2000, Tables 159, 160). Americans pay two or three times as much for the same prescription drugs as do citizens of almost any foreign country. The pharmaceutical industry justifies these costs as necessary to support the enormous expense of searching for and developing new medications. If that is true, Americans are subsidizing the discovery and development for the whole world. Moreover, it is believed that Big Pharma spends as much on advertising and merchandising as it does on research and development.
The reason for this disparity is that in nearly every other country than the US, the purchaser from the pharmaceutical company is the government. which negotiates volume discounts. Such government intrusion into the marketing process is forbidden by law in the US, an accomplishment of which drug-industry lobbyists are justifiably proud. As Dictator, I will throw a giant monkey-wrench into this happy grinding of the profit machinery.
First of all, I would drastically reduce their marketing costs by forbidding direct advertising of prescription medications to the public. The public has inadequate medical background knowledge to evaluate the multifarious claims and teeny-weeny fine-print disclaimers (which flash by so fast that you need a stop-motion TIVO to even realize they are there). All these ads accomplish is the patient placing pressure on the physician to prescribe the latest and most expensive nostrum seen on TV. The physician fears losing the patient or a malpractice suit if the prescription is not provided.
Second, the government will be the only purchaser of prescription medications, at a (deeply-discounted) negotiated price. The negotiators will be former buyers from Walmart. The government will then distribute these medications at cost directly to pharmacies in a secure manner. The pharmacies will buy their prescription medications only from the government, and not through third-party concerns, eliminating a present opportunity for slipping counterfeits into the channel. The government will not bother to buy me-too drugs of marginal benefit over what is already available. With these changes, I will reduce the cost of prescription medications (perhaps by as much as a factor two), and the foreigners will pay a bigger share of the R&D costs. Big Pharma will have to cut them smaller discounts to make up for the money they don’t get from us.
None of my proposals directly reduce costs for upper-middle-class or wealthy Americans. They will benefit indirectly, however, because the system will incorporate much more competition, will be much more efficient, and will not be forced to saddle on them the costs of treating uninsured patients who cannot pay.
Having totally reformed the financing and delivery of medical care for rich and poor alike, I will then convert the malpractice system to a no-fault mechanism. Any individual suffering an unfortunate outcome in a medical situation will be compensated for actual loss plus pain and suffering without having to claim and prove negligence on the part of the practitioners; no punitive damages will be permitted. Every such instance will, however, be reviewed by a medical panel to determine whether practitioner negligence was a contributing factor. Any practitioner found to be negligent three times will be barred from practice anywhere in the US for the rest of his life. Hospitals having larger rates of unfavorable outcomes than the 90th percentile will be barred from performing the service in question for ten years. This method of dealing with malpractice will greatly speed up the compensation of victims for their losses, effectively weed out incompetent practitioners and hospitals, and eliminate the additional cost of the skimming by lawyers. For their part, the practitioners will have the security of knowing that the evaluation of negligence will be made by a jury of peers knowledgeable in the limitations of medical practice as well as of its capabilities. Malpractice insurance will become “Unfavorable-outcome” insurance; it will become much cheaper because negligent practitioners and hospitals will be driven from the field, and because punitive damages and lawyer-skimming are eliminated.
So far, I have knocked down two of the major factors driving up the unfairness and the cost of health care: providing for the care of the one third of the nation that is unable in the present system to care for itself; and the reducing the tax imposed by the legal tort method of compensating victims of malpractice. The third, the proliferation of extremely expensive spare-parts replacement treatments, and how to ration them, is more difficult.
We cannot afford to provide these treatments to our entire population. Therefore, they must be rationed. We ration them now, to those who can afford to pay for them, either outright or through private insurance coverage. I think there must be a better way.
I would require the practitioners performing these very expensive procedures to perform one procedure for free in the pro bono system for every one they performed for a fee in the private system. This will undoubtedly result in higher costs charged to the fee-paying patients and their insurers, because they are in effect paying for two procedures instead of one. For many, it will still be a bargain. For others, it will shift a procedure with a marginal benefit/cost ratio into the unfavorable category.
This ukase will still not result in the medical resources to furnish such services to every person in the US who needs them or can afford them. Rationing will still be necessary, euphemistically called “prioritizing”. If this were to be done by a rational selection process, the first component of establishing priorities (for both fee-paying and pro bono patients) could be the quality and quantity of new life conferred. Why waste a kidney transplant on a seventy-year old in poor health with only a few years to live, when a teen-ager injured in a car wreck could be given a normal life span that he otherwise would not have? The second component might be determined by what the prospective patient proposes to do with the new life he is given. Why waste a liver transplant on a forty-year old confirmed alcoholic, when you can give a young mother ravaged by hepatitis a new lease on life to rear her children?
Although this all sounds very logical and straightforward, this dimension of the problem would involve some extremely difficult value judgments if you really get down to priority rank-ordering the cases. Is a banker more worthy than a lawyer? Is a homemaker more worthy than a politician? More importantly, who would decide? Oregon recently held a referendum to try to decide this type of question, and came up with a formula such that everybody’s second or third choice won the sweepstakes, and they went back to the drawing board.
No, such a system would be far too prone to manipulation by whoever ran the decision-making process, and it would be perceived as being manipulated by everyone ruled out, even if it were run by God himself. I would say, instead, set up a few obvious categories to rule out, and select priority ranking for the rest by lottery. At the beginning of the year, randomly pick all three hundred sixty-five dates of the year in sequence to establish the priority order. Match patients needing a particular treatment to the priority listing according to their birth dates. Perform all the procedures for all patients having birthdate corresponding to the number one priority date, then go on to the number two priority date, and so on. Some patients would not survive until their birthdate came up; c’est la vie. Others might survive the entire year and still be around to participate in next year’s lottery; viva la vie.
It seems heartless; it seems cruel, to make life depend on the roll of the dice. But remember, every last one of the treatments we are referring to has been developed only within the last half century, many of them within the last quarter century. And in many cases, the limiting factor is not the availability of medical service, but the availability of organs to transplant. So, none of us are worse off by being denied access to these treatments than we would have been a few years ago. All we are doing is taking them away from being the exclusive province of the well-to-do, and making them available to a wider fraction of the population in as scrupulously fair a manner as possible.
It would take some very sharp figuring to determine whether all my changes would save any money. Medical service to a substantial part of the population would be expanded, albeit at lower cost per unit of service. Expanding medical school places would certainly entail investment cost. I think that the introduction of competition, and the placing of the decision-making with respect to cost in the same locus as the decision-making with respect to benefit (the patient) will help to limit future growth of costs to no more than that of inflation. Elimination of the lawyers from the practice of medicine will certainly help to hold costs down. And finally the restriction of subsidies to those who really need them will improve the fairness of the whole process.
Unfortunately, this does not quite take care of the whole problem. Looming over the entire medical industry is the specter of AIDS, the Acquired Immune Deficiency Syndrome. AIDS is a contagious disease, and has no cure, although anti-retroviral drugs appear to drastically slow its progress. Before they were introduced, the disease was 100% fatal, but infected persons might live as long as ten years after diagnosis. The disease involved loss of immune-system function, leading to frequent opportunistic infections, increasing disability and eventual death from one or more of the infections. Some patients on anti-retroviral drug “cocktails” have now survived longer than ten years in otherwise good health with adequately-functioning immune systems. These treatments are quite expensive, of order $5000 per month. (These costs will go down under my prescriptions for reducing the cost of pharmaceuticals).
The disease is spread by “exchange of bodily fluids” between an infected person and an uninfected one, introducing the HIV virus into the latter’s bloodstream. There it invades immune system T-cells to replicate, killing them. As of 2005, there were reported to be 1.2 million HIV-infected persons in North America ,(Global Health Care Council Website) perhaps a million in the US. The modes of transmission are as follows (SATUS 2000, Table 217). Of 35000 new cases among men in 1999,half resulted from homosexual sex or drug use, with another 8% from heterosexual sex; among 10000 new cases among women, half resulted from heterosexual sex or drug use. For 25% of all cases, the mode of transmission was undetermined.
Interestingly enough, published statements by medical authorities have totally ruled out insects as possible vectors of transmission, even though mosquitoes are known to transmit many blood-borne infections, notably malaria and yellow fever, not to mention equine encephalitis and West Nile virus. Similarly, infection by flea bites has figured prominently in the transmission of bubonic plague to humans from rodents in the past. Deer ticks are the vector transmitting Lyme disease. The reasons advanced for the unique absence of such channels in the case of AIDS are not very convincing: that the viral concentration in the blood of an HIV-positive person is low enough that an insect cannot withdraw enough viruses with its typical blood dose to infect the next person it bites.
This is a “long-tail” statistical situation. While the probability of an infection transmission from one bite is very low, it is not zero. Because an HIV-infected person lives for ten years or more, and his blood contains active viruses the entire time, and in Africa at least may be bitten by insects tens of thousands of times, the cumulative probability of transmission may well approach one before the patient dies. In order for the epidemic to continue, all that is necessary is for an infected person to infect at least one person before he dies. I do not believe there is any epidemiological way of proving that a one-in-ten-thousand channel of insect transmission does not exist. Clearly, however, treatment with anti-retroviral drugs (drastically reducing the viral concentration of the blood stream) tips the odds in a much more favorable direction in the US.
However, these drugs do not cure the disease, and are only effective when they are taken continuously. Discontinuing treatment after suppression of viral concentrations and rebuilding immune-cell concentrations results in relapse and return of viral load to critical levels. Since the transmission by all routes is reduced by reduction in viral load of the infector, it is vital that infected persons be required to remain on their medications for the rest of their lives, regardless of the serious side effects that sometimes occur.
I will dictate persons infected with AIDS be required to wear a plainly visible badge, identifying them as HIV-positive, submit to a monthly blood test to determine their viral load and immune-system status, and must be provided with the necessary anti-retroviral drugs at no cost. The purpose of the badge is to inform non-infected persons to avoid homo- or hetero-sexual contact, to avoid sharing drug-needles, and to inform medical personnel, who may treat them in event of injury, of their status. Should HIV-positive persons fail in any of these requirements, they will be quarantined to remove them from contact with the public. All persons entering into the United States from abroad must prove HIV-negative status before receiving a visa.
With these procedures in place, HIV and AIDS can be stamped out in the US within a decade or two.
The high cost of anti-retroviral drugs and the inadequate public-health infrastructure in Africa and many parts of Asia make this prescription difficult if not impossible to implement there. It might be worthwhile for the US to provide the necessary medications to these areas free of charge, under the condition that the countries involved institute the other aspects of the program. Public-health measures to reduce the enormous insect-bite hazard would be an excellent contribution, not only to the AIDS problem, but to minimizing the transmission of other endemic diseases as well.
CHAPTER 8 OF BOOK “HOW I WOULD RUN THE COUNTRY IF I WERE DICTATOR, by Argus C. Zall
Chapter 8 Public Education
In this chapter, I Federalize the public school system to have an American National System, uniform across the entire country, abolish the private school system, and introduce student-performance-based tracking, and build teacher and administrative accountability into the system
(Copyright July 31 2006)
The public school system of the country has gone from one of its brightest spots to a national disgrace in the space of a generation, especially in urban areas. I went to a public school in the South, a backward province, in the nineteen-thirties, and got a thorough grounding in English, history, mathematics, physics, chemistry, and foreign languages. A single urban public high school in New York City graduated in the 1930’s a half-dozen geniuses who went on to earn the Nobel Prize in Physics. The only reason kids in the South were sent to private school was to be indoctrinated with a particular religion, or to straighten them out. If their parents could afford it, the troublemakers, the dumbunnies who couldn’t cut the mustard in the public school system were sent to “military academies” to knock some discipline into them and force them to study so they could get into college. Those whose parents couldn’t afford it usually had run-ins with the law, and wound up in “reform schools”, basically schools inside of jails.
Today, the public school system, especially the urban public school system, is a disaster. Its curriculum has been watered down to nothing, and its graduates can neither read nor write nor reckon. The middle class in many areas is abandoning the public school system entirely. If Rip van Winkle had fallen asleep in 1950 and waked up in 1990, he absolutely would not believe his eyes or his ears. What has happened?
In a single word, DESEGREGATION. It has been a catastrophe beyond imagination for blacks and whites alike. Having said that, let me at the same time insist that the blacks had a totally valid objection to the monstrous unfairness of a segregated public school system funded by local taxes that left their schools impoverished, denying them opportunity for the education they earnestly craved and desperately needed. Their segregated schools were in poorer segregated communities, unable to generate the tax base to support the superior schools they needed.
The reasoning behind the desegregation fight was that if schools were desegregated, and blacks were admitted to white schools, they would get the benefit of the better schools created by the higher taxes that the wealthier communities could provide. At the same time, rubbing elbows with whitey would stimulate the brothers and sisters to higher achievement. The combination of better schools and teachers, more money per pupil, and friendly competition would accelerate intellectual development and finally permit this important minority to achieve full equality in the white-collar world. Unfortunately, it doesn’t appear to have worked out that way.
Perhaps the example of Boston may be instructive. In the sixties, when desegregation of the public schools systems of the South was proceeding amid howls of pain and establishment of “segregation academies”, the Boston newspapers were full of tut-tutting about the unreconstructed Southerners, attempting to subvert the “law of the land”. In the seventies, however, the blacks of Boston filed suit in Federal Court, pointing out that the Boston public schools were every bit as segregated as those in the South. The mantra of the School Committee at that time, the sacred “neighborhood school” concept, served to keep them that way, given the residential segregation of the city. In 1974, a Federal Judge agreed that segregation existed, and decreed full and immediate integration by school bus. It didn’t work any better than in the South. The only people that benefited were the contractors who provided the school buses.
In the early seventies, the Boston public school system was 2/3 white, one third black and minority. It had about 63,000 white pupils and 31,000 black and minority students, with most of the blacks in highly segregated schools. There was a great deal of resistance by the white community to the cross-town bussing, near-riots in fact. There was much exhortation on the part of the local media and the pols to the citizenry to obey the law, and love their brethren, and “make integration work”. After a while, the outright violence ended, and the city calmed down. Eventually, even, a black was appointed school superintendent, and the judge turned the school system back to the city. Success, right?
Not quite. In 1990, the whole school system was about as segregated as the worst schools were in 1974. It was three- quarters black and minority. There were only 14,000 whites in the entire school system, and 43,000 black and minority students. In 15 years of “integrated” schools, 49,000 out of 63,000 (78%) of the whites had abandoned the Boston public schools, while the black and minority school population increased from 31,000 to 43,000. The operation had been a success, but the patient died.
The Boston experience is by no means unique. Wherever desegregation has been forced, whites have left the public school system in droves. Where have they gone? They have gone to private schools; they have gone to parochial schools; they have moved to the suburbs, where the numbers of blacks and minorities in nominally-desegregated schools is smaller and less threatening. The response of the social engineers to this situation, repeated across the country, is to insist on “metropolitan-area- wide” integration. I can only shake my head in wonder. They have crippled the inner-city systems, and now want to extend the same medicine to ever-wider circles of destruction. As long as people can vote with their feet, you can’t force them into a situation they fundamentally oppose. They will move faster and further than you can send the school busses after them. And they will take their tax money with them, leaving the schools attended by the blacks even more impoverished that they were before desegregation.
If desegregation of the public school system (as it has been practiced) doesn’t work in Boston, the cradle of abolitionism and justice for the black man, where can it work?
The architects of this master plan will argue that: a) the flight of whites is a figment of the imagination; b) even if some have left, it is a negligible percentage; c) when confronted with facts like the totally damning statistics above, blame an unregenerate racism lurking just beneath the surface of society; d) try to destroy the private automobile transportation system to prevent “voting with the feet”. If you can make people travel only by public transportation they can only move where the government will provide transportation to (which will not exceed the reach of the school buses!).
Perhaps it might be worth while investigating first some of the reasons why whites leave the public school system when it becomes desegregated. First and foremost is the perception that quality of education, in all its dimensions, goes down. Note that I said “perception”. It doesn’t matter whether it actually goes down, it is just whether it is perceived to go down. I have a number of cousins still living in the South whose children were in the public schools when they were desegregated. All of them stuck it out for a few years, either out of a desire to make it succeed, or because they were almost through it, or both. Uniformly, they have told me that their children in integrated schools were no longer challenged to achieve. Courses became less demanding, standards of classroom behavior were lowered, required courses became electives, etc., etc., etc. Eventually, they either graduated or left the public school systems for private ones. None of those children’s children (my cousins’ grandchildren) now attend desegregated public schools. And these were mainly suburban school systems that were for the most part at that time not infected with the drug and crime rot of the inner cities.
“Tracking” or “grouping” of academically-gifted students in honors courses, or more-demanding sections of regular courses, has been used to offset this problem, and retain the smarter kids in the public school system. My all-white public high school in the thirties had a three-track system, so that smart kids could learn at a rapid pace, average kids could enjoy mild competition from their peers, while dullards had the basics pounded into their thick skulls. I had little interaction with guys in the other tracks, until we were fellow draftees in the US Army. I am sure glad the numskulls didn’t clutter up my classes, because believe me, if brains were dynamite they wouldn’t have been able to blow their noses. For all that, though, the pound-in-with-a-sledgehammer education technique had worked. They could read and write and do arithmetic, speak grammatical English, and knew enough American History to realize why our country was worth dying for. They made good soldiers that I was proud to serve with and the majority of them, I am sure, became self-supporting taxpaying citizens after the war.
There are, after all, three dimensions to intellect: first, the ability to memorize, to get information from the transient or “quick” memory, into the long-term memory (from “RAM” into “DISK”, in computer parlance); second, the data-base of facts and rules with which the long-term memory must be filled; and finally, the set of mental algorithms used for processing and reprocessing the information in this data base to create new facts or ideas or rules (”reasoning ability”). Geniuses differ from the rest of us mere mortals primarily in the ease and rapidity with which they memorize. They don’t even have to think about it; it happens virtually automatically. Consequently, their data bases are filled with an enormous store of knowledge available to their reasoning engine. Less-gifted people have to have help learning to memorize and have to develop conscious devices or memnonics for tagging stored facts with directory information for retrieval. (”True Virgins Make Dull Companions”, the sexist phrase to remind the ordinary seaman of the steps in going from a charted “True” course through a “Variation” correction to “Magnetic” course plus a further “Deviation” correction to the desired “Compass” course to steer by is a good example). Dullards have no memory skills at all, and have to be forced to memorize by painstaking repetition and drill, with repeated reinforcing drills to repeat again what was memorized yesterday. Dullards can’t think clearly, because their data base is usually empty. The person who has no “twos” in his mental disk will never be able to deduce that “two plus two is four”, even if the addition algorithm is part of his software package.. He isn’t computing with a full disk.
It is the responsibility of the schools to deal with all three aspects of intellect: to train people how to memorize; to fill their data bases with a core group of important facts; and to teach them how to reason with those facts. And it is here that you have to separate the people by tracks. You don’t have to teach a genius how to memorize, nor do you have to fill his data base for him; all you have to do is hook him up to the fire hydrant of knowledge and get out of his way. Mere ordinary mortals need to be taught how to memorize and recollect, as well as need to have the data base doled out to them at a rate that they can absorb it and file it. Dullards need to be put into the heavy-lifting weight-room class of memorizing, with the mind treated as a muscle that withers away if its not used, but increases daily in strength with hard exercise.
The tracking system of education, properly applied, deals with these differences and uses them to full advantage, by using methods appropriate to the class of student being taught.
Unfortunately, wherever it has been used in desegregated schools, the tracking system is either under challenge in the courts, or it soon will be. And wherever the suit comes to trial, the tracking system will be thrown out by judges’ edicts. It is, unfortunately, in flagrant violation of one of the provisions of anti-discrimination law, which I paraphrase: If a policy has unequal (adverse) impact on any minority group to what it has on the society as a whole, it is de facto discriminatory and prohibited whether there is any intent to discriminate or not. Note that I added “(adverse)” although that is not in the law as it is written, just in the way the judges interpret it. Affirmative action has unequal impact on black minorities from society as a whole, but that doesn’t appear to be against the law.
Whatever the reason, be it the residual effects of hundreds of years of persecution, or lead paint, the absence of father-figures, mothers who are too tired from working all day to require kids to study, rampant black anti-intellectualism, culturally-biased teaching or testing, or whatever, black children on the average do not have the academic achievements of whites at any level in any educational system. They have a bell-shaped curve of their own, shifted to lower levels of achievement across the board than whites in the same school. If students are tracked by actual accomplishment, IQ, or any other measure, blacks will be found in the fast track in smaller proportions, and in the slow track in larger proportions, than they are in the population as a whole. I will be accused of unregenerate racism for saying so, which I deny absolutely. I am merely stating a fact that anyone with any connection to an educational system will recognize as true, but will not dare to admit in public. Be that as it may, according to the law, the resulting imbalance is de-facto discriminatory, and cannot be permitted.
So the thing that made the public school system acceptable to me and my family in the South in the thirties, and which permitted Nobel-prize geniuses to blossom within it in New York, is either out the window, or will be, as a violation of the law. And with it go all the smart kids in the school system who can afford to get out.
There is a more insidious effect of this de-facto discrimination law in the individual desegregated classroom. The individual teacher, faced with different distributions of academic skills, who honestly tries to teach and grade in a truly color-blind fashion is in for a peck of trouble. The proportion of failing students who are black will be greater than the proportion of blacks in the class as a whole. The teacher will be called on the carpet by the Administration, because those statistics are dynamite. Improvement will be demanded in the proportion of failing blacks, or the teacher will be demoted, possibly be fired..
The teacher has two choices: abandon color-blind teaching, and devote much greater attention to the more laggard blacks to the detriment of the more gifted pupils; or grade only on a pass-fail basis, and fail nobody. If nobody fails, blacks will not be over- represented in the failing group. The classroom presentation then can be at a much more difficult level, suitable for the better half of the class; if it is beyond the grasp of the slower ones, it doesn’t matter. They will get something out of it, however little, and will pass anyway. Thus we get high-school graduates who have progressed all the way through twelve years of school who cannot read, write, speak correct English, or do simple mathematics. They have been more poorly served by the public school system than were the dullard rednecks in the third track in my high school. Where they needed to have knowledge pounded into them with a two-by-four, and could have gotten it in a well-managed tracking system, they got passed automatically because everybody at the policy level pretended that everything was color-blind and equal. The troops on the firing line, the teachers in the classroom, knew that it wasn’t so and defended themselves against the unreasonable expectations of the Administration and the lawyers and judges in the only way they could.
Do you still wonder why the product of the public school system today is so much worse than it was a generation ago? The result is designed into the system as if it were a blueprint. It would be a miracle if there were any other result. Until we acknowledge and admit the real facts, and design a public school able to deal with the real facts, there will be no other outcome.
This is the reason that the teacher’s union, the NEA, has fought so vigorously against the requirement of achievement testing, such as the Massachusetts MCAS, being required for graduation from high school. Such tests are graded on an absolute basis, with a minimum score required to pass and receive a high school diploma. The initial years of testing revealed that half the students flunked, with a large disparity between blacks and everybody else. Such tests revealed starkly the massive fraud that had been perpetrated against the students, their parents, and the public. These results have forced teachers to “teach to the test”, which in fact means teach a curriculum that encompasses all those things that a high school graduate should know. Test scores have dramatically improved in the years since, to the extent that, in Massachusetts anyway, the vast majority of seniors are passing the test. This does not mean the problem is solved; those students who figured they were going to fail the tests anyway have simply dropped out of school along the way. This is hardly an ideal solution.
A few chapters ago, I identified the public school system as one of the central resources in the war against the drug culture. Clearly, the school system we have now cannot be; only drastic restructuring and redirecting will permit it to be of any value at all in that struggle. Fortunately, the same restructuring is what is needed to have it do the job it is supposed to do in the first place: educate the citizenry, first into their responsibilities as citizens, and second to acquire the skills they will need to be effective participants in the economic world. Here is how I would change it.
First, I would decree that the private school system be abolished. The bright kids have to be kept in the public school system. The tax monies of the middle and wealthier classes have to be made more generously available to the public school system. The interest and enthusiasm of well-educated parents have to be more fully brought to bear in the public school system. These necessities cannot be achieved if those people are outside the system. They cannot be allowed to vote with their feet.
Second, to make this possible, a fair and objective tracking system in the public school system would be mandated. This would be based not on IQ tests or personal likes or dislikes, but on actual accomplishments in the classroom. Those who score highest on objective tests of accomplishment will be moved into the faster tracks where they will have opportunity to learn still faster. Those who are slow learners will score lower on these objective tests and will be moved into slower tracks where they will be taught by the repetition, drill, and rote methods appropriate to slow learners and totally inappropriate to the quick-study population. It’s simple: you can’t run Shinkansen “bullet trains” on the same single track as slow freights.
It will be the unavoidable fact that the blacks and some other minorities will be under-represented in the fast track and over-represented in the slow track, at least at first. This does not represent an unfair discrimination, but is the actual state of academic accomplishment of these communities. As long as the testing is color-blind and measures actual rate of learning in the classroom, and not some hypothetical measure of “intelligence” whatever that is, there is no unfair discrimination. Moreover, the slow learners will be much better served by teaching appropriate to their rate of learning than simply ignored in the back of the room.
The color-blindness of the system will be achieved by using only computerized testing. Students will at frequent intervals take computer based tests in every subject. They will be assigned identifying numbers for each test totally at random. They will identify themselves to the computer only by this number in taking the test, and the computer will report their scores to the administrative office identified only by this number. The computer will have no knowledge of students names, or of what numbers have been assigned to whom. The computer is color-blind, and objectively measures the knowledge of the test-taker. Scores will be matched against names in the administrative office after the fact.
On a major qualifying test, for example, students achieving more than a certain score will be invited by the computer to take a more difficult supplementary test. Achieving greater than a critical score would qualify the student for the fast track in that subject. Students who passed the first test but not the second would be in the second track. Students who failed the first test would be given a repeat test; those who passed it would be assigned the third track. Students who failed both the first and repeat tests would be assigned to the slowest track.
Note that assignment to any particular track would be for that subject and that term only. It would be perfectly possible for the same student to be in the fast track in mathematics and the slowest track in foreign languages. It will be perfectly possible for a student to be in a faster track during one term and slower track in the same subject the next term. The result depends totally on the student’s grasp of the material at the particular point in time, as revealed by his score on the computerized test.
The excuse will be made by some minority groups that the tests are “culturally-biased” and therefore not color blind. It will be argued that minorities outside the mainstream culture will be unable to score well enough on such a test, therefore it is ipso-facto discriminatory. My reply is that the entire education system is going to be “culturally-biased”. That is after all one of its primary objectives: to bring a polyglot mixture of people of different racial and ethnic backgrounds into a common mainstream American culture, sharing the knowledge and heritage that made this country what it is, and acquiring the skills and knowledge that it takes to succeed in that milieu. If vocabulary and reading skills are inadequate to learn as fast as the average, then the student will be in the slow track until vocabulary and reading skills can be developed. If inadequate command of English prevents learning, then the student will remain in the slow track in most subjects until English is thoroughly learned.
Such a system is based on the premise that everybody can learn. Some people learn more slowly than others, require more help in learning, and take longer to learn than others. They cannot expect to be allowed to slow down the learning of the quicker students, and they cannot be simply ignored and passed automatically from grade to grade. Placing them in the track appropriate to their measured ability to learn will allow them to receive the kind of instruction best suited to their needs. I note that the student-teacher ratio will be much lower in the slow track than the fast. The slow student needs much more help. The brighter student needs only to be directed to appropriate study materials and be given goals to achieve.
The curriculum of this school system will be aimed at producing citizens who: can read and write and speak English expertly; have mastered mathematical and computer skills; are thoroughly familiar with the history of the world in general and of America in particular; are knowledgeable about the geography and ecology of the globe; have sufficient scientific and technical knowledge to understand the basics of how technology affects every aspect of our lives; have a thorough grounding in economics, and of the operation of the capitalist system; and are able to speak, read and write at least one foreign language. The level of accomplishment in each of these areas which will be required of all graduates, slow or fast, will be sufficient for a person to function without further formal education as a fully knowledgeable participating citizen of the United States. Additional higher education will be needed only to acquire specialized job skills, or to further particular interests of the student. The fastest track students will, in addition, have taken enough advanced courses in mathematics, the natural sciences, economics, etc., to be able to enter undergraduate universities having completed all of the general curriculum, and be prepared to proceed directly to the courses in their desired major field of study. Thus, they should be able to complete their undergraduate studies in two years, and then proceed to post-graduate study.
The final curriculum reform I will institute is to abolish forever the stupidity of “bi-lingual education”. The only thing that binds this country together and makes it different from Canada is one language. All classroom education in my schools will be in English, and I mean grammatically correct, with proper diction and in conformity with the rules of politeness and courtesy. Anybody who can’t speak, read, and write English well enough to be able to get along in class will spend whatever time it takes in remedial classes to learn English. If the Polacks, Wops, Swedes and other squareheads, Frogs, Micks, Kikes, Portugees, and Gooks of all persuasions can learn English, the Spics can learn English. Again I steadfastly reject the criticism that I am running a “culturally-biased ” school establishment. As I have said before, of course I am. That is the purpose of the schools, to bring a polyglot nation to a common mainstream culture, and to give its members the tools to function in that culture. If they want to retain their ethnicity and culture in their home lives, and in the communities where they live, no problem. But our public discourse will be in English, and our heritage in law and human rights is Anglo-Saxon. That’s what all the immigrants came here to get, and they are going to get the culture that goes with it. The Latinos are no exception.
The objection will be made that some students “choke” in taking tests, and therefore tests cannot be the sole measure of their academic achievement. I say “nonsense”. The present generation of students have grown up with computers, excel at the challenge of computer games. Tests can be structured like computer games. The student zaps a Klingon, and gains access to the treasure room, where answering the next question is required as an “open Sesame” to proceed to another level of the inner sanctum. There will be no time limit on completing the test, and it does not have to be finished in one sitting. The teacher will be involved in advising the student whether it is time to take the achievement test, or whether further study is needed first.
Discipline will be rigorous. All students will wear uniforms, to eliminate clothing snobbery. Orderly behavior, respect for each other and for teachers and staff will be mandated. There will be sufficient adult supervision in all social and classroom settings to prevent absolutely any bullying, physical or otherwise. Bullying or other anti-social or disorderly conduct will earn demerits. Exceeding a specified number of demerits in a term will result in a student’s being sent to spend “penalty time” in solitary confinement instead of participating in after-hours activities. and will require attendance at “re-education” classes. The concept that these regulations infringe on a student’s “right of free speech” is ludicrous. Teen-agers are not yet citizens. They are apprentice citizens whose job it is to learn the rules: how to be productive members of society, fully-observant of the rights of their fellows, so that when they reach their majority they can become full-fledged citizens with all the constitutional rights pertaining thereto.
A further level of segregation will be employed. Boys and girls will be taught in separate classrooms. They learn in different ways, and at different rates. Appropriate methods of teaching one are totally inappropriate for the other. Each inhibits the other in classroom discussions. But note: they will be taught the same subjects, that are the basis of the core curriculum. There will be no relegating of girls to “home economics” because science is too difficult or not relevant to their future “station in life”. Moreover, although they will be segregated in the classroom, they will not be segregated socially, in study halls, or cafeteria, or after-hours activities. Supervised socialization of the two sexes is an essential part of their education. Similarly, the tracks will not be segregated socially, but encouraged to interact in all other than classroom settings. Sufficient adult supervision will be provided to insure that social interactions between all students are wholesome and not hurtful to any student.
Needless to say, teaching this curriculum is not going to be accomplished in twelve years at 180 days a year between eight and two PM with no homework. But I have already said I was going to keep the kids in school all day to keep them out of contact with the drug pushers. I’ll have more to say about that in a minute.
Beyond the curriculum reform and the establishment of a color-blind, objective, tracking program, the next major bombshell I’m going to throw into the system is in the assignment of the responsibility for running it, and the funding to keep it afloat. The oldest shibboleth about the schools is “local control” and “local funding”. Humbug! Local control and funding really means local screwing of the groups out of favor in the locality, and sweetheart arrangements for the in-groups. It was the consequences of local control and funding, the “separate but (vastly un-)equal” result that was the root issue in Brown vs. the Board of Education, which started the whole uproar. Further, local control gives undue opportunity for local special-interest groups to pack the school committee, and skew the curriculum toward their particular agenda.
It is also what’s behind the 1990 decision by a Federal Judge that he was empowered to direct the State of Texas to levy taxes to fund the schools on a state-wide basis, because local funding gave vastly unequal results, given the inequality of community wealth between richest and poorest school districts. His logic is impeccable, but I believe we fought a revolution over the principle of “No Taxation Without Representation”, and nobody elected him.
I’m going to go him one further, and Federalize the whole public school system: Federal responsibility, Federal authority, and Federal funding. Initially, the money will simply come by funneling the school taxes of every locality and state to the Federal Department of Education, which will disburse them to operate the whole shebang on a national basis. Later on, after I get a few more of these immediate problems straightened out, I’ll attend to getting the tax system reformed and rationalized, and this temporary expedient will no longer be necessary. Certain advantages will immediately follow from this arrangement. There will be one set of standards over the whole Nation; A diploma from the high schools in Yalobusha County, Mississippi will mean the same as one from Scarsdale, New York. A hidebound religious group in Missouri won’t be able to dictate that the local schools use textbooks teaching creationism or its present-day surrogate “Intelligent Design”. There will be no more local school boards to meddle and perpetuate their own prejudices for generation after generation. Students will be educated as Americans first, and as some subset thereof later.
There will be great danger as well, and that is the lack of competition. No more private schools means that everybody has to attend the same public schools. The public school system will be a monopoly. It will be necessary to take great care that we don’t re-create a monopoly like the Post Office, which doesn’t work, or one like AT&T which worked beautifully but treated its customers with arrogance and high prices.
It will be necessary to build an accountability into the system to take care of the perfectly normal human tendency to coast when you know the customer has no alternative. This of course will have several dimensions: first, the performance of the individual teachers in the system; second, the provision of adequate facilities, supplies, training, and support organization; and third, the provision of adequate courses and curriculum offerings. Let’s look at the teacher dimension first.
It is generally believed that teachers do a better job in the private school system than the public one. It certainly isn’t because they are smarter, and probably not because they are better trained. If they were smarter, they would probably be teaching in the public schools, where salaries are up to fifty percent higher. Aside from the fact that they have better student material to work with, a major factor in the performance gap is that private school teachers work on one-year contracts, while public school teachers have tenure. A private school teacher knows that without performance, there will be no contract renewal. This is the ultimate accountability, and I propose to bring these benefits to the public school system.
This proposal is, of course, anathema to the teachers professional society (read “union”), the National Education Association. They believe in tenure, and seniority, and all those other good things for teachers that are lousy for students, and which I can’t permit in my monopoly public school system. But they do make a very valid point about the “accountability” question. There is no objective way presently known to anybody to evaluate a teacher’s performance that takes into account all the other variables that influence academic performance by students: how good the students are; how supportive the community is; how difficult the course is; how adequate are the materials, supplies and facilities provided; et cetera, et cetera, et cetera. And they point out that all too often in the private school system, the non-renewal of contracts results from personal conflict between teacher and administration, not any objective measure of teaching performance.
To counter this absolutely correct criticism, therefore, I have had to invent a system of measuring teacher performance which corrects for all these other variables, and measures the performance of each teacher in comparison with all other teachers nationwide doing the same job. This takes advantage of the fact that I am running a national public school system, the same all over the country, and have thousands of teachers in every category to compare against. It goes like this.
In every subject which students take at different levels year by year, some students will do better in the same subject this year than they did last year; some students will do worse. These differences are readily measured, because we are using computerized standard tests to measure progress for advanced placement, high middle and low middle and slow tracks. Comparisons of test scores this year vs. last year at the same stage of the school year gives an objective measure of whether accomplishment of an individual student is improving or deteriorating.
Students may do better because: the subject is easier this year; the student is more mature and better able to grasp the content; the student is more motivated; the course material is better designed; the teacher is doing a better job than last years’. Students may do worse because: the subject is more difficult this year; the student is spending too much time on extracurricular activities and neglecting schoolwork; the student is less motivated; the course material is not as well designed; the teacher is not doing as good a job as last years’.
A measure of teacher performance is to obtain the net number of students who improved from one year to the next, less the number who fell back, divided by the total number of students taught, expressed as percentage. We note that the same student population and the same community are involved; and that there is no element of absolute student accomplishment involved, nor of the amount of improvement involved. Good teachers will be able to make poor students improve in performance; poor teachers will not. Good teachers will also be able to make good students improve; poor teachers will not. Thus we have an objective measure of teacher performance, the net percentage of students whose academic performance in the same subject improved while in the teacher’s class and care. This measure is independent of the caliber of students taught, or of the actual level of accomplishment in either year.
To control for difficulty of subject and caliber of design of the course being taught, I take advantage of the fact that many thousand different teachers around the country are teaching the same course to the same grade with the same materials. If the course is difficult or of poor design, these teachers as a group will have lower percentage-of-students-improved scores than others. Therefore, rank-order all teachers in this group according to their percentage-improved scores. An individual teacher’s standing in this rank-order list is a measure of only one factor: the performance of the teacher, relative to all others in the nationwide school system.
Therefore, rank teachers by their percentile standing in comparison with all other teachers in the nation teaching the same course in the same school year, and then combine these percentile rankings into one master list. Teachers in the lowest tenth-percentile ranking on this list will not be offered contract renewals.
This percentile ranking will also be the basis for salary administration. The top rank will get top dollar; the low ranks will be paid much less, even if they have forty years’ seniority. Removing the present artificially low limits on maximum teachers salaries will also remove the greatest incentive that now exists for excellent teachers who love classroom teaching to become lousy administrators who hate what they are doing: to earn more money. One reason the public schools are so overburdened with administrators is to make higher-paying jobs for all those teachers who can’t afford to stay in public education at their plateaued salaries. My system won’t need these jobs, because the top rate for top-ranking teachers can be $100,000 a year or more; that’s what these stars are worth (at least as much as an entry-level trainee in a Wall Street law firm or brokerage firm).
This pay-for-performance system will use one-year bonuses instead of merit increases that add to base salary, by the way. That is to say, a teacher in the top rank will get the appropriate bonus in the year that top rank is achieved. It won’t be permanently built into the salary. A lesser rank achievement in a following year will result in a lesser bonus. Similarly, a teacher in a lower rank (above the cut-off, however) will suffer a salary penalty for that year only. This way, every teacher will have every incentive to maintain and improve performance every year; failure to do so will be immediately reflected in earnings.
A few further comments about teachers: training and their teaching assignments. All teachers would be required to have a minimum number of University credits in the subject matter which they teach. These need not have been gotten in college. In fact, teachers would be encouraged to take continuing classes, both in their specialties and in new areas they might wish to change to. They would periodically be given a semester off with pay to attend University classes, with the system paying the tuition.
Teaching assignments would be based on the principles that no teacher teaches the same student in two successive years, and that no teacher teaches the same course for more than five years. The first year is a learning experience for the teacher; the second year gets rid of the rough edges. In the third, fourth, and fifth year, the students benefit from an expert teacher who knows what works in the particular school environment, and is still fresh and challenged. Beyond the fifth year, the teacher is coasting, recycling old stuff without much mental effort or concentration. Therefore, after the fifth year, the teacher will be re-assigned to teach a different course. If change of subject is desirable, this is an opportune time for a semester off for additional study. Necessarily, a five-year assignment schedule means that the comparison with all other teachers teaching the same course for ranking purposes must be with those who are in the same year of the five-year cycle as well.
The accountability of teachers, and the rank-ordering system to give them incentive to improve, is only one dimension of the accountability of the system. We have also to provide means of evaluation and motivation of individual school administrations, local school system administrations, and national administrations.
The national school administration will be responsible for curriculum and teaching materials development, including the computer systems and programming, developing the budget and getting it funded. The local school system administration will be responsible for the operation of the local system, expending the budgeted and appropriated funds for capital expenditures, maintenance, scheduling, salaries, teaching materials, supplies, etc. The local school principals will be responsible for the smooth functioning of the local school, insuring that supplies and materials are on hand. All classroom materials will be provided; in no case will the teachers be expected to provide materials out of their own pockets. One of the principal’s major functions will also be effective integration of the local school into the community; involving the adults in the community, non-parents as well as parents, into giving time as volunteers, providing feedback of the effectiveness of school programs, and other myriad ways that the community can help.
Principals will work on a three-year contract basis. They will be evaluated on the level of achievement of the students in their school in comparison to all other schools in the nation. Determine the average student accomplishment level on a scale of one to four, four being fast group, three and two upper and lower middle respectively, and one the slowest group. Determine the position of the school in a rank order of all schools having the same environment and demographics. Compute this rank order for the local school system as well. Principals whose schools are simultaneously in the lowest ten percent in the nation and below the average for their systems will not have their contracts renewed. Principals whose schools are in the lowest tenth percentile but are above the average of their school systems will have their contracts renewed for two years. If they continue to outperform their local system, but are unable to reach the ten percent goal, it is clear that they are being held back by a poor system. Transfer to a better system would be appropriate.
Superintendents, working on a five-year contract, will similarly be evaluated on the basis of the rank-order position of their school systems. Ranking in the lowest tenth percentile without year-by-year improvement in the last three of the five years will result in no renewal of contract. School system administrative staff will serve at the pleasure of the superintendent. If a superintendent’s contract is not renewed, the incoming superintendent may wish to replace some, many, or all staff members. Thus, these worthies will have every incentive to insure the success of their school systems and their superintendents.
The performance of the national school system, and of the Federal Secretary of Education, can be evaluated against those of other nations. The Secretary will work on a ten-year contract; for contract renewal, the system must achieve an increase in ranking of educational achievement against other nations in six out of the ten years of the term. Again, the staff will serve at the pleasure of the Secretary, and will therefore have a great interest in insuring contract renewal. Although the Scholastic Achievement Test (SAT) program of Educational Testing Services will no longer be needed for college placement information, it will be used to provide a comprehensive objective independent measure of the educational accomplishments of the school system to form the basis of policy and contract renewal decisions.
I have already mentioned that the students will attend school six days a week from 8:00 AM to 6:00 PM, three sixteen week terms, forty-eight total weeks a year. From morning through lunch until about 2:00 PM, the day will be devoted to the educational curriculum I have already outlined. The remainder of the afternoon will be devoted to enrichment programs, in the arts, music, drama, dance, and in the high schools to vocational training: drafting, shop, auto repair, appliance repair, TV repair, computer repair, etc. Several times a week, all students will also participate in intramural sports. On those days in which there is no intramural sports participation, the final period of the day will be a half-hour of physical training, Parris-Island style. All students will be fed lunch in the cafeteria, where only healthy foods in appropriately-sized portions will be served. No snacks from home will be allowed, and there will be no vending machines.
Recent educational research suggests that the first few years in a child’s life are absolutely crucial to intellectual development, and that the starvation-diet intellectual atmosphere in urban black children’s homes is a major determinant of their subsequent poor academic performance. For this reason, all children will attend nursery school, within the public school compound from 8:00 AM until 6:00 PM, beginning at age two. Within this environment, they will be provided with mentally-challenging play and learning opportunities. Reading of stories to them, to inculcate a love of reading, will be an especially important activity. From nursery school they progress to pre-kindergartem at age three, kindergarten at age four, and pre-elementary at five, and first grade at six. Many of them will already be reading, writing and able to add and subtract by the time they get to first grade, and will necessarily be in a fast-track from the beginning. This situation now applies to many children of upper-middle- and upper-class parents. In my system, the same opportunity will be available to all, regardless of parental income level.
There will be opportunity during the afternoon periods for private classes within the public school environment. If the Serbs or Croatians, for example, wish to hire a teacher to inoculate the children of their ethnic group with the glories of their history and culture, they may do so. The school system will make classrooms available for this kind of private instruction. This will, by the way, include religious instruction if various sects so desire, without any blather about “violating separation of church and state”. The religious group, not the state, will pay for the instructor. The state provides classrooms on an equal basis to all without favoritism to any religious group; there is therefore no “religious establishment” promoted by the state, and no violation of any constitutional provision preventing such promotion. Parents will no doubt complain that their children are being “indoctrinated” with values and mores to which they do not subscribe, “brainwashed” in fact. I will say to them, if that is their concern, that they must take advantage of evenings and one day each weekend to spend time with their children to impart their own cultural and moral values, counterbalancing the influence of the school system.
Only those students who finish in the upper middle or fast tracks will be admitted to universities. The upper middle track will first attend two-year general-curriculum colleges, to get caught up to the level of the fast-track students, before proceeding to universities for concentration on major and minor fields of in-depth study. The fast-track students will proceed directly to the universities for major and minor specialization. Lower middle and slow track students will proceed after graduation either to vocational studies, apprenticeship training in trades, or directly to the job market. If they wish, students in the lower middle track will be allowed an extra year before graduation to catch up to the level of the upper middle, in order to be able to attend college. Students who finish in the lowest track are not college material, and cannot be permitted to burden the college community.
Despite the intensive study program leading to the high-school diploma, graduates will probably not have sufficient experience or maturity to select wisely major fields of university study. Nor will lower-track students have enough experience to select appropriate vocational or apprenticeship training. The three-year mandatory universal military service, to be undertaken after graduation from secondary school, that I have already referred to will help fill these gaps. In addition to the additional training and discipline that universal service will provide, exposure to a wider range of geographical environments and a wider cross-section of the US population will help broaden the outlook of these young people. Fast-track students, who will enter universities at the junior level, will not be delayed significantly by three years universal service in starting their careers beyond the ages at which they do now.
Finally, the colleges and universities will not have to devote any resources to remedial education, as they now do, to complete the job that elementary and secondary education is supposed to do and does not. The cost savings achieved here will partly offset the vastly increased cost of the school system.
The greatly increased time of attendance at school will remove a large number of children and teen-agers from the job market. This will open employment opportunities for many adults who are presently unemployed and are on public welfare programs. Even single mothers will be able to hold these jobs, because their children will be in school all day. They will be particularly valuable in providing the teaching assistants, hall monitors, nursery-class aides, and other positions in the expanded school systems. They will be encouraged to take additional classes leading eventually to full-fledged teaching jobs. Again, the savings in welfare costs will help offset the increased costs of the school system. Of course, teen-agers will be deprived of pocket money; however, they won’t have much time to spend money anyway. Their relative shortage of funds may help give them a better perspective on the value of money. There is no more profligate consumer than a teen-ager with a job bringing in a hundred or so a week whose basic shelter, clothing, and food requirements are already being met by his family.
Finally, there will be no latchkey children at home alone with idle time on their hands to get into mischief or be inoculated into the drug culture.
Although there are cost offsets such as mentioned above which will reduce the total cost of this vastly expanded school system, they won’t be enough. It will cost us more by a substantial amount to have an educational system adequate for the 21st century. Again, however, this is one of those areas that would be cheap at double the price, regardless of what it costs. I will have no compunction against raising taxes to meet these costs.
CHAPTER 9 OF BOOK “HOW I WOULD RUN THE COUNTRY IF I WERE DICTATOR” by Argus C. Zall
Chapter 9 ” The No-cash Society”
In this chapter i detail a completely electronic system of
payments and receipts, and abolish the use of cash. This system, run by the
Government would apply a “Transaction Tax” to every financial transaction, and
would be come the only tax collected by any government in the country.
THE NO-CASH SOCIETY
(Copyright July 31 2006)
Once I get trade, the budget deficit, immigration, drugs, crime, the schools, and the military under control, I will turn my attention to reform of the way we manage the flow of money back and forth through the economy, and the way that the government gets the share that it needs to do what needs to be done.
Right now, we have the damnedest hodgepodge system imaginable, attempting to combine in one confabulation a mixture of swapping wampum beads (read “currency” or “medium of exchange”) with credit and electronic funds exchange, which for convenience employs the same units as the currency. The cash part of all this is basically a holdover of a system invented by the Sumerians 4000 years ago to replace barter in marketplace transactions. Credit is a more recent invention, originating in the “moneylenders” of biblical times, expanded in the Middle Ages to facilitate commerce by permitting the delivery of goods to be separated in time and place from the delivery of currency. Still more recent is the credit of convenience, the “charge account” affording similar privilege by an individual merchant to a known and trusted individual customer. The last half century has seen the flowering of this into the “credit card” system in which a factor organization verifies the creditworthiness of the cardholder, pays the merchant and subsequently collects from the customer. In its earliest days, of course, all of this credit flow was handled in the form of paper transactions: bills, checks, deposits, interbank drafts and credits. Since the advent of computerized banking, it has become even farther removed from the cash which it replaces, relying on electronic funds transfers between banks, all of the larger commercial enterprises, and increasingly, individuals as well. Electronic funds transfers, of course, are nothing more than data bits on a tape or disk. They are just a means of keeping the score instead of swapping piles of elaborately engraved green paper.
Until a few hundred years ago, all money was “commodity money”, in which the cash itself had a recognized value derived from the substance of which it was made. The invention of paper money replaced much of this with “credit money” in which the issuer guaranteed the value of the paper by offering to redeem it with commodity money. Today, virtually all cash is “fiat money”, having zero intrinsic value, and worth only what the issuer says its worth. Necessarily, the marketplace independently decides what the value of such money is, by adjusting prices as measured in the units of such currency.
Cash in our economy today is used for three things: first, as a medium of exchange in small transactions (buying a newspaper or a loaf of bread) in which the cost of processing the transaction through the credit system is greater than the value of the transaction; second, as the sole medium of exchange for the economic underclasses who are unable to qualify for charge accounts or credit cards; third, for every conceivable kind of illegal transaction, from tax-avoidance to drug-dealing.
Only the first of these has any redeeming social value. The poor are automatically stigmatized by not having credit cards. Illegal transactions fuel the shadow economy, deprive the government of much needed tax revenue, and are the life-blood of the drug trade. I will propose a system which does away with cash, eliminating the anti-social transactions, while preserving the ability to deal inexpensively with small transactions.
To begin with, I would interpose between the economy and the banking system an electronic transfer system run by my government. The only way funds enter or leave the banking system is through this electronic funds transfer system. Commercial enterprise A desiring to pay supplier enterprise B for goods enters a transfer draft through a government-owned and-operated terminal into a computer network (independent of the Internet, perhaps even the same as the ID-card network)) which debits a transfer account of enterprise A and credits a transfer account of enterprise B. Credits and debits between these transfer accounts and the accounts of enterprises A and B at their respective banks are then made in the form of electronic funds transfer by the banks. No cash changes hands.
All citizens in the country will also have transfer accounts in this network, registered under their personal social security numbers, accessed only by the previously-mentioned biometrically-identified ID cards. Cash registers of merchants will be replaced by point-of-sale terminals owned and operated by the government, linked to the network. To make a purchase, the customer must input the ID card, and submit to the biometric confirmation. The cashier inputs the transaction code and amount. The customer’s transfer account is immediately debited and the merchant’s account is credited; if there are insufficient funds available in the customer’s transfer account, the transaction is denied. The customer must maintain funds in the transfer account by electronic transfers from bank accounts, or other sources such as wage payments by employers.
As noted before, anyone using a stolen card with ID not confirmed biometrically will be automatically handcuffed and turned over to the police.
Salary or other income to any individual would also enter the banking system through the electronic transfer network, credited by the employer or other payor. The individual could arrange through his bank for transfer account balances in excess of a defined amount to be automatically “siphoned” to bank accounts, and for transfer account balances less than another defined amount to be “pumped” by transfers from bank accounts. Interest and dividends would also be credited to the individual through the transfer account. An individual making a major purchase, such as a car, would arrange financing in advance, have the purchase price credited to his transfer account and complete the transaction at the merchant’s terminal, all with no cash changing hands.
Small purchases will be dealt with by having a “cash track” on the ID card. An individual could obtain “cash” at an ATM-type machine, debiting his transfer account for an amount less than say $100, and crediting the cash track on the card with the amount. Purchases of less than ten dollars could be made by inserting the card into a point-of-sale terminal. This terminal would read the cash track, debit it by the amount of the purchase and rewrite it, and credit the transfer account of the merchant. It should also deliver a printed receipt to the customer including the remaining balance on the card. No ID confirmation would be required for such transactions.
The whole transfer network would operate in real time in a “debit card” mode. Purchaser’s transfer accounts would be debited immediately; merchants’ transfer accounts would be credited immediately. There would be substantial cost savings over the present method: extending credit by the merchant, billing the credit card company which pays the merchant and accumulates charges for one month to bill the customer who then writes a check to the credit card company which in turn makes a deposit to its bank which passes the charge through to be debited against the customer’s own bank account. All of this roundabout technique involves the credit card company twice, plus three banks, to accomplish a transfer of data bits from the disk file of the customer’s bank account to the disk file of the merchant’s bank account. It is financed by a fee of several percent levied on the merchant plus a usurious interest charge levied on late-paying customers by the credit card company.
The real-time data network I propose accomplishes this transfer immediately, without any intermediaries, and at far lower cost. The “revolving credit” aspect of the current method would be handled by arrangement between customer and the bank through which he maintains the necessary balances in his transfer account, at suitable interest, of course.
Funds transfer between individuals, or for mail-order, telephone-order, or internet transactions would be accomplished through ATM-like machines. In making such a purchase, payor receives from payee a payee ID number, transaction number, and amount. Payor proceeds to a nearby transaction machine, and accesses his own account through his ID card. Payor then enters payee’s ID number, transaction number, and amount, effecting the transfer. The machine prints out a verification copy of the transfer for the payor, and sends an electronic notice to the payee.
I am sure you are wondering why I am insisting that a cashless network like this, an expanded version of what the banking industry does now, has to be owned and operated by the government independent of the banks. Wouldn’t it be just a costly overlay on top of what is fast becoming an automatic system anyway?
The answer is simple. I want to run the system in order to use it to collect taxes. As soon as I get it up and running, with every transaction going through my fingers and recorded in data bits, I am going to abolish the hodgepodge collection of income taxes, excise taxes, sales taxes, property taxes, intangible property taxes and what have you with a single unitary tax: a transfer tax. Every single transfer of funds that goes through this network is going to be taxed, and there will be no other taxes collected by any government entity anywhere in the US. And since my network will be the only way for anybody to pay anybody else for anything, there will be no “shadow economy” cash transactions escaping my notice.
Only transfers of funds within the network between different accounts will be taxed. Transfers from an individual bank account into a network transfer account under the same social security number will not be taxed. Thus “siphoning” or “pumping” from bank accounts to transfer accounts to maintain balances would not suffer any tax. No bank would be able, however, to transfer funds within the banking system itself from an account under one social security number to another under a different social security number bypassing the transfer account network. All transfers from one account number to another have to be made through the transfer network, and will be taxed. Transfer from the account of one spouse to another of amounts less than say, $20,000 per year will not be taxed, to facilitate household management. Transfers from accounts of parents to accounts of minor children of amounts less than $500 per year will not be taxed, to help parents educate their children in the wise and frugal management of finances.
The simplicity of the transfer network tax will result in enormous savings in tax administration. The IRS will no longer need armies of clerks to process tax returns. It will no longer need an army of Talmudic scholars to write and interpret the most complicated tax code ever conceived in the civilized world. The taxpayers will no longer need a legion of experts searching out every loophole and trying to avoid the minefield of traps for the unwary. The Treasury will no longer have to borrow in anticipation of tax receipts to keep the government running between the quarterly payments of estimated taxes. The government will get its money in absolute real time, every minute of every day. Not only that, it will have a minute-by-minute reading of the health of the economy, from the volume of the transaction taxes it collects. No need to wait a quarter for the Commerce Department to read its tea leaves and publish statistics that are already three months out of date, preliminary, usually wrong, and revised a month later. There will be no more endless jockeying for advantage by platoons of lobbyists attempting to get their own special interest deductions or exemptions written into the tax code by Congress.
As a further simplification, no brigades of clerks will be needed by American business to process withholding of wages for taxes. The savings that result from the elimination of all the people now carrying out these non-productive tasks will more than pay the cost of operating and maintaining such a system.
The taxes collected by the Federal Government through this network will be divided in some reasonable way between the Federal Government itself, the States, and the municipalities within those states, at least partially based on the volume of transaction taxes collected within their respective jurisdictions. Consequently, states and municipalities will be spared the present enormous financial burden of maintaining their own tax-collecting organizations. As I have already mentioned, the funding of the public education apparatus will be Federal, reducing the burden on States and municipalities.
It is not possible at this writing to determine what the tax rate of the transaction tax will be. Nobody knows what the volume of transactions is. All that’s known is the gross domestic product, $12 trillion, and the total Federal, State, and local tax take, about $3.7 trillion (2005 data). (SATUS 2006 Tables 424 and 429) However, GDP doesn’t count the shadow and illegal economies, and there are multiple transactions involved in most entities counted in the GDP. I would get the system up and running for a year or so without the tax feature. Then once I knew what the volume of transactions was, set the rate to yield the tax revenue needed by Federal, State, and local government. If there five transactions involved for every item comprising the GDP, the tax rate would be about six percent.
What about the people on the lower rungs of the economic ladder who don’t have bank accounts and who don’t have credit cards, and many of whom are receiving public assistance? They would still have social security numbers, biometrically-verified ID cards, and would have transfer accounts. They would apply to the network for internal identification as “low-income citizens”. Provided they met the qualifications, their accounts would be so coded; any transfers from any source into the account would be free of transfer tax. Purchases debited against these accounts for necessities would be free of transfer tax. If these low-income citizens were receiving unemployment compensation or welfare payments, transfers from the appropriate agency account would be periodically made into their accounts. There would be no identification on the ID card itself that these were low income citizens. Consequently, they would be much more fully integrated into the mainstream economy than they are now.
Because this will be a national network, garnishing of wages under court order for child support will be a trivial exercise. A court-ordered tag will be placed in the transfer account file of the parent obligated to provide child support. If this worthy leaves town and goes to work somewhere else, it doesn’t matter. Any transfers into the account will still be garnished, with appropriate sums transferred to the account of the parent receiving child support. No action on the part of any employer is needed; it happens automatically. This one change will enormously reduce the cost of Aid to Dependent Children. The vast majority of this public assistance is required because a father splits and leaves mom to raise the kids with no means of support. All mom needs to know is his social security number.
Aliens legally entering the country will deposit funds into a temporary transfer account and use their biometrically-identified visa card as a temporary ID. They will be able to handle all transactions within the country in the same fashion as citizens. However, these transfer accounts and ID cards will be strictly temporary. They will expire when the term of the visa expires. When they expire, the alien must either leave the country, apply for an extension, or starve. Moreover, unless the alien has a work permit, no wages or other funds may be transferred into the temporary accounts.
Illegal aliens will have no way of receiving or spending any money at all. They can exist in the country only on the sufferance of citizens or legal aliens handling their wages and purchases for them. The network would be programmed to flag any account receiving wages from several employers simultaneously; probably some of these are wages for illegals surreptitiously laundered through a legal account. The inability to hide and still collect wages and eat without the computer knowing what’s going on will make illegal aliens much easier to find and send back where they came from. The much higher probability of detection will make employers more careful about being sure that prospective employees have valid ID cards. The combination will make the US a much less attractive haven for illegal immigrants of all nationalities.
There are a couple of problems with the transaction tax system which result from the nature of the distribution system in the marketplace. Some organizations are vertically-integrated, others are not. Consider, for example, the typical neighborhood hardware store. It buys goods from a wholesaler (paying a transaction tax) who buys goods from a manufacturer (paying a transaction tax). The hardware department at Sears, however, gets its goods internally from Sears, which acts as its own wholesaler, buying directly from the manufacturer. The transfer of goods from the wholesaling part of Sears to the retail store takes place entirely within Sears, and the financial part of the transaction is merely a book-keeping entry that doesn’t pass through my transfer network.
Therefore, there are only two transaction taxes burdened on the goods the customer buys from Sears: the one the consumer paid, and the one Sears paid to the manufacturer. When the customer buys the same item from the neighborhood hardware store, there are three: the one the customer pays, the one the retailer pays, and the one the wholesaler pays. Since, in the final analysis, all these taxes will be reflected in the price paid by the ultimate consumer, the item purchased from the neighborhood hardware store would be higher in price by at least the amount of the extra tax imposed by the extra layer in the distribution system. Sears is vertically integrated, the neighborhood hardware store is not. Thus, a pure transaction tax system will be a heavy burden on small businesses, which provide more than half the jobs in our economy.
I will handle this by decreeing that whenever goods are physically moved from one place to another (eg from factory to warehouse, from warehouse to retail store), a transaction will be deemed to have taken place, and a sale and purchase entry must be made through a transaction terminal. The selling price will have to be computed in exactly the same way as if it were an “arm’s length” transaction between unrelated parties.. The fact that the debited transfer account and the credited transfer account might be the same is irrelevant; the transaction tax would still be collected. Their more efficient mode of doing business would still give highly-integrated retailers a commercial advantage over the conventional chain of wholesalers, distributors, retailers, etc., but they would not have a tax advantage.
The network will have to have significant memory and distributed computing power, as well as communication linkages. This, however, does not require any new technology. Banks presently operate ATM networks over wide geographical regions, which accept customer cards and process transactions through banks which are geographically remote from the ATM. Credit card systems operate with networks of electronic-verification terminals to guarantee purchases for cards which a customer may use thousands of miles from home. The main problem to establishing this cashless economy is the investment cost of the hardware, the cost of programming and training, and a period of dislocations in the transition. The return on the investment will come in the reduced cost of collecting taxes and the higher taxes collected by the tapping of what has hitherto been a shadow economy.
The present banking and credit card system uses the eminently-hackable Internet network to process its transactions, and has recently been subject to massive disclosures of private information that could lead to identity theft on a hitherto-unprecedented scale. My system will use the same independent secure network used for the national-ID-card previously described. The same card will be used for both purposes; the cashless-transaction system is merely an extension of the ID-card verification network.
For every account, all transactions will be recorded in a rolling 30-day memory. This will be periodically reported to the account holder: as a print-out mailed to a home address for an individual, as an electronic data transfer for businesses. This is similar to what you now get from the major credit cards: a print-out that itemizes date of purchase, where purchased, what was purchased, and the amount.
This account information will be accessible to law-enforcement officials, under a court-ordered search warrant. Thus an individual or company subject to a criminal investigation would have a tag placed on the account which would result in automatic transfer of all the information to the investigating authorities at whatever intervals were specified in the search warrant. There would be no requirement of notification to the account holder that a court-ordered search of the account files was in process.
I have mentioned that the IRS would no longer have a need for regiments of clerks to process tax returns; they could all become supermarket cashiers. But I would greatly increase the investigative staff, to be able to analyze and interpret the vast amount of data available to track illegal transactions. I do not pretend that the cashless system will eliminate the illegal drug trade, or the money-laundering industry. It will just make it easier to get information that will stand up in court. The network computers will be programmed to identify deviations from norms in transactions of various businesses. If a laundry processes sales of a thousand five-dollar shirt-washings every day, but doesn’t have purchases of soap and hot water to match a national norm for laundries, the computer will conclude that something other than shirts is being washed. A computer flag will alert the IRS to investigate the establishment. I would have enough IRS agents to investigate every flag turned up by the network computers. Significant deviations from several norms for either individuals or business establishments will be sufficient reason to suspect wrongdoing to obtain a court-ordered search warrant. Then all transactions in the account will be forwarded to the IRS for study. Verification of a pattern of suspicious transactions would result in the case being turned over to the district attorney for on-site surveillance and investigation.
Another capability of my transaction network would be the ability to follow the “cash tracks”. Normally, the customer identity in a cash track would be ignored by the point of sale terminal; however, the card still has the individual social security information recorded on it. For an establishment under suspicion as a purveyor of illegal substances, under court order the reading of social security numbers on all cash track transactions presented to the point-of-sale terminals would be surreptitiously “toggled on”, so that these numbers were transmitted to the network along with the amount of the cash sale. To continue the laundry example, this would undoubtedly turn up social security numbers of individuals who were so squeaky-clean they had four or five shirts washed every day. These individuals would become themselves subject to investigation.
Also subject to particular scrutiny would be accounts that resulted in international transfers. International transfer account data is needed to verify prepayment for goods to be admitted into the country, and to prevent illegal drug money from leaving the country. When an international transfer was input into the network, it would not be immediately processed, but rather would be directed to the terminal of an investigator. The transfer data would have to include information to track the shipping and customs papers for the goods or services being paid for. The investigator would have to call up a facsimile of these papers for verification before the transaction was processed. Again suspicious transactions would be flagged for more detailed examination.
We note that these international electronic transfers now happen under the purview of the banking system. Unfortunately, this system has every incentive to process what it knows or suspects are illegal transactions (for a substantial commission, of course), as well as the means to hide them under a variety of blankets. I will take this function out of the banking network and assign it to my network. The investigators assigned to verify the legitimacy of all international fund transfers will be well paid to insulate them from temptation. Their own transfer accounts will be subject to permanent scrutiny to detect any surreptitious input transactions which might be payment for processing transfers without the required supporting data.
This will, of course, delay the processing of international transfers somewhat. The amount of delay will be dependent in part on how many process agents are available; I would tend to be generous in staffing to minimize delay. It will also depend on the degree to which the transferor has provided the necessary tracking information and verified that the required documentation was already in the network before input of the transaction to be processed.
More mundane software requirements of the network will be to identify “offsetting transactions” between separate organizations. Company A sells computer systems; among its clients is Company B, which provides auditing and accounting services to Company A. Company A and B agree to a semi-barter transaction in which the cost of the computer sold by A is offset by the cost of service rendered by B, and only the net difference is input to the transaction network, and the tax collected is only on the net. I’m greedy. I want the tax to be collected on each transaction, not the net. The network software will have to recognize such offsets and flag them for the IRS to identify. Bartering of services will be more difficult to recognize, and probably can best be done by comparison of transaction volumes and amounts of services for organizations in particular businesses versus national norms for such businesses. To prevent barter transactions of all kinds from serving as a tax-avoidance loophole, I will have to make barter of any kind a criminal offense. All transactions have to be reflected in dollars going through the transfer network, where they are accessible to tax. No payments in kind, nor employee discounts!
A by-product of the operation of this nation-wide cash-free electronic medium-of-exchange network to process all transactions will be vastly improved statistics of the economic status of the Nation, available in real time. I have already mentioned that the transaction volume data could be available minute by minute. Similarly current data on international accounts is available in real time. Moreover, the network could accumulate data on auto sales, appliance sales, indeed every dimension of the economy, all in real time. Broad categories of information would be publicly disseminated. More detailed breakouts, eg how many putty knives were sold in zip-code 12345 in the month of July 2006, could be made available for a fee, through Internet information networks.
Thus an individual seeking to open a fast food restaurant in Podunk could have up-to-date information on the sales of burgers, fried chicken, pizzas, etc, and their relation to the national norms for consumption of these items by the population. He could then observe that there was no room in the market for another burger restaurant, because there were already too many, but that the local consumption of tacos was far below that of the region in general. Thus market opportunities and lack of opportunities could be identified immediately based on current data from the transfer network. Not only will this greatly improve the chances of success of new businesses, but my government can make a modest profit on the collection and sale of slices through the cumulative data base.
Upon incarceration, a convicted criminal would have his ID card confiscated. If he attempted escape, he would not be able to buy anything to eat. The account of a criminal released on parole would be flagged: his whereabouts, as recorded from the locations where he made purchases, would be forwarded continuously to a parole officer. This would permit easy implementation of “house- arrest” incarceration of non-violent criminals, for example. The ease of garnishing receipts in a transfer account would make it practical to place first-time burglars or muggers on house arrest, with freedom to work at paying jobs. Their wages could be garnished to satisfy the restitution requirements of my criminal justice system. If they strayed from the defined territory, or attempted to make purchases at proscribed types of establishments, they would be handcuffed and apprehended for incarceration in more-restrictive environments.
Mind you, I don’t underestimate the ability of the criminal element among us to try to find other media of exchange, particularly for international transfers in financing the drug trade. Diamonds and other jewels, computer chips, objets ‘d arte and other articles having a high value per unit of bulk or weight would be the easiest to use for smuggling, as well as for shadow-economy transactions within the country. Legitimate purveyors of such goods would be especially carefully monitored by my transfer system to make sure that they were not in the process of converting data bits into a currency that bypassed my tax collection.
I think it will take the better part of a decade to get this system fully implemented and to track down and stamp out most of the attempts to bypass it. Once it is in place, it will be so much easier and so much less costly than the cash-credit-”check is in the mail” method we now use that we will wonder how we ever got along without it.
CHAPTER 10 OF BOOK “HOW I WOULD RUN THE COUNTRY IF I WERE DICTATOR” by Argus C. Zall
Pollution and the Environment
In this chapter I discuss the fact that humans are now a
major factor in the ecology of the globe, and how we are befouling the nest we
live in, most especially by causing major increase in the concentration of
greenhouse gases in the atmosphere. I dictate solutions to these problems.
POLLUTION AND THE ENVIRONMENT
(Copyright July 31 2006)
I read a great deal pro and con about “endangered species”: species whose habitat has been so perturbed by human activity that they are in danger of becoming extinct. Sometimes it seems as if these endangered species have better protection than human species. Thousands of jobs and whole communities are supposed to disappear to preserve the habitat of a few hundred spotted owls. The construction of a new telescope in New Mexico has been held up for years to preserve a habitat for a squirrel. It must be a particularly lily-livered squirrel. Every other kind of squirrel I’ve ever seen seems to absolutely thrive in, and become total pests in, habitats dominated by humans.
For all my bemusement at the stridency with which the dedicated environmentalists defend the snail darter, the alligator, the whatever, I have to say that they make a valid point. Humankind has increasingly become no longer a small perturbation on the global environment, but has major impact in an ever-increasing number of dimensions. Something like a third of all the fresh water that falls on the US in the form of rain is used in some human activity before it returns to the ocean or re-evaporates. No wonder our rivers are sewers!
No, my concern is not for the trivial endangered species. My environmental concern is for Ichi-ban, Numero Uno: us. We are the endangered species. We are altering the planet by our wastes. We are altering the planet by our destruction of plant life on which we symbiotically depend in ways that we don’t yet realize. We know that we depend on photosynthesis by green plants to convert the energy of sunlight into food, even when we get it second, third or fourth hand. But we also depend on photosynthesis to consume carbon dioxide and convert it into oxygen for us to breathe.
In addition, carbon dioxide is a major “greenhouse gas”. It is transparent to the bulk of incoming solar radiation, which is heavily concentrated in the near infra-red and visible regions of the spectrum. The absorption of the solar radiation helps heat up the earth, which in turn establishes a balance between heat input and heat output by radiation of longer-wavelength infra-red radiation. However, carbon dioxide and other greenhouse gases such as methane are opaque to this longer-wavelength radiation; they absorb it, preventing the globe from balancing its heat loss to its heat input from the sun. The globe responds by increasing in temperature to radiate more long-wavelength infra-red, so that it can get rid of enough heat even if the greenhouse gases absorb some of what it emits. This of course goes on now, and has for millennia, regulating the temperature of the planet as a function of the incoming solar radiation and the “natural” concentrations of greenhouse gases in the upper atmosphere.
The carbon dioxide concentration itself is the product of a balance between the processes producing it and the processes consuming it. Increasing production has to be matched by increasing consumption, or the concentration in the atmosphere increases. And it is this natural balance that humankind is now perturbing in a very significant way.
At the same time that we are emitting enormous quantities of carbon dioxide by an economic structure that depends on combustion of fossil carbon for its energy supply, humanity is trashing the forests of the globe, temperate forests as well as rain forests. Not only that, but we are also turning the oceans into our cesspool of last resort. And the oceans are an even larger reservoir of plant and animal life to help clean up our atmosphere. The oceanic plant life consumes dissolved carbon dioxide and evolves oxygen; much of the marine animal life (that feeds on the plant life) consumes dissolved carbon dioxide to form the calcium carbonate that is a principal constituent of their shells or bones. The ocean floor is littered with their skeletons, ultimately becoming limestone that permanently removes carbon dioxide. The layers of limestone rock hundreds of meters thick over the globe were all formed in this way, and are mute testimony to the ability of the oceans to remove carbon dioxide. The enormous reserve capacity of the oceans to dissolve and dispose of carbon dioxide must surely be the only reason that more than 350 years of exponentially-increasing carbon combustion hasn’t already turned the planet into a furnace like Venus.
Into this vital absorber and converter of our most important waste product, we discharge heavy metals, organic toxins, and the ultimate pollutant, oil. I think it is time we started worrying a little bit more about the health of the billions of tons of microscopic plants and animals that we are depending on to help keep the balance of the atmosphere that our lives depend on, and worried a little bit less about the spotted owl.
A capsule history of humankind and its wastes can be written “out of sight, out of mind”. In the Middle Ages, cities were cesspools in which the recycling of human excrement onto or into the ground contaminated the well water coming from a water table only a few feet below. Bacterial contamination was the principal problem, leading to efficient transmission of numerous diseases. The earliest solution to this problem was to collect the night soil and dispose of it elsewhere; hence the ubiquitous “chamber pots” (and chambermaids to empty them into “honey wagons”). Out of sight, out of mind!
The invention of the flushing toilet and its companion, the sanitary sewer, was a truly great milestone. For the first time in history, humanity no longer had even to look at its turds; just flush them away with a flick of a lever. Out of sight, out of mind!
Presently, however, a foul odor and even fouler sights began to emanate from the streams into which the “sanitary” sewers emptied their effluent untouched by human intervention. And cities downstream began to complain that the same stream that was their water supply was the sewer for the city a few miles upstream. And so was invented the sewage treatment plant: settling and filtration removed most of the solids, aerobic bacterial action converted most of the rest of the goo (mainly to carbon dioxide!), and chlorination killed the bacteria after they had done their job. The solids were trucked off somewhere else (out of sight, out of mind!), and more or less potable water went off downstream. Although most cities in the US heartland that were on rivers (water supply and sewer) had the full bore sewage treatment plants by the 1930’s, many coastal cities with the ocean to dump into didn’t have anything but filtration (if that) as late as 1990! They could achieve the “out of sight, out of mind” solution by running their discharge pipes far enough out to sea that the outgoing tides would flush their immense toilets for them.
On the whole, the “out of sight, out of mind” solution has worked very well to prevent widespread plagues and epidemics resulting from the recycling of bacteria from “unsanitary” disposal of sewage into the water supply. “Sanitary” landfills have proven to be suitable depositories for sewage sludge, if a bit noxious for those who happen to live downwind. Certain beaches and clam flats on the seashore have had to be declared off limits because of their high concentrations of coliform bacteria. However, the successful implementation of this system has made the modern metropolis possible. In the 1930’s, one measure of the the degree to which “civilization” had reached the boondocks of the world was the prevalence of what was politely termed “indoor plumbing”.
Nowadays, however, the problem is no longer only sewage disposal. It now includes taking out the trash. Unfortunately, “taking out the trash” today means getting rid of enormous quantities of hazardous, toxic, and carcinogenic materials as well as tons of paper and cardboard. Here again, we have historically relied, and still rely today, on the “out of sight, out of mind” method. My wife thinks the trash is gone when she puts it out of sight in the kitchen trash can. I think it’s gone when I put it out on the curb in the rubbish barrel. The community thinks it’s gone when Waste Management, Inc. carts it away to some landfill God only knows where.
The EPA occasionally declares one of these landfills to be a “hazardous waste site” to be “cleaned up” because of the toxins or carcinogens that may be in it. When they get around to it, they dig it up, dirt and all, and cart it away somewhere else! Where did all the stuff they took out of the Love Canal site go? Don’t ask; “out of sight, out of mind!”.
Not to mention the other modern pollutant, radioactive waste: “low-level” and “high-level”; what are we doing with it?
The so-called “environmentally-safe” disposal sites for all this stuff are supposedly constructed with water-tight bottoms: dig a big hole, line it with clay covered by a watertight plastic sheet, with a sump and drain to a pumping system. Fill it up with your hazardous waste and cover it over with a watertight cover to keep the rain out. As fast as the liquid drains into the sump, pump it out and dump it back into the top of the pile. As long as the plastic liner remains intact and the clay doesn’t mud-crack up, you keep the stuff from getting into the ground water supply. To be sure that it isn’t getting into the ground water, you sink test wells all around the site and sample and analyze the water for contaminants.
The life of a plastic liner? Who knows? twenty years, if you are lucky, given the corrosive nature of some of the stuff that these sites are holding. When the plastic liner is gone, you have to dig up the whole site, transport the witches’ brew to a freshly prepared site, and then rebuild the clay and plastic liners to receive fresh junk from somewhere else. There has to be a better way.
Then there is the lesser problem: the non-biodegradability of most of today’s non-hazardous waste. Way back in ancient history, before World War II, most of the trash was paper or cardboard and tin cans or glass bottles; it was either burned in an incinerator, or piled in a landfill and covered with dirt. Bacterial action decomposed the paper and cardboard, reducing the volume to a small fraction of what it had been, and the cans rusted away. The volume of non-degradable glass was minimized by bottle-deposit/bottle-return systems for beverage containers. Incinerator ash was much smaller in volume than the original rubbish and could be discarded in a much smaller landfill. Food wastes (”edible garbage”) were typically collected separately and fed to the pigs. With all this, the “dump” for a major city was not nearly as big as it is today, although New York typically barged its trash to sea and used the bottom of the Hudson Canyon for its dump.
Today, a very large component of the trash is plastic, which does not biodegrade. What is worse, since we don’t want to look at our rubbish, we encapsulate the rest of the trash in non-biodegradable PVC bags before we put it out on the curb. The bag prevents the bacterial action on the otherwise-degradable contents. PVC itself poses serious problems in incineration, since it can simply depolymerize to vinyl chloride, a potent carcinogen; unless that is burned in the final stages of the incineration, it can vent as a vapor to the atmosphere. If it is burned, as it should be, it forms hydrochloric acid, HCl, which eats out the chimney of the incinerator. Moreover, the HCl contributes to the acid rain burden.
All of these problems, however, are essentially local. The pollutants emanating from properly-operated landfills, incinerators, sewage treatment plants, and hazardous waste sites are usually confined to the immediate vicinity; they can remain for a time at least successful applications of the “out of sight, out of mind” principle of waste disposal. They would not be my first priority as dictator in reversing humankind’s rape of the environment.
No, the real problem is our global perturbation of the atmosphere, the ultimate “out of sight out of mind” repository. The destruction of the ozone layer and the ever-increasing venting of greenhouse gases such as carbon dioxide to the atmosphere have far more potential to make the earth uninhabitable for all of us. In my view, moreover, they may well be connected. In the last decade of the twentieth century it was demonstrated beyond a shadow of a doubt that chlorofluorocarbon gases (”CFC’s”) vented from “aerosol bombs” and refrigeration machinery rise to the upper atmosphere where they decompose liberating chlorine, which destroys ozone molecules (triatomic oxygen). Ozone absorbs short-wave ultraviolet from the sun that is harmful to life. The effect of reduced ozone concentration is to permit more of this harmful radiation to reach the surface. The consequences of this increased harmful radiation are more skin cancer for humans and who knows what damage to the plant life.
The biggest impact upon the ozone layer has been in the Antarctic, where the destruction process is vastly accelerated by the presence of ice crystals in the upper atmosphere. These apparently offer favorable sites for ozone molecules and chlorine atoms to meet and react. This one-two punch reduces the ozone content of the upper atmosphere in wintertime by a factor of two or more (the “ozone hole”). A similar effect, to a lesser degree, occurs in the arctic. While we certainly recognize that ozone depletion is potentially troublesome, we have to date acted as if the ozone hole itself is a minor problem that does not particularly affect us. After all, nobody lives in Antarctica.
However, the colder ocean waters near the polar boundaries of the temperate zones are by far the most productive biologically, because cold water can dissolve much greater quantities of gases from the atmosphere than warm water. I have already outlined the role for phytoplankton in consuming carbon dioxide, and furnishing food supply for animal creatures that consume additional carbon dioxide for making bony shells or skeletons. All this happens in colder water at a far greater rate than in warm water. Whales travel to Hawaii for mating in the winter, but they don’t eat; there is nothing there for them to eat. They travel to the Gulf of Alaska in the summer and fall to gorge on the bounteous harvest of krill and arthropods and all the other species that the oxygen-rich and carbon-dioxide-rich frigid waters bear.
All of these plants and animals live in the top few feet of the water column, through which ultraviolet light will penetrate. If destruction of the ozone layer extends far enough from the polar zones to these nearby subpolar regions, the amount of harmful short-wave solar ultraviolet reaching the surface of the ocean there will increase. Who knows how sensitive the phytoplankton are to increased short-wave ultraviolet? I don’t, and neither does anybody else.
But the scenario of increased short-wave ultraviolet (resulting from ozone loss) killing off phytoplankton, reducing the ability of the most biologically-productive waters on the globe to scavenge carbon dioxide has sufficient potential to tip the scales of a system in precarious balance that I think we should not risk it. And quite frankly, it scares the hell out of me that a mere fifty years of our use of CFC’s has had the potential to affect the atmosphere over 5% of the earth’s surface in a major way: not by percentage points, but by a factor of two. That’s not a perturbation; it may be the largest single component in an intricate networked system.
There was some years ago a world-wide congress devoted to getting agreement to limit the production of CFC’s. Agreements were reached that the developed countries would cut back on production by factors of order two, with the idea of eventually phasing them out completely. This has been successful to the extent that global atmospheric content of CFC’s has stopped increasing, and has begun to decrease slightly. I don’t think that this is enough. These things have extremely long lifetimes in the upper atmosphere: a quarter century or more. If the entire world went cold turkey today, there would still be ozone depletion occurring in the year 2025 from residual anthropomorphic CFC’s.
There are two major sources of leakage of CFC’s: aerosol spray cans, and unsealed refrigeration machinery. Household refrigerators and air conditioners need not be major sources of leakage, since they are hermetically sealed. All that is necessary to prevent any leakage at all is to require that they be equipped with exhaust nipples through which the refrigerant can be pumped out and stored for recycling when any service is performed on the unit or before it is discarded at the end of its service life.
The aerosol spray can has become a smaller source in recent years, since many manufacturers have switched to “environmentally safe” propellants, which usually means propane or butane. These may be environmentally safe, but they can be fatally hazardous to consumers; propane and butane are highly flammable. Use one of these handy-dandy little devices while you are smoking, and you may find that you are giving yourself a hair-spray with a major-league blowtorch. Use one too vigorously to spray insecticide in a kitchen that happens to have an open-flame pilot light in the gas stove, and you may blow the side wall out of the house.
The truth of the matter is that not one of these gadgets is essential to a happy and productive life. They are “convenience products” designed to permit us to be a little lazier than we otherwise would have to be. The convenience they provide is not worth the cost to the environment that results. I would in a single ukase outlaw the entire genre, cold turkey. Bring back the “Flit Gun” for insecticide (a hand-powered atomizing spray device that worked just as well as the aerosol can, for those of you that don’t remember pre-World-War-II America). Generations of Americans enameled the porch furniture with a brush and paint can. Not only don’t we need spray cans of enamel, but their elimination would also get rid of a major tool of the graffiti artist, saving millions of dollars in the cost of eradicating his handiwork. It would take all of thirty seconds more to lather with shaving soap in the morning instead of using an aerosol can. Gourmets of the world unite! Outlaw plastic whipped cream!
Admittedly, this would be a terrible economic dislocation to the people employed in this industry, and I would provide them with wage and salary maintenance for up to one year, as well as provide investment capital for the industry to convert its factories to the manufacture of other varieties of dispensers for similar applications. I am sure that inexpensive electrically- powered or hand-powered dispensers could quickly be developed for every single present use of these devices.
This brings us to another major source of leakage of CFC’s: unsealed refrigeration units, such as automotive air conditioners and many large industrial units. These have compressors driven by shafts powered externally, such as a pulley on the fan belt for an automotive air conditioner. The refrigerant CFC’s under pressure in the compressor slowly leak out past the rotary shaft seals. Automotive air conditioners typically require recharging with refrigerant every couple of years or so, oftener in hot climates. The CFC’s which escape and must be replaced permeate to the upper reaches of the atmosphere and contribute to the ozone destruction. Although most manufacturers have switched to refrigerants in which chlorine is replaced, in whole or in part, by bromine. I would guess that in the end, bromine will be damaging to ozone as well, so that won’t really solve the problem.
Part 2 of my ukase would prohibit the recharging of any unsealed refrigeration unit with halogenated refrigerants. Either it must be replaced with a sealed unit like that in a household refrigerator, or some alternate non-CFC refrigerant must be used. For large industrial systems, either ammonia or sulfur dioxide could be used. They were, in fact, the refrigerants of choice for the first fifty years of mechanical refrigeration systems. Both of these refrigerants, by the way, have highly pungent odors easily detected in small concentrations. The stink gives early warning of leaky seals needing replacement, before any significant loss of refrigerant has taken place. The smell and the potential toxicity of these gases makes them undesirable for household refrigerators, which is why they were replaced by CFC’s. However, Sears Roebuck manufactured and sold sulfur-dioxide-charged unsealed household refrigerators as recently as 1947. I know; I repaired them.
For automotive air conditioners, the belt-driven compressor would be replaced by a sealed unit with an internal induction motor like the household refrigerator. The pulley on the fan belt would drive a constant-speed high-voltage alternator to provide power for the induction motor. A potential advantage of this arrangement is a greater degree of flexibility in locating the compressor under the hood.
Much of the technology development that has been carried out to date in response to the ozone-depletion problem has been to search for other CFC’s which are lower in chlorine content, so that more of them could be released to the atmosphere for a given amount of chlorine deposit. I would firmly reject this approach as not solving the problem, merely postponing it. If we reduce the chlorine deposit per CFC molecule by a factor of two and the world-wide usage of CFC’s continues to grow at 10% per year, in seven years we will be right back where we are today.
This brings us to the 500-pound gorilla of atmospheric pollution concern: the exponentially-increasing discharge of carbon dioxide to the atmosphere that results from a world economic system that depends on the combustion of fossil carbon to provide energy. US energy consumption doubled in 34 years between 1953 and 1987 (World Almanac 1989 p172); in 1987, 89% of US energy consumption resulted from combustion of carbon-containing fuels. This still only represents a rather modest average annual increase of about 2%. The population doubling time is recently about 50 years, an average increase of 1.44% per year. Consequently, three quarters of the increase in our energy consumption simply stems merely from the fact that there are more of us to consume energy. Even if we were to cut our per-capita energy use in half over the next thirty years, we would only increase the doubling time of our energy consumption to seventy years, a mere blink of an eye on a geological time scale: not a solution, only a postponement, again.
Extrapolating backwards in time, assuming similar annual rates of increase for energy consumption, we can reach the conclusion that one half of all the carbon dioxide deposited in the atmosphere to provide energy for our society since the European settlement of this continent has been vented in the last thirty years or so! If similar rates of growth of energy consumption continue into the next century, the amount of carbon dioxide discharged into the atmosphere in the next thirty-four years will equal the total released to date. And what happens as the less-developed countries increase their use of energy derived from carbon combustion? They have a much bigger population than we do, and a much faster rate of population growth; if their per-capita use of energy remotely approaches our own, the rate of increase will be even faster than that I have projected above.
Will the oceans and the forests be able to handle this plus our doubled burden in 2025? Perhaps they will. But, projecting to the year 2059, the burden will double again. Maybe by then it will be a race to see which disaster befalls us first: converting the planet to a sauna or running out of carbonaceous fuels to burn.
Malthus predicted that the population of the world would ultimately be limited by our outstripping the food supply. He didn’t reckon on humankind’s ability to use fossil energy to increase many-fold our capacity to produce food. Ultimately, however, if we continue to depend on carbon combustion, the Malthusian prediction will be borne out: we will either outstrip our supply of carbon, or we will outstrip the capacity of the planet to dispose of the combustion products.
I see only one ultimate solution: to wean our society away from dependence on the combustion of carbon for energy. Notice, I did not say wean us away from the use of energy. Without the use of energy to multiply our capacity to do work, we cannot support the population we have now, to say nothing of the population of the globe in the upcoming century. No, the only solution is to convert our society to the use of the only primary energy system capable of meeting our needs that does not release carbon dioxide: nuclear power. Wind or solar energy have been touted as possible “renewable” energy sources. Unless we paper the entire desert with photovoltaics, solar can’t come close to cutting the mustard. Unless every hilltop and shallow ocean basin is covered with windmills, wind power won’t either.
Beginning about the year 2010, I would decree that over a twenty-five year span the use of carbon combustion as a source of energy would be eliminated. This would have to be done in manageable stages, however. First, starting now, existing electric power plants would be converted to burn natural gas, which has only one atom of carbon per four atoms of hydrogen. It releases far more energy per molecule of carbon dioxide formed than any other carbonaceous fuel. That will buy us time, by slowing the rate of increase in carbon dioxide emission. Second, a phase-in of nuclear power plants to replace the fossil-fueled plants would commence. Initially, these would be nuclear fission plants. At the same time, I would vastly step up the engineering effort to develop fusion power plants, with the idea that these would be the primary energy source in the latter half of the 21st century. The relatively long delay in starting this program results from three factors. First, there are plenty of other things on my plate, problems more pressing in the short term that have to be addressed first, as I have outlined in previous chapters. Second, the conversion will be an enormous shock to the economy, which will have to absorb numerous other shocks and get healthy again. Third, although this is perhaps humanity’s most serious long term problem, we probably have fifty or one hundred years to solve it; we can afford to wait a little while before tackling it.
The public and private transportation system of the country would be converted from gasoline- and diesel- power-based to electric. All vehicles would be battery-powered, but the batteries would be housed in a trailer towed by the vehicle. The technology to accomplish this exists today, and is cost-competitive. Fuel-cell hydrogen-powered vehicles may become cost competitive in the future, but not soon enough. When the battery was discharged, the vehicle would pull into a service station, where a trailer full of discharged batteries would be exchanged for a trailer full of charged batteries. (For a fee!) The discharged-battery trailer would be plugged into a charging station served by the electric power grid to be recharged for the next customer. Even if the range was only fifty miles at highway speeds, the service stations would not have to be any closer together than they are on the turnpikes now. Exchange would not take as long as filling the gas tank does today.
All railroads would be electrified, which would restore a significant cost advantage over truck transportation for long-distance shipping; they would not have to use up payload to lug batteries around. Piggy-back would become the norm, combining the flexibility of battery-operated truck transport for local collection and distribution with the low cost of rail for the long-distance portion of the journey.
The conversion would be in slow stages, however. Existing vehicles would be permitted to remain on the roads to complete their service lives. Manufacturers and importers of vehicles would be required to convert their product mix to electric at the rate of 10% per year for the first few years, scaling up to 20% per year by the fifth year. By the eighth year, only electric vehicles would be sold. This slow introduction will be made necessary by the lead time necessary to build the power plants to provide the electricity to charge the batteries.
Existing service stations would be required to set up facilities to exchange and recharge battery trailers. Their market for gasoline will evaporate anyway as the existing vehicles make their way to the junkyard. Electric heat would replace combustion heat for all residential, industrial and commercial uses. In most parts of the country, heat pumps operating on solar-heated-water heat reservoirs would be used for wintertime residential heating. Electricity will be costly, since large profits will be needed to provide funds for investment in building the system. Hence, “McMansions” will become much too expensive to heat and cool, and will most likely be divided into multi-family housing.
This would be a very ambitious program, requiring billions of dollars of investment. To begin with, electric power today only accounts for one-quarter of US energy consumption. We would need three times the generation capacity that we have now to convert the country over to the use of electric power as the primary energy source. The reason that we would not need four times the capacity is that electric energy once produced is converted into mechanical work with much greater efficiency than achieved by internal combustion engines.
Second, this expansion would be entirely nuclear. Our nuclear power capacity would have to increase by fifteen times, as approximately one fifth of our present electric supply is nuclear. Further, as I have said, the ultimate primary energy source will be fusion power, that essentially uses the tritium and deuterium in the oceans as the fuel. Since there may well not be sufficient U-235 to fuel all the fission reactors, they will be breeder reactors, to create plutonium fuel to stretch the supply. Necessarily, this will mean all power plants and nuclear infrastructure will be operated under 24/7 military security to prevent pilferage of nuclear materials. This will be another function of my vastly-expanded military.
I can hear the screams of “unsafe!”, “far too dangerous!”, “conservation!”, “solar power!”, “make do with less!” from the bleeding hearts when I announce this program. What everybody preaching “conservation!” and “improve energy efficiency!” seems to have forgotten is that we went through this once before, in the 1970’s with the OPEC energy crisis. At that time, the energy efficiency of virtually every electric appliance or device was increased from ca 70% to 90% or better. All the inexpensive gains have already been made; the law of diminishing returns applies to attempts to increase efficiency to, say 95%. It will cost more than twice as much, but the energy savings will only be one-quarter as great. No, we will not conserve nor innovate our way out of this one. Therefore, it will be necessary to undertake a serious re-education program to correct the abysmal ignorance of the American public about our dependence on energy in the first place, and on the relative hazards of the various forms of energy that we now use.
The first announcement will therefore be deliberately designed to be a shock. I will suspend all use of fossil fuel energy in the US for a period of one week. All gasoline and diesel powered transport will be halted. All fossil-fueled electric power stations will be shut down. Nuclear-generated electric power will be distributed, allocated to residential consumers on a “rolling-blackout” basis, because there won’t be enough to go around. Nobody will be able to go to work; there will be no work, since every job now depends on fossil fuel. The only food available will be that which is already on the supermarket shelves. People will have to travel on foot to get it, and much of it would have to be eaten raw, since only those with electric stoves will be able to cook. Even they will have energy only for a few hours a day. All use of gas heat or oil heat will be terminated; since it will be in late winter, people may get pretty cold. They will be invited to assemble (on foot) at the only warm places in the country: armories, gymnasiums, auditoriums, etc., which will be electrically heated by power from the nuclear plants. While there, they will be educated into the dimensions of the problem, and why nuclear is the only choice. They will be re-educated about the safety of various kinds of energy now. Most people are not aware, for example, that “safe, clean, natural gas” is by far the most hazardous.
Not a single member of the public has ever died in the US as a result of the operation of a nuclear power plant, but a hundred or more citizens are killed every year as a result of natural gas explosions. Five houses blow up every winter in my state, and half of them are not even connected to the gas line; it leaks into the cellar from broken pipes in the street. The reason for this disparity? Nuclear power plants are operated by college-trained engineers; gas companies are operated by, and are at the mercy of, ditch diggers.
Most people are not aware that the mining of coal kills more than a hundred workers every year, and destroys the lungs of thousands. Far more people died from the fact that the shut-down of Three-Mile-Island required generation of more electricity from coal than were harmed by the accident itself.
Half a dozen pleasure boats blow up every summer along the Atlantic coast from explosions of gasoline fumes. Gasoline leakage from underground storage tanks of filling stations has blown up any number of buildings, to say nothing of polluting the ground water in innumerable communities.
Contrary to the popular belief, nuclear power is in fact the safest. I would use the opportunity created by my “energy shock” to educate the citizenry of that fact. Then I would give them a choice. They could either accept my plan for converting the country to nuclear-powered electricity, or disconnect themselves from the electric power grid in every aspect of their lives. They could protest as much as they liked, as long as they didn’t make any use, at home, at work, or in any other way, of electricity. And that would mean essentially going back to the dark ages, because the usage of combustion energy would be phased out. After the electric-powered system was in place, all use of combustion energy would be outlawed, including candles and kerosene lamps. I suppose they could emulate the Amish, using horse-drawn carts for transportation and windmills for mechanical energy. They would have to grow all their own food, because everything that was in the markets would have required electric energy to grow it and transport it. They would, I suspect, soon learn how inadequate solar power is for furnishing heat in the wintertime, unless they moved to the sunbelt. They could not work anywhere in the mainstream economy since all those jobs would depend on electric energy produced by nuclear power.
Our society cannot exist without energy. Our planet cannot support the continuing increase in carbon combustion that will be required by increasing population if we do nothing. It will take at least a quarter-century to make the conversion in the US alone, and perhaps a century for the whole globe to convert. Again, the only weapon we will have in forcing the rest of the world to follow our lead is economic. If you fellows want to sell your goods in our market, you will have to start the process of replacing energy from carbon combustion by energy from nuclear fission and fusion.
You will notice that I have not mentioned “acid rain” among my concerns about the atmosphere. Acid rain is a byproduct of carbon combustion, principally sulfuric acid from the sulfur in coal, and nitric acid from the nitric oxide formed in the combustion process using air as the oxidizer. Eliminating carbon combustion in all forms essentially eliminates acid rain. It is, moreover, the only way to eliminate acid rain; the billions of dollars we are going to be spending to reduce sulfuric acid emissions from coal-fired power plants only postpone the problem. Reducing sulfur emissions by a factor two at best only puts the problem off for a generation, when our use of energy will have doubled again. Actually, it will take reducing sulfur emissions by a factor four to reduce acid rain by a factor two, since sulfur is only half the problem, at most.
Of course, converting the energy system of the country to nuclear-fission- or fusion-generated electricity will greatly increase the problem of disposal of nuclear waste. Even if the system is fully converted to fusion, which does not have radioactive reaction products, the fusion reactors themselves will become radioactive because of the bombardment of reactor components by neutrons emitted in the fusion process. When they must be scrapped at the end of their service lives, the bombarded materials will have to be disposed of as radioactive waste.
Moreover, we still have to consider the disposal of many other kinds of hazardous waste, chemical carcinogens and the like. The quantity of these will increase as our population increases. Again this is a problem which we are handling now, in a more or less imperfect way, which will get worse and worse as time goes on. Consequently, I would treat the twin problems of nuclear and hazardous waste together.
This would be based on the principle that these materials be stored in geologically-predictable strata in which no contact with ground water was possible. By far the best such strata are those where ocean floor is subducting under continental crust, headed for the viscous molten mantle of the earth. These strata are too deep for any contact with ground water. The direction of motion is known to be down; the rate of motion is known to be several inches per year. They will never reach the surface again for more than a hundred million years. Therefore, I would drill wells 40,000 feet deep into these strata along the California coast, into which concentrated nuclear and other hazardous wastes would be loaded, following which the well would be refilled with concrete to seal it. The ultimate “out-of sight-out-of-mind” repository. It will be an expensive solution, and politically impossible in any other climate than my dictatorship, but it is the only solution that guarantees that no human will ever see these materials again.
All the rest of the trash will be divided into recyclables, and burnable rubbish. All articles containing any metals would be required to be recycled, to recover the metals and to prevent them from leaching from dumps into the ground water supply. All glass and plastic products would have to be recycled. Paper and cardboard would be recycled. The remainder of the rubbish would be non-recyclable paper, building materials and food wastes. Because I would have already eliminated essentially all of the combustion that presently pollutes or atmosphere with carbon dioxide, it will be safe to use incineration to reduce the volume of these materials that eventually goes into landfills.
Ultimately, therefore, I will have solved the most pressing problems that the burden of our wastes is imposing on the planet. The solutions will be expensive; they will inconvenience many people, and have very serious economic impact on many people and industries. Unfortunately, I believe that we have no choice. If humankind is to have a future on the planet at all, to say nothing of continue to expand in population, we cannot continue as we have in the past. Since one US citizen imposes ten times more burden on the environment than the average of persons world-wide (because of our high level of consumption of everything), the change has to start with us.
A very large side benefit of getting us off our oil addiction (and one of equal importance to saving the globe) is that I will then be able to lean on the Moslem oil-producing states. They are now using our own money to fund a religious war against us. The fact that we presently can’t get along without their oil means that we have to tread rather carefully in dealing with them. Once we are free of our dependence on their product, I will have no hesitation in telling them, “OK Buster, welcome to the new world order. You either rein in your terrorists, and stop waging war against us, or I will declare war against you, and see to it that you don’t ship another drop of oil. I control the oceans, and will expropriate whatever you try to ship, and sell it on the world market. Furthermore, if that doesn’t work, and you still want to enjoy martyrdom in a jihad, I will be happy to help you. And please note, nuclear weapons will not be my last resort.” I will have advised all of our allies of my intentions as I start the conversion from oil to nuclear power, so that they may reduce their reliance on oil as well.
Venezuela will get the same treatment if their tin-pot little satrap is still making trouble. Since all of Venezuela’s oil exits through a few-mile-wide mouth of Lake Maracaibo, blockading it would require very little naval force.
There is still one other problem, however. In addition to perturbing the atmosphere by spewing vast quantities of carbon dioxide from fossil-fuel combustion, we have also drastically disturbed the capacity of the oceans to absorb it. The oceanic absorption goes somewhat like this. Carbon dioxide in the atmosphere is in solution-evaporation equilibrium with dissolved carbon dioxide in the surface (“mixing”) layers of the ocean. Increasing the concentration of carbon dioxide in the atmosphere results in a corresponding increase in the concentration of dissolved carbon dioxide in the surface layers of the ocean, until the (concentration-dependent) rate of evaporation again equals the rate of solution, on a time scale of weeks to months. The dissolved carbon dioxide in the water is the fuel for photosynthetic conversion to oxygen by the biomass of phytoplankton. Phytoplankton is consumed by zooplankton, which in turn is consumed by fish, shellfish, whales. etc., all of which have bony shells or skeletons, made principally of calcium carbonate. When these creatures die, their shells or skeletons, being heavier than water, sink to the bottom of the ocean. The calcium carbonate is made by reaction between calcium ions and carbonate ions formed in the solution of carbon dioxide in seawater. In a fraction of the cases, the carbon-rich carcasses of the creatures also sink into the anoxic deep ocean, where decomposition does not result in the formation of carbon dioxide.
Thus the chain of events described above converts carbon dioxide dissolved in the mixing layer to calcium carbonate deposited on the ocean floor (where it eventually becomes limestone.), or biological carbon in the anoxic deep ocean (where it eventually becomes coal or oil). When dissolved carbon dioxide in the mixing layer is removed, its concentration therein is reduced, reducing the amount of evaporation into the atmosphere. Evaporation no longer equals solution, so that the concentration of carbon dioxide in the atmosphere decreases until the rate of solution again comes into balance with the new lower rate of evaporation. The export of biological carbon to the ocean floor therefore indirectly reduces the concentration of carbon dioxide in the atmosphere. The enormous deposits of limestone and extensive coal beds and oil deposits around the earth are mute testimony of the ability of prehistoric oceans to remove carbon dioxide from the surface ocean and from the atmosphere and sequester it in solid form.
The land areas of the globe are basic net emitters of carbon dioxide, and the oceans are the basic absorbers. They convert carbon dioxide emitted by the land into the global atmosphere to limestone, coal and oil at the bottom of the sea.
The emission process by combustion of fossil fuels is the one the earlier discussion in this chapter has focussed on. Measurements of the important fluxes suggest that the natural fluxes of carbon from the land and ocean total 151 gigatonnes per year , (P J Falkowski, et al, Science, vol 290 p 291, (2000)) to which we add 6 gigatonnes by combustion (M J Battle, et al, Science vol 287, p 2467 (2000). Some of the present-day values of oceanic fluxes and of the amounts stored in the various reservoirs have been estimated Jorge L Sarmiento “Sinks for Atmospheric Carbon” Physics Today Aug 2002 pp 30-36). In particular the flux of carbon to the deep ocean from sinking dead biomass is presently estimated as 11 gigatonnes per year. In a following article entitled “A Possible Alternative Cause for Atmospheric Carbon Dioxide Increase”, I present arguments that human despoilation of the oceans has drastically reduced this deep-ocean export by as much as a factor two in comparison to pre-industrial times. That is, if it is 11 now, it was 22 gigatonnes then.
In other words, while we have increased the emission of carbon dioxide to the atmosphere by six gigatonnes a year, we have reduced the sequestering by twice that, eleven gigatonnes per year. Ergo, two-thirds of the problem of rising carbon dioxide in the atmosphere is the degradation of the removal process. If we don’t fix that, it won’t matter what we do to stop the emission; carbon dioxide in the atmosphere will still keep rising because the oceans can no longer absorb the natural emissions from the land .
I don’t want here to go into the detailed arguments I advance there, but basically they can be summarized in the words “Few fish in the ocean die of old age anymore” We bring them out on land, where the consumption of their tissues by oxygen- breathing humans (and pets!!!) releases their carbon to the atmosphere, and acid rain dissolves their carbonate shells and skeletons, returning carbon dioxide to the atmosphere. Every fishery in the globe is depleted, some to the extent of near-extinction. Removal of the large predators has opened an enormous ecological window for invertebrate jellyfish, which now consume half of the plankton in the ocean and do not sink to the bottom when they die.
The good news in this tale of woe is that it would be a lot cheaper and a lot quicker to restore the health of the oceans than it will be to convert the world to nuclear power. Because the lives of many fish are reasonably short, just putting a complete stop to all forms of fishing would in a few decades restore the biomass, and the rate of export of carbon dioxide to the deep ocean. But as I said, I won’t be dictator of the world, only the United States. But I would decree that there be no fishing of any kind by anybody in our national waters, out to the edges of the continental shelf.
The signs of global warming are already around us: higher ocean water temperatures, more strong hurricanes, blizzards, natural-disaster-scale lighting/thunder/downpour summer storms, rising sea levels due to glacial melting and retreating. Even if we accomplish all of the above, it will be fifty years before we get significant decreases in atmospheric carbon dioxide, and begin to reverse the effects noted above. It will be necessary to make some changes to adjust ourselves to cope with the problems.
First of all, I would decree that a mile-wide strip along every seacoast be classified as a “littoral zone”. The construction, maintenance, and repair or replacement of all infrastructure (roads and bridges, levees, jettys, groins, utility lines, communication lines) within a littoral zone shall be the responsibility of the property owners therein, allocated in proportion to the area of property owned. It will not be the responsibility of the municipality, the county, the state, or the Federal government. Second, all structures in the littoral zone must be covered by “windstorm insurance”; this insurance will cover all forms of damage associated with windstorms; wind, wind-driven water, flooding, etc. Such insurance must be purchased from private carriers, and the premiums will not be subsidized. Premiums will be determined actuarially by zip code, and will reflect at a minimum the cost of removal of an irreparably-damaged structure, and the repair of the property’s share of the infrastructure. Because the cost of infrastructure repair may be much greater than the value of the structure, annual premiums for this insurance in high-risk areas (eg barrier-island properties) may well be greater than the value of the structure. Such costs may well be too great for the majority of people and businesses presently in the littoral zones, and may well lead to abandonment of the property. Ownership of abandoned property will revert to the Federal government.
The screams of the bleeding hearts are already ringing in my ears. “Only the rich will be able to afford sea-shore property!!!” “Your are denying access to the ocean to all but the very rich!!!” Not so. Municipalities and local governments will still maintain public beaches. Moreover, I will decree that private ownership of oceanfront property commences at 100 horizontal feet inshore of the high-water mark. Public access to all beach areas below that limit is permitted and encouraged; public rights-of-way to the beachfront will be maintained at least every mile along the seashore.
My message will be, “Live by the ocean if you want, but don’t expect the rest of us to pay for storm damage that you expose yourself to.” The one mile strip, as recent hurricanes have shown, is an extremely high-risk area, in which storm-surge flooding and wind damage is frequent and catastrophically damaging. This is not a place where people should build houses, high-rise apartment buildings, office buildings or hotels, and expect the rest of the country to cover their windstorm losses.
Similarly, flood-damage insurance must be included in homeowners’ insurance policies, with unsubsidized premiums determined actuarially by zip code. Because some low-lying areas in flood-prone zones flood frequently, premiums in these zip codes will be high, and discourage people from living there. To which I say “Good! These areas have rich alluvial soils, and farming or gardening would be a far better use for them.
To summarize an overlong chapter: Our continued existence on Earth demands that we stop destroying it. We are no longer a minor perturbation on climate, ecosystems, oceans, atmosphere. I have outlined several steps that I would take as dictator to start reversing our past raping of the environment. Since our wastes are only part (though a disproportionate one) of the problem, I would demand that the rest of the world do likewise if they wanted to sell goods in out market.
CHAPTER 11 OF BOOK “HOW I WOULD RUN THE COUNTRY IF I WERE DICTATOR” by Argus C. Zall
In this chapter, I decree a new social contract between business and society, make significant changes to the organization of corporations, prohibit greater than 40% foreign ownership of US corporations, and decree certain changes in the operation of American business, and of the civil court system.
I also make final remarrks
(Copyright July 31 2006)
Calvin Coolidge once said “The business of the American people is business”. (John Bartlett, “Familiar Quotations”, Little Brown & Co, 15th Edition p 736 (1980)). American business is the provider of essentially all the jobs in the country. Those in the public sector that are not directly supported by business are indirectly supported by the taxation levied on the economic activity business creates. Therefore the health of business is vital to the health of the country. That said, there appear to be many ways in which business acts that are not good for the country.
Thomas Jefferson once said (John Bartlett “Familiar Quotations” Little Brown & Co 19th Edition p 736 (1980)) “Merchants have no country. The mere spot they stand on does not constitute so strong an attachment as that from which they derive their gains.” Nowhere has this been more clear than in the wholesale exporting of American jobs during the last decade to every low-wage corner of the world. My cash-in-advance restructuring of our foreign trade will make many of these exports of jobs unprofitable. I will go farther than that, saying to American business, “You are allowed to exist for the twin purposes of providing world-class goods and services, and of providing jobs for American Citizens. As long as you do that, you will not be taxed except in the form of the universal transfer taxes. If you hire foreign nationals, I will add a tax equal to their salaries, unless you can prove to me that their presence on your payroll is necessary for improving your export sales and increasing the number of jobs you have for Americans.”
Next, I will prohibit majority foreign ownership of any American business. Foreign entities or persons will not be permitted to own more than 40% of any US Company. Any US companies that presently have greater than 40% foreign ownership will be required to issue sufficient additional stock for sale to the American public (at whatever price the market will allow) to reduce their foreign ownership to less than 40%
The stockholders of a corporation are its owners. The board of directors is supposed to be the agent of the owners, and members of management are employees, hired by the agents to operate the enterprise. The present common practice of having members of management sit on the board of directors is an egregious conflict-of-interest; the frequent practice of having the chairman of the board of directors serve as chief executive officer of the corporation is a doubly-egregious conflict-of-interest. The nomination by management of candidates for seats on the board is a triply-egregious conflict of interest. I will abolish all of these practices.
No employee member of management of any corporation may sit on the board of directors of any corporation, most especially not his/her own. The chairman of the board may not be chief executive officer. Boards of directors will then be one-hundred percent “independent”. They will be responsible for hiring the management and for overseeing its stewardship of the company’s business. The board of directors itself will have the responsibility of nominating a slate of candidates for vacant seats on the board, at least two candidates for every vacant seat, to be voted on by the stockholders.
The composition of present-day boards of directors is heavily skewed toward lawyers, financiers, salesmen, personnel experts. There is never anyone who ever worked in manufacturing, and if there is anyone versed in science or technology, it is either the in-house Director of R&D, or an academic scientist who has not a clue about how to get new products developed and introduced into manufacture. These boards are incapable of providing oversight of management’s stewardship of the health of the manufacturing and R&D operations of the company. Moreover, they then hire managements in their image, and those specialties are almost never found on the upper-management team.
I will also decree a change in how boards of directors are composed. There must be three directors with previous working experience in every major function of the corporation; Finance, Accounting, Sales and Marketing, Personnel, R&D, and Manufacturing (if the corporation has such functions). Only such a board can provide proper oversight of all of the operations of the corporation. One third of the board (one in every category) must be re-elected or replaced every year. Necessarily, many of these positions will have to be filled by retired former executives of other corporations, since they will have the necessary expertise while not being in the employ of any other corporation.
I will next interfere with the operation of all American business by prohibiting the use of what is commonly called “mark-up pricing” Let me explain. The last place in American (or world, for that matter) business where anyone knows the true cost of doing any one thing is the factory floor. The cost of materials and labor to fabricate a putty knife is known to within pennies per thousand items. And that cost, known as “total direct cost” is typically ten percent or less of the final selling price of a mass-manufactured and mass-merchandised item. There are many other costs that are included in the final selling price: the “period costs” or “fixed costs” of owning and operating the factory; warehousing and shipping costs; wholesalers “break-bulk” costs; distributor’s costs, advertising costs (“my putty knife is better than yours!”); retail shelving costs; retail customer transaction costs; and yes, profit. The problem is, these costs are known in total, but not how much is accounted for by an individual product.
Therefore, they have to be “allocated” among the multifarious products in a given distribution chain. I may know the monthly cost of operating my factory which makes xx thousand putty knives, xx thousand paint brushes, xx thousand spatulas, x thousand paint-can stirrers, etc., etc. etc., every month, but I have to charge that cost in some way to the individual items that make up the product stream. In the nineteenth century, when the only computing instrument was a green eyeshade and a lead pencil, business developed a very simple way of performing this allocation. Add up the total direct costs of all of the items that were produced in a month and divide it into the total fixed cost for the month. Then charge each item its share of the fixed cost by multiplying its total direct cost by that quotient. The quotient was usually expressed as a percentage, so in effect the cost of the product was “marked up” by its percentage share of the costs to be allocated. This was then repeated at every stage through the distribution chain; costs of each stage were allocated in proportion to the cost of the goods entering that stage, by a “mark-up” percentage.
This made sense in the nineteenth century. The markups were small, ten percent or so. The fact that in the vast majority of cases the true cost incurred by a product at every stage was most-emphatically-not proportional to its cost entering the stage made little difference, and the cost of trying to do the allocation right was exorbitant. The system makes no sense today. The ease of spread-sheet manipulation and calculation makes determining much more realistic allocations trivial. The markups are now forty and fifty percent; the total cost to be allocated is 80% or more of the final sales price, and the economic distortion incurred by allocating it wrongly is significant.
Let me give you a simple current example. In 2005, gasoline was selling for about $2 a gallon, of which perhaps one quarter, $0.50, was due to the cost of the oil that went into manufacturing it. The other dollar and a half was divided among allocated costs through the manufacturing and distribution chain, say $1.30, and profit $0.20. This year, the price of a barrel of oil is much higher, representing say, $0.75 of cost per gallon of gasoline. No other costs in the system changed!!! The price of a gallon of gas should have gone up only to $2.25. But since the prices were figured on a markup basis and the same percentage markup was used as previously, the price of a gallon of gas has gone to $3, with $2.25 instead of a dollar-fifty to cover allocated costs and profit. But none of the other costs changed; they are still only $1.30. Guess where the other seventy-five cents went? Straight to the bottom line! Total profit goes from $0.20 to $0.95, nearly quintuple what it had been before.
Do you wonder that Exxon/Mobil is reporting record profits while the rest of us groan under the burden of $3 gas? And the executives of Exxon/Mobil can testify with a straight face before Congress that it’s not their fault. They are pricing their product the same way they always have! They’ve done it this way for more than a century, and are completely blind to the fact that the method by which they allocate indirect costs is responsible for this outrage.
For more examples of the foolishness of markup pricing, see the companion article following this book, entitled “Markup Pricing: A Distorter of True Costs; an Obstacle to Progress; and an Exporter of American Jobs”
I will decree that the use of markup pricing by any business is forbidden. Allocation of fixed, non-proportional costs must be done by a realistic algorithm. For example: the true cost of warehousing an item is equal to the multiplication-product of cost per-unit-time-per-unit-area of warehouse, times the area occupied per item, times the length of time the item remains in the warehouse, plus the cost of storage and retrieval, plus the cost of processing the paperwork. All of these quantities are known, and none of them has any relationship whatsoever to the cost of the item entering the warehouse, which is the assumption of markup allocation of costs.
Having dealt with business in general, I will turn to the operation of several specific businesses. First, the operation of the civil court system, in which all disputes that do not involve the criminal system are settled. At present, this system is largely publicly-funded, and has been systematically starved of resources. As a result, multi-year delays in adjudicating a claim are the norm. This system is taken advantage of by the legal defense lawyers, who request and usually receive repeated “continuances” or postponements of trials. It can take five years to get to trial in court against a defendant’s insurance company for a claim stemming from an auto accident, by which time the plaintiff’s witnesses may have moved, forgotten what they saw, or died.
No longer. The civil court system is to be funded entirely by the litigants. Upon filing a suit, the plaintiffs will indicate how many days it will take them to present their case, and pay up front a fee equal to court costs for that length of time. The defendants’ response will include a statement of how many days the defense will require for presentation of its case, and a fee to cover the corresponding court costs. The date of trial will be set at six months from the date of the defendants’ response. One six-months continuance may be allowed if required by either party for the sole purpose of gathering additional evidence. Attorney, plaintiff or defendant inconvenience will not constitute grounds for continuance. On the appointed day, the case goes to trial. If neither party is prepared to go to trial at that time, the suit will be dismissed with prejudice (ie, it cannot be filed again). If one of the parties is not prepared to go to trial, a summary judgment will be issued in favor of the other party. When the case goes to trial, neither of the parties will be allowed to take longer to present their cases than specified in the original filings. However, there will be no refund of unused court costs. Since the system is entirely funded by the litigators, the number of trial days required is known for at least the upcoming six months, and has already been paid for, the necessary facilities and judicial personnel can be provided to handle the demand. Since at present the court costs are heavily subsidized by the public, the costs of litigation will increase significantly; this may have the effect of favoring out-of-court settlements of claims, a result greatly to be desired.
The loser in a civil trial must pay to the winner the judgment established by the court plus the winners’ court and legal costs. Punitive damages will be allowed in the case of willful misconduct or gross negligence on the part of the defendant. However, the purpose of punitive damages is to punish the defendant, not to enrich the plaintiff. The plaintiff will receive in the judgment of the court his actual losses plus award for pain and suffering, and is made whole, to the extent money can do so, without collection of punitive damages. Punitive damages will be assessed by the court where indicated, but the payments will go toward covering overhead costs of the court system and to the general funds of the jurisdiction.
Where the plaintiff’s injuries and damages are the result of a crime, no civil suit will be allowed. Victims of crimes are already made whole (again, to the extent that money can so do) by the municipality, which then holds criminal trials to obtain reimbursements from the perpetrators. Thus, the reformed system will abolish the present “double jeopardy” of an alleged perpetrator having to defend against a civil suit (with a lower standard of proof) as well as a criminal trial for the same wrongful act.
The next industry I am going to shake by the nape of the neck is the so-called “Entertainment Industry”, which has become nothing but a University instructing the young in the tools, methods, and “beauties” of antisocial behavior and violence. It claims protection under the freedom of speech clause of the Constitution. I refer you to the opinion of the Supreme Court and the words of Oliver Wendell Holmes. Jr. mentioned in Chapter 3. There is no right to incite illegal or criminal behavior, in film, TV, music, stage, or literature.
Since these industries have proven to be completely incapable of regulating themselves, I will place them under censorship, with every product having to meet tests based on the last five of the ten commandments (wholly secular social prescriptions that form the basis for any civilized society): Does it incite the dishonoring of parents and other elders? Does it incite murder, theft, or any form of sexual misconduct? Does it incite perjury? Does it incite covetousness? Does it incite the violation of any laws or acts of Congress? This is not to say that portrayal of any of the above acts is forbidden, but they must not be glorified or presented as anything other than depraved behavior which ultimately is punished. If the answer to any of the above questions is “yes” (as determined by a randomly-selected panel of citizens not in any way associated with any branch of the entertainment industry), the work may not be publicly distributed or presented. Service on these juries will be a required civic duty, the same as service on criminal or civil juries. A two-thirds majority vote will be required for the work to receive the imprimatur of acceptance.
Argus C. Zall
Copyright July 31 2006
So that’s my jeremiad, and set of prescriptions to get the country back on track. Some of them may even be worth considering. I will be interested to read what comments people might care to make.
There are a number of other areas where a dictatorship might be useful, that I haven’t touched on: Homosexual “rights”, Homosexual “marriage” (my avoidance of the euphemism “gay” may be clue as to my mindset in these matters); more in-depth examination of the workings of the economy; a polemic about the lousy deal present-day heterosexual marriage has become for a guy.
Maybe I’ll get around to these topics in future postings.