My Philosophy of Government

by Bill McGaughey 

The rebuilt I-35W bridge over the Mississippi river on the day when the last section was added

I sympathize with the Libertarians in wanting small or nonexistent government but don’t quite agree with them.  More than ever, we need government to regulate economic affairs for the betterment of society and preservation of the natural environment.  

Adam Smith’s “free market” did not anticipate how economic transactions would collide with a fixed supply of natural resources.  Taxation is needed to make certain commodities artificially expensive when their supply cannot be sustained.  We need government to create the proper financial incentives to guide humanity in a smooth transition from an era of wasteful plenty to one where population pressures and industrialization put pressure on the earth's resources. Otherwise, a crash landing will take place.

The U.S. system of government is corrupt.  There is a corrupt relationship between legislators and the lobbyists and interest groups who fund their campaigns.  “Bribery” would not be too strong a word to use to describe the situation.  The laws are written in excessive detail to benefit or penalize certain parties.  Then lawyers are needed to interpret and enforce these inscrutable laws.  You get what you pay for.  The rich get everything, and the poor nothing. That’s our system of democracy as it has become.

In the latest phase of decadent capitalism, politically well-connected business interests take over functions of government as private contractors and are paid handsomely by the taxpayer. Employees of private contractors outnumber U.S. military personnel in Iraq. Those of private security firms under contract to the federal government outnumber CIA employees. In 2006, these private contractors received 70% of the $60 billion which the U.S. government spends on foreign and domestic intelligence. This looting of the public treasury takes place under the guise of privatization and the myth that private enterprise operates more efficiently than government. Really, governmental services are a guaranteed market for the contractor services assuming that corrupt government officials can deliver the contract.

I will make a leap of faith in imagining that American government can be honest.  I will imagine that the laws can be simply written and can apply equally to all persons or parties.  I also imagine a system of laws that use computers to do detailed and specific calculations of tax rates, while not respecting any particular party.  I imagine a system of “employer-specific tariffs” to protect workers’ interests in international trade.  I imagine an “employee-specific” rate in the employer’s share of the FICA tax, designed to address the problem of illegal immigration.  As far as I know, those concepts are unique to me and my candidacy.

Employer-specific tariffs

National governments should be empowered under international trade agreements to impose tariffs on imported products for the purpose of regulating international business.  A tariff is a tax that must be paid to bring a product into the country.  Generally, its amount is a percentage of the product’s value.  

Instead of setting tariff rates that are a fixed percentage according to the nation from which the product is derived, I envision a tariff whose rate is a percentage that reflects the difference in labor costs between production in a low-wage country and what the same production would cost in the country where the product is consumed. 

Actual production costs are known from financial records.  Imputed production costs can be calculated by assuming that the higher wages paid in the consuming nation were paid to produce the goods in the foreign factory and also that standard working hours were in effect.  One can then subtract one from the other to determine the cost differential.  Divide this number by the number of units produced to determine a savings per unit.  That becomes the basis of the tariff.  Either all or part of the cost saving from outsourcing to a low-wage country is offset by a tariff.

Such a system of taxes is flexible because when hours or wage levels change in the process of foreign production, the tariff also changes.  The higher the wage, the lower the tariff.  Employers thus have an incentive to raise wages.  We need computers to calculate the ever-changing numbers, which become schedules of tariffs to be applied to a range of imported products. Yet, the general principle can remain the same for all products regardless of where they are produced.  There need be no “trade wars”.

For more information, go to this link.

Use of the FICA tax to compensate communities for illegal immigration

Certain businesses use illegal-immigrant labor to achieve labor-cost reductions without outsourcing production to another country.  The illegal immigrants will work for less.  Their illegal status ensures that they will not take individual or collective action to achieve higher wages or reductions in working hours. The “foreign sweatshop” can be in the United States.

At the same time, we Americans have a relatively generous “safety net” for poor people.  Illegal immigrants are poor by virtue of the low wages and nonexistent benefits they receive.  That throws the burden of caring for these workers and their families on governments in local communities where the immigrant-employing businesses are located.  The taxpayer, not the employer, picks up the tab for public-school education for immigrant children, the cost of medical care not covered by health insurance, and welfare benefits such as food stamps which poor people are eligible to receive.

It’s possible to match benefits with costs by calculating the additional cost to the community of having certain immigrant workers in their midst and then applying it to the immigrant worker’s hourly wage.  I would propose that this cost, expressed as a percentage of the worker’s hourly wage, be added to the employer’s share of the Social Security (FICA) tax as a surcharge.  The federal government would collect the money each hour the illegal immigrant works and then remit it to local governments that bear the social cost.  

The cost would be calculated specifically for the employee taking into consideration the wage rate, health-insurance status, number of children in the worker’s family, and the cost of education and other services in the particular community.  Again, computers would be needed to calculate the tax in ever-changing conditions.

For more information, go to this link.

Shorter work hours

I believe that ultimately the economy must move to reduced work schedules to avert environmental catastrophe. That way, the world's urban masses could support themselves with minimal use of natural resources. While government does not directly set work schedules in the private sector, it can use tax-like tools and techniques to create a financial incentive for employers to schedule fewer hours of work in a week and, consequently, employ more people.

In the United States, the Fair Labor Standards Act has created an incentive for establishing a 40-hour workweek. While employers are free to work people longer than that, they are required to pay one-and-one-half times the employer's regular hourly wage for hours worked beyond forty.

A problem with this arrangement is that the higher overtime wage creates an incentive for employees to seek overtime work opportunities. If the extra half-time pay were taxed away instead of augmenting the employee's wage, overtime work would become onerous both to employer and employee.

In order to reduce work schedules from forty hours a week to a shorter schedule, the Fair Labor Standards Act could be amended in several respects: (1) Set a lesser number of hours, such as thirty-two, for the standard workweek. (2) Raise the overtime penalty rate from time-and-a-half to a larger number such as double time. (3) Tighten the eligibility for exemptions for administrative and professional employees. (4) Enforce the law instead of winking at violations.

For more information, go to this link.

Subsidies and tax breaks as incentives to switch to renewable energy

We want people to begin driving flex-fuel, hybrid, or electric cars in order to reduce our nation’s imports of petroleum from foreign countries, thus aggravating the trade deficit.  However, it’s currently cheaper to drive gasoline-powered cars.  The government can change this cost relationship by increasing the tax on gasoline at the pump.  It can increase the vehicle tax for conventional automobiles. 

Conversely, it can offer tax incentives for installing wind turbines to generate electricity.  It can subsidize development of battery technology to store and transmit electrical power. It can purchase vehicles powered by alternative energy in its own fleets. 

By doing all these things, the cost of transportation using alternative energy comes down until consumers find it cheaper to purchase this type of transportation.