Wednesday, January 25, 2012

State of the Union

Okay, word of warning here.  I'm going to do a little bit of political rambling.  If this kind of thing annoys you, this might be a good time to change the channel.  I give this warning because lately I can't even handle watching most of the political coverage on TV (I'm just tired of the punditry and bickeing and the fact that everyone is talking, but no one is listening).  On the other hand, I just sort of wanted to document how I feel as we head into the 2012 presidential election season.  For posterity.  For me.
Skip this if you want...

I didn't watch Obama's State of the Union Address last night, but I read a copy of it online.
I think he had some good points.  Some of his ideas will be controversial, but that shouldn't be surprising.  The wealthiest, most powerful people in our country have had a really good run of things for at least a decade, and some of Obama's ideas are likely to be seen as a threat to their continuing high level of good fortune.  But some changes may be necessary because some of the same policies that are making our wealthiest citizens richer may be simultaneously, unnecessarily making some of our middle and working class citizens poorer.
I agree that we need to reduce current laws that provide tax breaks for companies that are outsourcing jobs overseas.  I agree with the idea that taxes should be used to support companies that create job opportunities in America (and I believe, in general, that government can actually take actions that affect the private sector business world for the better- the revitalization of America's automotive industry being a prime example- but that such action should be taken infrequently and with caution).
I also strongly agree that we need to focus on educational and vocational training for our students so that we have a workforce that remains on the cutting edge of innovation and development.  We may not be able to consistently underbid other countries in terms of providing cheap labor (which is pretty hard when you're competing with third world countries), but we can continue to be known as a country that comes up with some of the best products in the world and which has a workforce that manufactures goods of superior quality.  In order to have a workforce that fulfills these ideals we need a strong educational system.
The education system needs strong funding.  It also needs cost controls.
The president said that we need to support our effective teachers and give teachers more lattitude to pursue lessons and curriculum without having to spend so much time on preparation for standardized tests.  I was also in agreement when he said that we need to be able to fire teachers who are proven to be ineffective (not really a liberal sentiment- the unions balk at this sort of talk), and we need to be able to tie taxpayer funding for higher education to an institution's ability to keep costs down and efficiently graduate students in a reasonable amount of time (this idea shouldn't be limited to colleges, but to trade and vocational schools as well).
I also think, though, that students need to be given the opportunity to receive financial aid and/or take part in loan programs that have reasonable interest rates.  Our financial sector shouldn't be looking at college loans as an area where they can gouge customers who are desparate to build a foundation for their futures.  The flip side of that equation (which Obama didn't take on) is that students shouldn't be taking out massive amounts of debt in order to pursue fields of study that will never pay them back.  Our country is short on students who are studying math, science, engineering, and certain other fields.  We should implement a system that specifically rewards students with loan incentives if they're going to pursue particular fields of study that will ultimately benefit the American economy.  This might sound a little brutal, but education reform won't help the economy if all of our students take advantage of subsidized loans and scholarships in order to study poetry and art (fine fields of study, but maybe taxpayers shouldn't be expected to foot the bill).
I'm also in agreement with Obama that we need some tax reform.  When wealthy people who make their money off investments instead of wages end up paying a considerably smaller percentage of their income than middle class, salaried workers, the laws definitely begin to seem... well, unfair (Mitt Romney paid less than 14% on $42.6 million in income over the last two years, lower than tax rates paid by many middle class Americans).  I know that people feel differently about the whole idea of progressive taxes in general, but I'm still one of those crazy hippies who tends to think that the people who benefit the most from living in our society (and from the efforts of the lower paid employees who help generate the wealth) can probably afford to pay a little more in taxes.  After all, when jobs are being outsourced to other countries and companies are polluting our air and water so they can make more money, the greatest financial benefits tend to flow to the investors and people at the top of these companies.  They rely on our educational system to give them better workers.  Their trucks use our roads.  They rely on our military and coast guard to protect the companies themelves.  They can afford to pay their fair share in taxes to help support the country that's making their financial success possible.  Profits don't occur in a vacuum, and the only way to continue to make America the sort of place where companies want to do business is to ask the people who profit the most to reinvest in our country. 
We need to slow down the gap that's been widening between rich and poor.  Some people don't see it coming, but I really do believe that we could become a country in serious decline if we don't continue to reinvest in education, infrastructure, health care, and other areas that support the American middle class.
I was also kind of surprised and happy to hear the president touch on the need to fight intellectual property infringement, trade in counterfeit goods, and piracy.  If America's future is to be found in securing a position for itself as a worl leader in creativity, innovation, and design, then we need to be able to safeguard our ideas against theft from foreign and domestic individuals and companies.  If we can't underbid other countries in order to compete in manufacturing, we need to be able to produce higher quality products and protect them against trademark infringement (i.e., we don't need fake, ripoff American products being sold overseas and destroying the market for American exports).  Similarly, we don't need our intellectual property to be devalued by having it stolen and sold by those who would copy it (e.g., pirated copies of movies, music, software, etc.).  Obama spoke of a Trade Enforcement Unit, and I think that's a great plan, so long as such an organization has some genuine ability to take enforcement action.
I also liked the fact that the president wants to hold bankers and other lenders responsible for fraudulent loan and investment schemes, and I support the idea of stronger prosecution of true crime in those areas.  Equally important, though, and perhaps unaddressed, is the fact that many Americans are getting themselves into complex financial situations with very little or no knowledge of exactly how various loans and investments work.  The culpability for bad lending practices undoubtedly comes from some predatory action on the part of lenders, but also some really bad judgment on the part of borrowers.  Lenders shouldn't be allowed to be misleading, but I also feel sort of weird about telling bankers when they can lend money or telling responsible adults how much money the should be allowed to borrow or how they can invest.  I'm not sure exactly how to remedy this except to perhaps require certain high risk borrowers to prove a certain minimal level of understanding on certain loans before we allow the person to finalize their decision.  Maybe some sort of short test or something?  Is that lame?  Probably, but we ask people to take tests before we give them a driver's license.  Now that we know the impact that bad loans can have upon an entire community, maybe it wouldn't be so bad to require people to have a basic level of financial knowledge before making loan and investment decisions.  I'm not sure...
Anyway, overall, I thought the State of the Union Address wasn't bad.  The state of our actual union is a little rough, given the economy and all, but there are some reasons for optimism, and I'm hoping (fingers crossed) that we're moving into a period of time when, with the right leadership, we can really turn thing around.
I feel a whole lot better about things than I did a year ago.
Hope I feel even better on the one year anniversary of this post.

Everybody take care.  Now back to your regularly scheduled program.


Paul Toohey said...

I agree with you on this, good words Steans!

Also: the thing most propel forget about loans etc, is that the loaning institutions used to be cautious to how the lent money in order to protect themselves. They have gotten away from that which led to the collapse (due to their greed)

J.S. said...

Thanks, Paul! I agree that the burder has shifted liability away from the creditor and onto the borrower to a degree that I consider to be unreasonable (especially given the fact that most lenders are doing this professionally, and most borrowers are relative amateurs who don't understand technical nuances in the loan procurement process). I feel like if the greater liability doesn't lie on the side of lenders, we usually end up with some predatory lending practices (which was a big factor in the mortgage collapse that led to the recession).