The Bookstore

Today I stuck another dagger into our troubled economy. I downloaded a book to my Kindle!

This all took about one minute: that is one minute from its inception (deciding to purchase the book based on an article I was reading on my Kindle) to its culmination, ordering the book and having it delivered to my Kindle. One minute!

Why does this activity damage the economy? Think about it.

These are the economic consequences of my technological activity. First, I did not drive to the bookstore, so did not burn any gas nor buy any. This is a negative and a positive for the economy, save gas a positive, not buy from a bookstore a big negative.

All the employees at the bookstore, from the publisher to the clerk lost. By not buying a classic paper based book, many employees were affected, from the logger who fells the trees to the clerk who would take my money for the transaction.

The book itself, being electronic, cost about half what a hardbound (or paperback) would cost; roughly a $20.00 hardbound book costs $10.00 on the Kindle. I save $10.00, many others lose!

This took roughly $10.00 out of the economy; unless I decide to spend the $10.00 savings on something else, which I did not.

Plus, I did not pay sales tax on the book. This cost my state about $.70. Currently my state, like many others, is cutting teachers, closing schools and laying off state workers. This is all happening while the Conservatives have so demonized taxes that politicians dare not raise them.We are literally throwing our children’s education out to placate anti-tax fervor which is destroying our economy. Every dollar of a laid off teacher’s salary takes many more out of the economy, just as my savings on a book takes money out of the economy.

Anti-tax conservatism is what is killing the economy, NOT government spending or taxation.

Will this technological effect stop? It will not, given the advent of the I-Pad in a couple days. In fact, the negative effect on the economy will only increase.

Technology has always displaced workers. The Industrial Revolution, in only a hundred years, radically changed “developed nations” economies from agrarian to factory based, with huge transitions that directly and indirectly led to two world war catastrophes. The stresses of industrialization caused the conflict between fascism and communism that nearly ended the world, and still threatens us all.

So, what do we do about this? Do we continue to muse about how interesting this all is, and do nothing, risking another catastrophe? Did we not learn anything the last time?

I suggest the following? Get ready, my conservative friends, because government is involvedand must be a major part of the solution.

We need begin by taxing internet commerce. It is crazy to not enforce the laws we already have to tax the internet. And, we should do it nationally. Attempting to tax locally or by state is crazy, it can’t be enforced. Servers are literally sprinkled all over the place, determining which state the transaction actually occurs within is impossible.

So try a “value-added” tax on ALL internet transactions. This rate need not be particularly high, say 5%, should do it. But, every transaction, not just sales, needs to have this tax on it. This includes transactions from other countries. Yes, it sounds like a tariff.

As I write this, “Good Morning America” is broadcasting a report how Americans are overpaying property taxes. This is reinforcing the myth, that Americans are somehow overtaxed. This is simply not true. Every survey and study shows that in fact, Americans are not overtaxed. What we are is unfairly taxed. The tax codes have been so politicized that that basic progressive fairness has been lost in a myriad of tax breaks, concessions to corporate power; etc.

Because of the unfairness, the Federal Deficit is large and getting out of control. Unfortunately most Americans focus on reducing spending, ignoring the fact that almost 80% of the federal budget is NOT discretionary. If we add to that military spending the figure is over 90%.

That means we can’t reduce the deficit through spending cuts without drastically harming our country. The only way is to increase revenue. That means more taxes! The trick is making them fairer and broader at the same time. Taxing the internet would be a great start.

We all continue to dodge taxes in multiple ways, and we weaken the economy and weaken ourselves. Internet commerce, led by zealots like Meg Whitman who as C.E.O. of E-Bay refused to cooperate with California State Tax Franchise officials, to even divulge who E-Bay’s customers were, has enjoyed special status for years as a “new business model” and exempt from taxes to encourage the innovation. This innovation is now over ten years old!

Internet commerce is no longer a “new business type”. In short, the internet business model no longer needs any protection from taxation. It is well established and a large part of the world economy.

So, tax it. Start thinking of our deficits, both locally and nationally, as not just products of the recession but as products of outdated and inadequate revenue sources.

In a sense, we are trying in the new health insurance reform law, to address this revenue problem. Health care has been grossly unfair in the way it raises revenue. A huge proportion of the population was left with no health care at all, while the majority paid outlandish insurance premiums to a “for profit” system.

We did the same thing we are doing now with tax reform, we allowed special interests who would be minimally harmed by tax changes to dictate to the rest of us. For example, recently in the press major corporations announced startling bookkeeping deficits supposedly caused by the new Health Care Reform Law. What they did was to “book” losses they projected years in the future caused by their losing tax breaks for providing health insurance to their employees and retirees. The truth is these will be offset by government subsidies and new tax advantages in the reform legislation. In an amazing show of contempt for the rest of us, these corporations were attempting to scare us with potential adverse effects from LOSING AN UNFAIR TAX CUT that is more than offset by other tax advantages in the new law.

Incredibly, the “fat cat” corporations want their cake and eat it too, twice! This arrogance and avarice is killing us. We simply cannot sustain allowing corporations to pay less tax than a mom and pop convenience store in Texas. The unfairness is beyond belief.

This resulted in a Health Care “system” that was, and is, unsustainable. The truth is, my fellow conservatives, taxes will have to be raised anyway, WITH the new law! This will have to occur because we were in fact, underfunding the health care system in the past. The difference is the new system makes the funding much fairer. Rich corporations and the wealthy were getting huge tax advantages with the old system, not paying their fair share of Medicare taxes for example, while the middle class and the poor suffered with rising costs or no health coverage.

In a real sense, it surely is a redistribution of wealth, from the rich to the poor. However, socialism it most assuredly is not! This, by the way, is the real reason rich Republicans are so angry with the new law, because they are losing some of their special tax status.

Of course, they are so rich anyway, that the loss is minimal. None of them will suffer any drop in standard of living, in fact the “hit” has been blunted so much, that further tax increases in the future are probably necessary on the rich, corporations, AND the middle class to keep the health reform going.

Remember, President Bush’s tax cut is STILL in effect, which has been a huge windfall for the top 1% of the this country, and is not scheduled to expire until next year. President Obama did not attempt to stop them, because of the myth that maybe even he has swallowed, that taking away the tax cuts would somehow further damage the economy. There is no empirical evidence that this has happened or will happen.

Wait a minute, my conservative friends will say, what about the 70s and the Reagan miracle that revitalized the economy?

There is no empirical economic data that proves the Reagan tax cuts sustained the economic growth of the past thirty years. In fact, that growth merely continued in the same pattern from 1945 to 2008 regardless of the tax policy of the United States!

What we are discovering, especially in California, is that long term tax cutting and government cutting eventually WILL DAMAGE THE ECONOMY! That’s right, there is a point, and California has reached it, where mindless tax cuts have exactly the opposite effect as intended on the economy. I would propose that we all study California, as a once great state is reduced to third world status, as a PRODUCT of conservative economic policy. The damage to the finest public university system in the world in the past five years will adversely affect California’s economy for decades. I would not be surprised to see wholesale abandonment of California by technological giants like Apple to occur in the next decade, because of the decline in the educated population. . California’s failure is directly linked to the anti-tax madness of the past forty years,not the recession!

Tax cuts, we have found do not stimulate the economy. In fact, in the long term, if they are applied in multiple ways, they in fact have harmed the economy. Surely, they have harmed people, by cutting essential governmental services like education. A huge “underclass” is developing quickly in California, with dramatic effects on the quality of life, safety and security of California citizens.

This must stop. I am sure Amazon, E-Bay and the rest will scream if we tax them. But tax them we must. And, these tax dollars, needs to go to retraining, educating and reinvesting in new economic models that work to make our energy use dramatically more efficient, and our transportation system less costly. And, we need a massive re-education effort, to retrain a generation of Americans who have been displaced by the negative effects of technology on employment.

My little Kindle has cost several people their jobs. I did this, by simply using it the way it was designed, contributing to a shift to a paperless reading environment virtually overnight. As millions follow this lead, we will have massive economic change. Technology is doing the same thing the factories did to farmers in the 1800s, displaced them, unemployed them, and enraged them!

The paradigm has shifted. Regardless of the Conservatives protests, it is not going to shift back.There are three things we cannot really change but only adapt to: 1. Cheap petroleum and coals reserves are finite and running out. 2. Global warming is a reality, and is already modifying our economy. 3. Technology continues to change the world economy in often unpredictable and harmful but irreversible ways.

The only way we can even hope to deal with these monumental changes, is through government to help plan progressively to adapt. Private enterprise cannot do it, because by its nature, self-interest not public interest drives it.

If we do follow the folly of using privatization to deal with this paradigm shift, oligarchy and aristocracy will be inevitable results. This could lead to political conflict and dislocation that will, as in the twentieth century, produce warfare.

In a real sense, we are in the 1930s right now, when the world economy was struggling to adapt finally to the shift from an agrarian culture to an industrial one. Now, in the “post-industrial” world, of digital technology, we again struggle to find our way. The most frightening change is that today, mankind possesses weapons of mass destruction that kill us all if we choose to fight rather than adapt. Or, if we somehow survive that threat, and continue to use fossil fuels as if there was no tomorrow, there won't be one!

So, raise the taxes. Do it in an educated way and fair way, but raise government revenue and then use our democratic system to modify our economic system for the better of not just American citizens, but of the world as well.

It really is the only choice we have.