Today, Senator Obama spoke on the Reverend Wright controversy and made clear what he believes. Three points came out of his speech and I am sure he only intended one point. The biggest issue resolved was that he explained why he continued to befriend Reverend Wright and why he continued to be a part of his congregation. His explanation was both eloquent and clear. He personally understands the reasons why Reverend Wright thinks the way he does and he understands why it is different from the way he (Senator Obama) thinks. Barack Obama defined the differences so well that it had the ring of truth and clarity. This writer is convinced that Senator Obama has not exercised poor judgment when sitting through Reverend Wright’s sermons; that he successfully compartmentalized what Reverend Wright was saying compared to what he believes.

He did not address or explain the previous statements that he had never experienced these sermons personally yet now in this speech stated that he had heard the questionable sermons all along. Do we chalk this deception up to political gamesmanship? The straight talk was absent here. Two other issues surfaced during his speech, that shine a clearer light on what and how Senator Obama thinks.

His statement, that he will find a way out of the war in Iraq, did not ring as clearly as his previous definitive proclamations regarding the speed of removal of our troops if elected and taking office. Does this mean that he now understands that unraveling Iraq will be like cutting a fine diamond and that it cannot be done haphazardly or hastily? To improperly unravel or to just leave Iraq may create more world problems for us in the future than remaining and continuing to stabilize the country, which is currently happening.He needs to be pressed on this by the unbiased media – if we can find them.

His statement that we need to stop corporations from sending jobs out of the country just for the sake of profit demonstrates a glaring lack of understanding of how capitalism works and creeps up upon a socialist agenda. Under capitalism with some controls, the better the environment for profit, the better the environment for growth and prosperity.This means jobs – good jobs! The jobs are leaving because the corporations need to make profit to survive and will seek out the most advantageous environment to make that profit, even if it means to create and manufacture elsewhere. It is the responsibility of a government in a capitalistic economy to foster an environment to entice corporations both foreign and domestic to produce here thus creating good jobs and plenty of them.You cannot regulate jobs unless you are in a failing communist or socialist economy where the standard of living misery is balanced and widespread.

He should be seeking to change the health care system by relieving corporations of this burden and ameliorate the corporate tax rates to foster a profitable environment for corporations producing in this country and trading with the world.This should be the fix he seeks. This will place corporations doing business in this country in a position to grow and sustain good paying jobs. Remember, corporations do not pay taxes they collect them for the government from you in the form of higher prices, but in the world trade environment they cannot pass these taxes on so they become uncompetitive. When they are uncompetitive they move to an environment where they can be competitive and move the jobs elsewhere. He should not be condemning profit, which is the engine of prosperity and standard of living as long as it is heavily laced with successful world trade.

America needs to regain the fundamentals of a strong economy for a number of important reasons.National socio-economic health, political and diplomatic influence in the world for trade, defense, and standard of living all depend on a fundamentally strong economy.The fundamentals of a strong economy, from a non-economist’s view – mine, start with comparative advantage in world trade.This is something which our country and our leadership and labor unions have taken for granted over the last 20 years, letting this precious commodity dwindle away.We also have mistaken productivity and its usefulness toward comparative advantage with an effective trade economy.Remember, while productivity helps our trade advantage, it does little to help our trade related employment number or the quality of the trade related jobs.Simply put, the definition of comparative trade advantage is “what do we have to offer in the deal that makes us come out ahead of the other guy?”

We hear about free trade agreements and that trade is good – and it is!Entering into the world trade arena without a trade advantage or at least a trade equilibrium is just down right dumb and we have run headlong into this arena stark naked.We need to rediscover our comparative trade advantage or discover a new one, if we are to successfully compete in world trade.

Look around, the world has oil and we need it, the world has cheap goods and we need them to keep inflation down, the world has the capability to produce both quality goods and cheap goods that it could not produce 50 years ago, the world has cheap labor – shall I go on?What do we offer?Well we still have some bright minds, even though they may be heavily populated with foreigners, we still can grow food with the best of them, we still offer innovation, but we have no monopoly any longer on innovation.Our dollar is losing value which helps us produce relatively cheaper goods for the world market and thus lower the trade deficit.

A devalued dollar is a two edged sword as also it brings us a higher cost of living and a lower standard of living relative to the world.What do we plan to do about this obvious problem?Well Senators Obama and Clinton want to tax us more - mostly business and the rich – you know, tax the engines of investment and growth!Senator McCain wants to keep personal income taxes low and cut spending, but this will not bring us back to a fundamentally strong economy even though it is good start.It is how, when, and who we tax that is the problem.We are an economy that taxes income accumulation.We should be taxing the disposable money spent on “stuff” and not the money earned and used for growth re-investment.

Businesses pay a 35% Federal corporate tax rate and varying state corporate tax rates, bringing the total corporate income tax on profit to between 40% and 50% for the most part.Remember the corporations only collect the tax and anyone who buys their goods pays the taxes.If a corporation works on a 15% profit margin, and they make a set of golf clubs which they wholesale for $500, $65 is taxable profit of which the retailer pays $30 of the income taxes due on the item.When the item is resold at retail at $800, assuming a 15% profit margin, $105 is the taxable profit and $47 is the income tax due on the item paid by the end user, the consumer, you.Actually you pay a total of $77 of the corporation’s and reseller’s income taxes.

Granted, this example is clunky and probably filled with holes, but it does serve to demonstrate that when we tax corporations for manufacturing or reselling all we do is raise the price of the item.This works fine when all the competition is paying the same taxes.If does not work fine when world trade is involved, because our goods and services are then less competitive with the goods and services of other nations. We already start out with a disadvantage, in that we pay our workers more than the workers in far off lands receive, but this can be adjusted with productivity.

Unless we seriously look at our tax structure and make changes sooner rather than later – maybe move to a consumption tax or a fair tax and get away from inhibiting investment, growth, and production with income taxes, we can expect to have a lower dollar value, a lower standard of living, etc.Income taxes on domestic corporations foster a comparative trade disadvantage for us.Our government must find ways to domestically foster healthy manufacturing and servicing sectors so we can compete with the rest of the world without giving up good paying jobs.If the tax burden shifts from corporations to individuals, their will be no real change in who pays the taxes, except we will compete in the world trade markets effectively, create good jobs, and restore a fundamental of a good economy.

Senator McCain, you must find a way to remain in the forefront of the public consciousness, while Senators Obama and Clinton are busy trying to earn their party’s nomination and the press is fawning all over the Democratic Party race.

Why not hold a series of public, invitation only, forums on a number of the issues facing us today?  You should hold meetings with bipartisan experts from their respective fields on:

• Oil/Energy - what is the fastest and most effective way for this country to shed its oil addiction?
• Jobs/Trade - what is the fastest and most effective way to turn this country into a world trading juggernaut and bring manufacturing jobs back to America?
• Social Security - what is the most effective way for us to secure, preserve, and enhance social security to ensure that is meets the needs of current recipients, near recipients, and the young people paying into it today.
• Immigration - what do we do with the current population of illegal immigrants after the border is controlled?
• Education - do we really need the Department of Education at $60 Billion annually?  Don’t the states have qualified people to manage education, is there a redundancy?
• Health Care - can it be fixed so as to cover most everyone in an affordable and effective manner?
• Housing - what is the most effective way to stave off deflation of housing values?  Keep the housing values high and you will have a chance of getting out of this mortgage mess.

Broadcast these meetings on the internet.

Senator, no definitive results will come out of these meetings, yet

• you will have given yourself a template for action, if elected
• you will have demonstrated a clear desire to solve these problems, creating hope
• you will have kept your activities in the media, while polishing a domestic agenda image

How would your attempt to address these issues in a presidential manner, while your opponent is mired in a fight for the nomination be viewed?I hope someone in your campaign with a little forethought sees this message and conveys it to you.

In economics books it is called Comparative Advantage.It is the underlying key to successful trade among nations.In non-economist terms, it is what can I offer that the other guy can’t that will give me an advantage in trading so I come out on top.

When the United States was very young, we had unbelievable amounts of natural resources.As we approached the twentieth century we had a powerful work force achieved through the immigration of people looking for a better opportunity.These people were both adventurous and driven to succeed – they made a productive work force.Oh yes! we still had abundant natural resources.In the second half of the twentieth century, after the two world wars, Asia and Europe were devastated and without infrastructure, and they were in need of all things manufactured as they were rebuilding.The comparative advantage of the United States was its gargantuan manufacturing infrastructure resulting from the build up to produce for World War II, and the many technical achievements gleaned from the war arsenal.We had a customer – the world – ready to consume any and all that we could produce.In effect we not only had a comparative advantage, but also an absolute advantage – we could only prosper – we could literally phone it in.It was all about us!

By the close of the twentieth century both Asia and Europe, with the exception of the iron curtain countries and the Republic of China, had rebuilt their infrastructure, and in many cases with more up to date and productive manufacturing facilities than we had.The United States had fewer desirable / usable natural resources.Our coal reserves became unpopular and our desire to not spoil our planet kept us from fully developing our oil reserves.In the mean time, oil was becoming the key natural resource in the world for the later part of the twentieth century and the early part of the twenty first century.

In the second half of the twentieth century, we became oblivious to the world – remember it was all about us!We paid our people ever increasing wages in manufacturing, added many unproductive work rules, and taxed our companies to the point that all three events took away our comparative world trade advantage in manufacturing.We were now at a trade disadvantage – yet our appetite to consume was still feverish.During this period, it became more advantageous for our manufacturing companies to move manufacturing overseas. If they had not done so, they would not have been able to compete on the world stage and be profitable. During this period, one bright spot in our comparative advantage was our strength in technology and highly educated and well trained engineers.Our use of technology gave us a comparative advantage in productivity.We continued to utilize our comparative advantage in the trade of technology – we thought it up and it was manufactured overseas.Over the last quarter of the twentieth century and the beginning of the twenty first century, Asia caught up, only with a twist – same or better engineering with lower wages – the comparative advantage shifted in their favor.We also allowed our schools to lose their leadership in delivering a strong education from K through 12.

Today, what do we offer: restrained under utilized resources, a broken education system, uncompetitive costs on a world scale due to high wages on the remaining manufacturing jobs (auto industry), a declining infrastructure, comparatively high taxes on companies attempting world trade, and a voracious appetite to consume manufactured goods and oil from overseas?Yet our political leadership continues along as if we remained the pre-eminent holders of all things comparative trade.Our free trade agreements are good, yet we entered the trade arena with a handicap – we have no comparative advantage, so they are NOT good for us at this time.Protectionism will not work, because the nations of world can get along trading among themselves – they no longer need us.

What do we need to do?

• Business: stop taxing our domestic businesses engaged in manufacturing, give them a financial trade advantage as they will still be paying higher wages for manufacturing workers than their world competition; remove the health insurance financial burden from business and move it to a national health insurance system; move to a consumption tax and stop taxing the businesses that need to trade to grow so they can build and offer more good paying jobs – we need to put our domestic businesses on a level playing field with the rest of the world.
• Children:target our children by giving them all a top flight education and by challenging them with a tougher curriculum, and longer school years just as advantaged world trading nations do.
• Energy:drill for and refine our untouched domestic oil reserves in the short term; utilize nuclear, clean coal, and solar in the mid-term; develop wind, geo-thermal, advanced solar, tidal and hydrogen fuel in the long term. We need to lower the cost to produce and transport.

If we don’t rebuild our lost comparative advantage we will never hold a free trade advantage, we will continue to become a nation of past successes and a second tier nation at that. Remember it is a world economy now and the competition is fierce.

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Sounds confusing, doesn’t it. The cry around this country to “get those dastardly corporations – they are the cause of all our troubles” is so misplaced that it is almost like saying don’t put prisoners in prisons, because prisons are unsafe because there are too many dangerous people in prison.

Have I now cleared all this up? Okay it is simple, even if Senators Obama and Clinton appear to not get it. Corporations factor in the income tax rate into their cost of sales and thus the price they set on what you buy at the point of sale. So, go ahead and tax the living day lights out of these corporations, they just collect their income tax for the government from you. There is one hiccup with this plan. These corporations are unable to incorporate their income tax into the price on sales overseas or in Canada and Mexico.

Senators Obama and Clinton, please pay attention here as this is important and you act like you have never heard this before. When you tax a corporation and it cannot pass on that tax it either cannot survive internationally or it adapts by closing plants in the United States and opening these plants in another country. Are you still listening? When they do this, they create jobs in other nations and terminate jobs in the United States. This is called free enterprise. We could try to regulate corporations and force them to keep the jobs in the United States, but then they will not make any money and the investment capital will move to a company in another country and not here. It is like squeezing a balloon. Squeeze one end and it gets bigger on the other end – squeeze too hard and it breaks.

Our tax code and the fact that we tax our corporations at the second highest rate internationally may have something to do with out trade deficits and the loss of good paying jobs in this country. So yes, when we tax a corporation they bill us for the tax through domestic sales or sell us merchandise made in another country where the bulk of the profit is taxed at the other country’s favorable rate and the taxes go to the other country.

Senator Obama has a socialist solution for this conundrum. Instead of lowering taxes on domestic corporations so they can manufacture in the United States and create good paying jobs. These are jobs that make you more financially viable, jobs that make our economy healthier, and jobs that help us export to other nations. Senator Obama’s solution is to support the Patriot Employer Act. This act is right out of the socialist play book – we all know that the socialist economic system is failing all over the world. It is the second worst economic system, on how people benefit, only when compared to communism.

The Wall Street Journal quotes Peter Merrill whom they refer to as “…an international tax expert at PriceWaterhouseCoopers…” as saying “…Apparently Mr. Obama believes that by making U.S. Companies less profitable and less competitive world-wide, they will somehow be able to create more jobs in America.” http://online.wsj.com/article_email/SB120407121574294919-lMyQjAxMDI4MDI0ODAyNzgxWj.html

Honestly, they must have taught international economics at either Columbia or Harvard when Senator Obama attended. If he knows better and is sending us down the wrong path just to get elected, then he does not deserve to be President. If he does not know better, then he does not deserve to be President. The same should apply to Senator Clinton. The solution, Senators Obama and Clinton, is to help these corporations become as competitive as we possibly and then turn them loose on the world. This will create the right kind of jobs for this nation – we will not have to settle for jobs where you must learn the phrase – Do you want fries with that?

Senator Obama, drop your support of the misnamed Patriot Employment Act which is a form of reverse protectionism – it protects the world from us – and lower or eliminate corporate taxes. Yes, we all will personally pay more income tax which will be offset by lower prices for goods, since the tax will no longer be included in the price. This will stimulate domestic production of all kinds of goods and improve our standard of living by allowing us to hold better jobs. Aren’t you and Senator Clinton about jobs?

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