The Rise and Fall of the United States of America:

An Economic Crisis

Written By:
Gerard FitzGerald
Dedicated to Susan and Mark, my wife and son and of course my other children and family
and friends, whose help and words of encouragement have made this possible. I have several
other tomes in development, and they will be out shortly, I hope.

A brief bio, I have an extensive education including:

LaSalle University Business
Administration
KVCC: Computer Science
UMA Liberal Ats
SNHU Psychology
SNHU (NVU) Clinical Psychology
And of course, multiple businesses and extensive learned life experiences which includes a
continuous learning model where I learn something new every day.
 Introduction

While reading The Rise and Fall of The United States: An Economic Crisis, I do not want the
reader to think that I am a doomsayer. I am merely an observer providing my interpretation of
history. We can look back in history at all of the great countries (super powers) that once
existed, and examine the demise of their societies. None collapsed as a direct result of an
aggressor, but rather their problems originated with the lack of moral standards and careless
economic policies.

When the majority of the people in a society are content, it is easier for the government to
control them. An excellent example of this is the American Revolution. The European
powers were still trying to have total control over the colonies. The colonists had grown
unhappy and discontented about the excessive controls that were placed upon them. When
the majority of the people are unhappy, the country becomes a prime candidate for
revolution. Hopefully, the leaders of the revolt have democratic prniciples vs. communist or
theocratic tendencies.

Defined, democracy means a government by the people, exercised either directly or through
elected representatives. Also, there is a political unit with this form of government.(l )

( 1) Marger S. Berube, TheAmencamHeriiageDictionary; Boston, Dell Publishing, 1988,

p190.

1
 Table of Contents

Introduction

Democracy and Capitalism

American Politics

Industrial Revolution

The Depression

Crime: Its Effects on the U. S. Economy

Inflation in the United States

Financing the Government

Government Welfare Programs 79

The National Debt

Ethics and Morality, How They Affect Our Economy

Summary 107

Bibliography 115

ii
 2

Democracy is a very old word and its meanings have always been complex. It camc into the

English language in the sixteenth century from ... a trans lation of demokratia, Greek, from
the root words demos (people), and kratos (rule). It is at once evident from Greek uses that
everything depends on the senses given to people and to rule.(2)

To explain why American democracy differs from other democracies, such as in Britain, we
must first understand what is meant by democracy. Democracy is used to describe three
different poltical systems. In one system (found in the former Soviet Union), a government
is said to be democratic if its decisions serve the true interests of the people whether or not
those people had any say in making those decisions.

The term democracy is also used to describe a system in which all of its citizens participate
directly in making govemmental decisions. (A local town meeting is an excellent example of
direct democracy.)

Finally, democracy is also a method by which political decisions are achieved by

officeholders who are constantly trying to get re-elected by popular laws or regulations that
benefit their own constituents. This is generally referred to as a representative democracy.

(2) Phillip Green, " Democracy," New Jersey, Humanities Press, 1993, p 19.
3
It is inconsistent to consider a society to be democratic when the rights of the majority are
controlled by a minority. Generally speaking, the economy produces people. The experience
of these individuals determines their economic and social status. Individuals control their own
developement as well as control their own labor efTorts.

In a democratic culture, capitalism can only flourish with little or no regulation from the
govemment. We can see what happens when the govemment interferes in the private sector,
or in the private lives of its citizens. Two good examples of this are: the government's
control over the banking industry; and the interference between the church and state. Both
of these points will be discussed in detail later in this paper.

Every person in this country is affected by laws and regulations, some of which are
neccessary to protect the general population, and to maintain order in society. The United
States govemment has been burning the candle at both ends. What I mean is, government
officials will pass legislation under the pretense of protecting a worker's rights or safety, but
at the same time they will ignore the laws they have passed. Also, I believe that a majority of
these laws are passed just to raise revenue for special government pork projects, so that
government representatives will get re-elected.

In this paper, I will show how the United States became a great country, but will collapse
through carelessness in failing to learn from history. After closely studying the Constitution,
I believe it is possible to change the course of the country in mid-stream by adopting a
different interpetation.(3)

(3) Dillin, John, "Religious Freedom," TheChristianScienceMonitor. January 11, 1994, V86,
W33.
5

When I outlined my work and began to write this paper, I thought about the major events
and government actions or inactions that are causing the fall ofAmerica through
economic decay. I believe it is not one particular reason, but an accummulation of
neglect and reckless conduct by the government, and by the very people that the
government serves. It is important remember they work for us; it is up to us to make sure
that they are held accountable for their actions.
 4

I will also include and interpret some of the policies and laws that have had, or will have, a
detrimental effect on this country. By quietly passing laws without firm definition, the
government is slowly turning our democratic society into a dictatorship. I will also show
how the govemment has constantly violated our Fifth Amendment rights.

Whether or not the reader agrees with me, it would be difficult for anyone to argue with facts
that can be found in any library. I think it is important to point out that, I am an ultra
conservative republican, with strong religious beliefs. This does not prevent me from
believing that everyone is entitled to the same rights and personal beliefs.

The United States is, without question, the greatest country on earth. Originally, it was a
place where people could enjoy religious freedoms. They could also be free from
government interference in their business and personal lives. Today, our lives are full of
government regulation and control. The freedoms that we enjoyed have been taken from
us by a government that is becoming more like a dictatorship.(4)

I believe that people learn from example, and we have seen a lot of good and bad things
come out of Washington. It appears that a many people have learned the bad things and
perfected them, from rampant crime and religious persecution, to unrestrained abuses of
credit. Citizens are no longer required to accept personal responsibility, if they make a
mistake it was someone else's fault.

(4) Andrew Greely "Keeping the Faith," Omni, August, 1991, v 13, nll, p 6.
 Democracy and Capitalism: Can They Co-Exist

Capitalism, one of the rights protected by the Constitution of the United States, is not
without its problems. Many people complain that the "capitalists" have ruined our country.
They believe that the real meaning of democracy has been transformed. They also believe
that democracy has come to best represent the person with the most money rather than the
desires of the majority.(5)

When we exercise our right to vote, we believe that our vote really counts, and the elected
leaders will actually do what is best for the people. However, as we can tell by reading the
local newspaper that this is often not the case. We read about sweetheart deals in which one
company reaps enormous benefits for contri buting money to an encumbant's re-election
campaign.

Our country was originally founded on the belief that the people would have a say in how
the government would be run, and the govemment would not (or could not) intefere in our
private lives. This guarantee must be maintained and, if possible, extended. I am not going
to judge whether or not it is ethical for a company to "donate" money to receive preferential
treatment, because everyone does it in one way or another. Most people have used their
influence to reap some type of benefit It is human nature to do this, and the politcal arena is
no different.

(5) T.H. Mclnish, "Individual Investors," Journal-o&Qnomic-PsychQlogy, June, 1982, v2,

p125-136.

6
 7
The Politcal Action Committees (PACS) have been operating in Washington since the end
of WW Il. Corporate America realized the potential of endless profits and rising stock
prices, so they hired lobbyists to generate their buisness from the government via PACS.
PACS have used any means possible to get their way, which seems to be nothing more than
legalized bribery.(6)

When we investigate different countries and examine their political frameworks we can
find the same type of activity. Although some countries have different methods of
handling politicians caught with their hands in the cookie jar - they execute them.
Perhaps there is a lesson to be learned from this.

The stock market crash of 1929 spread fear throughout the country. Millions of people lost
huge sums of money, and the crash resultedin thousands of banks to fail. The speculation
bubble finally burst, and the economy entered another business cycle. However, this time it
was different. Now, when people become desperate, they look to the government for help,
and the government is more than willing to help.

It would not be fair to blame all of our problems on corporate America. Corporate America
is not blameless, but neither is the government. When the government institutes laws and
regulations on business that are costly or restrictive, business must look elsewhere to make
their profits. I strongly believe that the only laws that should be passed are those that
protect the public, not those that extort money from a legitimate business interest.

(6) Brooks Jackson, "Sitting Pretty," TheNewRepublic, October 17, 1988, v199, n16, PI7.
People that do not have an interest in a business concern seem to applaud when the
government attacks a particular industry that is successful. I do not think that they
 8
know what they are doing, they should be shaking in their boots because their
company could be next.

There are people in government that believe in a "moral economy" whereas, companies
are forced to provide benefits, usually at a very high cost. Hence the transfer of
manufacturing from the United States to foreign nations, where labor costs are lower,
along with a host of other expenses. I personally see this in my own state which is world
renowned for its timber. Companies can buy wood in Maine, ship it to Taiwan for
processing, and send it back (to Maine) as wood products which are then sold throughout
the state. I believe this is an excellent example of excessive government regulation.

Congress should not force their so-called "morality" on business just to get re-elected.
We are supposed to be free from government tyranny. Does the govemment really care
about the people? Or are they instituting regulations for the benefit of, for example, the
insurance industry which receives large sums of revenue through premiums?

The people of the United States once directed their forms of govemment, to establish
justice, to promote the general welfare, to secure the blessings of liberty, and to protect
its citizens from violence. The purposes for which people enter into society will
( should ) determine the nature of the social compact. The nature and ends of
legislative power will limit the excess of it.
There are certain vital principles in our free republican government which determine and
overrule a flagrant abuse of legislative power; to correct injustices by positive law. The
Constitution contains certain protections that secure life and liberty, however, Congress has
been known to pass laws that they know are unconstitutional, but pass them anyway, and
wait to see if anyone (law abiding citizen) will challenge them.
 9
It has been the policy of all of the states, which have individually framed their own
constitutions, to define, with precision, the objects of legislative power. If any act of
Congress, or the legislature of a state, violates constitutional provisions, it becomes void. If,
on the other hand, any legislature passes a law within the general scope of their power the
court cannot declare it void merely because it is contrary to the principles of natural justice.
(7)

Our forefathers had the foresight to protect us from excessive government control or
regulation through the fourteenth amendment. This Amendment clearly states that, " No
State shall make or enforce any law which shall abridge the privileges or immunities of
citizens of the United States.

The Supreme Court has frequently substituted it's judgement for that of Congress and State
legislatures concerning economic regulation. The two most important issues here are the
Fifth and Fourteenth Amendment. The Court has constantly interferred in labor law, price
regulation, and limitations on entry into business.

(7) William B. Lnckhafi, " Constitutional, Rights and Liberties," SLP.aul, West Publishing,
1986, p63.
The Court and Congress held that the 40 hour work week was in fact constitutional, and
premium pay must be paid to workers who work over 40 hours week. As a manager, and
a worker in a business, I disagree with the 40-hour work week. From my point of view,
there are168 hours in a week, and the forty hour work week makes up less than 25% of
that time.
 10
There have been many attempts by the government to control business further by
instituting laws that forbid union discrimination. The government has, in effect, seized
corporate America (unionized companies) and has given control of it to the workers. This
is in direct violation of the Fifth Amendment, whereas the seizure of private propeny for
public use (although limited) is illegal.

The liberals in government, with their so-called pro-labor stance are sickening. As I
recall, the labor union movement had its origins in socialist and communist countries.
While business needs to be fair to its workers, the workers should not have the right to
legalize extortion. Afterall, if I have the money, and I have someone working for me, I
would not let the workers tell me how or when they will or will not work.(8)

The government has gone even further, with the regulation of wages. Minimum wage was
set, rather than let the market determine what wages should be. Wages should be left

(8) Michael Flug, "Organized Labor," Labor History, Summer, 1990, v31, n3, p 322.
up to the individuals involved and not the bureaucrats in Washington. But they havc gonc
one step beyond what is reasonable. I am referring to the Davis Bacon Act which stipulates
that when a company has a government contract valued over $2000.00, that company must
pay the prevailing wage. This has cost the taxpayer untold billions of dollars in cost
overruns.(9)

Price regulations, quotas, are yet another area where the government has attempted to
control business. The only winner in this situation is the large farmer or politician up for
 11
reelection. This type of legislation has cost the individual taxpayer thousands of dollars
annually in increased food costs. Where else but America does a person get paid not to
grow food?

I believe that the market should set prices by the basic principle of supply and demand. It
only serves as an injustice to the people to haveprice regulations. An example of this is the
price quota that the state of Maine has implemented on the price of milk sold in state. There
was a company that wanted to sell milk to the consumer at $ 1.75 per gallon, but because of
the powerful farmers in the state, that company was forced to sell milk at $2.35 per gallon

As we have read, the Fifth Amendment limits the government's power concerning eminent
domain... "nor shall property be taken for a public use without just compensation. " The
due

(9) Ibid.
process clause has long been held that the state compensate the owner when it takes
property for a public use. The government has constantly abused the public's rights
through this loop hole. They claim that they are acting in the public's best interest. There
have been countless abuses of eminent domain, whereas one company with powerful
political ties can influence government in taking another persons property without any
legal recourse.(10)

These are just some of the loopholes that exist in our country that have caused dissent
and distrust of the govemment. It seems that, whenever a person or corporation discovers
 12
an innovative concept that proves to be very lucrative, the government wants a piece of
the pie. They do this through regulation, specifically, taxation.

Our forefathers came to this great land to escape the tyranny and oppression that existed
in Europe. Whether it was economic or religious persecution, they had had enough.
Throughout history the govemment has slowly encroached on our Constitutional rights,
and have severely limited our economic rights, including capitalism.

Capitalism, although it is not a perfect form of government, proven to be the best. We

must stop the government in their fracks, as Americans, and take back our rights. If we
do not, one day we will not recognize our country. Why should someone be penalized for
showing initiative by imposing excessive taxation and regulation?

( 10) "Constitutional Law," HaryardLawReyiew, December, 1995, v109, n2, p 524-529.

If this country continues on its present track we will cease to be great, Democracy and
capitalism can co-exist as long as govemment is kept in check. I am often amazed at
peoplesr reactions when a business is penalized by the govemment. They appear to be happy
with the attitude that they got what they deserved. Sooner or later the government will be
knocking on someone elses door. Will they get what they deserve, or will it be a dictatorial
govemment that wants to usurp their Constitutional rights? If this does happen, who does
one turn to?
 American Politics

In the past two hundred years, America has changed from a (primarily) agrarian society to
an industrial and technological powerhouse. In the 1700s, most people lived on fanns and
provided for their own needs; whereas today most people live in and around cities and earn
their living by providing goods and services to other people or companies.

One of the restrictions of American life over the past couple hundred years has been the
government. Somehow, the government has gone from an organization that is supposed to
help its people to a minority-controlled group that greatly regulates our lives - from the
moment of birth to the day we die.

The government does have good intentions. Through the use of OUR tax dollars they do
provide services that are meant to help the communities in which we live. From the local
police force to social security, the government has developed programs and laws that force
the average person to increase their reliance on the govemment. I've spoken with people
who, when faced with a crisis, say it's alright, the govemment will help, rather than
believing that they can do it by themselves. It is amazing how fast the government has been
able to destroy the will of the people.

Although the government is restrictive on everyday life, its role is constantly changing.
Our founding fathers could never have forseen the excessive control that the govemment
exercises over the economy, or their intrusive tendencies in business. It is important

14
 14

that we understand the government and its institutions so that we may be able to determine
how they might respond in the future.

To help resolve certain politcal issues that affect Americans, we must determine what
government should do, and hold it accountable for its actions. Most Americans would not
willingly live under a different kind of government. Americans still debate the proper role
of government in society, and what role, if any, it should have in our economic and
personal lives.

The basic idea that the government should play a limited role in the lives of its citizens
developed in the 17th century. Reformers advocated a society in which individuals would be
free to live their lives as they saw fit, with few, if any, restictions imposed by the
government or, most importantly, the Church. At that time, monarchs had absolute control
over the people, and did not have to answer to anyone for their actions. Since the people
believed the kings were representatives of God, they had to submit to their rule. The rulers
made the laws, imposed taxes, and most importantly, had absolute control over economic
activity.

The people became tired of the control that the government imposed over them, and
developed several new principles which would later form the basis of our Constitution: I )
There would be no taxation without representation, and the people would dictate how tax
revenues would be spent. (Il)

( I l) William D. Richardson,"The Constitution," November,

1991, VB, 1B, p 275.
2) That the ruler could stay in power as long as the people wanted him/her to. 3) That the
people would have certain freedoms to think, speak, or, most importantly, worship as
they saw fit. 4) That the people would be free to live as they wanted without government
interference. 5) That the government would have limited powers.(12)
 15

The founding fathers who had written the Constitution observed these principles. During the
1800s Americans generally believed that society would be best served if the government
played a limited role in social and economic life. Without interference from the government,
individuals were able to transform natural resources into a thriving and productive market.
The national government's role was to protect citizens from external enemies.

However, by the end of the 19th century, a certain group of reformers began to question
the role of the national government. The Constitution gave the people control over the
government, but personal freedoms were threatened by the new industrial corporations.
Many industries were soon dominated by a single firm who had no competition, and
could therefore could set their own prices.

By the late 1 890s, reformers proposed that the role of govemment should be expanded
to check abusive corporate power, and to protect the rights of the worker and the
consumer. Reformers began to work for strict legislation to stop the monopolies that
existed in all industries at the time, including steel, oil, railroads, and food.

(12) Ibid.
Suddenly, there was a movement to have the government intervene on behalf of the people,
a major mistake. A national reform crusade started and several governmental agencies
began through the Social Security Act, the National Labor Relations Act, and the
Agricultural Adjust mentAct. The Securities and Exchange Commission (SEC) also was
initiated, and began to regulate financial institutions. I believe that, although certain laws
and regulations are needed, the government has gone too far, as I will show. The power
should rest with the people not with the govemment. (13)

From a democratic perspective, the important issue is how effectively the people can control
their leaders. As defined earlier, the word democracy comes from the Greek word demos
 16

and means "rule by the people." In ancient Greece, interested citizens would meet in the
local square to discuss and resolve public issues. In larger societies, citizens tend to
participate less in the political arena. In modem America, the people generally partocipate
only in the election of their leaders. People generally participate in politics only when
election time comes around and they pass judgement on their leaders by voting for or against
them.( 14)

In theory, American citizens do have considerable control over their leaders, and the
direction in which the government can go. On the other hand, military dictatorships base
their power on might, and would-be rulers will fight to the death for the right to become
leader.

( 13) Stephen G. Breyer, "Afterword," Yale-I..aw-.loumal, July, 1983, v92, n8, p 1614.

( 14) Roland Larson,"Democratic Inevitability," Winter, 1993, v34, n2.

In the United States, people belong to many different social groups which are not
controlled by the government, but these groups do have considerable influence over the
politicians. These groups, also known as political action commitees (PACS), often donate
huge amounts of money and often are the deciding factor in whether or not laws are
passed. One of these groups is AARP, a group of retired people that is extremely powerful,
and often has Senators and Congressmen tripping over each other for contributions to their
re-election campaigns.

To maintain a stable society, people must agree to disagree, and to resolve their
differences within the legal framework of our polical institutions. This means extending
rights to everyone, as guaranteed in the Constitution, the right to become a part of the
 17

majority where the political decisions are made. Democratic institutions often require an
attitude, "you scratch my back and I will scatch yours." There is so much excessive pork
that comes out of Washington as a result of this behavior.

To understand the origins of the United States Constituion, one must look at the
beginnings of the country, back to 1787, and consider the European control that existed.
It is also important to understand the early Americans' interpretation of the Eng lish
Constitution.

Early in the 13th century, English kings found that they could no longer finance their
foreign policy, and conduct certain military campaigns without raising more funds. In the
year 12ff), King Henry Ill was at war with France, and desparately needed more funds to
continue.

Consequently, he called his knights together to come up with a scheme to raise the
additional funds. Henceforth, democracy was born (at least in theory).

The new Americans found certain key items in the unwritten English constitution: 1 )
meaningful representation; 2) limited government and; 3) the primacy of common law,
where the laws were written and not abritrary.( 15)

The early colonists tended to distrust the government because the leaders were appointed by
the king of England. The colonists placed their trust in their representatives, which increased
their say in how the government was run. By having the power to elect their leaders,
colonists were able to control what their leaders did or did not do.
 18

There was much conflict between the governors and legislators, and this led to distrust of the
English controlled govemment. After the French and Indian Wars, England had begun to tax
the people to death and this led to a desire for independence.

"The colonists drew upon their religious convictions that all humans possess certain human
rights that cannot be abridged by the government." James Wilson, one of the early leaders
of the co!onies, said: "All men are, by nature, equal and free... no one has a right to any

(15) "Constitutional Law," HaryarWLawReview, December, 1995, v109 n2, p 524.

authority over another without his consent ... all lawful government is founded on the
consent of those subject to it... such consent was given with a view to ensure and to
increase the happiness of the governed, above what they could enjoy in an independent
and unconnected state of nature. The consequence is that happiness of the society is the
first law of every government. (16)

This was considered a radical doctrine, because colonists began to perceive England as an
alien government that was violating their basic rights. Therefore, revolution could be
justified. England started to take action against the colonial militia outside Boston, but it was
too late. The battles of Lexington and Concord were the final break. On June 7, Richard Lee
of Virginia introduced a motion that "these United Colonies are and of right ought to be, free
and independent states. "

On July 4, 1776, the Second Continental Congress formally adopted this Declaration of
Independence. After independence was declared, the individual states began to draw up
new constitutions that protected the rights of the individual.
 19

The Constitution dictates the basic structure of the American Government. It also
specifically limits the national government to the powers given to it. The national
government is, however, the dominant leader in the area of rights and of power. As
described in the Tenth Amendment, states may excercise certain powers as long as they do
not interfer with the laws of the national govemment.

( 16) Alpheus T. Mason, and Richard H. Leach, "In Quest of Freedom," Prentice Hall,
Englewood Cliffs, 1959, p56.
The Supreme Court was reluctant to enforce the Articles of Confederation, and no one was
really sure what role the national government should play. It was not until the early 1800s
that Chief Justice, John Marshall, used his interpetations to place national power on a solid
footing. During his leadership, Marshall was able to lead the court to numerous decisions, in
favor of the national government.

As history shows, the Supreme Court was not always a strong supporter of national power.
During the period between 1870 and 1935, the court sided with the states in their decisions.

This made some leaders angry because some of their so called "power"' was taken away .

Then, about 1937, President Roosevelt wanted to push his New Deal through Congress, but
was stopped by the court. Under extreme pressure, the court then refused to hear any cases
that had anything to do with the New Deal.

The Great Depression led to a rapid expansion of government aid programs. Originally, the
national government simply made large sums of money available to the states to help with
massive unemployment. Later these programs were given specific functions; grant-in-aid
assistance programs, which survived the New Deal, are basic entitlement grants that provide
assistance to the blind, disabled, and dependent children ( also known as Aid to Families with
Dependent Children).
 20

Unfortunately, President Johnson favored these programs and the power that was given
to the national government. With his Great Society program, Johnson tried to re-make
American society, giving away massive amounts of money through government grants.
These programs doubled under the Johnson administration.(17) The continued use of
grant-in-aid programs has had serious political repercussions for the national
government.

Through grant-in-aid programs, the Johson administration provided funds for education,
housing, health, and the poor. It was his " War on Poverty." Headed by the Office of
Economic Opportunity, the Johnson administration tried to channel funds directly to the
disadvantaged. The end result was that the poor became dependent on the government, and
hopefully would vote for the leaders that provided funds for these programs.(18)

I believe that these programs started a whole generation of people who would
become reliant on the government and lose any self respect that they might have had.
These people were tumed into numbers and no longer considered people.

( 17) James W. Fosset, and Kenneth T. Palmer, "The Changing Politics of Federal
Grants,"
Brookings Institute, Washington D.C., 1984, p. 6.
(18) Piven, Francis Fox, and Cloward, Richard A. , "Regulating The Poor," Vintage
Books, New York, 1971, p 222
These grant-in-aid programs have caused considerable problems for the states that
participate in them. Government regulation has forced states to swallow their "pride" and
beg for this money. Although the money might not be needed, it is there for the asking.
 21

There are, of course, strings attached. For instance, if the money is allocated for paint, the
state is unable to buy a fire truck.

The political views of Americans tend to be liberal, in that Americans support private
property, free enterprise, freedom, and individualism.(19) Amer icans often take these rights
for granted. Americans often agree on certain democratic rules of the game. However many
people in America, are often intolerant of certain groups that they do not agree with. For
example, the on-going fight for abortion rights in this country has proponents both for and
against it and some will go as far as murder to make their ideology known.

During the late '50s, Americans had a high level of trust in the federal government, but that
trust began to deteriorate rapidly in the mid '60s. One cause of this was the passage of the
Civil Rights Act, which many whites as well as blacks believe that the government had
pulled a fast one.

A number of news commentators contend that the American economy is stagnating and will
probably remain sluggish over the long run.(20) This is occurring as a result of the large
federal deficit, and increasing foreign competition.

(19) Eward C. Banfield ,and James Wilson , "City Politics," , Vintage Books, New York,
1963, p64.
(20) Stevens, William, "Governors are Emerging as a New Political Elite," New York
NewXorkTimes, march 22, 1995, PA 16.
As inflation continues, people become less optimistic about the future of the country.

Voting based on social class will increase as the economy weakens. Economic problems
have other effects; people believe that as the economy falls they will lose something. If
left unchecked, this will cause people to make mistakes when it is time to vote because
they will be voting on their emotions and not on the facts.
 22

Political participation generally refers to peoples' actions that have some effect on
govemment. People have many different reasons for participat ing in political
campaigns. The primary reason is economics. People often will vote for the candidate
that "promises" to return to them the things that the government has taken, or the things
that they believe the government has taken.

The media also plays a major role in politics today. People often believe what the news
tells them every day in their own homes through the idiot box (TV). Politicians have now
become experts at using the media to their own benefit. They can now manipulate the
media to control public opinion. Along with their privileges of being an encumbent,
politicians have unlimited opportunities to influence people. Freedom of the press is a
powerful thing. Although the govemment will tell us one thing, they will often use
censorship to contröl us, and our opinions of them. For example, recently when the latest
un-employment rates were posted, the rate reported was at least three points below the
actual figures. If you believe that the economy is in great shape you are likely to go out
and spend money.

The United States has a two party political system. Most countries have multiple parties, all
in competition for the votes. It is easier for the gover nment to operate in a two party system
because they can compromise, and are better able to get things done. Parties in America,
generally, are structurally centralized, therefore it is difficult for the leadership to punish the
turncoat who has decided to vote with the opposition. (20)

The Republican party became the rival of the democrats, thanks, in part, to President
Lincoln. President Lincoln was largely responsible for the rapid economic expansion in this
country, including urbanization, and the industrial revolution. The power base moved from
 23

agriculture to business, even though problems existed between the new powerful business
interests of the north, and the old rich farmers of the midwest.

America, like other countries, is not perfect. Sure, politicians do not always do what the
constituents want them to, but it is possible to sway their opinion or even the way they vote.
This is done with the infamous political action committee. Unfortunately, it is possible to
buy votes in Congress. Where have ethics gone? They call it a campaign contribution for
reelection.

With the everchanging political landscape in this country, it is imperative that we maintain
the basic foundations that have been laid out for us in the Constitution. History will repeat
itself. We must keep the government in check and not let our leaders encroach on our rights,

(20) Ibid.
more than they have already. I believe they have done this, and are doing it by excessive
taxation. Think back for a minute to the events that led up to the American Revolution.

Am I wrong?

American companies produce and exchange a multitude of goods and services, and
government is an intergral part of this activity. The government builds highways, maintains
the schools, and basically controls the infrastructure of this country. The government also
manipulates the strength of our currency through the control of certain key interest rates.
Every time the government makes an economic decision, some people will make money
while others will loose money.

Throughout our history, people of this country have migrated from the country to the city
where the jobs are. The leaders in Washington must help the economy to maintain stable
economic growth. Can the lawmakers in Washington effectively manage the economy?
 24

They can, in the sense that we now know how to use fiscal policy to control an inflationary
economy. The problem comes from excessive government intervention, whereby the
leaders in Washington often hate to see people or companies that are successful without
their help, therefore they will introduce legislataion to establish control,

i.e. taxes.(21)

(21) William H. Milo, "Congress Gets Its Turn to Reform Regulation," Industry-Week,
1981, 009, 20, p17.
The budgetary process is an extremely important political battleground. Leaders in
Washington fight over the distribution of wealth and income. There are certain peoplewho
argue that the government should use its power to control the wealth of the masses. The
federal income tax, developed through the Sixteenth Amendment, is a progressive tax - the
more you earn the more taxes you pay.

Somehow, the government got the idea that it was supposed to re-distribute the wealth in
this country, by taking from the rich and giving it to the poor. Although I, personally, am
neither rich nor poor, I find it disturbing that if you are successful the government will
penalize you for your efforts.The United Sbtes is a great country. We as a people have rights
and laws that are suppose to protect us from big government. Do these laws really protect us
or do they hamper on us? While I believe that every one is entitled to certain rights and
protections, I do not think that these rights should be extended into the private sector.

We, the people, must maintain, or even extend, the separation of the government and the
people in our private lives. I believe should also include the economic sector. When the
government orders you to hire a particular person, or what to pay that person, you are no
 25

longer free, but, in essence, become an employee of the state. If a company and a person
agree to certain conditions for employment, the government should not interfere.

(22) Brenda Lloyd, "Minimum Wage," Daily-NewsRecQ1d, 1990, v20, n70, April 10, p2.
 The Industrial Revolution

The Europeans who had first discovered, then settled, America had begun to focus on its
untapped abilitities which could be exploited for humankind. This attitude went back a long
time. It was recorded as early as 300 BC when the Egyptians were building the pyramids.
The early Christians believed that God had given them dominion over everything on the
earth and they were to use their talents accordingly.

The development of the sciences and of technological advances in the western world grew,
in part, because of our urge to know God better and also to exercise the dominion that He
had given us. However, history shows us that, in certain societies, technological advances
were not pursued because their economies were based on slave labor, and they had no
interest in saving time for their workers.

In Europe, however, the Christian church developed an attitude of productive labor, as well
as the devices to enhance it. During period 1000 AD to about 1500 there were many attempts
to harness natures power. However, there was, and still is, a belief that if something is not
broken then do not fix it. Innovation is a gamble that some people refuse to take because of
the fear of the unknown.

Ancient England that many colonists had left for America was still stuck in a time warp, that
is, the dark ages. England was still an agricultural society, and they did not have the
knowledge

28
 27

to maximize the lands potential. Transportation to and from the major cities and towns v•tvas
usually a long and difficult journey, travel was mostly by horseback or river boat.

Manufacturing establishments were foreign to England and, up to that point in time,

England's only export had been wool. For most of their manufactured goods, England had
become extremely dependent on other nations. Other nations were so advanced that the
English began to lure foreign nationals with the promise of money and property if they
would come to England to teach the English how to manufacture goods.

In the Americas, the Europeans had been extremely lucky because the Indians were widely
scattered and divided into many factions. They were at a technologoical disadvantage with
the Europeans. The technology brought to the United States was basically medieval. A
significant problem the colonists faced was the reproduction of tools and manufacturing
techniques that needed to be maintained at a high level.

As we look back at the colonists, and examine their tools and machines, we are amazed that
those tools even worked. But those tools proved to be invaluable to the people that used
them. A primary concern for migrating Europeans was to bring over enough tools to ensure
survival in a foreign and hostile land. They also brought a huge storehouse of knowledge that
they were able to adapt to the new land.
As immigrants raced to America, the Americans were waiting for them to collect as much
information as they could on new processes or even re-designs on existing machines. To
this day, Americans continue to borrow technologies from other countries and use them
to the benefit of all and/or for profit.
 28

It was the rural areas from which the English colonists came to eventually settle on the
east coast of America. In the new country, they attempted to duplicate the practices of
their former homeland. Some tools were brought with them, others were forged once
they arrived. This proved to be the general practice for the next 300 years.

The country in which they arrived was not an empty wildemess. It was inhabited by Indians

who had been here for thousands of years. In the New England region, the

Indians moved from area to area to suppliment their needs. In southern New England

women accounted for about 60% of the labor to produce food through agriculture.

One of the technologioal advances that had a tremendous impact on the natives was the
firearm. There were laws passed that made it illegal to instruct Indians on the operation of
guns. Gradually, greed took over and some of the colonists began to sell the Indians
muskets. The Indians suddenly became experts in the use of firearms.

On their arrival to America, the colonists discovered that the weather was similar to

Englandts, which made farming quite easy. In their initial migration, the colonists transferred
their existing technology, including crops, implements and livestock. There were no
immediate additions to the traditional tools that they had, however, since the new world had
huge amounts of timber, they began to improve their axes.

As the colonists began taking this new land for granted, they placed greater demands on the
land to increase crops to eat and to sell. One major problem that the colonists failed to
identify was crop rotation, which must be done in order to preserve the quality of the soil.
 29

Cotton, one of the most plentiful crops growing in America, could be made into clothing. It
was an extremely time consuming process, until a man named Eli Whitney developed the
cotton gin which vastly improved the processing of cotton by at least 1000%. At this point,
one might say that the industrial revolution was born.

One interesting fact to note is that the American Revolution and the Industrial Revolution
occured at the same time. During those politically unstable times, the steam engine was
improved, the first steam boat was built, and the iron industry was revolutionized by the
introduction of fossil fuels. People now realized the huge profit potential and began making
in-roads to technology.

One of the industries that received a huge boost was engineering, particularly with respect to
transportation. America did not have an adequate infrastructure to support its rapid
manufacturing expansion that was about to take place. As a result, civil engineering was
born.
The need for hazard-free travel was vital for the economic survival and expansion of the
United States. From the stagecoach to the steam locomotive, rapid innovations were made
in the transportation sector. Not only were people interested in improving the quality of
life, but they also wanted to make more money under the free enterprise system. The
government realized the importance of interstate commerce, and made it easier for
investors to make money. Not only would a few people make a lot of money but the price
of important commodites would drop to the affordability of the average family.
Everyone benefited.(23)

The new manufacturing systems in the United States were innovative, while the
Europeans continued to manufacture one item at a time. The new entrepreneurs in
 30

America took a stand, and decided that the best way to run their factories was the
assembly line. This method meant the machines, or jigs, would do most of the precision
work, thus they could use semi-skilled labor while maintaining quality. The benefit of this
in any industry is that the cost of goods sold is lower and the net profit is higher.

When the Constitution of the United States was first written, the founding fathers had the
foresight to include an article that allowed people or companies to apply for, and receive,
a patent for their work or inventions. At the urging of George Washington, Congress
passed the first patent law.

The race was now on for people to get a patent issued. The ability to get a patent might

(23) Slobodan P. Simonovic, "Challenges of the Changing Profession," JournaL01Profes —

, 1992, v118, nl, Jan, pl.
determine who would be the next millionaire and although some leaders in Washington were
reluctant to give this right (monopoly) to one person, they did finally give in, and this proved
to be a catalyst in the rapid expansion of industry.

During this time, inventors were not the only people that were trying to receive patents, or
making breakthroughs in new technologies. Now there was a new group of individuals on the
scene. They were the engineers. These engineers were professionals that cared about the
quality of their work, and the capabilties, education, and moral character of other individuals
who would call themselves "engineers. "(24)

Agriculture, during the1800s, was the predominant occupation of most Americans. Almost
all of the work that was done was accomplished by hand, with some help by oxen or work
horses. But by 1900, a major portion of the work was now mechanized.
 31

Farming was often a difficult, and dangerous vocation. This was good news for the
entrepreneurs of the time. After examining the farmers at work, they developed the steel plow
which saved hundreds of man hours that had been necessary to clear a field. Subsequently, a
farmer was able to enlarge his farm,resulting in a larger yield, which he could then sell.
Labor costs were reduced, thus increasing profits.

(24) Ibid.
During the late 1800s, most Americans considered themselves to be agriculturalists, but
this too would change. People wanted to move closer to the cities, with all of their
amenities, for an easier life. This transfer of population from farms to the cities began
the H urbanization" of America.

Certain regions of the country became centers of manufacturing, specializing in products

that were unique to that area. For instance, the city of Detroit and surrounding areas
became the world's capitol of automobile manufacturing. This practice continued for
many years, but as Americans would soon find out, it could prove to be devasting to the
economy if that particular industry faced hard financial times. We can see the results of
this by looking at the city of Cleveland, Ohio. After the rubber companies started
tocelose and move their operations unemployment soon rose to over 40%.

As the cities grew, the demand for city services increased. Clean water, police protection,
transportation, and sanitation became neceessary services. With more and more demands
placed on the government, people were placed in a difficult position. A lot of them came to
the city because of the preconceived notion about opponunites for work. Unfortunately,
they soon found out that they were wrong.(25)
 32

With so many people in the cities, there were problems with housing. Landlords stepped in
to provide some relief, but the people realized that the farm animals they had left back

(25) Michael Haines, "Housing Demands in the U. 1992,

v31, nl, Jan., p99.
in the country had more space in the barn than they had in their apartments. Overcrowding
was common, conditions worsened. With the use of bricks and mortar, buildings rose from
two or three stories to twenty or thirty story structures which would house thousands of
people.

(26)

America continued to prosper from all of the resources that had come from Europe. Now
there was a trend to expand these benefits to the western states. The industrialization of the
west was a direct result of the revolution in the east.

In the west, there were fantastic opportunities available to entrepreneurs, miners, and
homesteaders. The land was rich and fertile, with vast amounts of timber, and it seemed an
unending supply of gold. Although a lot of gold was found on the surface, including river
beds, prospectors had to devise ways to get it out of the ground. This is where American
ingenuity was put to the test. The dilemma of how to safely get the gold out of the ground
was solved, and it led to the birth of the mining industry.

Science and technology have never really been separate from each other. No tool or
technique has ever existed without the other, although some might not have understood the
pair. As a result, many processes that once were widely practiced are now concentrated in
the hands of a few.
 33

American industry was soon faced with various production problems, how to efficiently
organize companies and workers into competent and profitable enterprises. Scientific
research was utilized to solve the difficult technical problems. Corporations were organized

(26) Ibid.
to generate profits rather than goods. Unfortunately, in the quest for profits, the quality of
the services and commodities suffered, and the consumer could do nothing about it until
Americans started to purchase from countries such as Japan.

Throughout the industrial revolution, thousands of diverse products became available to

to make peoples' lives easier. People would no longer have to work 12 to 14 hours per
day, their work could now be accomplished in eight or 10. There are many benefits to this
way of life. On the other hand, there are many disadvantages to industrialization.
Something is lost when people become dependent on a machine or tool. They no longer
have the desire to think, the machine will do it for them.(27)

We realize now that there were many benefts to the industrial age of the 1800s. This was a
prosperous time for our country, making many people extremely rich, however, it also
dramatically increased the standard of living for most Americans. The age of consumption
had arrived. There was an expectation that factories would keep on producing and people
would continue to consume. This would prove to be disasterous for the world.(28)

I will show how this affected us and the consequences resulting from the lack of SELF
regulation, not government control. Perhaps we could say that consumerism is like a drug
requiring strict government control, but I believe that without evidence of fraud or
criminal wrong-doing, the government has no place in any business, at anytime.
 34

(27) Carroll W. Pursell, "The Machine in America," Baltimore, John Hopkins University
Press, 1995, p87-94.
(28) Ibid.
 The Depression

The Depression that occurred in the early part of the 19th century was a dramatic economic
downturn for this country. It put millions of people out of work, caused countless business
failures, and was a catalyst for government intervention in our private and business lives.

There was a certain amount of arrogance in the people of the 1920s. Technology was the
anchor of the economy, and affected every American. While wages were low, it was high
unemployment that signaled the start of the Depression, descending on this country in
October 1929. During that next year the rate of unemployment went up a staggering ten fold.

Throughout history the economy has been cyclical. Economic expansion cannot go on
forever without correction or realignment. If business did not have its problems, such as
labor, credit, sales, or even government intervention, we would be living in a perfect world,
and we do not. I will show and explain the causes and effects of the Depression, and how it
changed the political landscape of this country for at least 50 years.

Although the Depression affected the entire world, it was the United States that felt its
effects most. After World War I, the people felt a great deal of cynicism towards the
government and business. Soon afterwards, people began to question morality, ethics, and
even personal and business finances. People started to exhibit strange and bizarre types of

37
 38

behavior. For the first time, Americans began to over spend their incomes and took on
excessive debt loads that greatly exceeded their incomes. Combined, these forces
produced unprecedented inflation of prices, especially stock prices.

Prosperity was not without its problems. There was a mild recession in the mid 1920s,
which should have raised red flags to cut back on excessive debt and speculation in the
stock market. By the late 1920s, the market started to decline, then on October 24, 1929,
stock prices plummeted. Optimism was replaced by pessimism, business firms started to cut
back production. People wanted to protect their money so they started to make withdrawals
from their banks causing a run on the banks which started to fail in the thousands. These
events helped to throw the U. S. economy into a deep depression.

Capitalism is generally characterized by economic crises with recessions and depressions

every few years. Capitalism is also vulnerable to cyclical crises because it has: I )
Production for markets; 2) Production for private profit; 3) Use of money and credit. The
United States's economy has, and will continue to, suffered from recurrent downturns. I
will show the causes of the Depression and the solutions that the government used to try to
bring this country back to economic prosperity.(29)

When business produces more products than it can sell it creates a back log of inventory,
that eats up storage space and takes away from the profit because of high credit costs.

(29) Lee Clark, "Capitalism Is Richer," 1989, 07, nl, Nov-Dec, p17.
When a business has excessive inventory on hand, it is generally forced to cut production and
lay off workers. This, in effect, creates a ripple effect The workers who are laid off stop
spending, therefore, the companies that were supplying the workers are forced to lay off
people as well.
 37

During the Great Depression, millions of people suddenly became involuntarily

unemployed. The unemployed did not have enough money to buy desperately needed food,
clothing, and shelter. Unfortunately, human misery and suffering affects virtually everyone,
especially when the economy is experiencing a contraction.

All capitatlist economies suffer from fluctuations in business activity. A business fluctuation
can be defined as an expansion in business activity followed by a contraction in economic
activity, and generally does not follow a pattern. However, the same sequence of economic
events can be found in every business cycle.(30)

Society suffers many types of losses from the contractions that do occur during business
cycles. Thousands of manufacturers stand idle, millions of workers are unemployed ,and
society loses because little, if any, expnasion takes place during these cycles. For that
reason, any depression or recession will lower long term growth rate.

(30) Ibid.
During every contraction period, many businesses cannot sell their products at a profit,
consequently, the number of bankruptcies skyrocket, the number of new ventures
declines millons of small businesses are forced to close, and even some large
corporations are forced to close.

Without a doubt, the greatest economic crisis of this century is the Great Depression.
Although the Depression lasted throughout the 1930's, there remain startling facts that
should not be ignored. They include the complete collapse of the banking system, a real
estate market crash, a rapid decline in industrial output, and severe price deflation.
Wholesale prices fell by almost 35%, and investment dropped an amazlng 90%. Although all
industries faced declines, some key industries were devastated, namely, iron, lumber, and
auto production, which fell

While we can see that there was a modest recovery in the mid 1930s, the economy faced
another decline that would last until the mid 1940s. Increased demand on the military
sector was the factor that finally restored the economy.

With the economy of the United Staes in a shambles, the people felt they had to place the
blame on someone other than their own short sightedness. So the people blamed the only
person that could be the fall guy for everything, President Hoover. Govemor Roosevelt

(31) Theodore Rosenof, "Dogma Depression, and The New Deal," Kennikat Press, Port
Washington, 1975, p35.
of New York would soon become President, with his promise of a chicken in every pot,
and a New Deal for the people that were suffering from the effects of the Depression.

Note: This is probably where the socialists and liberals were able to gain a
stronghold on the direction of our country. Call these programs whatever
you would like, but social security, welfare, medicare, and a host of other
government giveaways were ideas that were borrowed from Karl Marx.
The rationale was that the people were too stupid to think for themselves
and, therefore, it was up to the govemment to step in.

In no way do I want to seem indifferent or ignorant to the suffering of the people

experienced during the Depression. I have personally spoken with some who experienced
the Depression, first hand, and I have learned valuable lessons from them. They also have
told me of the suffering that they endured. For example, my mother tells of stories
 39

the people that came to see her father, who was a doctor, and of their inability to pay for
his serices. He had pity on them, and took whatever they could afford, even if it was a few
chickens or perhaps some fmit, the gesture made the people feel they had contributed.
 40

The New Deal policies destroyed whatever confidence had existed, preventing investment,
and delaying recovery. Among these policies were:

I ) Deficit spending
2) Excessive taxation

3) Currency manipulation
4) Over regulation of business.
Moreover, the very uncertainty surrounding the New Deal experiment compounded the
confusion.(32)

The New Dealers believed that the country could pull itself out of the Depression with a
redistribution of the wealth. They also believed that this was the cause of the Depression.
The key to recovery was to increase the purchasing power of the people. The idea was
that if people recieved higher wages they would be in a better financial position.

Higher wages, shorter working hours, lower prices, farm programs, old age pensions, and
taxation were among the means to redistribute income and purchasing power.(33 )
Although this theory is good in principle, it ignores the problems - people start a business
to make money, if their costs are higher, they raise their prices - the result is starting at
suare one. But, when you think about it, this was nothing but a ploy by the government to
extort more taxes from the people to pay for their ever expanding socialist experiments.

(32) Ibid.

(33) Ibid.
If I am in business and I have a seven to eight percent net profit expectation on my total
out lay then I must raise my consumer prices to maintain it. There comes a point in a
business when operating costs such as labor, insurance, and high taxes make a business
 41

unprofitable, the business owner discovers that working for someone else is more
profitable.

Another remedy, with deep roots in America's past, looked to a monetary formula to
resolve the Depression . As the crisis deepened, so too did the call for government
intervention to print more money. The idea of increasing the supply of cash to benefit
everyone, resulting in less debt ,increased prices, and would ensure economic recovery.
(34)
What were the government leaders thinking when they proposed this idea? This process
leads to higher prices, actually increases unemployment, and translates to higher inflation.

For instance, if we increased the money supply to the point that everyone in America had
one million dollars in cash, what would it be worth? If only a small percentage of people
have a million dollars in cash what is it worth?

President Roosevelt's political skills produced the most remarkable legislative

accomplishment any American President has ever made in so brief a time. The House
passed 11 measures in a special session, with a total of 40 hours of debate.(35) Yet
Roosevelt was soon facing a serious crisis. Farm income had dropped to about one third of
the1929 rate, quick action had to be taken if he wanted to bring the country out of the
Depression, and to keep the powerful farm lobby happy. So the Agricultural Adjustment
Act was passed, which gave the fanner price supports and guarantees. Farmers could now
get paid for not growing crops - a form of welfare.

(34) Ravi Batra, " The Great Depression", 1987, Simon Schuster, New York
(35) Ibid
Although not all of Rooseveltts programs were bad, most of them had a socialist theme
behind them. One of his programs, referred to as the Public Works Administration
(PWA), greatly benefitted American society with its many public works projects
throughout the country. It is estimated that at least 75% of all schools built during this
time were constructed by the PWA.

A major issue remaining is that most of the projects completed by the PWA did not offer
jobs to most unemployed Americans. Rather the jobs went to large construction companies
whose labor forces were unionized. According to the Davis Bacon Act ,any project that is
funded with federal monies over two thousand dollars, must pay workers the prevailing
wage. Hence, the majority of workers were still unemployed.(36)

While the government stepped in with grants or welfare payments ,it gave a large
number of the unemployed cash payments, however, the people wanted jobs, not a
handout. The government was unable to provide the jobs.

The early New Deal made important changes in the American economic setup, but not
drastic ones. Roosevelt tried to work within the existing power system, to avoid radically
altering it. The Emergency Banking Act, and the Glass Steagall Act, actually strengthened
the nations banking system, much to the surprise of the bankers.

(36) Clayton Cramer, "An American Coup d'etat?," History Today, 1995, v45, nll, Nov.,
p42.
The National Recovery Administration (NRA) allowed big business to keep a bigger
share of their profits through self government. The Home Owners' Loan Corporation
(now known as Finance Housing Authority (FHA]) did help many small homeowners to
 43

keep their properties. The Securities and Exchange Commision (SEC) did help regulate
the securities industry by protecting the public from unscruplous securities dealers.

The combined effect of the Depression and the New Deal program on Americans was
profound. People began to demand economic morality from the president. Demands that
the New Deal move further to the left (or into a socialistic form of government) started to
stir from many quarters. Most of these rumblings came from factory workers who felt they
were underpaid. Were these workers given too much of a good thing? Or were there
legitimate problems that had to be resolved.(37)

I believe that the emergence of the labor union movement, in the early part of this century,
did more damage to America than it did to help it. Up to this point, we can see that the
American worker did suffer from some excesses that existed at the time. However, I
believe the business owner should call the shots not the worker.

Basically, all of the government programs that were tried, failed. Although the need for
some type of regulation and reform was needed, none of the re-employment programs
worked for a sustained period of time. When election time comes, an encumbent can say
unemployment is down, even if it is for one week.

(37) Ibid.
 44

It was not until World War Il that there seemed to be a resolution to the unemployment
problem plaguing this country for the previous 15 years. During this time, unemployment
fell dramatically as many people were working for the war effort. When the troops
returned home after the War, citizens were revitalized, they had pulled together, and were
able to put the feelings of despair behind them.

The economy had come back to life, unemployment was virtually non-existant. People
were working, banks were loaning money, and businesses were again manufacturing
products at an incredible rate. Although America had won the War it came at a huge cost
with the loss of fifty million people.

What would have become of America had there not been a war'? I believe that without it,
this country would have ceased to exist as we knew it, There were many valuable lessons
learned from the War. I will concentrate on one lesson. The military industrial complex.
Big business learned that they could generate huge amounts of money from government
armaments manufactured to protect America from real or perceived threats from abroad.
(38)

Is it a good idea to base the economy solely on one industry? At this time in history we
have no choice. Dependence on military production is very deep. I will go into this in
more detail later in my analysis of the economy, and the mistakes that we have made.

(38) Susan Eisenhower, Cold War Legacy," Omni, 1993, v 16, n2, Nov., p4.
 Crime: Its Effect on the U. S. Economy

Crime is any infraction of the law. I believe that the more serious criminals act out in
frustration because of their inability to cope with society. I will explain the effects
blue(middle class), and white (upper class) collar crime has on society, and the
devasting economic consequences that follow,

In no way do I want to appear to be perfect or judgemental. I believe that crime is almost a

past time in America, some even treat it as a game. God has given us many commands, one
of which, obey your leaders for I have placed them into power . If those leaders make laws,
we must follow them, at least until we rescind them, or remove the offending lawmaker at
elec tion time.(39)

There are at least as many explanations of "crime" as there are questions asked about it.
What explanation is correct? The explanation of crime is a matter of what one believes,
understanding of human beings, and our perception what makes a crime.

The quality of popular concern with crime is more restrictive than is the attention given to
crime by the layperson. Crime comprises a variety of behavioral acts. There are three basic
elements involved in defining crime(40), they are:

(39) Gregory C. Leavitt, "General Evolution of Crime, n 1992,

v33, n2, Summer, p241.
(40) Gwynn Nettler, " Explaining Crime", New York, McGraw Hill 1974, p13.

47
1 ) The legal definition: the arrest, prosecution, and conviction of the offender.
 46

2) Social perception: this is what society, as a whole, thinks about criminal activity.
3) The offender's self concept: this is a cop out for the criminal, who believes he is
innæent, and in most cases believes society is the criminal.(41)

The word crime has been used so frequently that people believe the word has one
allencompassing definition. The courts define crime as an illegal act, while others view
crime as an act that is injurious to society as a whole. The term "crime" is legally defined
in the penal code in all of states as " a crime or public offense, is an intentional act
committed or omitted in violation of a law forbidding or conmmanding it."(42)

Every society exerts certain pressures on its citizens which are intended to require a
uniform degree of behavior. People living close together, and interacting with society,
need some way of predicting the reactions that others will have for their own actions.

Society maintains certain controls that dictate acceptable behavior.

Usually when people act in a manner that is acceptable to society, they are rewarded.
Generally, they are considered an asset to their community. Conversely, when a person is
considered a criminal, they usually snubbed or ostracized from the general populaüon.

(41) Ibid.

(42) Fred E. Inbau, James R. Thompson, Andre A. Moenssens, "Criminal Law," Mineola
N.Y., The Foundation Press, 1973.
 47
Although, there are certain people in society who, for their reasons, find some excitement
in associating with criminals.

There are three types of law regulating behavior. Contract law, provides standards for
contracts, dictates what is required for each party, and what remedies the parties have in
case of disagreement. The contract can be written, oral, or implied.

Tort law, provides relief, in the fom of money, compensation for injuries suffered. Tort
law specifies the circumstances in which such actions can be taken to court. There is a lot
of abuse with tort law. In fact, the majority of the back log in our court system at this time
involves tort liability.

Criminal Law, specifically forbids certain acts, dictate certain acts, and provide
punishment for violators. At this time, there are so many violators of criminal law that
there is not enough prison space for convicted criminals.

Today in America, the legal system contains laws that are clearly agreed upon by the vast
majority of society. What fosters equitable justice in America, is the fact that written laws
are tempered by the courts, through a jury of peers, and by a judge who administers the
process.

Considerable attention has been paid to the utility of personal measures of criminality. We
generally know where certain kinds of crime occur and where the criminals congregate.
Reasons have been devised for deficiencies, and translated into accepted statistics. When
crimes occur, we often ask why. Society has been quick to find an answer for this
disturbing trend. Psychologists and therapists have responded. They blame society,
 48
parents, or anyone else except the criminal. The truth is, we must be responsible for our
own actions.

In life, there are no guarantees, except of course death. There are a lot of things that I
personally would like to have, such as money , cars, a big house, and so on. However,
that does not mean I can steal these things, I must work for them.

What has happened to society? When did the criminal take over our society? Some crime,
a segment of our society would say, can be rationalized. In these cases, the criminal
appears to be the richer member or society.

While violent crime is a serious problem in this country, costs us millions of dollars
every year, and has countless victims, I believe it is not as serious as "white collar
crime," which can also be considered power status crime. This form of crime has been a
part of the landscape since America's inception.

White collar crime is usually committed by people of high status in the course of their
occupation. The primary objective in committing such crimes is generally financial gain.
White collar crime is defined as, violations of anti trust laws, misrepresentation in
advertising, patent infringement, and violations of labor laws.(43)

43) Edwin H. Suthefland, "White Collar Clime", NewYork, Holt,

The federal government has also included filing false income tax returns, and fraudulent
social security claims as white collar crimes. Addiåonally, any crime committed by a
nonphysical means, or by concealment, or guile, in order to obtain money, to avoid the
payment of money, or to obtain some type of advantage is considered a crime.(44)
 49
The problem of internal, white collar theft is that it is a growing problem. American business
loses at least two hundred and fifty billion dollars each year to thefts committed by
employees. Fraud and embezzlement in financial institutions have sky rocketed from a mere
two hundred million dollars in the early 1980s, to nearly one hundred and fifty billion dollars
today. Conversely, the total for violent crimes is a mere five hundred million dollars today.
(45)

Why is white collar crime so extensive? White collar crime, by definition, involves acts and
violations of the criminal law by corporate executives, business people, and professionals.
These people are generally members of the upper echelons of society, and are not expected to
participate in this type of behavior.

The motivation to steal comes from a real or perceived need for money. Because the need is
usually illegal or immoral, the perpetrator is reluctant to discuss it. Whatever the reason , if
given the opportunity and under the right circumstances the majority of people will steal.

(44) Herbert Edelherzt,"Nature, Impact, and Prosecution of White Collar Crime,"

Washington D.C., Government Printing Office, 1970 p14.
(45) Darrell, Steffensmeier, n on the Causes of White Collar Crime," Criminology, 1989,
v27, re, May, p345-358.
The best way to limit losses from employee theft is to have internal controls in place, a
kind of checks and balances. Make everyone accountable for their actions; regardless of
who the worker is, investigate if you have any suspicions. (46)

In trying to control, or stop, white collar crime, there has to be some form of penalty to
punish the perpetrators. Although there still remains the enforcement of regulations
 50
applied to business. Law enforcement personnel appear to be reluctant to prosecute these
people because of the pol itcal clout most of them wield.

A possible reason for the general acceptance by society of white collar crime is that, in
order to expose the crimes, there has to be a person on the inside. There are very few people
who are willing to give up their job, marriage, profession, or status in the community just to
bring a non-violent criminal to justice. Blowing the whistle is an extremely tough decision
for anyone to make, and without some type of paper trail or hard evidence, the crime is
virtually impossible to prove. (47)

Political crime, or unethical behavior, is one of the hardest violations of law to prove.

Recently, there has been a lot of publicity in the media about our political leaders and
some of the "crimesn that they have committed. It does not matter if they are innocent or
guilty, it is only the publics' perception and the politicians' popularity that determine if
there is a investigation.

(46) Ibid.
(47) Ibid.
People in power are often in a position to sell their influence for personal gain. Their
election or appointment provides them with a unique position. The violation of this trust for
personal gain is a crime of the highest order which undermines and subverts our government
and our social structure.

Despite this, the abuse of political power for personal gain has become a way of life. Since
the founding of our country, people at all levels have violated their positions of trust to
commit political crimes. This pattern of crime continues in every country.
 51
As we have reccntly seen in the media, people commit political crimes, such as bribery, in
order to maintain political power. They use political power for personal gain, or even in
attempting to increase their powerbase. I believe that political power acts as an aphrodisiac
for politicians - the more they get, the more they want.

The motivations behind political power are most probably ideological. The acquisition for
financial gain involves the basic human trait that we all have - greed. I believe that cases of
political crime involving greed are more damaging to our society than any other crime
committed. Furthermore, from what we can observe in our society, people have become
completely disillusioned with our entire political system.

Something must be done to correct the political system in America to end dissatisfaction
with our present system, and restore trust in our government. When graft and corruption
become a way of life, society is in deep trouble. The Constitution is no longer a
guarantee, but has become an insignificant document.

Some special interest groups say, "we can just elect someone else." Theoretically, they are
oberservers. What types of political crimes will this person commit? Unfortunately, there will
always be political crime. We can only hope that we are able to uncover it, prosecute the
perpetrators, and make the penalties more severe. In China, if a politician is found guilty of
crime (bribery) they are executed. Maybe that is a little harsh, but if the penalties outweigh
the self gratification that an indivi dual might receive, I believe there would be a reduction in
crime.

Organized crime has been a part of society since time began, and will continue to be a part
of it. I think that the effects of it have had a damaging impact on our culture. Hollywood has
 52
a fascination with it, society has become enamored with it, but it is a disease that has
demoralized our civilization.(48)

Although there will always be crime in America, I believe that society must change its
attitudes and perceptions about it Crime has been a part of our economic life since America
first began. A major reason why politicians are elected to office is because of their

(48) Jimmy Burns, U Business Faces Growing Crime Risk," TheFinanciaLTimes, 1994,
n32553, Dec. 19, p18.
viewpoints on crime. Certain illegal enterprises generate huge amounts of money for their
directors, and are considered above the law. It is difficult to come up with a solution that
would end crime overnight.(49)

I believe the best way to deal with crime and criminal behavior is to enforce the laws that
we already have on the books. People must learn that every action does have a reaction
and that they must be held accountable for their conduct.
 53
(49) [bid.
 Inflation in the United States

The principal concern for most Americans is the ability to maintain their standard of
living. Although there are numerous ways of measurig the prosperity of America,l the
most widely accepted method is the level of per capita income, and the purchasing power
that income has. The level and growth of an economys per capita are closely related - the
measure in which the economy utilizes its productive resources can encourage less
underem-

However, the true value of income also depends on the current level of prices for goods
and services - what that income can buy. If the present balance rises more quickly than
nominal income, the real value of income declines. If this happens, inflation results.

The term "money" appears regularly when economists predict how America's behavior
affects the level of income and the level of prices. Likewise, money does perform a
unique function, and does effect every part of our lives. Money is the universally
accepted medium of exchange. Certain economists believe that if the supply of money
is strictly controlled, infla tion and its effects on the economy can be diminished.

It is my belief that certain government agencies, including the Federal Reserve (FED),
are confused in their attempt to reduce the effects of inflation by the manipulation of

(50) Manjeet Kripalani, "Are You Watching?," Forbes, 1989, v 144, n9, Oct. 23, p388.
 55

56

interest rates. It seems that when consumers or companies attempt to borrow money,
interest rates go up. Conversely, when there is little or no demand those same interest rates
go down. The ÆD has manipulated the economy for years and the leader, Allen Greenspan,
is actually the most powerful person in the world. Wall Street investors make millions of
dollars by correctly guessing which direction interest rates will go.(51)

Prices are constantly fluctuating on the basic commodities that we use in our everyday
lives. The reasons for this is basic economics, supply and demand. For companies to
prosper, a certain percentage of their gross sales becomes profit. Without profits, there
would be no motivation for anyone to be in business. Everyone wants to have enough
money to live and buy the things that are essential to survive and, hopefully, to purchase
items that will create an easier lifestyle.(52)

Prices are a tool that we use to measure our standard of living. One person's payment is
another person's income. Unemployment, on the other hand, actually represents a loss of
goods and services. It is obvious that society wants to avoid unemployment, since the end
result of higher unemployment is higher inflation.

During inflationary periods, current income is redistributed from profits to wages and
salaries. Also during inflationary periods, there is a transfer of wealth from the consumer to
the government, and there is also a transfer of wealth among the classes.(53)

(51) Ibid.
(52) Paul S. Sarbanes, "Private Interests to Public Policy," The Christian ScienceMonitor,
1991, v83, n213, sept. 27, p18.
(53) G. L. Bach, and James Stephenson, "Inflation and The Redistribution of Wealth" ,
Reyiew«EconomicsandStatisiics, v56,1974,p2.
 56

Inflation results in identifiable costs. First, there is the uncertainty associated with
inflation. Mistaken predictions can prove to be costly to the efficient operation of the U.

S. economic system. For the most part, Americans respond well to the unexpected
increases in inflation. By reducing the amount of money they spend, there is more capital
to invest or put into savings.

The United States is a country that plays a major role in the economic affairs of the rest
of the world. The U. S. can also destroy economies throughout the world merely by
adopting dangerous or inflationary policies imposed by our government. Adjustment to
the expected rates of inflation is another costly matter requiring scarce resources. The
higher the rate of inflation, the more costly it proves to be.(54)

Inflation is also considered a kind of tax that everyone must pay. Like all taxes, it is
inefficient. When inflation rates are high, consumers generally allocate their resources for
other purposes causing a negative effect on the economy.

A key point to remember is that, placing money in a bank account for a period of time
may actually be worth less when it is withdrawn. I base this statement on the resulting
purchasing power of that money. Also, consider that if you put $100,000.00 into a CD at
6% for one year, the end results are startling. While the CD did earn six thousand dollars

(54) Allan H. Meltzer, "The Attack on Central Banks," 1992, Dec.

18, pA10.
in interest, income taxes must be paid on it, then factor in the average rate of inflation
(riight now about 4.5% to 5 %), the actual investment is a loss. Structual changes in the
 57

U.S, economy often causes inflation. Usually these changes are caused by Congress
through changes in the tax code or their current stance on economic policy. These
changes cause shifts or redistribution from the gainers to the losers.

The workers in the United States have suffered a decline in wages as a result of inflation,
and they are now demanding an increase in their wages to catch up. Actually, much of U.
S. workers losses can be attributed to the transfer of resources to farmers and world wide
oil producers. Remember the incredible increase in oil and gas prices in the mid '70s which
brought inflation rates as high as 25%.

Most economists believe that we used commodities (money) before the great Depression
forced its abolition. This wide spread belief is wrong. Other than agarian forms of money (
i.e. farm products used for barter) we have never really had an agarian form of money.

The monetary regimes of our country were based on metals standards - gold and silver
however this led to an eventual collapse. As we look back in history, we can see that the
decisions our past leaders have made, including the abondonment of the gold standard by
the Nixon Adminisration in the early '70s. Because of the huge amounts of gold that flowed
through the system, the gold standard ended up destabilizing entire national economies
through deflationary and inflationary shock waves.(55)

(55) Richard L. Strout, 'Economists Debate Retum to Gold Standard," The Christian
1981, v73, Sept. 1, p3.
The public keeps their funds in commercial banks. Some of those funds deposited at
the Federal Reserve, and it is the FEDs responsibility to regulate the proper circulation
of the currency.
 58

During inflationary periods, the central bank, the FED, has repeatedly reinforced its
monetary policy by resticting lending in specified areas of the credit system. Among
many examples of such selective controls are minimum down payment and
maximum repayment periods for consumer installment credit.(56) The FED has also
tried to counteract the credit cycle by influencing certain key interest rates:

I ) Through its power to set discount rates, though there is no real impact, but is a way to
inform the banking community about future policymaking.

2) The FED has also influenced yields on government securities.

3) The FED has also pressured banks to alter their prime rates in desired directions.(57 )

There are many hidden effects of inflation as well. One is the increased activity in the
underground economy. This involves unreported, and untraceable cash transactions.

Virtually everyone participates in this "blackmarket" when taxes and regulations

become a burden. It is a shame that people are forced into this type of behavior by their
own government.

(56) Ned C. Hill, and William Sartoris, " Short Term Financial Management", New York,
Macmillan Publishing, 1", p62.
(57) Ibid.
Eventually, when inflation is out of control, the erosion of the basic functioning of money
can and will unleash powerful forces of destablization placing pressure on the government to
take action. Stagnation and accelerating inflation are two sides of the same coin - a deep
seated crisis which represents the downside of deflation. The mutual connection between
lower profit expectations, and declining net investments causes the economy to grow slowly
or even recede resulting in a recession.

The relaxation of monetary constraint (credit), will allow producers to reduce the effects of

a profit squeeze, and will defer payment of their credit obligations by taking on an increased

debt load. But, rising service charges, due to debt will increase the debt load a company will

add to their fixed costs, thereby intensifying inflationary pressures.(58)

The increasing debt spiral has enlarged the number of borrowers, who are highly leveraged,
and in turn has caused mounting losses for lenders in the wake of higher inflation.
Eventually, creditors respond by tightening their credit tems. The creditors then switch their
investment strategy from loans to short term investments in which the profit potential is
much greater, although they might have a slightly higher risk.

The tightening of credit terms for long term funds will restrict heavily indebted borrowers
from obtaining more funds thereby forcing them to lower their current spending levels.

Some of the companies in which I have been involved have all faced credit problems at one

(58) Ibid, p303.

61
 62

time or another, and I have learned some valuable lessons from them. The most
important lessson being that if you are going to get a loan get the biggest one possible.
This will increase your chances of survival when other companies are faced with
monetary problems.

Our government leaders are faced with major decisions concerning our country's fiscal
policies. Even though they can not stop inflation completely, they do have certain tools
available to them to lessen the effects or problems associated with inflation. For their part,
the government must stop deficit spending immediately. I believe that deficit spending,
among other things, will cause the ulitimate collapse of our country, because we will
eventually not be able to pay the interest due on debt obligations.

The reasons behind the massive debt that we as a country have today can be traced to
entitlement programs and excessive military spending. While we must take care of those
who are unable to do it for themselves, and also protect our country, there comes a point
where we must reach limits. It can be likened to a person who has a huge amount of credit
card debt, and uses credit cards to pay off the debt on the old cards. The debt grows higher
and higher.

Peoples' income must rise to match the price increases that they are all faced with every
day or at least to maintain our current standard of living. The economy is similar to a big
circle where everyone has their hand out,with majority wanting to live most comfortably
at any cost. If inflation is not controlled, the economy can lapse into hyper-flation, where
the cost of life's essentials can increase ten-fold.

63
The fiscal policy of our government affects the economies the world over. When people
have confidence in our government, they invest in our currency or government-issued
bonds, which in turn helps to keep the rate of inflation low. Within the past few years,
there has been a shift in attitude towards the objectives and conduct of our political
leaders. The events of the 1970s, accelerating inflation and stagnant economic growth, had
chartered a course that was not correctable, and would ultimately cause undue economic
hardships for the country. (59)

Unfortunately, this led to the government instituting price controls in the hope of curbing
inflation and increasing employment. Since prudent financial management is key to a sound
fiscal policy, the United States has been plagued by recurrent episodes of inflation and
unemployment. I find it interesting that the government has allowed this to happen, given
that they have the ability to curb it through influence and regulations.

If monetary policies cannot stablize the economy, then it is natural for the government to
turn to fiscal measures. Government deficits pour additonal dollars directly into the
spending stream, which then effect free market operations. To effectively spread the
money out, tax cuts are far more efficient than increases in expeditures on public works or
defense-related items, which are support limited sectors of the economy.

(59) "A Rubber Stamp,CBO?" TheWashingtonPost, 1994, VI 17, Nov. 16, pA24.
A pennanent govemment deficit financed by bonds will raise expenditures, and also
increase interest rates. Unfortunately, this increase leads to lower investment by the
private sector, causing a rise in unemployment. One good thing that does come out of
this is that people generally increase their personal savings. Monetary measures,
together with what a fiscal policy can provide, are intended to help stablize the
economy.
With a relaxed mone- tary policy, the government may stimulate investment and the
growth of capital. However, the government cannot completely avoid inflation unless
the Federal Budget runs a substantial

Confronted with conflicting goals, the leaders in Washington are trying to create a quick
fix. They attempt to manipulate tax rates in the hopes of spurring investment for
economic growth by controlling export subsidies, and import quotas to lessen the
difficuit balance of payments. Budget deficits and surpluses have an immediate impact
on the economy but accomplish little in the long run while the effect of monetary
policies on the economy are not felt for some time.(61)

(60) Charles K.Coe, "Public Financial Management", Englewood Cliffs, Prentice Hall,
1989, p53.
(61) "Americanis New Edge is Low Cost Capital," BusinessWeek, 1992, n3247, Jan. 13,
p150.
Financing the Government

Since the Great Depression ended, the tem intergovernmental relations, has become a part
of our every day language. It has come to mean the cooperation between the federal and
local (state) governments, and the financial management systems that exist among them.
The governments' actions, whether independently or collectively, have a dramtic effect on
our economic and personal lives. Today, the state government could not operate without
the financial support of the Federal Government.(62)

Government has been growing at an alarming rate. The total share of national output has
increased dramatically from about 13% to almost 20%. There is growing sentiment that
the government is getting too big and demanding too much of the taxpayers' money, in the
forn of taxes or assessments, spent on unnecessary projects that only benefit individuals
that have contributed to certain political compaigns.

One of the unique outcomes of intergovernmental relations has been the rapid rise in
federal grants. The government uses these grants in an deceitful way. Any state (or city)
that receives these grants becomes a slave to the government, unable to operate without
strict control. The Federal government has been increasingly involved in the business of

(62) Charles K. Coe, "Public Financial Management," Englewood Clifs, Prentice Hall, 1989,
p124.

65
 64
providing aid. A more efficient method might be to reduce the taxes proportionately to
the state according to the amount of aid they receive, and then allow the state to determine
what, if any, programs they want to fund, based on the programs federal government
offers.

While the rapid growth of federal grants has had a major impact on intergovernmental
relations, it is showing signs of deterioration. The so called divendends that some
governmental officials had promised have never materialized, nor is it likely they ever
will. Most of these grants were backed with good intentions, but because of bureaucratic
red tape they are ineffective.

The mind-numbing increase in federal aid to low income families, and expenditures on
social services has transferred financial responsibility from the states to the federal
government. These programs were originally hailed as the ultimate plan to fight the war
on poverty. But as we have seen, the Great Society agenda has failed miserably, and
poverty has actually increased despite the federal government spending at least six
trillion dollars over the last 40 years.(63)

In our system of federalism, each level of government affects and interacts with an other
level. The synergy is especially active in the budgeting area since the Constitution does
not allow the federal government to intervene with local (state) budgeting. Generally, an
individual state has laws that dictate a balanced budget.

(63) Mark W. Plant, "Analysis of Welfare Dependence," American Economic Review,

1984, v74, sept., p673.
The prevailing economic conditions greatly influence the availibility of revenues, having
an immediate impact on budget recessionary conditions which result in lower revenues.
 65
When this occurs, the federal government creates budget deficits to help stimulate the
economy.

The fact that many people have different ideas on what the government should provide to
its citizens is good reason for government spending to be decentralized. Even when there
is little or no disagreement on the kinds of public programs that should be provided,
people will usually have strong opinions on how these programs should be financed. With
a decentralized government, more people can be accommodated, and public spending
becomes more efficient.

Economic and fiscal unity aside, regional rivalries and urban decay are not likely to
disappear. Crises created by inflation, energy shortages, and faltering eonomic growth add
to the tensions. While these intensify the strains, the only peaceable solution is the
establishment of such principles as self reliance, efficiency, and equity that history has
shown to be the most effective means of financial equality.

The federal fiscal system is faced with various of tax problems. One concentrates
different levels of government using the same tax base, the other concerns businesses and
individuals pursuing economic activities in different tax jurisdictions at the same level of
government. The economic failures and taxpayer disparity can seriously impair the
general welfare of the

(64) Thomas G. Donlon, "Behind the Curtain," Barron's, 1994, v74, Feb. 14, p10.
One obvious approach is tax coordination. This approach is attractive because it allows
each state government conéiderable freedom in designing and levying its own taxes. In the
income tax field, federal/state cooperation began as early as 1931, but for a long time its
accomplishments were limited, due, in part, to a lack of appmpriate economic incentives.
 66
The incentives are now in plæe, and the loeal tax authorities can æcess information from
the IRS to compare tax returns, and instantly alter returns.

We now live in a society where almost everyone attempts to play the same game,and that
is to not pay taxes. This atütude flourishes people witness massive government waste and
have become disenchanted with the system. They ask, why should I taxes and have to
work, when the government turns around and gives that money to someone who does not
eam it?

High growth and diversification havebeen the hallmarks of intergovernmental grants-

inaid in the United States in recent years. This aid from the federal government has
exploded in recent years. Though using grants has many opponents, the grants are
intended to help stabilize the economy.

Economic inefficiencies exist if those who pay for the program expand it to a point where
their own benefits equal their tax costs rather than the total benefits that society receives.
A major flaw in the grant-in-aid program is that when a state or institution receives a grant
they come under federal government control.(65)

(65)

Today, the government has its hand into almost everything, and harms almost everything it
is involved with. Federal, state, and local governments spend approximately 50% of every
dollar that we earn. Those who do the taxing and spending have long ceased to work for
the people. Rather, they work for themselves, and for their clients, the corporate elite, or

Ibid.
 67
the welfare culture. Most Americans sense that ever-rising taxes are feeding a cabal, and is
inconsistant with our moral values.

The Democratic party has long represented the values of those who have replaced the
traditional family with "big brother." It all goes back to the Roosevelt Administration's
New Deal, which institutionalized a federal bureaucracy into an organization that employs
millions of people with vast controls.

Today, big government has deprived America of self government. Citizens vote for
leadership, but have no control on how the elected act or what laws they implement.
There are literally millions of people that work for the famous alphabet agencies,
developed back in the 1930s, which have developed a sense of arrogance, and belief that
they
(the politicians) are above the law.

There was a time when government in Ameica meant the local government, but the
federal courts have gone a long way in the name of civil rights, which made state and local
governments subservient to the whims of the court, and elected leaders. The courts have
struck down legislation the people have voted for by referenda. Voting has become
meaningless, because the elected leaders are powerless to do their jobs.

Excessive graft and corruption comes from the hope of the government's guarantees of
security mean that we will get more than we paid for. Unfortunately, this is incorrect.
Recently, President Clinton initated a pet project, a national health care system, and
guaranteed that our benefits could never be taken away from us. He should look at Europe,
where they are cutting benefits to the bone because of health care expense. The
government now takes almost 16% of peoples pay for retirement, but it has been spending
 68
the money faster than it is taking it in. When people retire,what little they get back, if any,
is taxed.

The most devious thing about grants or entitlements is that people look to the government
for things that should be the responsibility of families. As a result, the family structure
begins to decay, and personal responsibility becomes non-existent. People who are
permitted by society to engage in whatever activity they choose, without assuming
responsibility for it, and expect the "state" to execute the duties customarily reserved for
parents will witness a decline in families and in civilization itself.(66)

The educational system in this country is destructive force as well. The public school
system use to be a where parents and administators could discuss problems and
solutions. Today, the system is "controlled" by the courts and special interest groups who
want to indoctrinate our children into some type of machine. This can be accomplished
very easily. Through the control of federal funding and grants, they can steal childrensf
minds before we are are aware of what's happened.(67)

(66) John Leo, "The Lingo of Entitlement," 1991, VI 11, n16,

Oct. 14, p22.
(67)
Throughout history, government acted the best when it stayed out of our cultural and
economic matters. And, when it did decide to act, it do so in a way that was decent and
responsible. The laws protected the family and personal liberty. Today, however, the
government has taken a stance of neutrality, and has actually promoted immorality.
While it is not the government's job to promote a particular form of morality, a country
without a moral foundation is a country on the brink of extinction.

Ibid.
 69
While the government encroaches into many aspects of our lives where it has no right, it
fails to meet its most basic obligations, such as, fundamental liberty from violence.

Families are no longer able to let their children outside for fear they will be kidnapped,
or even worse. The police are no longer able to handle the onslaught of crime that is so
pervasive in society today.

Taxes are intended to help maintain our government and the defense of our country,
including individual rights. Taxes have become a form of oppression that the
government has perfected. As the government gains more power, we lose a little more of
our personal freedom. When will it stop?

The American people have responded to the government by taking action into their own
hands. For example, many have stopped supporting the public school system by teaching
their kids at home. Many no longer depend on the local police department, and have built
small communities where they have private police.

If a person accepts the norm of big govemment, its beneficiaries will make hundreds of

excuses to grow even larger. The focus doesn't need to be on government hiring good

people government, the fact is that most of the people who work for government are good

people. The problem lies in the fact that government forces good people to do bad things.

There isn't a good way to operate a system of grants, entitlements, or rules that usurp
selfgover nment, nor is there a conservative way to operate a system that spends over 50%
of our Gross National Product (GNP). Spending that much money in an attempt to
accomplish so much has its own disastrous power. That is why we must cut government.
(68)
 70
Taxes are a major bone of contention, not only because they are bad for the economy, but
they take away personal liberty. In the absense of war, taxes should not be any greter than
15% of our total GNP. The tax structure should be simple. Today, our taxes are blatantly
unfair - rewarding those who have friends in high places.

The Constitution does not legalize entitlements for anyone. The nation must come to grips
with the fact that entitlements are inherently evil, that they have helped in the decay of our
society. We also must revive the idea that public assistance should be temporary, and not a
permanent right.

Regulations on business should be few, and simple. Regulations have become a tool the
government uses to destroy commerce and free trade. Regulations (or laws) should be
passed by Congress as the U. S. Constitution specifies. If this were the case, I am sure
there would be fewer laws which, in turn, would affect business positively.

America should also put an end to all unfunded federal mandates that have been forced
upon our local and state governments. All federal aid should be eliminated, except in the
case of national emergency. The federal legislators enjoy the prodigality of spending other
peoples' money, but an even more tragic occurrence is that they can force others to spend

(68)

Ibid.
 Government Welfare Programs

Since welfare (AFDC) began, there has been a certain sector within the government that
emphasizes the redistribution of income and wealth at the taxpayers expense. They have
assumed that the poor could survive on that alone. Conservative politicians have long
argued that the social matrix has been corrupted by these attitudes. The time has come,
however, to have a complete overhaul of the welfare system that is prevalent in America
today, inlcuding replacing the programs that have ravaged our society.

Today, America faces some serious problems, the number of unwed, and
unemployed mothers having yet more babies has exploded, for example. The system
that was designed to help (AFDC), has actually hurt the very people who need the
help the most.
The trillions of dollars that have been spent in the last 30 years have largely been wasted.
Conservatives now have an opportunity to completely overhaul the system, and they are
gaining more public support.(70)

The morally correct action to take is to replace the current welfare system. On close
examination, we are not merely passing out a monthly check, we are destroying any self
respect, and dignity the people mayt have. The poor have become stranded by a society
that has seen welfare backfire. We have seen lives destroyed with any hope of self
sufficiency evaporated. People who attempt to escape from this trap are often ridiculed by
their peers, and with little or no education, they actually make more money by in a
welfare program.

(70) David Whitman," Amencan's Hidden Poor," USvNews&-WorldReport, 1988, v

104, nl, Jan. 11, p18.

74
 98

75
Our predecessors did not have it easy, but they persevered. They did not live in the 'good
old days'. They worked long and hard to support their own families. There were problems
then too with alcohol and drugs, and medicine was not as advanced as it is today. I
believe a root of the problem involves society's attitude toward women, and how we
subjugate them. Unfortunately, since the majorlty of people on welfare are, in fact, single
females, they do bear the brunt of society's criticism.

Before aid is given we should ask this question,"will this assistance help to restore the
family?" The aid or program should help, not become a hinderance. Self respect must be
restored, and this can only be done by first showing respect to those people who receive
aid. After all, they are caught in a trap that was unintentionally set by the government.
The original purpose was to help the poor on a short tem basis.(71)

Jesus said: "You will always have the poor with you." America must stop exploiting the
poor, and help those that truly need the help the most. Programs have the chance to
succeed only when the objectives are clearly defined. America has wasted so much of its
resources in an attempt to fight poverty, that many people have faded into obscurity
because society has forgotten them. Re-education or job training is the best alternative we
have to help the chronically poor.

(71) Deborah A. Stone, "At Risk in the Welfare State," 1989, v56, n3,
Autumn, p589.
76
The government has made it tougher for people to escape the ravages of pverty, leaving
yet another generation dependent on the government for their survival. There are people
within the community that would like to help the poor, but because of government
intervention, they have become powerless. The government is somewhat fearful that the
private sector may be successful in its attempts to curtail poverty because citizens may
stop looking to the government for aid.(72)

We need to change the way America fights poverty, but in doing so, we must have a clear
set of objectives. Government programs need to be replaced, not because they are
expensive, but because they are seriously lacking in values. People need to be treated as
people, not like animals that are caged and fed occasionally.

Although I am in favor of America doing something about the AFDC program, I believe
that there is a larger welfare program in this country that most people in America ignore
the military industrial complex. While America needs a strong military to defend itself
and it's allies, there has got be a limit. Corporations make billions of dollars in profits
from defense programs that are either obsolete, or for sytems that we will never use.

The military industrial complex is like a heavy truck that is speeding out of control;
brakes not working, the truck will eventually crash, destroy or injuring everything in its
path. It is the time to overhaul the out-of-control military industrial system while we still
can. The pressure to reduce the massive federal budget deficit makes it a priority.

(72) Ibid.
 100

97

At the end of WW Il, the U. S. economy was the only industrial nation that was still intact.
The U. S. was in a position of controlling more than 50% of the world's manufacturing,
and almost 80% of the total gold reserves. It was at this point the U. S. began to exploit
the rest of the world, and started an aggressive military program.

The government leaders in Washington are faced with a daunting task: the deficit must be

controlled as well as reduced. At the same time, they must lay the foundation to improve

America's world wide competitveness to improve our economy. These actions must be

taken while the political climate is stil lin a state of turmoil. America should also redefine

the goals of this country, and institute the reforms that are necessary to accomplish those

goals.

Left unchanged, I believe the defict will continue to grow and the national debt will

progressively expand. It is unlikely that our debt will ever be completely paid off. Our

government leaders must take concrete actions to stop the disintegration of our economy,

and of our country. In the past) politicians have given a lot of "lip service," but have not

done what they promised. It is imperative that the we radically cut government spending,

across the board.

Given our deep economic problems, and the current political climate, I believe that

it is actually too late to save this country from an economic collapse. With the

national debt quickly approaching five trillion dollars, it is virtually impossible for

the government to ever pay its current which also include social security

benefits, government pensions, along with the cost incurred by the many other

delinquent promises they have made.

Americans have enjoyed a carefree lifestyle for the past 50 years with no regard for the
future. I admit I have also participated in this system. It would not be fair for me, or
anyone else for that matter, to point a finger of blame at any one person. But, I believe a
certain political party that has been, until recently, in charge of government spending for
the last 50 years, and they should accept the responsibility for the impending economic
chaos that looms over America today.
 102

Ethics and Morality, How They Affect Our Economy

Throughout the history of civilization, it has been shown that true freedom cannot survive

without a solid foundation of morality. The United States of America has become the most

powerful nation in history because of the tenents of the Constitution. America has used her

power in a attempt to preserve personal freedom and equal justice throughout the rest of the

world.

It is important for people to understand that the moral foundation of a society not only

extends to political systems, these principles must also include their economic systems.

The United States' committment to capitalism is, without question, one of the best

examples of this principle. Capitalism is a moral system based on Biblical ethics, and

there has been no other political system in the world that has helped so many of its

citizens increase their standard of living.(93)

Capitalism does not discriminate against any particular class of people, in fact, it actually

helps everyone. There is no other economic system that can actually make so many

people rich. In the United States, anyone with an idea or the inititive can become wealthy

almost over night, and the opportunities are endless.

Americans are living in a capitalist system and everyone is supposed to be equal but in

todays economic climate this is sometimes not the case. Unfortunately, there are

individuals who have only one goal, and that is personal monetary gain. And they believe

that it does not matter how they attain it. People need to have money for basic survival,

being

(93) Pilippe Van Parijs, "Basic Income Capitalism," Ethics, 1992, v 102, n3, Apr., p465.
 99

rich would be nice, but it is extremely important that a person maintain ethics and

morality. An alarming development in the last few years is that people believe in order to

get ahead you have to be dishonest.

Democracy is not actually mentioned in the Bible, in fact the early church had practiced
Communism. However, when people are gathered together with a common cause, they are
supposed to attempt to do the will of the Holy Spirit.

Morality is defined as: the ability to discern between good and evil. The word ethics has
the same definition, but is generally used to describe thebehavior of profesionals or
business organizations. It has often been said that unethical business practices are the
failures of individuals, a person that has had a moral upbringing will not usually cheat.
Regardless of the selection process there are bound to be a few individuals whose true
motivation is difficult to determine. Afterall, moral character is supposed to be molded
by a persons family, church, and education long before they enter the workforce.

In the world today, moral developement remains an unsolved problem that continues to

plague us. Factors that worsen the problem include television (the electronic babysitter),

and the absence of both parents due to employment obligations, and we cannot expect our

overworked school system to take on the role of parents. Even religion is less helpful than

it was years ago due to the mistrust that so many people now have of the religious right

because of the church's condemnation of their individual lifestyles.

Higher education often fails in its attempt to teach morality, even in its disciplines where
 104

morality once thrived. Great literature can be an excellent source for ethical instruction.

The fictional characters who must choose between good and evil often contain amazing

parallels between fables and reality. In examining unethical behavior, there is nothing new

or that has not been tied before. The only difference is the time and the players/insüuments

used to perpetrate the transgression.

In spite recent disclosures that unethical behavior is wide spread at many firms, companies

are now demanding more stringent accountability from their workers, and some are even

implementing "ethical training." On the flip side, it has been my personal experience in the

insurance field that, although companies demand ethical behavior from workers, they look

the other way as long as their making money and don't get into a legal bind.

Making the correct ethical decision is easy when the facts are clear and the choices are
black and white. But it is an entirely different story when the situatuion is obfuscated by
undefined, incomplete information, various points of views, and conflicting obligations.
Managers find themselves in this situtation all of the time. Moral choices usually depend
on the actual decision making process, and on the ethics of the decisionmaker.
Responsible moral judgement cannot be readily transferred to managers. It is normally

cultivated into the corporate environment, in the management process, involving:

I ) Recognition of management's resolutions.

2) Open debate to differing points of view.

3) Examining the implications of decisions on the corporation's future.(94)

 105

(94) Patrick E. Murphy, "Creating Ethical Corporate Structures," SlmnManagementRe

Yiew, 1989, v30, n2, Winter, PSI.
Ethical dccsions usually require an individual to have the fortitude to decide if they will

follow the path that the company has set, even if it is wrong. That individual must also:

have the ability to recognize the ethical implications, and consider the consequences of

alternative decisions. In addition, he/she also must have the self confidence to investigate

opposing points of view, and then choose what he feels is correct. Finally he/she must

have the resolve to investigate further so that his/her decisions are based on all of the

facts.(95)

The ethical individual often faces adversity in the business world, and usually on their

own. But these individuals cannot expect to remain independent unless they have the

continued support of management. The persistance of ethical problems can often hide

the solutions. The failure to maintain ethical standards is considered to be a corporate

responsibility. One can hire an individual who is unethical, but what do you do with a

corporation that is? When a person is first hired into a company, a person's moral code

may ultimately determine whether or not they can fit in. If, for example, a company is

unethical and corrupt, this can influence the individual to participate in activities that

they might not have even have considered on their own.

When put in the right circumstances, there are many people who will pursue an unethical
direction. It usually takes a strong person to refuse to participate in immoral or unethical
behavior at the expense of others. I can think of a perfect case in point. Back, when I was
selling life insurance, I was told by my supervisors to commit certain acts which I
deemed unethical as well as illegal and, fortunately, I refused to resign. I can only hope
that I can do the same in the future, if circumstances warrant it.
 106

(95) Ibid.
The corporation is actually an organization in which people often influence one another
to institute a set of acceptable standsrds. The leadership of a corporation must have the
loyalty of all of its members. As I have often said, 'I to be a leader, one must lead." For
the most part, I believe that workers will follow a firm set of principles if they see that
management follows them. And, if they observe that management is unethical, the
workers are more apt to be unethical.(96)

It is possible to have a diverse corporate culture with a mission statement that clearly

identifies objectives or goals, however, the identity of a particular corporation may

be more adaptable than the individual employee. Uncooperative people need to be

replaced, while th(N that have grasped the basic principles should be encouraged to

influence those who have not.

While the bottom line of a company is extremely important, the public's perception is

equally important. I think back to some books that I have read about the Vietnam War. A

supplier of military hardware knew their product to be defective, yet they kept on

producing the product in spite of all the evidence that it was dangerous. Was there a cover-

up that went all the way to the top in the White House? Were profits the motive behind

that corporation's failure to recall their product?

Corporations and the American family are basically in the same position. Both have goals
and both want to survive in a world that is often hostile to them. As we can see by

(96) Ibid.
examining history, the most effective way to destroy the corporation/ family is by finding

the weak link, then cultivate the seed of destruction. What I mean is, if a person makes

personal attacks against a family/company, the defenses go up, they gather together and

defend themselves as a group. Howwever, in order to effectively be destroyed, they must

be attached from within.

Business has become one of the most pervasive elements in American society. We are
involved it daily as active participants. The most successful businesses in the world are
those that operate in a capitalist society. An important ethics questions relating to
capitalism is that capitalism is a system in which there are going to be rich people and
those who are poor; there are some who consider this to be unfair.

I believe the role of the government in the free market system should be limited. The

government's only job should be to enforce the laws and our constitutional rights.

Unfortunately, the government has decided to be a "big brother" rather than a referee.

There are so many laws and regulations the government has instituted that affect almost

every aspect of business. These laws are often made in the name of fair play; often for

the national interest. While business often goes to court to fight these laws they

eventually obey them.

Ethical questions arise every day in the business world. While the very essence of

capitalism is competition and profits, I believe that it is possible to be both ethical

105

and profitable. Society has built different attittudes, and stereotypes that lump people

into certain categories. Take, for instance, our attitude about used car salesman. Most
 108

people automatically have a preconceived notion that used car salesmen lie about the

soundness, etc. of their product. While this is true for some, it is not true of all used car

salesmen, and what has happened is that a few have damaged the reputation of all.

How does the government enforce the laws and not violate someone's rights? I think that

this is virtually impossible to do. While most people are ethical and follow the law, I think

it would be hard to find anyone who follows it to the letter. As an example, corporations

often over inflate their losses for income tax purposes; it is impossible to track down

every company that files an over inflated return.

Our elected leaders in Washington have changed the rules of the game. Anything is

acceptable as long as you do not get caught. Businesses line up in the con-iders in

Washington with buckets of money looking for the next senator or representative who

will accept it. Of course, there are strings attached and, in essence, the money called

campaign contributions is actually a bribe. There is little that can be done to stop it. The

majority of leaders in Washington won't pass laws to restrict this practice because they

don't want to vote themselves out of a job.

I have observed many politcians, both active and retired, and have found a disturbing

trend. All of them have taken money (bribes), and I believe that this is why so many

people have become distrustful of the government. They believe that their vote does not

matter anymore, so why bother. The leaders in Washington will do what their

contributors want, not what their constituents want or need.

The business community in America has slowly turned from what is ethical and legal to
an attitude that anything goes, as long as it maximizes profits. Things that would have
been unthinkable 10 years ago are now common in the workplace. Profits have now
replaced ethics in most corporations. If a member does not participate he/she is expelled.
There may be one person out of a thousand who will stand up and fight for the injustices
corporation commit.(97) It may be too late to stop these practices. The only way to
completely change these attitudes is to let the system collapse and rebuild it from scratch.
Humans, our nature being what it is, will probably only take a few years to start the cycle
over again. People must be free to make their own choices, even if those choices are
immoral, unethical, or illegal. It is difficult to be a honest law abiding citizen, and
temptations to be unethical are great, but for me, it is important to have a clear conscience
and be as ethical as possible.

(97) Saul W. Gellerman, "Manage Ethics from the Top Down," Sloan Management
v30, n2, Winter, p73.

Summary

My opinions and beliefs are based on the one book that was responsible for changing the

course of history, the Bible. God revealed to us, his people, what the future holds for the

world. According to the Bible, a power we interpret as the United States, is not going to

be a major player. When you examine history, specifically the great countries that once

existed, there is one central theme that caused their demise - the moral and economic

decay of their civilization. We have recently seen this happen with the collapse of the
 110

former Soviet Union, although there reported serious financial problems may be a ploy

on their part.

I have discussed a lot of material in this paper, including the origins of this country, the

origins of debt up to the current budget trends of the government. It is almost impossible

to read a newspaper today and not find an article that discusses the national debt or

budget deficit. There is no other problem in existance today that affects so many people

in the world.

Since the end of WW Il, the International Monetary System has been based on the

strength of the U.S. dollar. The widespread acceptance of the dollar has given the U.S.

a unique position in the global economy. The United States has derived a significant

advantage as an issuer of world money by being the only country in the world that can

pay for its debts with other countries using their own currency.

107
Since the breakdown of the Bretton Woods agreement, the world has witnessed a

progressive deterioration of the U.S. dollar. This decline has demonstrated itsetf in several

different ways. Most notably, in a series of devaluations, and a long term loss of market

share in relationship to other key currencies, especially the Japanese Yen. But the

Japanese Yen is another story. They seem to be headed for the same demise as the U.S.

The trend in the decline of the dollar is a direct result of America's external position in

foreign affairs. As we continue to head in this direction, it is only a matter of time he end

of the dollar as a world currency.

When the European Union introduces its new supernational credit money, such an
outcome was virtually guaranteed. It will be too late to rejuvinate the dollar to its long
status as the international currency of choice. The U. S. has already lost its leadership in
trade, production, and control of capital flow. The "New World Order" has begun to gain
a strong dominance in the rest of the world and will soon replace the U. S. as a world
leader.

Even if the world economy can prove itself to be resistant to worldwide monetary shocks,

there is no doubt that the end of the dollar standard will have intense effects on the U.S.

economy. America will soon face the same external effects as all of the other world

economies. The United States will also soon begin to feel the effects of its foreign debt.

Once the dollar is no longer the accepted predominant currency, America will finally feel
 112
the effects of its weakened external position. The massive transfer of money to service our
foreign debt will cause our economy to become stagnant. America can come up with
solutions that might stop the effects, but only on paper or in theory. In practice any
solution may prove to be futile.

The challenges that America faces seem daunting, our economy is condemned to become
stagnant for years to come. Unless the economy exceeds the increases in debt servicing
charges, we will never be able to pull it out of an inevitable slide. America's fiscal crisis is
due to political demoralization as much as financial mismangement. Our banking system
is also in a state of disrepair as the events of the 1980s have shown us.

America's ability to finance massive deficits with re-imported dollars has its limitations.

Specific parts of the economy cannot continuously service old debts with new credit. Debt

servicing charges continue to absorb an ever-increasing amount of capital that could be

used for domestic programs here in the United States. Soon, foreign investors will begin

to search out new oppormnities in other countries, leaving the U. S. in a state of financial

cha(N

As long as the United States is able to attract foreign capital, we can disguise the fact that

our economy is in serious trouble. Unfortunately, those funds have begun to evaporate. As

we take a closer look, there are indications of a much deeper deterioration, including,

income erosion, financial instability, and capital reductions. These conditions have and

will continue to affect every sector of the economy.

 113
Consumer debt is exploding with the advent of credit cards, and people now find

themselves in a dangerous position. Approximately 17% of their income is allocated to pay

just the interest on their debt. There is no end in sight. The American family works as

much as they can yet they are unable to put any substantial amount of money aside for

savings.

The fiscal policies of the Federal government have helped the United States escape any

serious problems from the recessions that have plagued this country for the last 40 years.

These policies cannot last forever. The large budget deficits, have, in a sense, helped the

country from sinking into a deep depression. A growing portion of government spending

is now directed to the public bailout of specific sectors of the economy, such as for the

Savings and Loans, which has cost the American people an estimated five hundred billion

dollars.

The structure of our capitalist system is based on the allocation of our resources, the
manufacturing process, and the structure of work are regulated by profit. The privatc
enterprise system, when operating properly, leads to an efficient system of checks and
balances, controlled by the public. The problem is that the main motive in any business is
profit maximization, and the government should have been working toward budget
surpluses or at the very least a balanced budget, and this has not been the case.

Our leaders in Washington face an incredible assignment in the years to come. They not

only have to control the massive budget deficit, but they have to reduce the immense

national debt. To be successful they must reduce spending and keep any tax increases to a
 114
minimum, and at the same time not giving any particular social class a superfluous

burden. They also must regain a sense of direction/goal that is attainable. The time has

come to eliminate the detractions that inflict both political parties and remember that we

are all Americans.

The current tax system in America is in a shambles; it is flagrantly discriminatory. The tax

system has also proven to be regressive, and taxes have proven to be easy to avoid. I do

not believe that there is any equitable system of taxation. There are going to be people that

will benefit while there will still be others who will suffer.

The United States will probably remain the world's leading military power, but it is

doubfful it will remain the world's richest economy. Since Europe emerged from the

ruins of WW Il, and recently reunified, America is faced with some serious problems.

All of these points in history have led tothe "New World Order," In this new world, the

U. S. has lost its leadership and has become a mere player.

In the long run, the United States must resist the temptation to finance its hugh deficits

with money borrowed from abroad. The time has come to pay for all the excesses that

America has enjoyed for the last .50 years.

Domestic failure and economic decline have been masked by America's foreign policies

and military strategy abroad. One of the major causes for America's decline has been the

tendency for American corporations to relocate their operations on foreign soil. These

firms are some of the largest corporations in the world which are now exploiting the
 115
opportunities that were given to them by the govemment of the United States. America

has been at war with itself for the last 50 years. This may seem farfetched, but a possible

scenario could bethat these corporations secretly supported the very unions they claim

have caused them to move overseas so they could take advantage of cheap labor

approximately 10% of the cost for their American counterparts.

If America wants to reverse its downward direction, and bring the economy back to its

enviable position in world once again, we have to change the role that the federal

government plays in our lives. The abuses of government on the people of America, and

the damage that they have done to our Constitutiona is a depravation of our rights.

Government regulation has touched every aspect of our social and economic lives.

Governmental efforts to control and direct decisions range from the food that we eat to the

gas that we put in our automobiles. All too often these regulations are passed by agencies

of the government, rather than our leaders in Washington who are afraid of the backlash

that would ensue.

The very people regulations and laws were meant to protect have become victims of
them. This country was originally a place where people could be free to exercise their
choice of religion, and decide their own economic destiny. I believe that this is no longer
the case. Furthermore, I believe that the moral fiber of America is quickly sinking into
bankruptcy. I know that there are a lot of good people in America, but the current climate
in America doesn't respect the law abiding citizen, and criminals seem to live a better life
under the protection of the United States government. Under the current circumstances, it
is impossible to change our system. In order for the country to transform itself, we must
 116
introduce new fiscal initiatives in which we believe and that the leaders in the rest of the
world will realize we are serious about controlling our debt.

America has lost its war, the Constitution, and all of the laws that it represents have

proven to be ineffective. The United States is destroying itself. Jesus Christ said, "Any

kingdom that fights against itself will destroy itself." And, from interpretations of the

Bible, it seems that God has already predicted the end of America's status as an

economic and moral superpower.

Since the American economy is so large and the dollar still the principal currency for

international transactions, the U.S. has found it comparatively easy to draw on the

savings of others, or to export to other economies, the inflationary consequences of

creating excessive credit. Unstable American economic policies have thus spilled into

the rest of the world, producing similarly unstable effects in other economies. The

unstable world market has led the countries in Europe to create a new union in an

attempt to salvage their own fragile economy.

Through my research, I have come to a conclusion that it is virtually impossible to

save the United States from its fate, although there are several things that could be

done that might help:

I ) The drastic reduction in income tax rates, to a rate of no more than ten percent

2) The closure of the Interstate Commerce Commision

3) The re-instatement of our Constitution

The national debt has been a severe drain on our economy for quite some time, it will

continue to have a hold on it for ever. I have not found a way to reduce or control the

national debt. The powers in Washington have been controlling the economy for so long

that they cannot help themselves from their continued deficit spending.

The national debt stands at about five trillion dollars which in a perfect eco nomy would

take at least 50 years to pay back just the principal.The re ason that I believe it will

destroy this country is that people need things like protection from our enemies, clean

water, safe roads, and the list goes on forever. Most of these things are financed through

the issueance of government or municipal bonds which are paid back by the governm ent

when they issue new bonds, certainly it has become a catch-22.

In conclusion, there is nothing that can be done to save America from its demise.

We have fallen into a trap which was set by the good intentions of our leaders. It is

just a matter of time before the United States collapses.

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