Republicans, Democrats and Sailboats

Contemplate the sailboat. It's a very ungainly looking apparatus out of the water. Big sail sticking up in the air, big keel makes it hard to put down on land.

Contemplate designing sailboats. You have a trade off between the keel that sticks down in the water to stabalize the boat, and the sail which sticks up to catch the wind and drive the boat forward. If the keel is to big it slows the boat down. If the sail is to big you will probably capsize and end up dead in the water.

Economies seem very similar to sailboats. Government is the keel - it provides stability. The private sector is the sail. It provides the driving force to move the economy forward.

Democrats always tend to want to put a bigger keel on the ship of state. So when Democrats are in charge we end up with a big keel that the sail has a hard time pushing it through the water.

Republicans always want to put bigger sail on the ship of state and reduce the size of the keel. So when Republicans are in charge we go like hell for awhile then capsize and end up dead in the water.

The conservative approach would tend to err on the side of too much keel rather than too much sail.

Government Subsidies

Congress loves subsidies because they buy lots of votes. We pour enormous amounts of taxpayer money into agriculture, we bail out banks when they get in trouble, we dump big chunks of money into energy schemes. The federal budget is riddled with subsidies, big and small. Deserved and undeserved.

How can we as taxpayers protect ourselves from excessive subsidies? How do we subsidize industries that will help our economy while preventing abuse? Here are some ideas:

Basic rule - no one should be gettting rich off of government subsidies.

We cannot rely on Congress to wean industries of unwarranted subsidies. We should use the power of the IRS to control subsidies.

We shouldn't give subsidies to any business entity. It is too easy to build a link of related entities to abuse the subsidy process. The individuals who ultimately benefit from the subsidies hide behind walls of legal entities while they get wealthy at taxpayer expense.

If we deem an industry or business needs government subsidies, the subsidies should be given to individuals who then invest in the business enttities.

The individuals will be required to maintain subsidy accounts for tax purposes. To the extent they recieve any moneys back in from the subsidy money that return on investment should be taxed as any other income would be taxed each year up to the point the income received in that year exceeds by a factor of 2 the average per capita income of the average full time worker. Any income above the cut off point would be taxed at steeply graduated rates that reach near 100% as the total income exceeds by a factor of 4 the average full time workers income.

This format will allow the use of subsidies to establish businesses, or tide them over through rough patchs, but will motivate the principals in the business (who want to get rich) to wean themselves of subsidies (by repaying the subsidy) as the business becomes more profitable.