The Business of America Pt2

So what are the upsides and downsides of this dominant business of
royalties and licensing?

One upside is high profits to low investment ratio. Even in the field of
entertainment such as movies, if the producer practices cost containment,
three possibilities exist for profits. Lose some money, make a profit or
make an enormous profit. No, there is no such thing as break even.

All of this equates to tax revenues. Lower the cost of the material and
preserve profit increases the profit margin. Higher profit margin equals
increased tax monies. Every for-profit corporation has a fiduciary
responsibility to its shareholders to maximize profits.

The ability to maintain profits and transfer costs to a foreign company
meets this requirement. It further permits capital investment to be
provided for other projects. If we invest money in manufacturing
equipment, this money is tied up for several years. If it goes for
projects that are sourced off-shore, the investment can be recovered in a
far shorter period.

So what is the downside?

We sent our manufacturing base off-shore. Now we are faced with sending
consumer monies overseas. We lack the manufacturing capacity to take care
of ourselves. This adversely affects our balance of payments. It is good
for business, but bad for the diversity of our industrial base and
national defense.

Our nation needs a military, but national defense is far more than
military might. The military consumes and creates nothing. Every penny
spent on foreign goods just goes down the rat hole. No US jobs are created
and tax revenues leave the US economy. Our economy must be defended.

As a nation, every job sent overseas equals a transfer of US money. We
only have so much income. If we fail to save and re-invest in the US, we
will effectively spend our way into poverty.

As it is, we are rapidly moving into a service industry. This is nothing
more than taking in each other's laundry. Each monetary transfer is part
of the GDP and is taxed. If we move this money around long enough, almost
every cent is taxed away. This is the "trickle down" theory of the Reagan
era.

If we just admit that the business of America is taxes, and if we admit
that royalties/licensing is the path to greatest profits, then we have to
increase our educational expenditures. With our propensity for
entitlements, we can ill afford anything other than "No Child Left
Behind." The legacy costs of Social Security for the baby-boomers will
demand greater tax revenues.

So what is the solution?

First of all, eliminate entitlements. Cash the people out.

Remake the tax laws. Begin with a single employment deduction per employee
of $12,000 a year. No other deductions allowed. Set the tax rate at a flat
10%.

Tax all capital gains under 6 months investment at 35% as well as all
gambling tax rate. Day-trading is gambling. Eliminate deductions for
losses incurred by gambling.

We need to return to tracking of our students. Excellence must never be
compromised by dumbing down our brightest students. Tendering the argument
of equality can be addressed by tight grading standards. If the student is
failing, fail them.

Are these the answers? I don't know. We face a deficit and an enormous
national debt. We will have to make right on this debt and I fear our only
option will be hyper-inflation. Without a domestic manufacturing base, we
will face severe economic challenges. I'm not sure if American labor has
the skills a economic collapse would require. We truly live in interesting
times.