Socialism Is Draining America of Capital

By Dick McDonald

A free market capitalist system runs on its capability to devote a reasonable portion of the income it earns each year to investments in its future. For years, no country in the world has done a better job of that than America. Unfortunately for the last few years, Americans are spending more than they earn. That has created a serious shortage of capital in our financial markets and has forced Wall Street to solicit investment funds from foreigners and sovereign wealth funds.

A fear exists that if we continue to allow foreigners to buy up large segments of our economic engine we will lose control of our own destiny. Tom Friedman of the New York Times hopes to ignite that fear in a recent op-ed.

Another friend of mine in the ship-supply business in Baltimore, Alan Kotz, told me about a German customer who recently put in double his normal order. When Alan asked him if he was aware of how much he had ordered, the German brushed his question away and laughed: "Alan, never mind, everything for us is half price."

And a good thing it is. Even though the dollar has strengthened a bit lately, we are going to need foreigners and sovereign wealth funds from China, Asia, Europe and the Middle East more than ever to survive this crisis - and they are going to need us to be healthy as well. In the process, we are going to become even more intertwined and dependent on the rest of the world.

This election season sees capitalism under severe attack from American socialists. Under the guise that 95% of the taxpayers will receive a tax cut, the socialists are playing the Pied Piper leading Americans into believing the same lie that Bill Clinton swept into office with in 1992 and the Democrats took back the Congress in 2006 - middle class tax cuts. Tax cuts were never delivered in 1992 or 1993; rather taxes were raised. In 2006 - 2007, there were no tax cuts either. The question then remains: will Obama deliver a tax cut or will he tax the vibrant American economy unmercifully to establish a socialist state - a state that so many believe to be "fairer" than a free-market economy?

The capital markets, now starved for new sources of capital, appear destined for even more desperate times. A combination of higher prices, inflation and the possible increased taxation on the productive elements of the society will leave little room for investment by ordinary Americans. Combine that with the fact that socialists will flood into Washington in January and you will discover why the stock market has fallen from over 14,000 on the Dow to under 10,000. The people are not stupid. Government governed by those who favor their own concept of fairness over that of freedom signals a massive downturn in economic fortunes of all Americans.

It doesn't have to be so. We have a massive new source of capital to drive the American economy way past the 14,000 level. If we only divert the payroll taxes of $1.4 trillion collected each year by the Federal government into the personal investment accounts of taxpayers and then invest those sums into the capital markets we could put the economy into hyper-drive.

Americans are tired of being told there is no way capitalism can be "fair." They are tired of being robbed of 15.3% of the lifetime income in return for no nest egg whatsoever. It is time to liquidate the $50 trillion in unfunded liabilities for entitlements that the Social Security Administration warns taxpayers may never be funded and therefore cause the total failure of the system.

It is time for capitalism to prove it is the "fair" system ready to vault all Americans into an era of prosperity. As the economy is driven by infusions of new capital every year - we have that new source of that capital that America presently wastes on consumption. See www.riseupamerica.us for the blueprint that will revitalize our economy and enable every American to achieve the American Dream.