Equities Versus Corporate Bonds

This is a comparison between the earnings yield of the S&P 500 and the yield of BBB rated US corporate bonds (ICE BofAML). This deserves a more full analysis, but I think the key observation would be that bond prices have already moved up in anticipation of a downturn. Unfortunately there doesn't appear to be much opportunities other than cash, if like most analysts you are expecting equities to fall.

Votes and Percentages of Democratic Candidates

This chart compares the vote totals (blue) and vote percentage (orange) of the top Democratic Presidential candidates in the last election in which they ran. Two caveats: Biden was the running mate in his last election (not the main candidate), and the numbers for Harris were for a runoff election (against just one candidate after a jungle primary). 

Trump's Other Base

In an interview with Bloomberg News yesterday, Donald Trump said that he is considering adjusting capital gains taxes for inflation. As CNBC described, the proposal "would be an estimated $100 billion tax cut that would benefit largely those who own assets such as stocks and real estate." What makes this proposal so appalling is the fact that it was made the same day that Trump announced pay freezes for civilian federal workers. The cancellation of the planned 2.1% pay increase is necessary because "We must maintain efforts to put our Nation on a fiscally sustainable course, and Federal agency budgets cannot sustain such increases," Trump said. This insult, occurring four days before Labor Day, would, by itself, be grounds for impeachment in any rationally working political system. We, however, are dealing with a system under which one of the least popular and least skilled presidents in the country's history is guarded by his auxiliary base: the Democratic Party. Nancy Pelosi said "Impeachment is, to me, divisive," Pelosi isn’t the only one. Harry Reid said “The less we talk about impeachment, the better off we are.” Maybe Harry Reid will be better off, but not the working class. Some people have said that we need to wait for a Democratic majority in Congress before talking about impeachment, but Pelosi said "Again, if the facts are there, if the facts are there, then this would have to be bipartisan to go forward. But if it is viewed as partisan, it will divide the country, and I just don't think that's what we should do." So Democrats won’t start demanding impeachment until Republicans support it? I’m not clear on why we need more than one party if that is the way things are done.

Comparison of the Last Six Presidents

Donald Trump has made bold claims about creating jobs and addressing crime. In his February 28 speech to Congress he spoke of a 2015 murder rate that "experienced its largest single-year increase in nearly half a century". While it is true that the percent change from 2014 to 2015 was unusually large, the 2015 rate of 4.9 was still lower than at any time between 1965 and 2009. When I was a kid in the 1990s, the general consensus seemed to be that Democrats are the compassionate ones, but when you need to get the economy moving you need a Republican. The mythology of Ronald Reagan as an economic genius seems rather perplexing, as both Bill Clinton and Barack Obama achieved better reductions in the unemployment rate. Moreover, he achieved a decrease in unemployment at the cost of a massive increase in the national debt (even as a ratio to GDP). Trump now seems to have a similar economic plan to Reagan. Like Reagan, he plans to increase spending while decreasing taxes. Also like Reagan, the area he is most fond of increasing spending is the military. The other spending spree he wants to go on is border security. Whatever your opinion is on immigration, you have to admit that these types of spending are unlikely to generate any economic return (aside from the direct economic activity of government checks going to border patrol agents and wall building companies). At least if we spent money on infrastructure and education we would get some long term economic return. Spending it on border security will just give us a wall to stare at while we watch more and more of our tax dollars going to pay interest on the debt. 

A Program

On the one hand we have the Democratic Party, which limits itself to small programs that might help a small number of people. Just enough to give the appearance of being on the side of the working class and oppressed without upsetting their more important relationships with the rich and corporations. On the other hand we have socialist organizations, who tend to base their demands on the raw wants and needs of people without concern for what the actual effects would be if their demands were implemented. They usually explain this away by saying that if their solutions cause more problems than they solve, they'll just fight for more solutions to those problems. The only really important thing is to get people involved in the struggle. The problem is that before the socialists have a chance to explain why revolution is ultimately imperative, people have already concluded that their program is impractical, and moved on. Here is an alternative program I'm working on:

Three Key Pillars
Federalize All Taxes
A fundamental challenge to increasing taxes and government spending is that wealthy people and businesses will leave states and municipalities that have high taxes. Conversely, poor people may be drawn to locations with better welfare programs. This creates a situation in which a shrinking tax base supports growing needs. The solution is to have all taxes be collected by the federal government. Money would then be distributed from the federal government to the state, county, and municipal governments in amounts proportionate to population.

Welfare for All
However necessary they may be from a humanitarian perspective, welfare programs that only benefit people below a threshold of poverty will never be very popular. Even if it is a very small percentage of people receiving benefits, there is an awareness of the fact that some people choose not to be employed or only work part time for fear of losing there benefits. The solution is to provide the same welfare package to everyone. Specifically:
Free Post-Secondary Education
Education is a right that should not end with high school. Children should not be forced to choose between starting their lives saddled with massive debt or taking the risk of entering the job market with no post-secondary education. Providing this education will strengthen the economy, decrease social problems that are correlated with low education levels, and intrinsically improve the human condition.

Nationalized Healthcare
For too long our society has assented to letting people die who could be saved. What we need is not a public/private hybrid system that only brings us halfway there (nor Obamacare, which only brings us a quarter of the way there). We need to go all the way, with hospitals and clinics under public ownership.

Replace Social Security with a Flat Rate Public Pension
Perhaps it was political genius when politicians created Social Security eight decades ago: create a system that people depend on, but, unlike almost every other part of the federal government, make it dependent on a specific funding source. Then, when the system starts to fracture, the politicians can spend every election arguing about how to fix it rather than talking about real issues. The solution is to eliminate payroll taxes and pay for a public pension using general government funds. Social Security Disability benefits will likewise be replaced.

Food Stamps and Housing Subsidies for All (Sufficient to End Homelessness)
Everyone needs food and shelter, so everyone should be guaranteed some minimal level of these necessities.


Integrate Communities
There has been much focus on integration of schools, but is busing kids long distances really the best solution? What about when they get home? Can they really be put on a path to success living in an area of concentrated poverty (which likely implies an area of concentrated crime)? Do developers and municipal leaders have the right to build whatever kind of housing they want wherever they want if that means the right to force the poor into ghettos? Dealing with inequality will require integration of communities, not just schools. A possible plan would involve defining quartiles for home values. A neighborhood that is overweighted in one quartile would need to build more homes in the other quartiles before building any more homes in the overweighted quartile. Achieving full integration would be a long, slow process, but also very necessary.




Political Structure Reform
Replace Congress with a Unicameral Legislature with Proportional Representation
A person in Wyoming has 26% more influence over the House of Representatives than a person in California. In the Senate a Wyoming vote is worth about 67 times a California vote. People in the District of Columbia have no representation in Congress. Reform is needed, and party list proportional representation has the best promise of getting people involved in politics.

Ranked Choice Voting for Executive Offices
With ranked choice voting people will begin to vote for what they want rather than just voting against what they fear.

Some Additional Planks
These are not necessarily as unique as the Key Pillars, but they are still important planks that I think could gain overwhelming support.
Implement a Carbon Tax
We need to start treating climate change as the emergency it is. A progressively increasing carbon tax is the best way to do this. This would need to be coupled with the measures for making taxes more progressive at the bottom of the program. It would also require trade deals that account for emissions. 

Cap Military Spending at an Amount Equal to the Next Largest Military Spender
Do we really need a military that is more than twice as powerful as that of any other country. Currently, the second largest spender is China. If we matched our spending to theirs, we would achieve a 70% reduction, freeing up $416 billion per year.

Make Taxes Progressive
Eliminate Sales Taxes
Reduce the Corporate Tax Rate
Tax Dividends and Capital Gains at the Same Rate as Income
Increase the Maximum Income Tax Rate
Implement a Net Wealth Tax Similar to the Norwegian System