ECA Newsletter 3-14-19
We are all used to having to use every tool available to us to outwit and outbid our competitors for a chance to sign a contract with an owner. As I ponder the outcome of the 2020 Election, I consider what could happen to our industry if Bernie wins, or if the Dems win and adopt a very far left agenda that would mimic the Democratic Socialists that are so much in the news lately. I keep reading the news that young people believe Socialism is better than Capitalism for the USA. It makes me wonder, if all the young people vote for a socialist agenda and candidate, and non-citizens are given the right to vote, and the non-citizens believe a redistribution of wealth (socialist concept) benefits them more than capitalism, could a socialist United States be far behind? And if that happens, how does that affect our industry?
As I ponder those questions with you, let’s make sure we are communicating properly!
A little background high school remedial lesson for my own benefit and maybe some of you too—
What is the difference between Capitalism and Socialism and Communism?
- Capitalism: Although some of you may doubt it, our current system (political and economic) is based on capitalism. The key to capitalism is being able to own land, own businesses, be able to make a profit and be able to keep that profit to better yourself and your family. In a capitalist system, when one makes more profit than another, there is nothing in place that would take his/her “extra” profit and redistribute it to someone who has less resources (we of course do have taxes that do that but not to the extent that socialism takes that wealth and redistributes it). Capitalism is a system where greed and the chasing of the almighty dollar dominate the incentive and the work ethic of those trying to get ahead. The idea is that great ideas and innovation and increased efficiencies are derived from the “chasing of that dollar”. Critics of capitalism point out (correctly) that workers often are taken advantage of in the pursuit of profit and while a corporation can make “ungodly” profits, there is nothing in place that says those projects must be distributed to the workers who did the tasks to make that profit.
- Socialism-Specifically Democratic Socialism: The socialist believes that person and/or the corporation, should be taxed and regulated such that his/her wealth is redistributed to those that have less resources. The concept is to allow private ownership of land and businesses, but redistribute the wealth through government run social programs in such a way that all society members get what they need. Essentially, the socialist system is a “classless” system where the resources produced by the private sector are distributed throughout the society so that, in theory, the society is stronger because there are no “weaker” society members. The Democratic Socialist Party of America (from their website) believes working people should run both the economy and society democratically to meet human needs, not to make profits for a few.
- Communism: This is where socialism “morphs” into a political system where the government owns and controls the means of production and the property. There is no more privately owned companies or land in communism.
What countries are socialist today? Bangladesh, India, North Korea, Portugal, Sri Lanka and Tanzania. Yep. That’s it. Although some Democrats are touting Sweden and Norway and Finland as being socialist, they are not.
Now that we are back to a high school freshman level in our political civics knowledge, let’s look at how things seem to be leaning in our country and how they might affect our industry.
Alexandria Ocasio-Cortez (AOC) recently proclaimed America should shift from a Capitalist system to a Socialist system. Some would dismiss AOC’s views, but if they did, they would be making a mistake. It is her views that are primarily moving the Democratic party far to the left and wide out in the open and unapologetic about those socialist positions. Although AOC is certainly getting the most news, she is not alone in touting the benefits of Socialism vs Capitalism. Bernie Sanders is a Democratic Socialist (as is AOC), and many of the Democratic candidates for President in 2020 are taking positions that demonstrate they are leaning towards a socialist system rather than a capitalist system.
So back to my original pondering-could this country elect a socialist and adopt a socialist economic program? YES. And if that happens, how might that affect our industry? The rest of this “Soapbox” ponders that last question—
Here are some of the programs and taxes socialist candidates are considering as their “platform”:
- Higher tax rates on wealthy individuals-70% to 90% (highest rate is currently around 37%-was 43% in 2017)
- Higher tax rates on corporations-50% to 70% (highest rate is currently around 21%-was 35% in 2017)
- Use the higher tax income to fund lots of programs that have been discussed, including-free college tuition, Medicare for all, housing for all, jobs for all, and money for those that cannot or do not work, pensions for all.
So in the “Green new world”, it won’t matter if you are smarter, harder working, more innovative, and if you have the best clients and the best workers-all Contractors will essentially make the same after tax dollars because if you are better than everyone else, you will simply be taxed at a higher rate to redistribute your wealth. You will not have a choice.
In our world today, if you are better at signing good clients, better at motivating and training your workforce, and better at cost control of your work, you as an owner make more money. You then can choose to give some of that money out to your best workers to reward them or give to community relation projects or organizations that give to those projects to help them out (again-if YOU CHOOSE TO!). If Socialism is in place, you may not be able to give that money out to your best workers or give that money out to Associations or projects that benefit the community because the Government will have programs set up that do the compensation and community benefits without your choosing.
What happens to our company core values? If you pride yourselves in training and being better than the other firms in your area of work, will you still have that as a core value? I do not know the answer to that but would guess the socialist program that is chosen for your workers will not have your opinion considered.
The other thing to consider is that in socialism, the idea is to redistribute the wealth to those that need it most. So if you have the wealth, you can be assured that the government will be trying to get it to hand out to others that you may not want to benefit.
So what options do you have?
If you have wealth, and if you are a hard worker, and if you reward your best producers with the highest pay, and if you do not take advantage of your workforce, you might want to vote for capitalism (even with all of its “warts”). But if you can see your vote is not going to be on the winning side, you may want to choose what many other successful and wealthy folks are doing-move away from the high taxation and protect your assets.
The wealthy are jumping to safety!
Have your parachute packed!
That’s All Folks!