Saving Social Security And America

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[Policing Wall Street]

Many businesses have praised the "global economy."

Few confess to the damage that’s done in practice, including to our own American economy. Social Security will soon become insolvent; what is to be done?

Members of the United States Senate –from the Latin word "senex," meaning old as in senile— have quoted Adam Smith, without of course having ever read his work. They gained whatever knowledge they have of him from excerpts or from reading books such as "The Worldly Philosophers," by Robert l. Heilbroner.

The most important lesson of Adam Smith, which is never stated, is that there were no social benefits; that is, Social Security, Medicare and Medicaid.

There was no universal and free education for children. Therefore, all countries theoretically had the same social expenses- none. This made all countries equal. Under this scenario, free trade would be beneficial if we were to remove tariff barriers and permit the importation of food from Africa; rather than have protection for the "small" American farmer. You know those "small" family farms, with names such as Archer Daniels, Cargill, Bunge and so forth. The first presidential caucus is held in Iowa –the land of these "small" family farms—which is why we have expended such huge sums in farm subsidies. To the tune of $30 billion annually.

Let’s consider the workings of the so-called global economy by reviewing outsourcing. Yes, IBM outsources its programming to India. IBM saves billions of dollars by paying its Indian employees $15 per hour compared to $100 per hour in the United States.

Some might see this as good business. IBM saves $85 per hour. Yes, IBM does save money. Yet, those American high tech employees, who are left unemployed here in the U.S. by IBM’s decision to relocate abroad, are collecting unemployment. That means that IBM does not pay Social Security taxes and Medicare taxes it would have encumbered had these Americans been working.

The Indian employees are contract employees and they do not have any benefits. No medical benefits. No pension plan.

It is not the Indian high tech employee, who truly benefits. The benefits accrue to the firm that employees the high tech employee because these employees are contract employees.

Let’s now examine Citibank. My friend once had a problem with her Citicard at a Citibank ATM. Citibank provides a telephone that connects to a Citibank service center where your questions are answered. So, my friend picked up the telephone and spoke to a Citi representative. She had difficulty understanding the young man. So I spoke to him. He was very nice and he spoke to me from India. That’s right—Citibank, the bank which was fed billions of dollars in taxpayer bail money through TARP money, has its calls serviced in India.

As if that wasn’t enough, Citibank makes off like a bandit with your money with high interest rates on its credit cards. You, the American taxpayer, are subsidizing Citibank by lending Citi money at cheap rates. You have guaranteed Citi’s debt. Yet Citibank does not hire Americans who now desperately need jobs to service the company’s calls; Citibank hires people in India to answer your telephone calls about your credit card balances.

If Citibank and other U.S. banks were to hire Americans and those immigrants who reside in the United States who want to become US citizens, perhaps we as Americans would believe that our TARP money was being well spent.

Our social security system would have more people paying into the fund. Perhaps, it would eventually be solvent. Also, the federal government would collect more money in income taxes.

But even more important than social security is our national identity. There is something else that unites us as Americans. Our Declaration of Independence states: "We hold these truths to be self-evident, that all men are created equal…"

Now that does not truly mean "equal." It currently means "equal in the eyes of the law"; at least in a federal court. It means access to education and health care.

We guarantee all children, whether citizens, legal immigrants or illegal immigrants, a free high school education. We subsidize college for all children, whether citizens, legal immigrants, or illegal immigrants. But that is not the way it’s done in India.

In India there is no universal education. Children are born into a caste system; that is, their stations in life are determined by birth whether. That’s what establishes whether one exists on the margins of society or not.

There is no universal education; whether primary or high school. College education is for the well-off. India is one of the few countries where child prostitution exists.

(To be fair, my column on has also discussed a member of the Board of the American Stock Exchange --AMEX-- who years ago while I was a Wall Street trader, sexually assaulted women and laundered drug money. Well, that member of the Board, who was never prosecuted despite my complaints to the authorities, went on to India to have sex with children and to brutalize women.)

So, how might we stop the flight of American jobs to other countries? Simple; tax the profits of offshore subsidiaries of American companies—that is, those companies whose balance sheets and profits are consolidated with those of American companies, at a higher rate than that of the parent company. Say, a tax rate of 55%.

The American government must then apply those extra taxes to Social Security and Medicare; not to TARP funds, or to new fighter plane systems.

But even more important, perhaps we can get IBM and Citicorp to repatriate those jobs in India and elsewhere back to the United States.

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