Post War Credits

Post War Credits Martin G. Evans Professor Emeritus, Rotman School of Management University of Toronto The cost of the Second Iraq War is inexorably increasing. At the last count the financial cost is approaching $150 billion. We must pay for this war ourselves. It would be immoral and irresponsible to pass the cost of the war on to our children and grandchildren. The question is how to pay for it. In 1940 John Maynard Keynes published a small monograph entitled “How to pay for the war.” Later that year, the British Government incorporated some of his ideas into the Post War Credits scheme. This involved a forced saving deduction from an individual’s income; the savings were to be paid back after the war – in fact they only began to be paid back on a person’s retirement and people were still receiving post war credits as late as 1973 – almost thirty years after the war had ended. I suggest that the U.S. adopt a similar scheme – it has the advantage of paying for the war in the short term and creating individual retirement savings accounts in the longer term, which is a priority of the present Administration. A progressive forced loan of the form outlined in the Table would generate about $128 billion dollars a year – enough to put a big dent in the Iraq war’s cost. The scheme I propose here would be steeply progressive with the surcharge beginning at an income of $60,000. All income over $60,000 would be subject to a forced loan rate of 1%, an additional 1% would be charged on income over $100,000. After each increment of $50,000, there would be an additional 1% surcharge though the rate would even out at 16% of the portion of a person’s income over $500,000. This represents about a 1% increase in withholding at the lowest level but represents about a 45% increase in withholding for the millionaires among us. Income Forced loan rate. Additional withholding from income. under $60,000 0.0 % $0.00 $60,000 to $100,000 1.0 % 0 to $400 $100,000 to $150,000 2.0 % $400 to $1,400 $150,000 to $200,000 3.0% $1,400 to $2,400 $200,000 to $250,000 4.5 % $2,400 to $5,150 $250,000 to $300,000 6.0 % $5,150 to $8,150 $300,000 to $350,000 7.5 % $8,150 to $11,510 $350,000 to $400,000 9.0 % $11,510 to $14,150 $400,000 to $450,000 11.0 % $14,150 to $17,150 $450,000 to $500,000 13.0 % $17,150 to $28,400 $500,000 to $1,000,000 16.0 % $28,400 to $ 108,400 $1,000,000 to $2,000,000, etc 16.0 % $108,400 to $268,400, etc Alternative levels of withholding and different levels of progression could be administered if the scheme proposed here was thought to be too draconian. The important point is to get the war paid for by this generation. The funds in each individual’s loan account would accrue interest at the rate of 3%; this interest would accrue tax free in the individual’s account. At retirement, the account would be converted to an annuity with the repayment of the interest portion being taxable. This plan would ensure that the present generation paid the costs of its war and would have, as a bonus, the effect of generating retirement savings for the wealthier half of the country. Retirement funds for the poorer among us will have to await an administration more committed to the social safety net

Going to the Hogs

ate: November 3 2004
Sent to but not published by Boston Globe

The country is going to the hogs.

With the re-election of George W. Bush, the greedy business executives who looted their companies and the country have received a carte blanche. They are free to continue to pay wages below a living wage. They are free to offer jobs without health benefits though the benefits they receive are very nice, thank you. They can continue their drive to reduce regulations that are the protection of the public. They will be accountable to no one.

I lament for the nation.

Bush's Abdication of Responsibility

Date: October 27 2004
Sent to but not published by Boston Globe

George W. Bush's discovery of religion in his mid-40's has enabled him to disavow responsibility for his wild youthful misdemeanors. This is reasonable – no one should be faulted for their youthful mistakes.

But Bush and his administration have made the abdication of responsibility a way of life. Let us look at the tally.

As a Director of Harken Energy, George Bush abdicated his responsibility to the shareholders who were paying him by failing to file a timely "Insider Trading" report to the Securities and Exchange Commission.

As CEO of Halliburton, Cheney disclaimed responsibility for the aggressive accounting practices that have now been reversed following an SEC investigation.

In Iraq, Bush and his associates have abdicated responsibility for:

• the failure of intelligence that led to the beliefs that there were weapons of mass destruction under Saddam Hussein's control;
• the failure to plan for peace;
• the failure to abide by the Geneva Convention in the treatment of prisoners and detainees.
• the failure to guard anywhere, except the Oil Ministry, following the fall of Iraq.

At home, Bush and his associates have abdicated responsibility for:

• funding the "No Child Left Behind" Program;
• funding for the protection of the air we breathe and the water we drink;
• protecting the rights and freedoms of every American citizen.

With a record like that, why would anyone vote for a continuation of this administration?

Redistricting in Massachusetts

Date: October 21 2004
Sent to but not published by Boston Globe

The redistricting problems of Massachusetts have faded from memory. But unless we devise a better method of setting District boundaries, our troubles will come back at the beginning of the next decade. We need to think through an alternative to the Legislature devising the boundaries.
Think back to when you were a child, if a piece of cake had to be divided between you and a friend, you quickly figured out that the way to get a fair distribution was for one person to cut the piece of cake in half and for the second person to decide which piece to take. That kept the cutter honest and made sure that two equal pieces emerged.
It is not like that when it comes to choosing the boundaries of political districts in Massachusetts, the big brothers and sisters on Beacon Hill design and choose the boundaries – it is almost like the politicians choose the voters rather than, as it should be, the voters choosing their representatives. As a result Massachusetts has almost the least competitive election in the US. It is very clear that redistricting is much too important to be left to the politicians who act as the political heirs of Elbridge Gerry to create districts to suit their convenience.
There must be a better, fairer way of setting the boundaries of electoral districts. There are! Federalism is, after all, a source of experimentation so we can see a number of alternatives existing across different states.
My favorite would be for Massachusetts to adopt an independent electoral redistricting commission such as that found in Arizona. A committee of 5 persons is charged with undertaking the redistricting every ten years. Four of these are partisan (selected from a pool of 25 generated by the State Supreme Judicial Court) – but are NOT current, past or potential office holders. The four members then select a fifth. This small committee then designs one or more plans based on the usual criteria: equal numbers of voters, contiguity, compactness, community of interest, and adherence to the Voting Rights Act. One of these plans is then adopted by a simple majority vote. The boundaries are then binding on the electorate unless there is a court challenge. Any challenge would go directly to the State Supreme Judicial Court so as to ensure a speedy disposition of the case.
This process of designing the boundaries has the advantage of allowing politically motivated input to the system – through the selection of the commissioners – but keeps the politicians at arm's length when it comes to the design and decision. The least of many evils!
A quick look at the map of the current boundaries of the Massachusetts Congressional Districts shows that many of the current criteria are not met: districts do have roughly equal numbers, but they are not compact and they have little community of interest – what do the voters of preppie Needham have in common with the voters of blue-collar Fall River.
We are six years away from the next Census and the need for redistricting. If we start now, at the pace at which the political wheels turn in Massachusetts, we might have just the new procedures in place for 2001. But we have to get started NOW. If your district has a redistricting reform question on the ballot, I urge you to vote in favor to bring home to our legislators the importance of action.

Health care in the debate

Date: October 14 2004
Sent to but not published by Boston Globe

Mr Bush made a major misleading statement in the debate last evening when he said that "... government-run health will lead to poor quality health, will lead to rationing, will lead to less choice."

The fact is that the data show something very different. A useful indicator of the quality of health care is the infant mortality rate. In the US this is 6.6 deaths per 1000 live births. In Canada where health care is run by the provinces, the rate is 4.8 deaths per 1000 live births. In the UK where the central government pays for health care, the rate is 5.2. In Scandinavia the rate ranges from 2.8 (Sweden) to 4.6 (Denmark).

The fact is that for some people, US health care is the best in the world; for others, it is totally inadequate. Rationing of health care in the US is accomplished by the ability to pay.

Abuse and Terrorists

Date: September 13th 2004
Sent to but not published by the Boston Globe

I am truly appalled by the words reportedly (Boston Globe, September 11, 2004) uttered by Donald Rumsfeld: that our treatment of prisoners at Abu Ghraib was better than the way the terrorists had treated their captives - death.

We will lose the war on terrorism if we select their behavior as the standard against which we judge our own. In the past, we have judged our behavior against the ideals set forth by our founders: a beacon set upon a hill, a country of laws not men.

Our judgements about the propriety of those actions should be based on their relation to the laws we swore to uphold: the Geneva Convention on prisoners' rights, the anti-torture treaties that the US has signed. That should be the standard, not the behavior of the terrorists.

In 2002 Secretary of State Powell justified the US's failure to sign the International Criminal Court Treaty because "We have the highest standards of accountability of any nation on earth." Today how hollow this statement sounds after the prison abuses of this past year and their consequences of courts martial being arranged for soldiers and wrist slaps for officers involved with the abuse; to say nothing of the lack of accountability for those in the higher echelons of government.

Forgetfulness of McCain and Collins

Date: September 9. 2004
Sent to but not published in the Boston Globe

Ben DeLorio had it right about Senator Susan Collins (Boston Globe, Sept 1.) and David Claffey (Boston Globe, Sept 2.) had it right about John McCain. Frankly I had expected better from these two moderate Republicans.
Collins forgot to mention that from October 2001 until June of 2002, President Bush soundly resisted the call for a Department of Homeland Security. It was only through pressure from the Democrats and especially from the families of those who perished in the 9/11 attacks that President Bush reluctantly adopted the idea in June of 2002.
McCain forgot to mention, in his exuberant defence of the Iraq war, that Saddam was in fact highly constrained because of the UN Sanctions on Iraq; the inspectors on the ground; and allied air patrols in the air
It just goes to show that in an election year, being Republican trumps everything; even the whole truth!