WEALTH OF NATIONS

I use the internet most to get free access to articles, columns and publications that, otherwise, would be out of my reach. And I use social media to help me find them. I find that the International Spectator, Aeon Magazine, Quartz and the Atlantic Magazine are great sources for thought provoking information and by following them on Twitter I am always up to speed on what gets written there.One topic that intrigues me is the wealth of nations and what nations do to make their wealth work for them.

The International Spectator recently posted two informative statistics on that subject. In the first one it listed, based on 2014 data from Allianz, the ‘Total Wealth’ of 9 leading nations and this listing provides a good frame of reference for the relative strength of the USA as measured by wealth. The data put the total wealth of the USA at $48.2 Trillion or $151,114 per capita. The next wealthiest nation is Japan at $11.7 Trillion or $92,126 per capita. Here is the full list

COUNTRY	TOTAL WEALTH IN TRILLION DOLLARS	POPULATION IN MILLIONS	WEALTH PER CAPITA IN DOLLARS
USA	48.2	318.9	151,114
JAPAN	11.7	127	92,126
CHINA	10.5	1,357	7,737
UNITED KINGDOM	5.8	63.8	90,909
GERMANY	5.1	82.6	61,743
FRANCE	4.4	64.9	67,796
BRAZIL	1.1	200.4	5,489
INDIA	1.0	1,267.4	789
RUSSIA	0.5	142.1	3,518

The second statistic originates with Credit Suisse reporting on the number of millionaires in six leading countries. That list looks like this

COUNTRY	NUMBER OF MILLIONAIRES IN MM DOLLARS	POPULATION IN MILLIONS	MILLIONAIRES AS % OF POPULATION
USA	15.7	318.9	4.9
UNITED KINGDOM	2.4	63.8	3.7
JAPAN	2.1	127	1.65
FRANCE	1.8	64.9	2.77
GERMANY	1.5	82.6	1.81
CHINA	1.3	1,357	0.09

What do these numbers tell you? No two readers will draw the same conclusions from these two data sets, but a few observations jump out at us.

1.       Both in absolute terms and on a per capita basis, the USA is (still) far ahead of its nearest competitors when the yardstick is the financial wealth of nations.

2.       On a per capita basis, the USA, Japan and the United Kingdom are the wealthiest nations in the world, also confirmed by the largest number of millionaires.

3.       China’s wealth per capita is on par with Brazil, but far ahead of India and Russia.

4.       In Europe, the UK and France are the wealthiest nations, ahead of Germany.

The question is what we do with this wealth and how we protect it from eroding. National wealth is not unlike a person’s net worth. It consists of assets minus liabilities. Our assets do not grow unless we do something productive with what we have and we have been increasing our liabilities now for a while as evidenced by the growth in our national debt and by a large number of unfunded future obligations we have undertaken in the realm of pensions, entitlement programs and deferred maintenance of our civil and military infrastructure.

Sometimes I’m afraid that America will go the way of so many big lottery winners. The New York Daily News reported on the 12^th of January, 2016 that almost seventy percent of big lottery winners were broke within seven years of hitting it big. Just like these ill-fated lottery winners, America is more concerned with consuming than it is with saving and investing. And the wealth is incredibly unevenly divided. Thirty-five percent of private wealth in the USA is in the hands of the top one percent of households and seventy-six percent is in the hands of the top ten percent of American households. This is much worse than income inequality, where the top one percent of American households takes home about twenty percent of overall income.

This level of wealth inequality is bad from a socio-political perspective. It is one explanation for the high level of populist dissent evidenced in the current campaign for the 2016 presidential election. And it has led to a situation where a handful of very rich individuals has taken control of the funding of election campaigns that serve their, rather than the national, interest. It is equally bad from an economic perspective, because it sidelines all but a few Americans from risk taking by means of participation in the funding of research and innovation required for the generation of future wealth. It perpetuates the control that very few individuals have over the major economic decisions about allocation of resources and the types of investments America makes in its future.

America is still, by any measure, the wealthiest nation on earth. This wealth, if properly applied, should serve as a platform for continued global leadership. But just like the ill-fated lottery winners, America could lose it all if the wealth is not properly preserved, allocated and put to use for the benefit of all.

SECOND AMENDMENT

I tuned in, on January 7, to the CNN ‘Town hall Meeting’ on gun violence in which the President of the United States participated and I found it painful to watch. Here was the holder of the highest office in the land and it was clear from the start that he had to advocate for common sense gun control measures with his hands tied behind his back. I am not a big admirer of the current holder of the highest office in the land and am very concerned about the tendency of his and recent other administrations to stretch the boundaries of executive power, but I still don’t like to see America’s President powerless to steer the conversation to where it really needs to go. And I don’t think that he had to limit his arsenal of arguments for gun control the way he did. The first words out of his mouth were: ‘I do respect the Second Amendment’. Of course he does, he has sworn to defend the constitution when he took office. But he failed to say: ‘But I believe that the Second Amendment does not forbid the Federal Government, and much less the States, to put in place reasonable, sensible restrictions on the trade and handling of firearms’. By not putting up that argument, he reduced the debate to a fight on the periphery of the issue.

How quick do we forget! Former Justice of the US Supreme Court John Paul Stevens wrote a book that President Obama should have read and referenced in this town hall meeting. The book, published in 2014, is titled ‘Six Amendments, How and Why we should change the Constitution’. In the book, Justice Stevens reminds us that—and I quote—“for over two hundred years following the adoption of the second amendment federal judges uniformly understood that the right to bear arms was limited in two ways: first, it applied only to keeping and bearing arms for military purposes, and second, while it limited the power of the federal government, it did not impose any limit whatsoever on the power of the states or local governments to regulate the ownership or use of firearms.” This interpretation underpinned the 1939 Supreme Court decision in the ‘Miller’ case in which a unanimous Court held that Congress could prohibit the possession of a sawed-off shotgun, because that sort of weapon had no reasonable relation to the preservation or efficiency of a ‘well-regulated Militia’.

Justice Stevens writes in his book that during his tenure on the Supreme Court under Warren Burger he never heard any judge or justice express doubt about the limited reach of the second amendment and that he cannot recall ‘any judge suggesting that the amendment might place any limit on state authority to do anything.’ He quotes Justice Burger himself, who, in a 1991 appearance on the MacNeil/Lehrer Newshour remarked that “the Second Amendment has been the subject of one of the greatest pieces of fraud, I repeat the word ‘fraud’, on the American public by special interest groups that I have ever seen in my lifetime.”

So, what has changed? 

In the first place, the National Rifle Association (NRA) has deployed a vigorous campaign against the Supreme Court’s limited interpretation of the reach of the Second Amendment, it has significantly grown its membership and found a way to place a litmus test on people running for public office. Candidates for public office who do not underwrite the NRA’s interpretation of the Second Amendment not only will have to do without an endorsement and financial support of the NRA, but expect active campaigning on the part of the NRA against their candidacy. NRA keeps the pressure on politicians by issuing a ‘rating’ from A-F for each elected office holder in the nation. Hence Warren Burger’s accusation of defrauding the public.

In the second place, the Supreme Court, in more recent rulings has changed the law of the land in at least two respects. In the ‘Heller’ case in 2008 a divided Court (five to four) held that the Second Amendment protects a civilian’s right to keep a handgun in his home for purposes of self-defense. And an equally divided Court decided in ‘McDonald v. Chicago’ that the due process clause of the Fourteenth Amendment limits the power of the city of Chicago to outlaw the possession of handguns by private citizens. (Note that in both cases the Court rules on ‘handguns’).

This case history shows a few things:

1.       That it is not so much the law of the land, including the Second Amendment of the Constitution, as well the heavy hand of the NRA that prevents Congress from taking reasonable, common sense steps to reduce, if not prevent, gun violence.

2.       That the Second Amendment does nothing to prevent regulation of military style weapons outside of the use by well-regulated militia (in modern terms, police, National Guard and military).

3.       That the Second Amendment does nothing to keep the federal government from putting a registration requirement (like vehicle registration) in place.

4.       That only the due process clause of the Fourteenth Amendment limits the states’ freedom to regulate the possession of handguns.

Opponents of further gun control point to the fact that in spite of unabated growth of the number of firearms in circulation, gun related homicides in the U.S. have decreased since 1993 from 7.0 to 3.2 per 100,000 people, cutting it by more than half, but they have no answer for the fact that, at that rate, gun related homicides in the U.S. are still at least five times higher than in the rest of the Western world. The CIA World Factbook puts gun related homicides in Italy at 0.7, in Canada at 0.5, in Germany at 0.2, in Australia at 0.1 and in Japan at 0.01 per 100,000 people. Total annual deaths by firearms in the U.S. have, since the start of the 21^st century remained remarkably stable at around 10-10.5 per 100,000 people. Every year around 30,000 people get killed in the USA by the use of a firearm. That is roughly equivalent to the number of traffic deaths, which, in 2014 was reported by the NHTSA at 32,675.

Don’t such numbers provide a compelling interest on the part of the government to take whatever steps it can to protect its people from harm caused by firearms?

A problem with firearms is that they die a very slow death. Other than cars, which generally get junked after 10-20 years, guns stay in circulation and therefore keep accumulating. A responsible government needs to acknowledge that guns, while they have a legitimate use, are (not unlike cars, pesticides, pharmaceuticals) inherently dangerous, and therefore need to be subject to regulation. The question is how much and what kind of regulation is needed to adequately protect the people. Only an open political debate and process can answer that question. My contention is that there is nothing in the U.S. Constitution, including the Second Amendment, to hold back the federal, state and local governments from putting effective safeguards in place against unnecessary gun related deaths in the U.S. The lawmakers just need to unshackle themselves from the iron grip of the NRA and muster the courage to do what is in the best interest of the public at large.

Contrary to what the NRA may want you to believe, nobody has any intent to take away the right to bear arms for the legitimate use of protecting life and property, hunting or recreational use like skeet trap and target shooting. Nobody will prevent any law abiding and qualifying citizen to acquire a gun for any of these purposes. The Second Amendment certainly protects against that. But it should stop just about there.

Congress should have the courage and moral fiber to defy the NRA and ban the sale and possession of any firearms that are not commonly used for the legitimate uses referred to above. It should also impose a registration requirement, so that illegitimate and criminal use of a firearm can be traced back to its owner. It should mandate the use of technology that prevents accidental discharge of a gun or the firing of a gun by anyone other than the registrant. Finally, it should get serious about enforcing the gun laws already on the books by appropriating the necessary funds to adequately staff the agencies charged with public safety and gun regulation. In all other respects it should defer to the states and local jurisdictions to meet the needs of their citizens in line with local traditions and circumstances.

It is a pity that the President of the United States on January 7 did not seem to realize how much leeway the law gives him and the Congress to dispel the fraud perpetrated upon the public by the NRA and work together on putting reasonable and common sense limits in place on the sale, carry and use of firearms in the U.S.

RESOLUTIONS

If America were a person intent on bettering its life by cutting through the clutter, ridding itself of distractions, focusing on what really matters and making the most out of its God given potential, then it probably would have made the following New Year’s resolutions:

1.       Get out of debt and live within my means.

2.       Don’t hide behind the Constitution as an excuse for not dealing with my problems.

3.       Put my own house in order before I become judgmental and interfere with how other persons conduct their lives.

4.       Make sure that the rising tide lifts all boats.

Sounds reasonable and doable doesn’t it? Alas, we know only too well, also from own experience, what happens to our lofty New Year’s resolutions as we get further away from the January 1 date. Other priorities take over and we quickly fall back into the familiar routine that we know but will not get the job done. There is always next year!

America can (and needs to) do better than that. How much of a challenge do these four resolutions represent? Let’s examine that.

The first resolution is blindingly obvious and straightforward. America simply can’t continue to, each and every year, spend more than it takes in. Nobody really knows where the tipping point is. At what point will our indebtedness impede and reverse economic growth? America should not continue to test the boundaries and find out where the tipping point lies. Instead it should muster the courage to sort out what kind and level of spending is required to execute a national strategy that propels the nation forward, economically, socially, culturally, protected by adequate security. And then eliminate all other spending. To cover the cost of these expenditures America should set up a revenue collection system and process that 1) supports attainment of  the national strategy; 2) is fair and supported by its citizenry; and 3) preempts further deficits. Holding on to this resolution is going to be painful, given the depth of the hole that America has dug for itself.

The second resolution requires more explanation. In making this resolution America is asking itself if the writers of the Constitution could have ever intended to protect some of the rights that, by judicial interpretation, have become unassailable in our current lives. For instance, where comes the right from to buy, with virtually unlimited funds, the subservience of our elected officials to their campaign donors? Did the writers of the second amendment to the Constitution truly mean to put military style weapons in the hands of Americans outside of their participation in a well-regulated militia? If the writers of the first amendment to the Constitution had had access to television, would they have condoned and protected the right of political candidates and their cronies to pollute the airwaves with lies, distortions and innuendo about their opponents? What would they have thought of the end run that pharmaceutical companies make around physicians by advertising their ware directly to an unsuspecting public trying to watch the news, a game or some entertainment? America is hiding behind its reverence for a document written two hundred years ago in a world that has no resemblance with the world we are living in today. It provides an excuse for not acting where a responsible government would have to feel compelled to act in protection of the interest of its people.

The third resolution addresses America’s responsibilities beyond its borders. Resolutions are made with the intent to achieve better outcomes. While many in the USA and abroad believe that America is the indispensable power in keeping a semblance of order in the world, an activist American diplomatic and military intervention in foreign affairs is less and less in the cards for three reasons: 1) after Vietnam, Iraq and Afghanistan the American public cannot stomach more body-bags coming back; 2) it is costly and would have to lead to either increased taxes or increased deficits; 3) the ‘Yankee go home’ sentiment is widespread around the world. The fact is that America has lost the moral authority required of an effective arbiter in world affairs. It is exacerbated by the irresponsible rhetoric used in the presidential election campaign and abandonment of a long standing American tradition that in matters of foreign policy democrats and republicans rally behind the president. That moral authority is best regained by showing the world that America has the will, the means and the capacity to solve its domestic problems manifested by its growing national debt, its crumbling infrastructure, its political polarization, its governance system corrupted by money-influences and its increased inequality. Leading by example is still the best recipe for attracting followers and allies.

The fourth resolution is about counteracting the forces that drive sharpening inequality. America’s capacity to create wealth is still unmatched in the world, but it increasingly benefits a tiny segment of the population. If it merely was a matter of math, the solution would be simple: Dividing the nation’s income generation capacity, or the aggregate wealth, by the number of residents would lift everyone out of poverty and restore the middle class. That is just to say that America has the financial capacity to make sure that the rising tide lifts indeed all boats. But does it have the political will to get there? America would have to make sure that institutional advantages and disadvantages do not get perpetuated and exacerbated. Here the focus should be on the younger generations. They represent the future and are the ones who will project the revived American moral authority abroad. For that they, all of them, need to have a chance to grow up, protected from poverty, disease, abuse and addictions and supported by great education, a healthy environment and effective social services.

America is not a person and there is no indication that its political leadership has made any commonly agreed upon New Year’s resolutions. But four simple resolutions sure could make a difference.