The Greatest Threat To Our Republic is The Financial Ignorance of our Politicians
April 17, 2019
In a recent blog, I suggested that individuals running for public office should be required to pass a financial literacy test.
And why not? If you want to sell securities you need to pass a test. Same for real estate. Or for being a dentist, practicing medicine, becoming a plumber, electrician or HVAC tech.
You have to take a test to drive a car, be a teacher, or even become a professional barber.
How in the world can we allow people to manage our multi trillion dollar budget who have know nothing about money, how it works, or what makes our economy tick?
Here’s a very recent, very plain example of why financial literacy should be required of our elected officials.
Alexandria Ocasio-Cortez brags that she almost single-handedly killed the Amazon deal for 25,000 high paying jobs in Queens. Surrounded by her equally uninformed supporters, she took a bow and received great kudos from those who saw the whole sorry affair as her taking down “the man.”
It was a real David and Goliath story all right. But, in this case, it was AOC and her allies from the unions and the ultra-left who represented the forces of oppression and ignorance.
And it was Jeff Bezos and Amazon who were working to slay the hopelessness, despair, and poverty slowly taking over the area of Queens where Amazon intended to locate.
And all because she had no idea what was actually on the line or how investment works.
AOC incorrectly claimed that NYC and the State of New York had cut an unholy deal to give Amazon billions of taxpayer dollars in exchange for building their massive new headquarters.
She was dead wrong. And it’s why a financial literacy test would be a good idea for anyone with authority over taxes and government finance.
The actual deal was that Amazon would receive TAX CREDITS for each high paying job they created at this new facility above and beyond a minimum number. That’s a long way from getting a big check from the tax payers for simply building and opening up a new building.
Had she understood how such deals work, she would have realized that Amazon’s direct contribution to New York’s tax haul was going to be $27 billion over 10 years. And the sum total of tax credits they could qualify for was only $3 billion. It shouldn’t take a finance expert to understand that a $27 billion payoff against an investment of $3 billion over 10 years is a pretty hefty return for any investor — even state and local governments run by politicians.
And that’s only the direct pay off. That doesn’t count all the new stores those Amazon employee would shop in, the carpenters they’d hire to fix up the homes they’d buy, the landscapers they’d need to plant lawns and trees, or the painters to paint their living rooms and kitchens. It doesn’t include the shops that would supply their kids’ the clothes, bikes, and books they’d need before heading off to school. And it doesn’t count the neighborhood restaurants, the auto mechanics, the dry cleaners, the drug stores, or the new realtors. And all the economic activity those new businesses would produce.
AOC simply doesn’t understand how these deals work. Had she talked with Amazon, or the city council, or anyone else who knew anything about economics rather than the left-wing puppet masters who created her and control her, she would have learned that Amazon would not have received a single dollar of tax credits unless they created jobs.
Instead, her ignorance and arrogance cost her neighbors at least the 25,000 jobs that on average would have paid $150,000.00 a year plus benefits.
She also cost her neighbors the economic boom that a new Amazon headquarters with 25,000 jobs would create for them. It is a staggering loss.
Sadly AOC and her supporters wear blinders that lead them to follow a very narrow vision that says big corporations are bad. They’re evil. They do harm. Really? What harm? Employing her neighbors, providing more opportunity, cleaning up an otherwise run-down and depressed part of town?
Yes, Amazon and other big companies want to make money for their employees and shareholders. What’s wrong with that? AOC can’t tell you. Still, she has nothing good to say about them while texting on her iPhone. Hypocrite!
Those in control of our money (and contrary to liberal belief, the money we earn is our money) need a basic understanding of how money works, of the impact higher taxes, and conversely, lower taxes have on our economy. They need to know the ramifications of a 22 trillion dollar debt and the damage such a massive, and growing, federal debt will have on our kids and our grand kids.
They need to understand what happens to a dollar in the hands of government vs the hands of a small business person. They need to understand what stimulates growth, creates wealth, and triggers inflation.
If we had a true and comprehensive financial literacy test, I’m convinced two-thirds of the Members of Congress would fail. At least that many state legislators would fail as well … and probably half our governors.
Yet a majority of voters elected these people to impose and spend taxes however they see fit. I fear that tells us something as alarming about our voters as it does about the people they elect.
It also shows the failure of an education system that’s costing a fortune but not delivering, and education unions more interested in benefits for teachers than in knowledge and well being of children.
No wonder the Republic is threatened.
John Philip Sousa IV is an entrepreneur, political activist, author and accomplished business person. John has worked in the financial services industry for over 40 years, built a highly successful marketing company, ran for congress at age 24, and in 2016 created and led the successful movement to draft Dr Ben Carson into his candidacy for President of the United States. John is author of John Philip Sousa, A Patriot’s Life in Words and Pictures and Ben Carson, RX for America.