Ask what you can do for your COUNTRY

April 7, 2009

Sankarshan Acharya
Pro-Prosperity.Com and Citizens for Development

April 7, 2009

Honorable President Barack Obama
Honorable Vice President Joe Biden
Honorable Speaker Nancy Pelosi
Honorable Senator Harry Reid
Honorable Senator John McCain
Honorable Senator Chris Dodd
Honorable Congressman Barney Frank

Sub:     “Ask what you can do for your Country.”   

Leaders have repeated this quote during crises.  Somewhere I read that the idea was coined before President Kennedy uttered it.  Senator McCain has recently launched a “Country First” campaign.  President Obama has called for community involvement to uplift the Country from the present crisis.  If leaders emphasize working for the Country, it has to be a profound notion. 

We must therefore define Country rationally. 

Rationally, “Country” should be the vast majority of effective producers of globally competitive goods, services and ideas.   This definition underlies a fundamental truth that only the effective producers can make a nation prosperous and stable and that only they can feed and protect the rulers as well as the poor and the laggards.  If we stray from this fundamental truth, there will be utter confusion and deterioration in the core strength of a nation.  No democracy will adopt a different definition of Country.

What one should do for the Country can now be ascertained by those actions and policies that fulfill the common longing of the vast majority of effective producers.  I have rationally inferred the common longing to be prosperity amid stability of society.  A democracy should have a referendum to resolve the issue of common longing. 

A philosophy of service to the Country is Prosperity amid Stability: A New Economic Paradigm for Democratic Capitalism.[1]

The current crisis simply illustrates once again that the Country has not been served by its custodians, consistent with the desire of the founders.  In the wake of path breaking industrialization of America, markets crashed badly in the 1860’s leading to destitution of the vast majority with ensuing unrest.  In the aftermath of major inventions like telecommunication, radio and television, markets crashed again in 1929 leading to the Great Depression that left very few unscathed.  The current technological advancement marks the steepest progress humans could conceive of with peta bytes of data transmitted per second and with supercomputers of the bygone era available in a compact form for barely $500.  Yet, the Country is passing through a severe depression due to bankruptcy of households as well as bankers. 

With due respect to all and malice for none, one can assert that our custodians have abjectly failed to ask: “What they could do for their Country,” let alone acting to fulfill the Country’s common longing.  I do not relish stating so now, when the times are rough.  But I did not fear about stating the truth at the height of the “boom.”  The individual in me is incidental.  It is the message of service to the Country

The above discourse should make it easier to formulate optimal policies to serve the Country.

1.      Consider, for example, the naked short-selling practice which creates shares artificially beyond those legally outstanding under the corporate law.  Why should the custodians, professing to serve the Country, permit such artificial creation of securities that obviously decimates/dilutes the hard-earned savings of the vast majority of effective producers?  There should be no time (let alone 13 days) given to naked short-sellers to deliver.  Banning naked short-selling (perpetrated directly or indirectly) should be a mark of service to the Country.

2.      Consider trading between hedge funds, privately owned by executives of a bank, and the fund managers within the same bank.  Permitting such trading obviously hampers the trust of other investors in the bank and creates enormous moral hazard (blackmailing) risk for taxpayers as we are facing today.  Custodians professing to serve the Country should have no confusion in banning such trading and in not having individuals with private hedge funds as executives of any bank.  Whether or not the bank receives taxpayers’ funds is immaterial because banks are repositories of trust between creditors and debtors and the government custodians serving the Country are naturally obligated to maintain this trust.  The smooth operation of a bank is impossible without the trust.  Trust can be guaranteed only by the government custodians who remain dedicated to serve the Country.

3.      Trading between hedge funds, privately owned by the board of directors of a mutual fund company, and the fund managers in the same company is also a serious breach of trust that will eventually explode, if it already has not.  Government custodians serving the Country will have no confusion to ban mutual funds from becoming companies with BODs operating privately owned hedge funds. 

4.      Patent rights stifle efficiency in production that hurts the Country.  Government custodians serving the Country will not advocate using taxpayers’ resources to protect patent rights.  The inventors and innovators rarely benefit much from the protection of patent right as much as the robber barons, as we have seen through booms and busts.

5.      Recording data on net worth of individual households to measure the barometer of prosperity of the vast majority, say the middle 90%, is not only desired by the Country but also necessary to have early warnings about impending depressions. If the custodians are interested in enhancing their own net worth, why should they presume that the Country is naïve to be swayed by the government-hooted GDP growth?  President Obama has recently stated how the values of credit default swaps have been added to the GDP, while the Country has been depressed by such credit value gimmicks.

6.      As soon as the custodians recognized a collapse of the banking industry in 2008, they aptly created about $2.5 trillion for the banks that had gambled away insured funds and frittered the trust needed for their existence.  This allowed many irresponsible and reckless bankers to refinance their debts at near 0% by borrowing from the Federal Reserve.  But the Country is still paying 6-9% and ironically everyone including the bankers and the custodians are propped by the Country.  This shows that Federal Reserve is obviously not serving the Country.  How do the custodians serving the Country allow a Federal Reserve System (twelve privately controlled Federal Reserve Banks) lend money created on the back of the Country to a bunch of reckless gamblers, who have decimated their own debt and equity capitals as well as the trust of investors?  Creating money at 0% on the name of the Country is not passed on to the same Country that props everyone else.   

The Country has de facto defaulted in its debt obligations, judging by the necessity to print money to repay national debt.  The Country cannot produce as much as it needs to import for survival.  Have we forgotten why the founders declared independence?  The colonists resented trading of their goods and services for sterling pounds printed abroad.  The rest of the world is now resenting trades in dollars printed in the U.S.  This has shrunk global trade.  The Chinese have become vocal about the declining value of their dollar reserves.  It feels as if the rest of the world wants independence from dollar trade without a war.

May you muster the courage to serve the Country that props everyone in the nation!     

With profound regards,

Sankarshan Acharya