I Believe

• Guest Crom Carmichael and Social Security

  ☘️ Joel (00:00:00):Today, I'm pleased to host Crom Carmichael. Crom is an entrepreneur, investor, and business leader. He has served as the CEO and board member of Nishai Biotech, and if I said that wrong, I apologize, since 2002.🎤 Crom (00:00:16):Nope, that's exactly right.☘️ Joel (00:00:19):He's a native of South Bend, Indiana, graduated from Vanderbilt University in 1971. Crom has extensive leadership experience and a demonstrated strong commitment to innovation and growth, especially in biotech.Key aspects of your career include you're a founding investor in Serif Group, who provides seed and early stage funding to startups.You sit on the board of multiple companies, and those are all going to be in the written version (including Consensus Point, TrackPoint Systems, Confirmation.com, BancVue, 3SAE Technologies, and The Gardner School).You own an audio program that covers history's most influential thinkers called Giants of Political Thought. And the series fascinatingly outlines the philosophy of governance, including thinking of giants such as Thomas Paine, Thomas Jefferson, John Locke, Adam Smith, and others.And you and Mike Hassell now just started to host a podcast From Our Generation To Yours, where you offer lessons on business, politics, and life for the next generation.Crom, it's great to talk to you today.🎤 Crom (00:01:22):Well, Joel, thanks for having me. I appreciate it very much.☘️ Joel (00:01:26):I really appreciate that you focus so much on philosophy in governance because philosophy informs how and why we think about things.We establish goals based on some hopefully philosophical logic. And we need to orient ourself toward those goals because when we take our eyes or focus off of the goal, we get to start doing things that don't really make sense.I bet we can find common ground with the question, well, I bet we would both answer yes to the question of whether individuals have a duty to prepare for an uncertain future so they aren't a burden on others.I'm fascinated to hear your take on: Do we have a mandate for individuals to prepare for an uncertain future?As in, like a government requirement mandate. Essentially, should we have social security?Do we have a mandate for individuals to prepare for their future? And you have to make the assumption that me paying into Social Security is me funding my own Social Security in the future. I know that is not the way the system works.I know that it's not me paying in because I pay in for someone who's older than me and then somebody younger than me would theoretically pay in for me. But if I don't pay into the system, then I don't get the benefit.🎤 Crom (00:03:02):Right.So Social Security, when it was founded, it was promised to be like an insurance program where the money that you put in would go into your own social security account.And every year people get in the, I get, now I'm on social security and I get a piece in the mail that tells me how much I'm going to get. And I believe that even when you're younger, I believe that you can request and find out what the Social Security system, quote, promises, unquote, to pay you.But the Social Security system, as it actually works today, and you hit it right on the head. You're right on target. The Social Security tax is just simply a tax.The Social Security benefit is a promise that the government makes so long as it's able to keep it.But the money that you pay in, it does not go into an account in your name.It just goes into a Social Security fund that then is used to pay for Social Security and any other general expenses that the government might need the money for.And so the right word for it is, unfortunately, it's a Ponzi scheme.☘️ Joel (00:04:29):So I was going to ask, so some people call it a Ponzi scheme instead of an insurance program or, or however you want to describe it. Um, so you and I agree that it is not, that you put money into a bucket that money grows like the stock market or like a bond or whatever. And then at the retirement age of your life, you have access to that money.You don't ever theoretically own that money.And because you don't own it, some people call it a Ponzi scheme.I don't, I think that institutionally, there's a reason that we created the program and that came out of the Great Depression and people not having enough.So if that is still true, if we eliminated the program, then don't we have an obligation to maintain our commitment to it?🎤 Crom (00:05:34):Well, I mean, you know, Social Security from a political standpoint, I mean, people who have worked all their lives and now everybody who is retired today worked their entire life and paid into the Social Security system.So it is an obligation that the government has based on the promise that the government has made to every American citizen.And the government will keep that promise as long as it can. But the point that you make is that somebody's ability to receive or the government's ability to pay the benefit is what will depend on whether or not the benefit always gets paid.And so what age, I'm 76. And so I've been collecting Social Security for about, let's say seven or eight years. I paid into Social Security for about 45 years. And most people who are collecting Social Security feel that they have earned the money that they are receiving.And the reason that they do is that the people who started receiving Social Security in the 40s and 50s and even in the 60s paid very little into the system compared to the benefits that they were receiving.And so therein lies the Ponzi scheme.☘️ Joel (00:07:04):Sure, yeah.🎤 Crom (00:07:05):It's a little bit like, when I was in college many years ago, if I needed, I may be telling on myself here a bit, but if I needed a few bottles of alcohol I would send out a chain letter. Do you know what a chain letter is?☘️ Joel (00:07:21):Yeah.🎤 Crom (00:07:23):And I would put my name at the top. I'd put three of my friends under me and I'd send out the chain letter to about 100 people that I didn't know and tell them to send a bottle of such and such to the top person on the list and then remove that person, move the second person to the top and put their name on the bottom.And I'd send out 100 of those things, and I would inevitably get three or four bottles of whiskey. And so that's how Social Security worked from the beginning.Now, there was a senator named Senator Clark who offered an amendment to make it so that when people put money into Social Security, that it would actually go into an account in their name in the same way that an IRA works today.And that amendment, it was voted down.☘️ Joel (00:08:19):I wrote a previous idea back in, I think, May of last year. Why doesn't the government give every baby born in America a $100,000 loan when they're born?And over the lifetime of that child, and I understand the math doesn't perfectly work out because there's inflation and the reality of things,but...That individual repays their $100,000 to the government over their lifetime.And then the investment of that grows at some government promised kind of low rate, like 3%.And then at their retirement age, then they get, depending on what year they retire, then they get a benefit of that divided into 30 years.And so then if you don't live long enough, which most people won't because if you retired 65 and your benefits are planned to last till you're 95, then most people just statistically don't live to be 95. Then whatever you didn't earn in that, you still don't own. The government seizes it.And then that funds people who through not necessarily any fault of their own were injured or for whatever reason couldn't work.And so then the program always has full funding because of that.But I understand that there's political consensus that would have to take place for Congress to pass that and change Social Security.But to me, that makes sense that FDR could have when he created the Social Security program. He could have created it to benefit retirees at the time, but then somehow morphed it into a self-funded thing.Because we're going to have generations that are smaller than than previous generations. And like Gen X is smaller than the baby boomers. And so we have a problem now that social security is running out of funding because the baby boomers are a bigger generation than those that follow.And so then there are not enough people in the way that FDR set up, there's not enough people paying into the program.🎤 Crom (00:10:26):Well, yeah, and, you know, your ideas make a great deal of sense as a practical matter.I mean, they make a great deal of sense from a mathematical matter, but as a practical matter, getting Congress to agree to do something like that, I think would probably be giving $100,000 to every baby.I'm not quite sure how that $100,000 would be invested on behalf of that person.And then the problem becomes the politicians as that amount of money, if you even could establish it to begin with. Politicians would see that pool of money and want to do something, do something with it.And that's always been the problem because when Social Security was originally passed, I went back and did a little bit of preparation for this conversation.And the original Social Security tax for the individual was 1% on their first $3,000. So it was $30 a year. And the employer matched that. So the employer also put up $30 a year. And Roosevelt promised that those two numbers would never change. And, of course, that was not true. But he said that in order to get the bill passed.And then the media then reported what Roosevelt said, and the bill got – the Social Security bill got passed.And then as politicians started to see, well, gee, there are a lot of people who are now, and by the way, when Roosevelt passed that bill, average life expectancy was 62 and you didn't start collecting Social Security until you were 65.Well, then over the next 25 years, life expectancy increased to approximately 75 and they actually lowered the year that you could collect Social Security down to 62.And they increased the benefits.And that's because politicians found that if they ran on a platform back in those days of increasing Social Security benefits by 5%, people who were collecting Social Security benefits would vote for them.And so it's unfortunate that we could have an interesting conversation sometime on what the founding fathers, what some of their discussions were, and it's all in the Federalist Papers, by the way, what their discussions were when they were devising the Constitution, what were the principles that they tried to take into account in writing a constitution that they hoped would last for hundreds of years.Please, go ahead.☘️ Joel (00:13:26):It is really interesting to me, the John Locke piece that got lost in the translation between John Locke's philosophy and the Declaration of Independence that Life, liberty, and property, because it was one of John Locke's big things.The role of government is to protect your property. And then Jefferson changed that to Pursuit of Happiness.So I understand the challenge of saying that the government's role is to protect your property, because some people might hear that and say, oh, I don't own a house. I don't own 10 acres or whatever, so I don't have property, and the government promised me property, and so now you are obliged to give me a yard or whatever.That's not what that means.But it does mean that for your body, as an example, you can make decisions about your body. But if your dollars are your property because you work and generate funds from that work, and those funds become your property, then does the government have a responsibility to protect your property? And then that actually ties in with the insurance piece, because if the government does have a responsibility to protect your property, but you're facing an uncertain future, then do you buy an insurance plan to make it so you still have some money at the end of your life or in the instance that you can't work and that insurance would become Social Security?That's an interesting premise that I thought about.🎤 Crom (00:15:04):Back in the 20s, before the Great Depression, back in the 20s, more than half of the American people bought insurance policies in the form of annuities. And that was buying insurance privately that would provide for their retirement.☘️ Joel (00:15:27):So do you think we should still commit to Social Security?Essentially, you and I agree you have a mandate to prepare for an uncertain future.There are different ways that you can do that.How do you think we should get that done? Because we need to probably reform the program so that it's healthy again.🎤 Crom (00:15:52):Well, the government does have. A number of years ago, he federal government passed legislation they passed. And I'm going to I may get this, Joel, slightly wrong, but they provided for people if people wanted to set up IRAs, individual retirement accounts, they could do that if they worked for a company that offered a 401k. Then they could contribute to the 401 , and oftentimes the company matched that amount.And then there's this other thing called Roth IRAs. And I'm not that familiar with any of those in very, very specific detail other than there's lots of tax deferring that goes on in those plans so that they can build.And so for the average, for the regular person, if they work in a company that has a 401k, and the company contributes to that 401k with a matching grant, matching amount of money, I encourage people to put as much as they possibly can in those IRAs if they're matched by the company because that automatically gives them 100% return on that investment.And there's nothing that comes close to that in any other way of investing.☘️ Joel (00:17:22):But I agree, totally agree with the investment vehicles that are there.If it's going to take the place of social security, though, they can't be an elective thing. They have to be mandated, right?Because there will always be people that choose not to invest because they don't have the money, because we talked about low wages a minute ago.And because they don't have the money, they're not going to do it.And then they're going to get to the end of their life. And what do you do?Do you just leave them to die?And the answer is no, you can't. And so if you're going to have people be able to use their 401k as their retirement money, then it can't be optional.🎤 Crom (00:18:10):Well, in the society that we're in today, Social Security is going to exist until it can't. And that would be if you had an economic collapse and the value of money would have to be redefined. That's a possibility.That type of thing has happened throughout history.But for our discussion, for practical purposes, Social Security benefits are going to continue to be paid out because it would be political suicide to call for the elimination of Social Security benefits and exchange it for some other program.And so as long as Social Security benefits are going to be paid out, there would need to be some form of Social Security tax that really forces people who are working and earning money to pay money toward, as you say, the Social Security for the people who are currently retired.So I don't think there's a way out of the Social Security trap, if that's the way that you and I want to describe it, only because it's been around now for close to 90 years.☘️ Joel (00:19:35):Yeah, I don't know that I would call it a trap. I don't know that I would use that term. I would probably say it's a very inefficient vehicle to prepare for your retirement.And anytime we choose to funnel money through the government, you're just going to waste at a minimum 40% of it by people working government jobs.They're going to kind of siphon off that money.And so then by wasting 40% of it, you would have less money than you would if you had invested that money instead.But I don't know that the only way I think that we could change it, and that's an interesting point, if you elected to invest your own money and could prove that through your taxes every year, whether or not you could elect to not pay Social Security.That'd be an interesting point.🎤 Crom (00:20:34):Well, that's why I called it. That's why I referred to it as the Social Security trap.Because if you work and receive a paycheck, your employer is required to take your Social Security tax out of your pay.So it's not a choice that you as a worker, you don't have that choice.You can't say, well, I think I'd rather do this rather than pay the tax. You don't have a choice.☘️ Joel (00:21:01):Yeah, then it gets back to the Edmund Burke thing that institutionally we chose as a nation to do X at this time.And Burke would say we have a commitment to the institution to maintain the viability for people who don't have resources.So...🎤 Crom (00:21:23):Yeah, but it's also just there's a philosophical point, and then there's the practical political point, and that is that if anybody, if any politician ran saying that we're going to take away people's Social Security benefits who don't need the money, I will promise you that that politician will not win the next election.☘️ Joel (00:21:45):Yeah, yeah.🎤 Crom (00:21:47):So the tax will always be there as long as the social security system is viable enough to pay out the benefits.☘️ Joel (00:21:58):Yeah.And I actually, I personally think that we have to have social security or some form of social insurance so that elderly people aren't freezing to death in their apartments.I think that Social security, as it is shaped right now, probably needs reformed so that it better benefits those people.Because, for instance, if you consider the $100,000 loan when you're a baby thing, and then the worker pays that back through their lifetime earnings, you would pay less in social security taxes because you could even make poverty level wages and pay that $100,000 back.And you would almost double your entitlement benefit or your benefit at your retirement age is, I don't want to call it an entitlement at that point because that's an investment that the government made on your behalf when you were born.But I think that it's just something that we need to, we can't get rid of because too many elderly people and people who can't work depend on it.🎤 Crom (00:23:05):Yeah, I would suggest that the biggest area of federal savings is not going to be in Social Security because I would disagree with you just a bit on the cost of administering Social Security is actually relatively low compared to the cost of managing our healthcare system because with Social Security, it's just a formula and they pay it out.☘️ Joel (00:23:38):I really appreciate your time. And thanks for sharing the phone call with me.🎤 Crom (00:23:43):Joel, I appreciate it. Thanks for having me.May God bless the United States of America. Get full access to I Believe at joelkdouglas.substack.com/subscribe

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  24:21
• What Do We Owe Those Struck by Misfortune?

  Jennifer worked for more than forty years. She spent just a few years at home when the baby was born, then went right back to it.She didn’t ask for handouts.Never made a scene.She went to church on Sunday and to work every day during the week.She paid her taxes, saved a little, and kept going.She wasn’t rich.Didn’t have a pension.But she had her 401K and maybe some Social Security waiting if the government didn’t take that away.She thought she was doing it right.Then, her son got sick.He was in his twenties. Just getting started. No real savings. Barely enough insurance.The money he had didn’t come close to what he needed.He was the kind of sick that throws everything into chaos.The kind that doesn’t care how old you are or how prepared your mother thought she was.Jennifer fought the denials.Sat through the waiting lists.She watched the out-of-pocket bills pile up. The bills didn’t care about her budget or her plans.She wasn’t going to watch her son die sitting on any money, so she drained her savings.Sold her car.Skipped her own treatments to stretch the money. She never complained.She just did what any mother would do. She tried to save her child.So now, she’s 60.Her son’s alive.The savings are gone.She hopes to get a small Social Security check. She knows that because of the choice she made and would make again, she will have to work longer to cover rent. She doesn’t regret her decision.…Jennifer’s situation begs a question: what do we owe those struck by misfortune? To answer that, we have to ask something deeper…Why does this system exist in the first place?We consent to governance in order for those we elect to protect our property.Individuals possess inherent rights. These include the right to life, liberty, and the ability to strive toward purpose. These rights are your property. No one can own you but you. So, you are your own property, and only you have the right to make decisions about yourself.These rights exist independently of government. Even if government didn’t exist, we would still have the inherent right to live, make choices, grow from the result of those choices, and strive for a fulfilling life.By choosing to submit to governance, we assign a duty to those we elect to protect these rights and the property that comes from us exercising those rights.Beyond protecting the property that is our natural rights, government also resolves disputes over property. These might involve employers and workers, neighbors, families, or other rub points in society.This duty is not optional, and it applies to both the strong and the weak. Elected officials are charged with protecting the life and property of every individual, including those who cannot defend their rights on their own. We give up some control through laws, regulations, and taxes. Sometimes, we pool our resources to build things that multiply our individual capability, like roads, power grids, or schools. Other times, we give up control because we know we can’t always protect our own rights alone. This is where the tension in funding Social Security begins.Some succeed and come to see it as a kind of fraudulent Ponzi scheme. They feel that if they can’t access the money their government took from them in taxes when they want it, then those officials failed to protect their property.But that’s the view from the top of the hill. It’s not wrong, just incomplete. It’s the view of the world from the folly of wealth.Because eventually, time and chance happen to us all.The fastest runner doesn’t always win the race. The strongest doesn’t always win the fight. Wisdom, intelligence, and skill don’t always lead to wealth, health, or success.Sooner or later, misfortune visits everyone. We get injured. Or sick. Or old. Or maybe our child is the one who suffers.Because we don’t know when misfortune will strike, we hedge our bets. As a nation of individuals, we buy insurance in case we, as individuals, can no longer work due to age or injury.So…Our property begins with our ability to choose and pursue our life’s purpose. That includes our labor, our time, and what we create with them. But we live in a world that’s unpredictable and sometimes violent. We know that no amount of planning can fully protect us from injury, illness, or age.So, in our individual self-interest, we agree to pool some of what we earn. We buy insurance together so that if misfortune strikes before we’ve saved enough, we’re not left with nothing.This insurance is called Social Security. It’s not built to be flexible. It’s built to be there for when we can no longer work.But we still haven’t directly answered our question about Jennifer’s situation:What do we owe those struck by misfortune?What do we owe those struck by misfortune?We don’t owe those struck by misfortune sympathy. Nor do we owe them charity. We may have personal beliefs that direct us to love and serve others through our churches and nonprofits, but we cannot force others to share our personal beliefs. What we owe those struck by misfortune is commitment to stable institutions that protect the life and property of individuals, including those who cannot defend these rights on their own. Institutions like Social Security don’t spring up by accident. They develop organically over generations and embody the collective wisdom of society. They are built over time in response to painful lessons and misfortune. They reflect the accumulated judgment of generations who saw what happened when nothing was there to catch the falling. They are not the product of a single generation’s will. They are the accumulated wisdom of America refined by need and time.These institutions carry memory. They remember the cost of doing nothing, the pain of the Great Depression, and the reason we built a floor for those struck by misfortune to stand on.For those blinded by the folly of wealth and comfort, it’s easy to call for reform. They make claims of fraud without showing evidence. They bought in like everyone else, but now they want to walk away with their share as if the deal was only about them.We do need to reform the institution to better serve the needs of those struck by misfortune while still maintaining our commitment to it. Not to eliminate it or make it more difficult to use but to better serve those who depend on it. But reform should come from people who understand the purpose and history of the institution, not from oligarchs in power trying to tear it down.So, what does America owe Jennifer and others struck by misfortune? We owe Jennifer commitment to institutions that protect the rights and property of every American, including the weak who cannot defend those rights on their own.May God bless the United States of America.Music from #Uppbeathttps://uppbeat.io/t/eversafe/eversafeLicense code: STFNDGAT8W2XKNIF Get full access to I Believe at joelkdouglas.substack.com/subscribe

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  8:30
• Why Do We Tax Businesses at All?

  We want real prosperity for working Americans without piling debt on future generations. So, we’ve got to be open to new ideas. Some of those ideas might sound like they’ll never work. That’s fine. What matters is that we consider the options, build consensus, and stay focused on the results, not just the method.Consensus makes lasting change possible. If we build real consensus across parties and regions, then we open the door to a rarity in American policy: a permanent solution. Not a temporary fix. Not a patch for the next election cycle. We need a system that works because enough people agree on the goal and not the method for achieving that goal. Achieving the goal matters. How we get there is secondary.There’s another angle we need to consider. When we’re looking at solutions, we have to be willing to think all the way to the edges. On one end of the spectrum is the “do nothing” option. This option is something we should consider even when everyone’s yelling that we have to act. On the other end is the option that delivers overwhelming, decisive results.At both ends, we have to ask: Why wouldn’t that work? And if we can’t find a good answer, then maybe that so-called extreme isn’t extreme at all. Maybe it’s the best option we’ve got.So, with that in mind, here’s a question worth asking:If our goal is food on the table and heat in the house for all American workers, why do we tax businesses at all?If that made you pause or even angry, that means we’re asking the right question.Goals Matter More Than MethodsDuring World War II, America faced a nearly impossible problem. The country needed tanks, planes, and ships. We needed millions of them. We needed them fast. But at the time, the factories that could build them were busy making cars, stoves, and washing machines. The problem was so dire that adversary global leaders assessed there was no way we could achieve our goals and win the war. Reichsmarschall Hermann Göring, one of Adolf Hitler’s top lieutenants, said that Americans could only make refrigerators and razor blades. He assessed we would never be able to produce the military equipment and supplies necessary to defeat Nazi Germany.At the time, Göring was right. President Franklin D. Roosevelt knew it, too. So, Roosevelt started building consensus in order to create permanent effects to win the war. And he had a tough row to hoe. Many thought FDR was anti-business. He had expanded government oversight of banking, labor, and markets. He raised income taxes on the wealthy and introduced new corporate taxes many saw as hostile to business investment. He supported unions and workers’ rights that businesses viewed as empowering strikes and weakening employer control. He framed the wealthy elite as obstacles to recovery.But FDR wasn’t anti-business. He was pro-American worker. He opposed exploitation. He knew he needed a strong business culture. In his annual Budget Message to Congress on January 5, 1942, FDR said…“We cannot outfight our enemies unless, at the same time, we outproduce our enemies. It is not enough to turn out just a few more planes, a few more tanks, a few more guns, a few more ships, than can be turned out by our enemies. We must outproduce them overwhelmingly, so that there can be no question of our ability to provide a crushing superiority of equipment in any theater of the world war.”FDR’s administration couldn’t mandate patriotism or force companies to comply. It had to make the pivot profitable. The administration partnered with industry and offered massive contracts, tax incentives, and full-throttle support to retool factories for war production. The government offered something called cost-plus contracts. For every dollar a company spent retooling its factory, it got that dollar back, plus a guaranteed profit. There were advance payments, tax incentives, and full reimbursement for production costs. That meant zero financial risk for the companies. If they stepped up, they didn’t just help the country. They came out ahead.The results were fantastic.Ford built a mile-long assembly line just for B-24 bombers. Chrysler stopped making cars and started producing tanks. General Motors converted its plants to churn out machine guns and aircraft engines. These weren’t small measures. They were full-scale industrial makeovers. Entire factories partnered with FDR’s administration and reimagined themselves for the singular purpose of achieving the national goal. The method for achieving that goal was secondary.And it worked. Not because everyone agreed on the politics but because everyone agreed on the goal. And the government made it profitable to help achieve that goal. The system rewarded those who helped achieve it.America became the Arsenal of Democracy not just through sacrifice but through consensus. The right incentives produced the right results in the timeframe we needed. Fast forward to today. If we want prosperity for American workers, if we want families to thrive without leaning on public assistance, maybe the answer isn’t another patch or another tax. Maybe it’s the same principle. Let’s reward the businesses that help us achieve our national goals.If a business pays livable wages, covers worker healthcare, and doesn’t push its costs onto taxpayers, what are we taxing them for?In the end, it’s not about the method. It’s about the national goal of any worker being able to work for and achieve food on the table and heat in the house, all without taxpayer support. If we can achieve our goal, the method is irrelevant.If Low Wages Are a Business Model, the IRS Should Send a BillBusiness taxes bring in less revenue than the cost of low wages. So, maybe we’re taxing the wrong thing.Let’s take a closer look at the numbers.In 2024, the federal government brought in about $4.9 trillion in revenue. Out of that, corporate income taxes made up just 10 percent or around half a trillion dollars of that five trillion. At the same time, low wages cost the American taxpayer far more than half a trillion dollars a year. They cost about a quarter of the entire federal budget or 1.25 trillion dollars.When companies pay poverty wages, workers still need to survive. No matter what, people need food on the table and heat in the house. We have all agreed to this principle. Both parties have expanded social programs to help people meet these necessities.Because we all agreed that people need to be able to work for and achieve food on the table and heat in the house, these programs become mandatory funding. Mandatory means we must pay them. So, mandatory taxpayer-funded social programs kick in. These programs, including Medicaid, SNAP, housing aid, and refundable tax credits like the Earned Income Tax Credit, are automatic payments written into law. If someone qualifies, the American taxpayer pays.In 2024, nearly 25 percent of all federal spending went to these kinds of programs. Much of this deficit is wage-related. Medicaid alone serves millions of low-income workers, especially in food service, retail, and care work. The EITC is specifically designed to supplement low wages with taxpayer dollars. In short, the federal government spends far more cleaning up after low wages than it ever collects from taxing business profits.But rather than be angry at the state of the world, we need to figure out a healthy path forward.So here’s the question. If a business pays its people enough to live, doesn’t push its labor costs onto taxpayers, and supports self-sufficiency, should we tax that business at all?Because right now, we’re taxing good businesses and subsidizing the bad ones. And that makes no sense.But … we also can’t raise the minimum wage to mandate the change. Just like FDR couldn’t compel businesses to get on board to achieve national goals, we can’t compel businesses to eliminate the need for taxpayer-funded social programs by asking nicely. When we needed Ford Motor Company to build B-24 bombers, we had to incentivize the change.If businesses don’t increase revenue, they can’t raise wages. Mandating higher wages leads to job losses, not higher wages.Two Studies Arguing Past the PointIt’s been a year since California raised its minimum wage for fast food workers to $20 an hour. And, of course, some sources claim the wage increase mandate is killing businesses, and others claim it had no negative effect.First, a study conducted by the Berkeley Research Group, dated February 18, 2025, found that nearly 9 in 10 restaurant operators cut employee hours in the first few months. A third reduced benefits. Most said they planned to cut even more over the coming year.Jobs declined. According to federal data, California’s fast food sector saw its first December job loss in over two decades outside of a recession or pandemic. That’s not a small dip. That’s a reversal of a long-term trend.And prices jumped. Fast food menu prices in California rose almost 15% in one year, nearly double the national average. In April 2024 alone, the month the new wage took effect, prices in California spiked by nearly 3%, the biggest one-month jump in the country.…But before we jump to conclusions, let’s look at the second viewpoint.A study by the University of California at Berkeley from February 24, 2025, found something very different.According to their analysis, the $20 fast-food minimum wage in California did what it was supposed to do. It raised pay by about 8 to 9 percent for covered workers. It did not reduce jobs, it did not cause mass closures, and the price of a typical fast-food meal went up by only about 6 cents on a four-dollar burger.The University of California study used government data, private payroll sources, and job posting platforms. It compared covered restaurants to valid control groups and adjusted for seasonality and economic trends. Again, they found no significant job losses. In fact, the number of fast-food restaurants in California actually grew faster than in the rest of the country.University of California economists pushed back on the BRG study. They said BRG cherry-picked data, failed to separate correlation from causation, and relied on sources that weren’t central to the wage policy itself. For example, job losses had already begun before the law took effect, and the price spike BRG cited didn’t account for restaurant type or broader inflation. So who’s right? Both are likely correct.Businesses act in their self-interest to maximize profits. This statement does not intend to demonize businesses. If a business can invest in automation in such a way that results in higher profits, it will do so, as it is a means to reduce labor costs. But let’s get away from the contradiction. It only muddies our view.The decisive point is not whether the government should mandate a wage increase. Any mandate the government makes to the business pool has ripple effects, and there are winners and losers. The decisive point is that the government mandating a wage increase does not build consensus. We will not achieve long-term consensus with a wage mandate. Just like FDR couldn’t compel businesses to get on board to achieve national goals, we will not achieve our goals in a lasting manner with mandates. We have to incentivize change.We Won’t Agree on the Method. Let’s Agree on the GoalThe first step to building consensus is agreeing on the goal.And we can agree on the goal: food on the table and heat in the house for working Americans. We can build from there.Here’s a fact: any business that pays poverty wages costs the American taxpayer more than it pays in taxes.Here’s another: if we’re against raising wages to a livable standard for every worker, then we are for continued dependence on social programs. You can’t be against both livable wages and social programs. No matter how much we argue for market freedom, if wages stay low, taxpayers pick up the tab.So, we need to build consensus to get through our gridlock.Let’s throw out a proposal.If a business can prove it pays every worker a livable wage, including the dishwasher, the pipefitter, the burger cook, the philosophy major, the ranch hand … then how about they pay no federal taxes?It doesn’t matter if a business thinks those are low-skill jobs that don’t justify higher wages. If they don’t pay their workers enough, the taxpayer fills the gap, and that costs America a trillion dollars a year.But when workers earn livable wages, they don’t need food stamps. They can afford private healthcare, so they don’t need Medicaid. They no longer need the Earned Income Tax Credit. Higher wages reduce the taxpayer’s mandatory funding commitment. As a bonus, this approach reduces the burden on the federal budget and raises revenue because higher wages mean more income taxes paid by workers.Some will say that we can’t eliminate business taxes because we should mandate businesses pay both livable wages and taxes. And they have a valid point. But that stance has blocked progress towards our goal for more than 40 years. We will likely never gain the political consensus to make lasting progress with mandates.Whether a business pays taxes or how large its tax bill is isn’t the point.The decisive point is whether Americans can work for and achieve food on the table and heat in the house without piling debt on future generations.That’s the goal. That’s the consensus.If we reward the right behavior, we don’t need mandates. We build a system that works, even if not everyone agrees with how we got there.How we achieve our goal matters less than achieving it.May God bless the United States of America. Get full access to I Believe at joelkdouglas.substack.com/subscribe

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  16:17
• Dying on the Hill of Democracy

  Some say we fight for democracy. But what if that fight is misplaced?Some Hills are Worth Dying OnJuly 2, 1863, outside of Gettysburg. It’s the second day of the Battle of Gettysburg. The air is thick with smoke, the smell of gunpowder, sweat, and blood. Cannon fire rumbles in the distance, and the screams of wounded men echo through the Pennsylvania hills.The Confederate Army, under General Robert E. Lee, is pressing hard against the Union lines. After a brutal first day of fighting, Lee has ordered an all-out assault on the Union flanks. He intended to break their defenses, separate the Union Army from Washington, and win the war right here and now.Up on the far left of the Union line was a rocky little hill called Little Round Top. There, a professor-turned-soldier named Joshua Lawrence Chamberlain stood with his men, the 20th Maine Regiment.Chamberlain wasn’t a career military officer. Just two years ago, he stood in front of a classroom at Bowdoin College in Maine. He taught students theology, philosophy, and the great ideas that shape nations.He pursued truth. He was a man of character and conviction and believed in the union of states. He studied the moral arguments against slavery, knowing that America could not truly be free while slavery existed. He believed in liberty and justice.After the war broke out, Chamberlain volunteered for the Union Army. In his letter to Maine Governor Israel Washburn, Chamberlain stated he had much to learn about military service, but continued that…“I fear, this war, so costly of blood and treasure, will not cease until the men of the North are willing to leave good positions, and sacrifice the dearest personal interests, to rescue our Country from Desolation, and defend the National Existence against treachery at home and jeopardy abroad.”So, volunteer he did. But in all his reading and studying, nothing had prepared him for this moment at Gettysburg.He stood on this hill, gripped his sword, and stared down at the tree line below. The Confederate army was coming. If they broke through and took the hill, the Union line would collapse. And if that happened, Gettysburg could be lost. Maybe even the war.The first wave hit them hard. The men of the 15th and 47th Alabama came crashing up the rocky slope, firing, shouting, bayonets flashing in the sunlight. The 20th Maine fired down into them, holding the line. The Confederates fell back, regrouped, and came again. Then again. Then again.Chamberlain’s men fell exhausted, running low on ammunition, some down to their last few rounds.Chamberlain looked down at his men. They were bloody, battered, barely standing. The logical thing to do would be to fall back. But there was nowhere to fall back to. If they broke, the enemy would sweep through them like a flood.In war, everything is simple. But achieving even the simplest task is daunting. Fog, friction, risk, and the unknown close in on you. Exhausted, outnumbered, and wounded in the leg, Chamberlain could barely stand. His men had no more bullets. He did not know if help would arrive, and whether his unit would survive the day. He took a breath, steadied himself against the pain, and gave the order.He shouted, “Bayonet!”The 20th Maine roared to life. They charge.Down the slope, straight into the enemy. The Confederates, themselves tired, expecting another volley of bullets, not cold steel, panic. The Union men slam into them, driving them back, pushing them down the hill. Other Union soldiers arriving at that moment on Little Round Top fire volleys behind the Confederates. The Confederate line buckles. Then it shatters. They turn and run.And just like that, Little Round Top, Gettysburg, the Union Army, and the United States of America, held. Had Chamberlain’s men lost the hill, the Confederates may well have won the war. There would be no America.Chamberlain had spent his life studying ideas, philosophies, great speeches. He had left a good position in Maine and sacrificed his dearest personal interests for the union of states.He believed in liberty and justice.For him, that hill was worth dying on.And Some Hills Are Not Worth Dying OnIt’s 1953, the final months of the Korean War. The war is dragging on. Behind closed doors, diplomats are hammering out the details of a ceasefire. The fighting, at least in theory, should be winding down. But on a barren, rocky outpost known as Pork Chop Hill, men are still killing and dying.The hill itself is meaningless. It’s a craggy mound of earth, scarred by months of shelling, roughly shaped like a pork chop. No major roads lead to it. No towns depend on it. It has no real strategic value. And yet, it has become a battlefield. Two sides fight not to win the war but to influence the negotiations.The first battle erupts in April 1953. US forces, led by Lieutenant Colonel William Kern, first hold the hill when the Chinese launch a massive assault. The fighting is brutal. Soldiers fight hand-to-hand, clawing for control of bunkers, trenches, and high ground. The Americans barely hold. Casualties pile up. When the shooting stops, the hill is still ours, but we’ve gained nothing.Three months later, in July 1953, the Chinese come again. Thousands of soldiers charge up the slopes in waves. The battle turns into a meat grinder. The US high command debates whether we should keep defending this worthless hill, or we should let it go.(The low rumble of retreating trucks.)The decision comes down. We abandon the hill. The Chinese take it, planting their flag in the same dirt that had swallowed hundreds of lives over the past few months. And then, just a few weeks later, the war ends.After the bloodshed and sacrifice, the final armistice line was drawn north of the hill. The Chinese didn’t even keep it. The battle, in the end, meant nothing.This fact makes the battle even more tragic. Real breathing men fought and died over a worthless position. It was abandoned by the US, taken by the Chinese, and then given up anyway as part of the armistice agreement.Pork Chop Hill is one of the clearest examples of fighting for the sake of fighting, with no real strategic or territorial gain for either side.Some hills are worth dying on.This wasn’t one of them.History has made clear that some fights are necessary, and some are senseless. Today, we hear calls to ‘save democracy.’ We have to ask: What are we fighting for?Save American Democracy!Today, some call for Americans to “Save our Democracy.” This call has echoed for several years.To be clear, this rallying cry is futile.The word democracy appears in the US Constitution exactly zero times. That wasn’t an oversight. The founders didn’t build America on majority rule. They built it on structure, balance, and law. American government was designed to restrain power, not distribute it. The father of the Constitution, James Madison, even wrote a series of documents identifying why America is not a democracy.In Federalist Paper No. 51, Madison identified the purpose of government. He stated…Justice is the end of government. It is the end of civil society. It ever has been and ever will be pursued until it be obtained, or until liberty be lost in the pursuit.Justice is the purpose of government. Not power or control. Not democracy. Justice. It is the purpose of civil society. It’s the reason we create laws, elect leaders, and build nations. Only when we start to threaten liberty should we stop pursuing justice.The American founding fathers outlined a dogma that a just government exists to protect the weak, not to serve the strong. America owes allegiance to no king, and no aristocracy. America owes allegiance to the American people.The best way to safeguard justice is with many voices, many factions, and competing interests. No single group should be able to seize control and oppress the others. Justice requires checks and balances that divide, limit, and restrain power and influence. No branch of government should dominate. No leader should rule unchecked. No law or executive order should go unchallenged.Justice and liberty are inseparable. One cannot exist without the other. A government that fails to uphold justice will eventually destroy liberty, and a society that loses liberty will never know justice.This is a rallying cry.Our goals are simple. But achieving even the simplest goal is daunting. Until government servants establish conditions of justice that enable every American family to work for and achieve heat in the house and food on the table without taxpayer support, we will fight for liberty and justice. Until women have the liberty to make their own healthcare decisions without the government knowing what they decided, we will fight for liberty and justice.Until American institutions again support checks and balances and no longer threaten the due process and structure of the nation itself, we will fight for liberty and justice.The list goes on. Sure seems like we have plenty to keep us busy fighting for liberty and justice. We need not die on the hill of democracy.Those Who Cry for Democracy Have Lost Their WayYes, we are a democratic republic. But the point of American governance is not democracy.The foundation of America has never been majority rule. We are built on the higher purpose of liberty and justice.Justice for the oppressed.Provision for those in need.Liberty for those whose rights are threatened by the majority or the ruling class.Some say we must fight for democracy, but democracy is just a process. It means nothing without justice, and it is worthless without liberty. If we fight, let it be for the only things that matter.America was never meant to serve the will of the strongest, even if the strongest is the majority. It was meant to defend the rights of the weakest.That is the hill worth dying on.May we seek justice. May we defend liberty.May God bless the United States of America. Get full access to I Believe at joelkdouglas.substack.com/subscribe

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  13:47
• Why Do We Spend So Much on Defense?

  Why do we spend so much on defense?Opening Scene – Key West, 1948[Sound Design: Waves crashing, seagulls squawking.]Narrator: It’s March 1948, and the tropical heat of Key West, Florida, presses against a group of men in khaki uniforms and dark blue service caps. They sit around a long table in what was once a naval officers’ club, now repurposed for one of the most important meetings in US military history.This is where the fate of America’s post-World War II military structure is being decided in a meeting known as the Key West Agreement. Before this meeting, President Harry S. Truman had signed the National Security Act of 1947 into law. It came into effect on September 18, 1947. Among other directives, the act created the Air Force, separated the Marine Corps as its own service, and merged the Army, Navy, Marine Corps, and Air Force into one big, happy Department of Defense family.Except they were all unhappy. At the head of the table sat the first-ever Secretary of Defense, James Forrestal. He was tasked with bringing order to the growing tensions between the military services. There’s no official transcript of this meeting, but Forrestal’s message was clear. He wasn’t here to debate; he was here to decide.Forrestal (Actor’s Voice): “Gentlemen, this nation cannot afford inefficiency in its military forces. The roles and missions of each service must be clearly defined, or we risk wasting taxpayer dollars on duplicative efforts. The President expects solutions today, not another fight over who controls what.”Narrator: It was a polite way of saying, “Stop the infighting.” The war was over. The Soviets were the new enemy. And America needed a plan.The Fight Over Military RolesNarrator: The stakes couldn’t have been higher. World War II had ended just three years earlier, and now, the services were battling over bureaucracy.The Air Force, freshly carved out of the Army in 1947, wanted exclusive control over air operations, strategic bombing, and nuclear weapons. Furious at the idea of losing its aircraft carriers, the Navy fought to keep its fleet air arm. The Marine Corps wanted no part of being absorbed into the Army.The Army, which had spent the war defining large-scale land combat, was now struggling for relevance in a world obsessed with air power and nuclear bombs.[Sound Design: Ice clinking in glasses, the scratch of pens on paper.]Military Officer (Actor’s Voice): "Mr. Secretary, how do you want to handle this?"[Sound Design: Chair creaks. A brief pause. Papers being folded shut. Silence hangs for a moment, then quiet murmurs of dissatisfaction.]Forrestal (Actor’s Voice): “The Air Force will control strategic bombing and nuclear weapons delivery. The Navy retains control of aircraft carriers and fleet operations. The Army’s role remains ground warfare and land-based air defense. The Marine Corps will not become part of the Army.”Narrator: Forrestal had one goal. He intended to divide responsibilities before the inter-service feuding weakened America’s military effectiveness.This was the compromise. The Navy kept its carriers and agreed not to pursue its own strategic air force. The Air Force agreed not to pursue carrier aviation. Everyone agreed the Marine Corps would not become a part of the Army.All the services had vital peacetime tasks except the largest. The Air Force would operate the nation’s global strike weapons and stand watch over the homeland. The Navy would protect shipping lanes. The Marine Corps would project decisive combat power within days of notification.The Army, the largest service and used to special treatment, was left wondering whether its traditional role would fade away. And yet, the agreement set the foundation for American defense spending for generations. Instead of reducing redundancy, it baked in inter-service rivalry. Instead of cutting costs, it ensured every branch would fight to justify its share of the budget. And over the next few years, that fight would escalate and become public. [Sound Design: A military phone rings in the background.]While the generals and admirals were busy carving up the military’s future, another war was brewing. In Asia.[Sound Design: The hum of a military transport plane. Fade to silence.]The Forgotten Warning – Korea, 1949Narrator: The Korean Peninsula was spiraling toward war a year after the Key West Agreement. The US had withdrawn most of its forces from South Korea, assuming that a small advisory mission would be enough to keep order.In Washington, the focus was shifting toward nuclear weapons and strategic deterrence. Ground forces and conventional war were yesterday’s thinking. The real threat was the Soviet Union and its growing atomic arsenal.To make the matter more urgent, the Soviets conducted their first successful test of a nuclear weapon in August 1949. The West had lost its dominance. Then, in January 1950, US Secretary of State Dean Acheson defined America’s vital security interests in the Pacific. He excluded Korea from that list.But by the time Washington realized Korea wasn’t just another skirmish, it was too late. A Soviet-backed North Korea invaded the South on June 25, 1950, launching a war that the US wasn’t prepared for.And this is where General Matthew Ridgway enters the picture. He was the man who would change America’s military spending forever.[Sound Design: Artillery explosions in the distance. The rhythmic thumping of helicopter blades overhead.]Ridgway’s War – 1950Narrator: December 1950. The war was going badly. US and UN forces were retreating. The Chinese had entered the war, pushing American troops into a brutal winter retreat. Morale had collapsed. Soldiers were exhausted. Supplies were low. The US commander had been killed in a traffic incident.Amidst the turmoil, the Army chose a new commander, Matthew Ridgway. During World War II, Ridgway commanded the 82nd Airborne Division at Normandy and the XVIII Airborne Corps during the Ardennes Offensive. Upon taking command, Ridgway assessed the situation. He stated:Ridgway (Actor’s Voice): “The men I met along the road, those I stopped to talk to, all conveyed to me a conviction that this was a bewildered army, not sure of itself or its leaders, not sure what they were doing there. The leadership I found in many instances sadly lacking, and I said so.”Narrator: Many wondered whether America would leave. This list ranged from South Korean national leadership to soldiers on the ground. Ridgway expressed his intent and stated:Ridgway (Actor’s Voice): “I’ve come to stay.”Narrator: Ridgway took over the 8th Army after General Walton Walker’s death and immediately changed everything. He re-energized the troops, stopped the retreat, and launched a counteroffensive. By early 1951, he had stabilized the front and turned the tide. The Forgotten War would end in a stalemate rather than a decisive loss. But his biggest impact wasn’t just on the battlefield. It was what he did after the war.The Birth of Permanent Military SpendingNarrator: After Korea, Ridgway became Chief of Staff of the Army. And this is where he made his mark. Not with a rifle, but with politics.President Dwight D. Eisenhower, himself a former Army officer who led the Allies to victory in Europe, aimed to balance military commitments with economic sustainability. He knew that without military drawdown, America would run deficits due to military funding. He intended to cut the Army and shift spending toward the other services and the global strike weapons that defend America’s homeland. He sought troop reductions in Europe and intended to share defense responsibilities with NATO allies. Eisenhower stated, “Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.” Eisenhower warned against the establishment of a military-industrial complex.Ridgway publicly fought back. He argued the US needed permanent large ground forces to handle conflicts like Korea. He testified before Congress, pushing back against budget cuts and warning against over-reliance on nuclear deterrence.Ridgway won out. Presented with two conflicting arguments, Congress did what it does best. It gridlocked. The Army didn’t shrink. Military budgets remained high. And America locked itself into a cycle of permanent defense spending. This defense spending premise continues today.People like to say the US spends so much on defense because we have to “fight two wars at once” or “project power.” That’s wrong. Those policies were the result of high defense spending, not the cause.The real reason was that Matthew Ridgway and others like him made sure each military service had a justification for more funding, even when nuclear deterrence made massive peacetime ground forces unnecessary.And that’s the story of why we spend so much on defense.Seventy-five years later, America is still locked into this model. But what happens when the world changes and we don’t?Fast Forward to TodayOur high defense spending had an unintended consequence. America had such a large defense capability that some partner nations chose to put less effort into theirs. Now, America wants NATO and Europe to spend more to contribute to their own defense. This is an echo of President Eisenhower in the 1950s. And despite the fact that NATO has only once activated the Joint Defense Act, and that was to come to the aid of the United States in Afghanistan, some call for us to leave NATO.But in a twist that defies logic, those who call for America to reduce our commitment to partner nations still call for us to maintain high defense spending.These two positions contradict.One valid position would be to strengthen the economic footing of every American and reduce the burden of debt on future generations. One generation has no right to bind another generation with debt. The dead have no rights over the living.This position would acknowledge that we must reduce defense spending during peacetime. A result of this position would be reduced support for partner nations, requiring our partners to increase their capability.A countering valid position would be to maintain our high defense commitment to our partner nations. Security, economics, and influence are all tied together. This position would acknowledge that if America will be great, we need to maintain global leadership. We must act alone and with partner nations to create favorable conditions and gain and maintain freedom of action and influence. Nations form and maintain coalitions and international partnerships not out of altruism but as a strategic effort to enhance their own strength, stability, and interests.But threatening and divorcing our long-term partners while still increasing debt for future generations is both unsound and unwise.Is a country that burdens its future generations with debt while weakening its alliances making itself great again?May God bless the United States of America. Get full access to I Believe at joelkdouglas.substack.com/subscribe

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  13:11

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