Thursday, July 5, 2012

Frank Stronach will play a big role in Changing the FUTURE.......

Ideas | Frank Stronach Institut

This is what we stand for

Austria needs to adopt a number of political and economic measures that will improve the country’s standard of living.
We need to stop digging ourselves deeper and deeper into debt and we need to start paying back the money we owe. We also need to introduce measures that prevent politicians from mortgaging the future by borrowing more and more money to finance government spending.
We need a simpler and fairer tax system, a flat tax without loopholes or privileges that every citizen can understand. And we need to stop rewarding companies that invest outside the country, and instead grant tax exemptions to companies that invest their profits and create jobs in Austria.
We need to reduce the so called “great divide” between the wealthy and the working class. One of the best ways to do this is to provide incentives for companies that share profits with their employees.
We need to reduce the size of government bureaucracy. We are over-governed, over-regulated and over-bureaucratized.
Austria should continue to be a staunch supporter of a strong Europe. And it should support the free movement of persons, goods and capital within Europe. But Austria must manage its own political future and regain control of its own economic destiny.
And finally, the citizens of Austria need to have greater involvement in the political system. We must find new and innovative solutions outside the realm of traditional party politics.

Reforming government – more democracy and less party politics

Government is the management team of a country, and that management team is made up of politicians. Although most politicians mean well and want to serve the country, the primary mandate of a politician is to be elected or re-elected. So the dilemma we face is that government decisions are driven primarily by political rather than economic reasoning.
This is especially the case in Austria. Austria’s political system is pseudo-democratic and has become rife with cronyism. It is in dire need of reform. One of its chief problems is the lack of citizen involvement. Politicians who stand for election are chosen from among members on a party list, and various special interest groups ranging from big business and unions to large professional chambers influence who gets chosen to be on these party lists. Through this process, the political status quo is maintained from election to election.
The political system in Austria needs more democracy and greater competition so that the best politicians can come forward. For example, party leaders should be democratically elected by the members of the party. Similarly, every member of the National Council should be elected by the citizens living in that member’s electoral district.
Austria needs to urgently find solutions to a number of political issues in the areas of education, health, immigration and the environment. Political parties have shown themselves to be incapable of finding solutions to these issues, which is another reason why the country needs greater citizen involvement.
The Frank Stronach Institute advocates the creation of a new Chamber of Citizen Representatives as a way to create greater citizen involvement in the political system and to bring forward fresh ideas and solutions to the problems confronting the country. These new Citizen Representatives would be much more inclined to place the country’s socio-economic welfare and long-term national interests ahead of political considerations or partisan views since they would not be beholden to any political party.
Citizen Representatives would be selected using the same process as another time-honoured democratic tradition – the jury system. A computer could randomly select a list of candidates for the position of Citizen Representative in each electoral district across the country.
The addition of Citizen Representatives would make government much more democratic, effective and accountable. In addition, Citizen Representatives would bring a much more pragmatic approach to managing the affairs of the country, and  would be much more inclined to place the long-term economic interests of the country ahead of short-term partisan interests.   

Reducing debt to reignite economic growth

Every household knows that it cannot spend more than it earns, otherwise its occupants will soon become dependent on welfare. Every farmer knows that he cannot spend more than he earns, otherwise he will eventually lose his farm. And every business person knows that if your business spends more money than it brings in, the company will go bankrupt.
But when it comes to politicians, the dangerous consequences of debt are often ignored. When countries sink deeper and deeper into debt, it is usually the fault of poorly managed governments and reckless politicians looking for quick fixes, easy solutions and votes. In other words, politicians often end up placing short-term political gains ahead of the long-term economic well-being of the nation.
Austria has accumulated a massive national debt. The real ratio of national debt to GDP in Austria is approaching 100% and the country must pay approximately 10 billion Euros annually just to cover the interest on the debt owed, an amount that is higher than the combined annual budget for education, art and culture. If the country doesn’t take action to stop the build-up of debt, the interest on that mountain of debt will continue to grow. And, as the world has recently witnessed in the case of Greece, a large and out-of-control public debt can have drastic consequences for the entire country.
Citizens need to push for binding changes that will tie the hands of free-spending politicians so that governments cannot spend more money than they generate through taxes. Several countries have already done this. Germany established a so-called “debt brake” in its national constitution in 2009. The debt brake legislation requires the government to deliver a balanced budget over the course of several years (similar to a regular business cycle). If the country is forced to borrow money during a recession, it must return to a balanced budget during an economic upturn.
Switzerland also entrenched a debt brake provision in its national constitution in 2003 following a citizen referendum. The Swiss government estimates that the country’s national debt rate will decline to just 34% of the GDP in 2014 from 60% in 2004 when the debt brake was first established. In addition, most of the states in the US are bound by their constitutions to have a balanced budget. But these constitutional provisions are only effective if there are sanctions or penalties attached that hold politicians accountable for their actions.
Politicians need to stop making reckless spending promises in an attempt to win votes. But at the same time, it is also the responsibility of voters to reject spending promises made by politicians that are not in the long-term interests of the country. There is no escaping from the consequences of debt: in the final analysis, we are destroying our children’s and grandchildren’s futures, and we will all have to pay off the debt in the form of higher taxes and cuts to social programs. It is high time that we faced up to our debt obligations and forced our political leaders to stop spending more than they take in.
Freed from the burden of debt, countries would have room to lower taxes and become more competitive in the global marketplace, creating greater growth, more employment and a higher standard of living for all citizens.

Creating prosperity – giving employees a share of the profits

The main reason why people get up in the morning is that they want to create a better life for themselves and their families. People want to become prosperous.
But to attain prosperity, you must generate wealth, and wealth is created by three driving forces: good management, hard-working employees, and investors. All three of these stakeholders have a moral right to the financial outcome.
From my experience, sharing profits with employees is a proven and powerful formula for growth. When workers have a tangible stake in the company’s financial success, they are more motivated to produce a better product for a better price, and the company becomes more competitive. It’s the formula we enshrined in the Corporate Constitution of the company I founded, Magna International Inc., and it’s the reason why that company has grown into a world leader in the automotive industry with close to 110,000 employees working at over 370 manufacturing and R&D centres around the world. The Constitution ensures that everyone has a financial stake in the profitability of the company, while also striking a balance between the interests of management, shareholders and workers.
Balance is a vital element for any society. One of the main problems in our society today is that there is a growing gap between the wealthy and the average working person. That gap must be reduced. We need to create frameworks and tax incentives that will encourage companies to give employees a share of the profits. If everyone is in the same boat – management and employees – then everyone will work together to improve the products and services their company provides. In short, the company will become more competitive, producing better products, winning new customers and generating greater profit.
It has become popular nowadays to talk about how we can distribute wealth. But it is far more important to focus on how we can create wealth. Without wealth creation, there is nothing to distribute. And the best way to create enhanced prosperity and productivity is by sharing the financial success of a company with each of its key stakeholders. 

Reducing taxes – generating growth via a simple and fair tax system

Economic growth means a greater number of jobs. And if more people are working, we would generate more tax revenue while at the same time reduce government spending related to social costs such as unemployment and welfare.
In the final analysis, it is the tax system, more so than any other economic lever that has the greatest bearing on the creation of wealth and jobs. We need a streamlined tax system, one that is clearly understood by every citizen. A flat tax system would be straightforward and clear-cut, with no loopholes, no privileges , and could be applied to all personal income, as well as all corporate and capital income (dividends and interest income).  The flat tax rate would be between 20 and 40 percent; the optimal percentage would be found over the course of time.
The current tax system is overly-complicated, too vague and too difficult to understand. It has become a drag on economic growth, and requires businesses and individuals to spend more and more time complying with tax filings – time that ultimately increases the final cost of the product or service provided by the business. 
However a simple, flat-rate tax system would unshackle individuals and businesses from the enormous waste of time and energy spent complying with tax filings or preparing for audits. More importantly, it would stimulate the creation of jobs, reduce bureaucracy and spark economic growth.
If a company invests its profits outside Austria it should pay tax on those profits. But businesses that invest their profits in Austria should be exempt from paying any tax whatsoever – a reward for investing in our country and creating jobs. Furthermore, we should eliminate complicated amortization rules. The costs associated with the purchase of equipment should be accounted for in the year in which the purchase is made.
At the same time, we should keep and perhaps even expand the consumption tax on the purchase of goods and services.This tax would ensure that wealthier individuals contribute more taxes via their spending on higher-priced and luxury items.
Under a flat tax system, we would need far fewer tax consultants and financial experts. Naturally, some professional groups, driven by their own financial self-interest, would be very reluctant to embrace a simplified tax. But the truth is, we have drifted away from a real economy, one in which we manufacture products, to a predominantly financial economy based on financial engineering and manipulation. We have become less and less pre-occupied with creating real wealth, and more and more engaged in the process of transferring and redistributing the declining wealth that we do generate.
Today, more than ever before, we need to create a tax system that is transparent, simpler and more geared toward the creation of wealth. If we developed such a system, we would create greater prosperity and increased employment.

Reducing bureaucracy and increasing competitiveness

Austria is administered by 183 members of the National Assembly, 63 members of the Upper House of the Austrian Parliament, as well as 14 ministers and 4 undersecretaries. In addition, the country has 1 President, 9 heads of provincial government, 84 district leaders and 2,357 mayors.
On top that, Austria has 22 social insurance agencies and another central association in the health system, with each agency run by a chair and a host of other directors and officials.
The country also has three big chambers: the Chamber of Labour, the Chamber of Commerce and the Chamber of Agriculture. These three chambers are umbrella organizations for the nine provincial chambers for commerce, labour and agriculture. In addition, there are numerous other chambers, including the Medical Association, the Bar Association, the Chamber of Notaries, the Chamber of Public Accountants, the Chamber of Pharmacists, the Chamber of Architects, and so on. And each of these Chambers has a president, a vice-president and a large number of directors and officials. All of these various government agencies and departments are housed in luxurious office buildings and the senior bureaucrats and politicians who administer them often have large expense accounts as well as chauffeur-driven limousines.
I’ve often said that if you run a factory, it doesn’t matter how productive the people on the factory floor are if there is too much administration up top. The business will simply not be competitive. The same holds true for a country.
But in a civilized society, no one sector or group should be made the scapegoat for our problems. It’s not the fault of government employees that our bureaucracy has gotten bloated. All of us, to a certain extent, are to blame because we as a society have repeatedly turned to government as the chief source to solve all of our social and economic problems and fulfill all of our needs, forgetting in the process that government cannot give you anything unless it takes it from you first.
The plain fact is, Austria is over-governed, over-bureaucratized and over-administered. The administration does not create economic wealth but instead consumes vast amounts of tax money. The most important task of a country is to provide security. In addition, no individual should be hungry, homeless or without health care in a civilized society. Meeting these minimum standards is the key task of any country, and the government should fulfill these tasks as efficiently as possible.
We need fewer laws, simpler laws and less administration. There is a lot of government fat that can be cut out and a lot of waste that can be stopped. If we reduced the size of government burearcacy, there would be fewer people working on rules and regulations that hamper business productivity, and more employees contributing value-added activities in the private sector.
Whether it’s business or government, the key watchword in today’s world is efficiency, efficiency, efficiency. Those businesses and governments that understand this will prosper. Those that do not are doomed to fall behind.

Europe needs competition instead of egalitarianism

The most significant economic problems facing many European countries today can be traced back to the establishment of monetary union and the creation of the Euro. Many of the economically weaker countries within the European Union (EU) took advantage of the inexpensive money that the EU made available to them. Most of that money has been spent propping up an artificially high standard of living, one that has been borrowed rather than earned.
Greece is a prime example. Greece is the cradle of Western civilization and the birthplace of democracy, and the Greeks were independent for thousands of years. But in the 21st century, the country decided to join the European Union, which offered easy access to inexpensive money and other inducements that have driven Greece into national bankruptcy. Now the European Union is force-feeding Greece more stimulus money combined with a package of austerity measures that include cuts to social spending. It’s no wonder that the people of Greece are in revolt. Greece should be allowed to go its own way. It’s clear that you help a neighbour when he is in trouble. But it isn’t right that countries with sound economies and sound fiscal policies should have to subsidize countries that have been grossly financially mismanaged. When that happens, then everybody loses.
During the previous century, the primary concern of the European people following two devastating world wars was to establish a lasting peace. Over the course of time they agreed to work closer together economically to establish a stronger Europe. The European Community safeguarded free passenger traffic, free transportation of goods and the free movement of capital. As a result, the economy prospered for a long period of time. The engine of this economic miracle was the unfettered competition that was allowed to exist in all areas between the countries that were members of the European Community.
But then the countries of Europe made a critical mistake: instead of only concentrating on economic co-operation, they sought to bring about a political union. The foundation of the European Union, with its massive administrative machinery, has not contributed to further economic growth. On the contrary, it has created an enormous bureaucracy that has hampered economic progress. And in its zealous pursuit of “harmonization”, the EU has dragged Europe’s countries down to the lowest common denominator. It would have been easy for the various countries of Europe to implement the desire for peace and prosperity without forcing their people into an overly-centralized political system with a vast and intrusive bureaucracy.
It appears that the objective of the ruling class in Europe today is to build a federal state that is centrally governed, and within this super state, the rights and powers of the various countries that comprise Europe will either be eliminated or made subservient to the central power of the EU bureaucracy. That’s why it’s vital that the countries of Europe politically disentangle themselves from the EU and return to sound economic policies and principles.
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