Matthew R. Newman: What made you decide to run for Congress?
Josh Dowlut: Others are running on a platform of platitudes. I have specific ideas and solutions at a time that we desperately need them. The bank bailouts that started two years ago showed that the majority of those in power are corrupt, incompetent, or some combination of both. The dearth of good ideas within the current sphere of debate told me it was time to get my soapbox.
MRN: How would you rate our incumbent Congressman, Dutch Ruppersberger?
JD: I’d give him an F. He voted for the bailouts twice. (Remember that there were two votes; it actually failed the first time.) He voted for a boondoggle of a stimulus package that helped politically connected companies and was sold to us under the threat of “if we don’t do this, unemployment will go over 8%.” Well at 17 months and counting of 8%+ unemployment, we are fast approaching and will likely exceed the post-war record of 27 months. He voted to force individuals into contracting with a private corporation. The health plan is widely misunderstood by both sides of the spectrum. It is not socialist; rather, it is corporatist, or fascist; it is worse than truly socialist. He voted to raise the utility bills of every American. These decisions have a common theme: take from the middle class, give to the rich.
MRN: There is a “Repeal It” movement being led by the Club for Growth and conservatives in Congress. What are your thoughts on this movement?
JD: I support it either through the legislative process or through the judicial process. This may be hanging around for the next four years. I don’t think the 10th Amendment argument is as strong as the Commerce Clause argument, and that would require a real person to first be affected by the mandate before the Supreme Court would even hear the case. I am confident, however, that unless the court is willing to define simply living as economic activity, then the mandate would fall outside the purview of the Commerce Clause and therefore be unconstitutional as it would violate Article I, Section 8. God help us all if it gets that far and they interpret it broadly because that would open the floodgates of, to quote Elena Kagan, “silly laws” such as the hypothetical “three vegetables a day” question she danced around.
MRN: How do you feel your experiences help qualify you for this position?
JD: As a small business owner I have felt the effects of taxes and regulation first hand. I understand how regulations can act as barriers to entry and barriers to growth which limit a free market’s ability to function, which hurt consumers, which hurt small businesses, and which actually help large companies with the resources to comply with them. What percentage of Walmart’s labor hours do you think are devoted to regulatory compliance? What percentage of a 10-person company’s labor hours do you think are devoted to regulatory compliance? All regulations are disproportionately burdensome on small businesses.
MRN: On your website, you mention that Karl Marx, Jesus Christ, and Adam Smith would all oppose the 2008 / 2009 bailout. Would you mind explaining this position a little further?
JD: When the father of capitalism, the father of communism, and the moral authority of the Western world for the last 2000 years would all be on the same side of an issue, you know the other side is wrong. Smith never would have advocated for the government interfering to this degree with the “invisible hand.” Marx never would have supported such a huge transfer of income and wealth from the proletarians to the bourgeois. Jesus specifically advocated that the rich give to the poor and showed general contempt for the bankers of His day when He threw out the money changers. Understanding the philosophies of all these men, I am confident in saying that, were they alive today, they would vehemently oppose the bank bailouts. The only historical figures who might have supported them would be Marie “let them eat cake” Antoinette and Louis XVI. To privatize profits but socialize losses is theft.
MRN: On your website, you mention that you advocate “…going toe to toe with government unions to cut bureaucrats’ pay to parity and to phase-out unsustainable, unjust pensions.” How would you impact your legislative agenda?
JD: I’d introduce a bill to cut Federal employees’ pay down to parity with the private sector. Numerous studies using the government’s own data have shown that, even controlling for the same job, Federal employees make an average of 30-50% more than the private sector. A Cato study showed that both the voluntary and involuntary termination rates in the Federal government are 1/4 what they are in the private sector, indicating lax standards and above-market compensation. It’s unjust. It’s unsustainable. It must stop.
MRN: On your website, you mention that you’ve “Written on economic, fiscal, and monetary policy matters.” What have you written and would you mind explaining briefly your opinions on economic, fiscal, and monetary policies?
JD: How much space do we have? My campaign website (http://joshdowlut.com/) is simply a new homepage layered atop about two years worth of my writing on these subjects. I probably have more policy papers on these issues than any candidate in the state. I have also been published on seekingalpha.com, an economics/finance website. Some of my articles have been cited by other writers. In short, I support true free-market capitalism. True free-market capitalism requires that the government enforce laws against fraud and theft. It also requires a free-market banking system. That’s where our train starts to come off the tracks. With the Financial Services Modernization Act of 1999, and with the Commodities Futures Modernization Act of 2000, we have legalized fraud and theft for big banks. Since 1913 we haven’t had a free-market monetary system, and since 1971 we haven’t had anything to even try to keep it honest. It’s no coincidence that the middle-class wage stagnation began at the same time the gold window closed. It is mind boggling that some of the most ardent free-marketeers will so willingly accept central planning when it comes to the monetary system. We wouldn’t allow a central planner to dictate the price or quantity of milk, so why do we allow if for money? This country transformed from a backwater agrarian economy with a per capita income that ranked middle of the road internationally, to a budding super power able to mop up at the end of WWI with the world’s #1 per capita income without a central bank.
I also have some distinctly contrarian or heterodox views. For starters, deflation is good, deflation is natural; while it is often a symptom of depression, it is not a cause of depression. If you think about it, progress is the ability to get more output from the same or fewer inputs. That’s what raises standards of living, and that naturally leads to falling prices or deflation. There is ample evidence that shows deflation can coexist with growth and prosperity; 1820-1913 prices fell by 50% while real per capita income increased 5-fold. There is also evidence that shows deflation raises real wages. I also see credit as more of a problem than a solution. Credit creation drives up prices which requires more credit creation which drives up prices until you hit a point where your wages can’t afford it anymore. That’s when the music stops and 10 people go to grab 5 chairs. The reason the average man needs to take out a loan to buy a new Kia is because everyone else in the market for that Kia is using financing as well. Sometimes I wonder how much people would use credit cards if they were correctly called debt cards. When I hear politicians talking about how small businesses need more access to credit, what I hear is “small businesses need more access to debt.” Expanding credit benefits bankers at the expense of both consumers and productive sectors of the economy.
MRN: On your website you mention that you offer a “…well thought out, economically, and fiscally sound alternative to the bank bailouts.” Can you please explain this to my readers?
JD: FDIC has been the obvious answer staring us in the face all along. Transfer assets and liabilities from failed companies to unfailed companies and, if need be, to brand new companies. Adjust reserve requirements for the new bank to compensate for any defaulted loans. Cost to the taxpayer would have been somewhere between zero and maybe some increased administrative costs. FDIC could have facilitated the transfers only, and the Fed could have adjusted the reserve requirements. This would have kept the broad money supply stable and therefore kept prices stable as well. New short term commercial paper could have been given an explicit Federal guarantee for a year or so. Everything else should have been sorted out among the gamblers. This reminds me of a story about two young brothers who spent the summer playing cards with each other. At the end of the summer, one owed the other several hundred dollars. The debtor brother was insolvent. The creditor brother cried to the law (mom) to enforce and collect the debt. Mom said “you’re insane.” To fit this story to the bank bailouts, the mother would have called a meeting with all of the other neighborhood parents and demanded that their kids cough up a share of money enough to pay the debt … and she’d have had a PhD/MBA-based explanation as to why it was in these other kids’ best interest to do so. A lot of 401ks, sovereign wealth funds, and pension funds would lose money under my plan. It would not be painless, but it also would not be Armageddon, and in the long run it would be much better and fairer than the play we are running. What we chose to do was to take private debts that never even had an implicit government guarantee, and turn them into public debts with a “full faith and credit” explicit backing. Right now we are continuing to pour hundreds of billions of dollars into Fannie, Freddie, AIG, and the Fed’s member banks, and there’s no end in sight. Over 800 years of sovereign debt defaults from around the globe have shown that turning private debts into public debts is a recurring path to disaster.
MRN: There are currently four other Republican candidates in the race. Would you support the eventual nominee?
JD: The ancient Athenians used to draw straws to decide who would represent them in their government. They believed that otherwise politics would become dominated by the rich, the powerful, and the corrupt. I’d take throwing darts at the Yellow Pages over Dutch Ruppersberger. Yes, I will support the GOP nominee.
MRN: What is one thing you want to ensure that potential voters know about you / your candidacy?
JD: I wish I could have gotten this in closer to the top: Exempting small businesses from complying with the payroll tax is the absolute best thing the Federal government can do to help the economy and create jobs. No serious discussion is complete without it, yet I’m the only candidate crusading for this. To understand my crusade, you must first understand what the payroll tax is. It is a 10% surcharge on labor paid by the employer. It is a stealth, or hidden, tax. Whatever an employee thinks his tax rate is, the actual rate is 10% higher. If your employer wants to pay you $1000 of payroll, it costs them $1100. Unlike a traditional corporate tax on net profits, this is a tax on GROSS wages. As such, unlike the traditional corporate tax, it can put a struggling business under. By the same token, while cuts to the corporate income tax will have zero effect on a business that has no profits, cuts to the payroll tax can move a business from the red to the black. Three-thousand businesses closed in MD last year. We need this change. You could exempt the first 20 employees for a revenue loss of $160 billion. 85% of businesses in MD have fewer than 20 employees; therefore, such a change would have a huge impact on growth and hiring. Getting more aggressive with spending cuts to afford more revenue loss, you could exempt the first 100 employees from complying for a revenue loss of $320 billion. That would exempt 95% of businesses from having to comply with this and would really fatten the help wanted section.
I thank Dowult for his honest candor on the issues and I wish him well in the primary. If you are interested in learning more about his candidacy, check out his official website.