In the midst of our current “economic crisis", we've elected a new President and an activist Congress. The question on everyone's mind is “What will the Government do to stimulate the economy?" The premise with the prevailing angst over the recession is that Government can help us out of this (or any) recession by extending jobless benefits, jobs programs and financial bailouts of failed institutions and industries.
Sadly, this premise can only prolong the suffering instead of correcting the problem. If we're going to spend AT LEAST a trillion dollars on trying to get the economy back on track, let's consider some alternatives to the current thinking. Here are some ideas to consider.
Free Markets and Bailouts: There should be NO Government bailout, whether for the financial or auto industries, or any other that will jump into the fray for that matter. If a company won't run its’ business in such a way as to be profitable while properly managing risks and preparing for financial calamity, then both the market and consumer are better off with that company giving way to companies that WILL.
Eliminate ALL income taxes, including corporate taxes. Also, eliminate the IRS. Probably the single biggest impediment to job creation in the United States is our system of taxing away individual and corporate incentives to grow and prosper. Eliminating the corporate income tax would make the United States a virtual tax haven for companies and investors from all over the world. The influx of investment dollars would create more jobs than any Government program ever could. It would also allow hundreds of billions of dollars (now wasted on compliance) to be spent on planning profitable and productive areas of growth and expansion. As with investment, so too would jobs migrate back to the US.
Eliminating personal income taxes would also spur individual investment and savings. It would also remove the fear many (most) Americans of the Internal Revenue Service. It would also eliminate the possibility of Identity Theft at the hands of IRS employees (and private collection agencies) with access to personal information from tax returns. Americans should not fear their Government. That is not the case when it comes to taxation.
Adoption of a national retail sales tax could provide all the revenue necessary to run the Federal Government with no negative effect on the public. A tax rebate (as suggested in HR 25, The Fair Tax) would ensure that lower income households would not be penalized by the national sales tax.
Decentralize the banking system. Probably more than any single institution (other than the IRS) the Federal Reserve actually distorts and magnifies swings in the financial markets through politically motivated machinations of interest rates. Milton Friedman advocated slow but steady growth of the money supply to ensure growth while minimizing inflationary pressures and wild swings in interest rates. Interest rates fluctuate according to the market as a self-regulating mechanism. Messing with that mechanism only causes problems.
Instead of bailing out huge banks that have in part cause this financial crisis, encourage the development of community banks. Local banks are much better able to respond to local needs AND cause little or no impact if/when they fail. Local banks also ensure better service at the consumer level.
Free Trade and Fair Trade. Free trade is good for the American consumer AND our economy. Because American consumers can buy more with less because of cheaper imports, they have more to spend on their families or even to save for college, retirement or whatever. However, when I think of “free trade" I assume there are no restrictions on either side and that everyone is playing on a level field. Unfortunately, American manufacturers are generally held to a higher standard in compliance with various regulations. Hold importers liable for the same safety and quality standards as American manufacturers and make sure that American exporters are allowed the same access to foreign markets as foreign importers have to our markets.
Greater Consumer Power and Freedom. Instead of giving a trillion dollars to poorly run and managed companies that should be allowed to fail, I would rather give that trillion dollars directly to American citizens. This could be done in one of two ways. The Government could just suspend collecting taxes until a trillion dollars is not collected. This would benefit primarily taxPAYERS. The other alternative would be to send every citizen a check for $3000. Americans could decide for themselves how best to spend that money whether it be to pay bills, catch up on mortgage payments, put a down payment on a house or car or even invest it. Either way, the money goes where it is both needed and can do the most good.
In the final analysis, it was Government that created this mess. From the outside looking in, the only way to clean up the mess is to have the Government involved as little as possible. Do I expect President Obama or this Congress to enact these suggestions? Of course not. BUT, that doesn't mean they shouldn't be considered.
ABOUT THE AUTHOR: Dr. Tim Langley is a chiropractor, economist and business consultant. He lives and practices in Marietta, Georgia, a suburb of Atlanta. Dr. Langley writes on issues that relate to health, business, personal development, economic development and politics. He is also the developer of “The Membership Practice". You can find out more about Dr. Langley at his web site http://www.marietta-chiropractor.net or through his blog at http://drtim.wordpress.com
You can write or visit Dr. Langley at 2100 Roswell Road #200C-526, Marietta, GA 30062.