The Economy

I watched our President speak thusday night on a program to put America back to work.   He spoke for about 30+ minutes, said "Pass this bill, now", about 30 times and spoke in great platitudes.

Now, many people know that I am not a big fan of the President, but I have always considered myself a fan of his gifts.   This guy has the gift of public speaking down to an art.  He is smooth, confident, speaks in terms that endears him to "Regular Joes".   All gifts that I admire.  I would love to have that gift.  Reagan had that gift and very few others have that gift.  I  think I would personally like our president.  He seems like a great guy to set down with, shoot the breeze, watch a ball game or just talk current events.  But I honestly believe he wants to do the right thing.
On this particular night, he was using his gifts to speak on the condition of our economy and what he would like to do about it.  He spoke in high details about how Americans are special and how once again, "Made in America", should be a source of pride throughout the world.  All great things to say and all things we want to believe.

However what we want to believe and what is really happening are two different things.  Currently we have a 9% unemployment rate, stocks are down, home values are roughly 20-40% off of what they were just 5 years ago (depends on where you live), and many homeowners owe more on their homes than what they are worth.   Also, retirees are finding that their 401K's are worth less, gas costs more, health care costs more, and the Medicare-Medicaid that they were looking to depend on are going to go bankrupt soon,  To top it all off, Social Security will soon be a thing of the past, unless some big changes are made.

Further reality is that our federal government is spending money at a rate that would make the Trumps blush and those that we have elected are in a deadlock on which way to take our country.

It a short synopsis, we are up crap creek, and the only paddle available is being fought over by the local bullies.  In the meantime, we are careening toward crap falls with a big crash at the bottom.

Our President, is telling us that we need to keep pumping government dollars into the infrastructure and eduction. As well as offer tax deductions to small business.  But, he wants to tax large corporations and "millionaires" at a higher rate to help with the deficit.  In other words, more of what we have heard from our government the last 60+ years.

The other side of the isle is divided.  There are the "tea party" conservatives, the neo-conservaties, and the social republicans.  Kind of a large scale on the same party.   The tea party group is a more libertarian than republican.  The neo-conservatives believe in big government but only if it benefits the wealthy.  The Social Republicans are basically conservative democrats.  They are socially liberal, but fiscally conservative.  Seems like an oxymoron but it is really a true position.

So, we have one group that wants to cut the size of federal government, bureaucracy. and taxes.  The other side says we need to expand the size of government, take control of business and direct the economy from the top down.

Now as a college graduate who took both micro and macro econ, I can say that there are models in the world of both methods.  It all depends on what the people are willing to accept.

China was a stone cold communist state, everything was controlled by the state and the party.  It has now loosened up it's economy, but had kept a tight reign on the social and political power of the country.  It is a top down economy.  By the same token, many European countries are very geared to social liberalism, while trying to keep business afloat.  The US used to be a country with very few rules, great freedoms and a chance to make a fortune in business.  But as some abused the privileges, rules were cast and the more rules and more rules, (you get the gist), until we are more like the European countries than the US that we were.

We all long for the time when the US was the leading innovator, producer and consumer nation in the world.  We are now just he leading consumer.  As we regulated, we reduced the incentive to innovate and produce.  All facts, nothing new here so far.   As a people we seemed to be alright with that.  Our "poor" enjoyed the highest standard of living of any industrialized country on earth.  But still there are those that wanted more.

Democracy and socialism have nothing in common but one word, equality. But notice the difference: while democracy seeks equality in liberty, socialism seeks equality in restraint and servitude. -- Alexis de Tocqueville

American started out as a democracy and became socialistic.  I am not saying that the goals of helping the poor and working toward equality are bad, it is just that we sacrificed our freedom and liberty to do so.  The pendulum has swung toward the socialistic side, it just needs to swing back to get our economy back on track.

Those who exploited the economy in the late 90's and 00's were a group looking to make a fast buck be transferring wealth rather than creating it.  They created artifical wealth with the .com boom, the energy boom and lastly real estate.  They extracted large sums of money from others toward themselves. The resulting crashes by these artificial balloons have taken a toll on our economy. High fuel costs are raising the cost of production and transportation.  Finally, terrorism concerns and overseas wars are extracting tolls both in human and financial terms.  The result is a business community trying to keep their cards close to the vest, making profits as they can, investing or growing only when necessary, and avoiding any innovation or growth unless it makes for a larger market share with little investment.

Our economy will have to recover if anyone is going to see the "American Dream" fulfilled again.  The two sides of the aisle will have to become one with the people.  The possible outcome of failure is great.  I could see the US breaking up into smaller countries, groups of 4 or 5 states with no federal government.  I could also see us becoming a pure socialistic society with a very strong federal government, a political ruling class and tax rates approaching 50% on most people.  Both are very scary.

As a country we need to allow our companies to grow and innovate without large regulation.  We need to continue to help the least fortunate among us.  We need to reward those who create wealth by creating something, not by transferring wealth.  We need to make quality goods and services as a partnership with our business owners, instead of an adversary relationship.  Finally, we need to allow all Amercians the freedom to make their own decisions, both good and bad and live by the consequences of those decisions.

Out government needs to put those items at the top of the agenda.   We as voters need to elect people who are responsible and live with the same rules they pass. 

I am for reforming the tax code, simplify it, and lower the rates.  The results are astounding.  As a business owner, if you can reduce your accounting and regularatory costs, you can make more money and have more money to invest.   As a straight tax payers, a simplified code, with a one sheet tax form and no loopholes would make for more money by eliminating the need for large amounts of enforcement people at the IRS.  A tax holiday for multi-national companies would bring large sums of capital back to the US that is setting in foreign banks because of the tax burdens on bringing that money home.  Let them bring it home, just forgive the tax if they invest it in the US.

I am for reducing regulations on companies who are actively involved in innovation.  I also am for, investing in our roads and infrastucture as long as it is done competitively and as the money is afforded.  We need to find sources of energy at home.  Coal, natural gas, oil and more are needed right now to produce what we need to create an atmosphere that allows us to compete.  Cheap energy makes for competitive production on a world stage.