Thursday, July 10, 2014
How to Fix the American Economy Making it the Most Productive Competitive Economy on Earth-- Now! Yes The US Economy can grow at 7-20 percent per year.
How to Fix the American Economy Making it the Most Productive Competitive Economy on Earth-- Now! The Idea that the US is a Mature Economy that Cannot Compete with Growth Rates in Developing China and India is Wrong. Take Off the Friction on the US System Applied by Our Politicians and There is More Than Enough Room to Grow. the Sky is the Limit Lex Loeb Contributor Network . America is ready to roll. Already the best sign for a recovery coming soon is China's unloading of US treasury securities. That money going into circulation or even commercial banks anywhere on earth has the positive effect of coming back to the good old USA eventually to buy commercial goods and services rather than to finance the power grabs of Washington, DC. That is just a start. There is way too much financing of present and future government going on with US treasury borrowing. That is just one way to get the boom times on again. For most of the last 110 years and most of the years the US economy has been in growth mode and not in a decline. Something like 70 to 80 percent of the time has been what George Soros two years ago was calling a "super bubble". Once his pessimism caught on the markets and the economy tanked. In spite of that rare episode the economy is once again in positive growth mode and back nearly on the same trend line. What is not instantly understood by a lot of observers is that the higher economic growth rates visible in major developing countries are secular economic dimensions of US growth just counted in the US statistics because of foreign borders. A lot of capital deployed in these distant foreign places benefits American investors and then directly and indirectly the US economy. When was the last television set manufactured in the USA? It was a while ago. Zenith was the very last US manufacturer of TVs in the continental USA and that now was long ago. The US may have the most televisions per capita world wide and it also has cheap supplies. A television set made in China takes less hours for an American worker to buy one than it costs for someone in china to buy the same television. It would be an absurd waste of time and capital for televisions to be made in the USA if that made them cost more. Varioius parts of the television are still made in the USA and integrated in the the units at assembly. If televisions could be manufactured cheaper and faster by robots then there would probably be competitive advantages of manufacturing them in the USA because the cost of shipping which is a cost to consider is a lot less. Does it make sense to have a good supply of ready made televisions at low cost or high cost television to keep American workers in circuit board soldering sweat shop jobs? What is really amazing then is after the Chinese and Japanese gain a mercantilism positive trade balance advantage, they take the capital and loan it back to businesses and government in the USA. China and Japan are inadvertently financing the growth of American military might by financing the US treasury and wasteful government counterproductive programs like US welfare. Having China and Japan as creditors suggests that America is really the better investment in their eyes. Why not just spend their dollar surplus money and get value for it instead of pretending to save it? Taking a positive view of the trade imbalance is one way to change your entire perspective on the economic doom and gloom promoted by the mass media in their general ignorance on the subject. The US dollar can come crashing down when too many come out of treasury bond hibernation and enter the real economy but that means they are being spent on economic activity which is a good thing. Government can raise interest rates when it decides there is too much economic activity and right now we are way down with rates and it seems everyone wants to see job growth that accompanies real economic activity. Think about the last doom and gloom report you read about all that Chinese/ Japanese dollar hoarding in treasuries. The reality is that is future economic consumption that should be happening now as real stimulus to the economy. Let the US treasury go broke because those bonds get cashed in as fast as possible! They can't go broke they automatically get something like 30-40% of all the economic activity of the US economy just from income taxes. So the more economic activity there is the more cash comes directly back to the Treasury and it not as if Congress does not have big spending habits once it sees more cash. In fact Congress spends a lot more cash they really have access to. The limitation of high taxes and regulations will still be holding the full power of the American economy back even if the treasury vaults are emptied. Limits on government spending are actually being imposed by taxes being higher than they should be because revenues are lower with less economic activity they can tax. For the year 2010 here is what can be done to turn the American Economy around and put it in high gear improving both productivity, national wealth, ability to pay off debt, undoing the glut of residential and other types of real estate properties. It can be done immediately. If I ran the congress and the US Senate. it would be done immediately and any presidential vetoes would be overridden. Here is the Lex Plan to revitalize the US economy fast. 1. Allow foreigners to come to the USA and get a green card for living as US residents if they buy a home for at least $250,000 in cash ( and they don't even have to live in it) They are then allowed to apply for citizenship or not. 2. Allow US Banks and foreign banks operating in the USA to offer secret bank accounts like Switzerland used to do to foreigner individuals who are not affiliated with foreign governments. 3. Adopt a 10% flat tax and eliminate the IRS as we know it along with the entire existing IRS tax code with all of its complexities. 4. Not allow the US government to introduce any new takes like the VAT tax unless they eliminate the Income tax in favor of it. 5. Eliminate the capital gains tax. 6. Limit tort attorney's share of compensation in all law suits to 10% of judgments over $50,000 including class action law suits. 7. Set tax free service rates for medical professionals, and service providers such that base rates charged for services are tax free. Many doctors won't even accept Medicare patients because the government compensation is too low if that money were tax free to doctors they would be more willing to cooperate. Why do we tax something we want to cost our people less? 8. Give American citizens a tax credit for buying their own medical health insurance. (reducing the flat tax would serve the same purpose so this would apply to incomes below a certain level) 9. Stop the energy conservation movement. Allow immediate drilling for oil and natural gas on continental shelves in areas where finds as large as the ones in Brazil were just discovered and are likely to be found in similar unexplored areas in US territories. Oil prices are actually less then they were back in the days when whale oil was the primary source. Teach the conservationists that whale oil is "sustainable" in their lingo. The US should be able to help set the global price for oil and natural gas by controlling more of the supply until alternative energy sources become viable as competitive with oil and coal which they are not even with wasted energy tax credits. 10. Revamp the peace corp so that instead of sending wanna be anthropologists and tourists overseas we send Americans with business training and 1 to 2 thousand dollars of seed money to start businesses overseas in undeveloped places with a profit motive instead do gooding. 11. Let the US military take spoils to help compensate it for the high costs of world peace keeping. These can be limited to foreign partnerships not colonization enterprises. 12. Allowing US Port Cities to offer free port benefits to shippers. 13. Requiring the US Gambling industry , including indian casinos to pay out at least 97% on all games played limiting the house advantage on a wager basis to no more than 3%. Any game with a house advantage exceeding 3% should have be labeled with that amount so that those playing the games for "entertainment" know how entertaining it really is. 14. A temporary, for the duration of the recession , $2000 tax credit per new employees taken on in any business. 15. A deduction for all businesses and corporations of foreign taxes paid, And dividends that will be subject to double taxation even as the flat tax may apply. 16. Limited Liability for all citizens , corporations and business or automatic incorporation for all business entities nationwide. 17. A proposed amendment to the constitution that governments cannot rent out or provide as gifts use of public property for private or non-profit use but should sell those properties outright to the highest bidder to separate the commercial and taxable attributes of business from public land ownership. No public park should have a public user fee if it is not going to be an ordinary taxable business enterprise. Highest and best use doctrine still allows environmental organizations to place the highest bid and control the properties as they like. It then allows productive use of what is now federal and probably also state lands to be taxable for its' commercial derived benefits. 18. Allow foreigners with advanced degrees from universities to stay in the USA and get jobs to retain their talent. 19. Allow and increase the number of foreign workers as guest workers who are registered as legal aliens as required by the needs of the economy. 20. Allow foreign construction companies to bid on public and private works projects with the use of legal aliens for very significant savings on repairing the national infrastructure where required. 21. Require that the federal government and states that use eminent domain to acquire private property for what will eventually be other's private use to pay for the lost opportunity costs and loss of grandfathered rights. 22. Provide foreign workers a lower wage basis social security system that only pays out in their home countries based on actual contributions. 23. Require that social security is 100% based on actual contributions for eventual benefits and have the funds invested perhaps in broad spectrum ETF funds with annual statements available to participants. 24. Perform annual public audit reports on the US government congress and all administrative agencies by independent accounting firms for public access the same way the SEC supposedly requires corporations to do the same thing for investor protection. 25. Propose a plan to give each Senator's office 10 million dollars to spend anyway they want to for their term in office and congressional offices 2 million dollars each if they keep the budget balanced and cut government spending by 10 percent per year until the total government spending is limited to 10% of GNP in compliance with the flat rate tax. Higher spending will reduce these funds to those in congress. This is easier than putting them on commission and puts the obvious money objective of their political ambitions first instead of disguising it the way they do it now. The intent is to give congress reasons to limit spending because they have something to loose if they spend too much just the way taxpayers do. Call it an honorarium? 26. Allow any government worker or tenured state faculty member to be fired with cause and / or for lack of funding just the way workers in the private sector are subject to. This will allow departments like the EPA to be quickly reduced in size and departments like the failed department of energy to be permanently disbanded. 27. Take advantage of Fidel Castro's offer to ship to the US surplus Cuban trained doctors to run low cost heath clinics for legal and illegal aliens , Michael More, Joe Biden, the democrats who want a public option in lieu of their own exiting congressional health plans and welfare recipients who also demand the public option. Cuban doctors should be paid just a bit more than they are at home in Cuba for the opportunity to staff these new clinics nationwide. 28. Reduce the cost of running the national penal system which can run up a cost of $30,000 a year per prisoner by reviewing which prisoners are in prison for victim-less crimes/ economic crimes and find a way to get them private sector jobs in remote areas where their wages are garnished not to benefit the judicial system which is now what happens but that benefit primarily those they have harmed or to pay back to the general fund. Prisoners sign a waiver that if they commit a new crime after being released that they automatically get a due process incarceration that is twice as long as their original sentence. 29. End the war on drugs based on the failure of the long running war on drugs to have ended any illegal drug use. Legalize and tax drugs or provide alternative drugs in the market and keep prices fair and reasonable to end the smuggling , black market crime associated with the present war program. 30. Start a billion dollar national lottery to pay for programs and agencies like NASA. Include a check box for the number of lottery ticket numbers above and beyond the flat tax rate that applies as one more incentive to file. 3% house advantage gambling rule will not apply to the national lottery games but should be limited to 20%. You want to see a major boom and a growth rate in the US economy that rivals China's these thirty proposals can almost instantly make it happen. The sky is the limit. With major booms come the bubbles bursting. That always is a risk. However there is a solution not mentioned yet and that is to require all lending institutions to have sufficient collateral for loans they make. Anyone getting a mortgage should have a high loan to value ratio on the property they intend to buy. Those who buy and do not rent should have to be able to put down at least 30 percent. Banks not requiring at least this much collateral should be deemed not too big to fail. The average home buying couple is able to save more to reach the 30% threshold just because of savings from a ten percent flat tax and an end to capital gains taxes. The notion that government is saving our money for us or investing it is absurd. Rating financial risk should be on a collateral basis. Use of high risk borrowing should be reserved for those willing to loose. The so called populist rhetoric about America having too much globalization is nonsense and always has been. The power of America has been that the country is and has been one of the most globalized players in world history. The whole aftermath of Christopher Columbus was trade with the new world. The years when Cotton in the US south was king was as a hard currency earning foreign trade business. Our diets are globalized and have been for a lot more than 100 years. Every day you may be consuming products that you eat and drink from all over the world. Tea, (remember the tea party in pre revolutionary Boston?) , chocolate, bananas, cashews,Brazil nuts, European wines, real Parma- cheese, chewing gum, coconut products, rubber, sardines, cane sugar and hundreds of food ingredients including the tropical spices like black pepper are proof we have been globalized a very long time. Globalization is not new and it is no less beneficial than it originally was for Europe to colonize the world. The new globalization is where the USA does not need to colonize or exploit any part of the world in a colonial manner to reap much greater benefits than ever thanks to the benefits of free trade not making it necessary for us to have to build unnecessarily expensive hot houses to grow tropical products like chocolate and coffee where we can never compete. American food products are used all over the world as US dollars earned for imports necessarily has to lead to US dollars getting spent in the US economy for something real in return for them. The trade deficit is really just the lag time before foreigners loose the value they received because of US dollar inflation or before they make up their minds how they want to spend it. Proposals like these obviously tell you I would never be elected President nor elected Senator because the electorate prefers the illusion of the benefits of a mindfully controlled economy rather than the savage sustainable growth that we have seen happen in free ports around the world. Here in Oregon fear of growth and change directs the entire economy into the trash can and we don't even have a local sense of what we are loosing until a few of us go see what is happening in other parts of the world. Coupled with the religion of naturalism with the objectives of shutting down anything that changes the earth looks , at least in theory , has given Oregon remarkable low growth and mostly imported / transplanted wealth. An example of the local nonsense is government directives on having high density population in Oregon's urban areas and then limiting the height of construction projects so that the real economy of scale is lost except where cushy special interest deals allow the opposite to happen. Oregon is having trouble getting a liquefied natural gas terminal , a state that produces little of it's own energy in spite of a lot of hydro electric dams and probably natural gas fields that are untapped with more gas than the state can use that are off limits to exploration. In Oregon you can feel the pent up economic power that can't be exercised by the citizens because of the control freaks running the government. The costs are substantial with the state population surging. The state of Oregon Ideologies will actually rather see millions of acres of forest burn down naturally than be harvested for economic value even when the trees are salvage only value and not even living! Oregon has the potential to grow faster than the national economy does even when it takes my advice. There is room in undeveloped parts of Oregon for cities that are larger than our largest existing city and maybe as many as five or six of them. Everything possible to prevent even as much as a minor economic boom in Oregon is being done by elected politicians here. They then start economic development commissions that really just do the opposite . They spend millions on unnecessary convention centers against the will of the voters and then as the centers prove to be big fancy white elephants they attempt to go into the hotel business to pretend like everything they have done and failed at already is going to be a future success. The public maybe on the hook to pay for financial funding bonds that may end up becoming worthless. Reading that billions and billions of dollars have been spent over the last 20 years to give Portland it's supposedly wonderful public transit system and the envy of all other American cities with the light rails and trolley lines only to find out that half the people that rode the buses and equivalents 20 years ago are now using the fancy new publicly owned assets is mind boggling anti-economics. .