Posted by: Deborah D | January 9, 2011

12-Step program for America.

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12-Step program for America.

Good ideas abound for how to get the United States back on track economically. This is one of the better solutions I’ve read. Now, if only we can get our political class on board to get the heck out of the way of the American economic train, we’d be doing fine and quickly. This is from Richard Karlgaard, Forbes publisher.

…During the first decade of the 21st century the economy grew slowly (1.8% per year compared to 3.5% per year from 1947-2000) because of two recessions–by definition, a contraction in growth. The 2001 dip was short and nasty. The 2007-09 recession was long and brutal. Since the 1950s the normal pace of recessions is to have one dip per decade and one serious multiyear recession per generation. The 2001-10  period, therefore, was not typical but more like the 1930s and 1970s.

Many forecasters think that this is the new normal for the American economy, so we shouldn’t get our hopes up but just accept that we’ll never grow again. Karlgaard says, “Nonsense.”

The American economy is capable of growing at 3.5% per year for decades with the right fiscal, monetary, regulatory and social policies.

He suggests a straightforward 12-Step program to wean ourselves off of cheap money and get back in the game.

1) Admit we’re addicted to cheap money. Raise the fed funds rate to 1% immediately and then to 2%–and then peg the dollar’s value to a gold or gold-like standard. This hike would signal dollar strength and remove uncertainty.

2) Freeze the federal budget at 2008 levels. Allow private-sector growth to shrink the budget’s relative size back to the Clinton-era levels of 18% of GDP.

3) Allow one exception to the frozen federal budget: Increase military R&D. America can never afford to lose its high-tech military superiority. And military high tech has often transferred well to the private sector. Think semiconductors and the Internet.

4) Simplify and flatten the tax code. The federal tax code with its attendant regulations is 8 million words and growing. It distorts investment decisions. And its complexity is regressive, since only the rich can afford the best tax attorneys to reduce their effective rates.

5) Ban public employee unions. They have driven our states and municipalities to the edge of bankruptcy and have damaged public school performance and student prospects in a time of heated global competition for smart industries and educated workers.

6) Let smart and motivated people teach school. It’s silly to require a retired businessman to obtain a fifth-year “education” degree in order to teach. Kids from poor and broken homes–boys, especially–need successful role models from the real world.

He has (of course) six more equally excellent ideas for getting government and politics out of the way of the American revival. We need America-firsters in our government instead of America-haters. If we don’t want to go down the road of Greece, I suggest we take a big bite out of many of these ideas. His other ideas include: loser pays in lawsuits; make it easier (ala Singapore) to start a business (a one-stop website should do the trick), get rid of Sarbanes-Oxley and Obamacare, privatize Social Security and recruit brilliant entrepreneurs from other countries.

I also suggest that we get more real-world folks in our public offices. Stop electing lawyers and academics to our Congress. These folks don’t live in the real world. If the country is going to have a chance to get out from under the horrendous debt and deficits that have been placed on the backs of our children and theirs, then it’s time to get serious and right now.

We also need to rid ourselves of the bureaucracy – nationally and locally – that is making laws without being elected. A great article that appeared in the New York Post the other day talked about the dictatorship of the bureaucrats. We must end this way of doing the public’s business before they end us. Another good idea is to stop listening to all of the pundits, who’ve been in Washington, D.C. and New York City for far too long, who keep telling us what is and isn’t possible politically. Anything is possible – We Are Americans. We just need to find leaders with courage who want what’s best for the nation and will put that first.  Please read all of Karlgaard here:

Hat Tip:

Read the article on the dictatorship of the bureaucrats from Michael A. Walsh here:


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