Tuesday, November 3, 2009

My Economic Repair Plan

Here is the plan to fix the current economic crisis, as drafted by me along with my sister. This is a plan which would actually work if people cooperated, but it may not be totally feasible in today's world. It is basically a pull-up-by-your-bootstraps plan, and eliminates or drastically reduces government intervention. The government would be gradually returned to what it was originally meant to be.

The government's proper roles, as set forth under the Constitution of the United States, include:

  1. Defending the homeland, including enforcement of sensible law and order among the citizens of the land. Securing our borders. Maintaining a peacetime multi-branch military.

  2. Controlling the framework of the transportation system, including maintenance of roads and highways. Government should be prohibited from meddling in interstate and intrastate commerce, private transportation corporations, auto manufacturers, etc.

  3. Overseeing the money supply, and regulating currency and its worth. Overseeing banking as relating to the distribution of currency.

  4. Negotiating international trade agreements in the best interests of the land. Government is permitted to set tariffs regulating international trade.

  5. Bringing to justice those who violate the laws of the land.

These points constitute the basic framework of working government. Obviously, this list is too simplistic in itself, and it needs some expansion and interpretation along the guidelines of the Constitution, in the best interests of the citizens of the land.

The Constitution also provides for legislation by elected representatives of the citizens of the land. However, legislative bills should not grant the government power to interfere with free-market trade. Some laws that have been adopted over the years need to be amended; and some of them actually need to be shredded. The ultimate decision rests on us, the citizens of this land. This paper is simply a suggestion on how to survive the coming economic crash. Yes, economic crash; I actually said that, and I believe it will occur soon, given the way things are currently heading. This is a long-range plan. No instant drastic fixes will work because no one would go along with them, and they would admittedly create chaos.

Now, on to the good stuff...

Today, we are once again facing an economic crisis, similar to the Great Depression. People are losing their jobs, and are facing foreclosures on their homes because they can't pay the taxes and loan payments on their property. The bank assumes the house/ land by foreclosure, and the people and their families in some cases end up being left homeless. This is not a good scene for any of the parties involved. First of all, in a poor economy, the bank is saddled with MANY such loans that have been foreclosed on; so many in fact, that they can't sell them at any price. Take for example Detroit, where large portions of neighborhoods are vacant and overgrown. The bank can't sell them, even at $500, and the bank now has to pay people to keep the places looking respectable. Some people have left in order to find work elsewhere, but there are those who are unable to find work, and it doesn't seem right that they should live on the streets, while the bank owns plenty of vacant houses! The solution for this problem is pretty simple, although it could create some other problems which I will address later.

My solution is to temporarily suspend property taxes on people who have lost their jobs but who wish to remain in their homes. Banks would be required to extend credit indefinitely on ESTABLISHED loans only, and would be prohibited during the crisis from extending any new loans. The bank would benefit from this, by not having to foreclose on the properties. The properties would be maintained as well as inhabited, and would thereby retain their value. The inhabitants would of course benefit by having a roof over their heads while trying to find work. It is possible under such a system that the banks could crash, however I think many would actually do better in the long run.

Suspending the property taxes on qualifying land would ultimately leave the community with less money to work with for public utilities, schools, police, road improvements, etc. However, in hard times, these things are not as important as food, shelter, and clothing. It is likely the town government would suffer and need to cut back. People should be prepared to defend themselves because the police force might need to be trimmed. I'll be frank here, the citizens would be responsible for their own well-being. The government is not responsible for their well-being, unless it is responsible for their bad state in the first place! In other words, if the government (or the bank) throws you out of your house/ off your land, then the government (or the bank) should be responsible for helping you. As we place the burden of personal well-being back on the individual, government intervention decreases.

Another part of the problem we are facing is the loss of jobs nationwide. The “stimulus” package that was passed earlier this year by our Congress, was supposed to create large numbers of jobs. The last confirmed figure I saw stated that around a hundred thousand jobs, mostly in education, had been created or saved nationwide. Furthermore, in spite of the stimulus, the unemployment rate has risen to over 9%. Impressive, considering that 787 BILLION dollars was supposedly pumped into the economy. This is LUDICROUS. If the government would stop interfering in economic basics, unemployment would not be a problem and there would be plenty of jobs to go around. The Department of Labor holds the key to fixing this problem. Before we totally eliminate the Department of Labor, let's look at what actually needs to change. Setting the minimum wage artificially high in poor economic times causes fewer people to hire because they can't afford to. The solution for this is to lower or eliminate the minimum wage. This could cause a yell, but whatever happened to job applicants being told the rate is, say 4.50/hr, and saying, “No, I won't work for less than 5.50.” This is a problem that again, the citizens need to take upon themselves. The government's job does not include meddling in economics to artificially create the appearance of a good economy, when in reality the economy is not good. Without government intervention, when the economy is good, wages will go up; when it is poor, the wages will go down.

Another way the government interferes with wages is by imposing employee taxes such as workman's compensation. The cost on an employer for hiring one employee for ONE DAY is something like in excess of $500 depending on what he is doing (it's $900 for landscaping). This is ridiculous. If an employer is hiring an employee for ANY period of time, the government's cut should be ZERO. This is a free market economy, and the government is not responsible for making it go 'round, remember?? This ridiculous amount makes companies, especially small businesses, UNABLE to hire short term help. The simple solution for this is to eliminate Workman's Comp Tax and other government-required “employee” taxes. Period.

Okay, now I understand that workman's comp may seem to be a good idea because it pays you if you get hurt on the job. However, that isn't supposed to be the government's job. It's the employer's job to keep his workers safe and compensate them if they get injured. It may be argued that it would be easier on the employer to pay the $500 to the government than for him to cover anything that might happen. True enough, but the government's job doesn't include fixing your problems for you. If natural economics is left to itself, it eliminates bad businesses. Again, let's face reality instead of trying to create an artificial economy. Eliminating workman's compensation insurance and eliminating or drastically reducing the minimum wage requirements would create jobs. INSTANTLY!

One more problem is present on the job issue: Labor Unions. The original idea behind labor unions is good, namely that workers band together to secure the best wage rates and benefits in exchange for the best work, employers, and workplaces. This is a good idea.... until the union gets too powerful. When labor unions become so powerful that they strip the workers of their rights, and basically control both the workers and the employers, something is wrong. The labor unions are now meddling in free market economics and even collaborating with the government on just how to control the rest of the economy. So, now I am going to make a very profound statement: We need to decentralize the Labor Unions in this country in order to solve the rest of the labor problem. We need to peacefully disband the control centers of the labor unions nationwide. The big union bosses need to get a different job. Why are the big unions so much of a problem? Because they artificially set prices and wages, control the workers and the employers, and make it impossible for anyone to be hired who isn't part of the union. I do not advocate outlawing small company-wide unions, because I believe they do make the companies better and the workers happier.

Another economic issue we need to address is Social Security reform. Why did the government get into the business of taking care of old people?? This is not part of the prescribed duties of the government. Today, the Social Security program is essentially bankrupt, and due to the baby boomers now moving into retirement age, the system will soon finish crumbling. The working-age people today are not paying for their own retirement, they are paying for the retirement of the elderly currently receiving benefits. Most of the working people of today will never see a cent of the 15% of their income that is taken for Social Security.

Before the days of Social Security, children took care of their aging parents and relatives themselves. Government run nursing homes did not exist, although a few privately supported ones did, I believe. Unfortunately, with so many people now dependent on Social Security, it is hard to terminate it. Although we need to eliminate Social Security, we need to do it as a slow steady withdrawal. I would propose a plan where Social Security benefits would be cut over 15 years, at the rate of 6.67% per year, and the Social Security tax rate which is currently at 15.3% would be cut by one percentage point each year. At the end of 15 years, Social Security would have evaporated, and we would be left with a 15% tax cut! With a 15% tax savings, people would have some extra money to spend on caring for their aging relatives, whether directly themselves, or through private caretakers.

In addition to cutting Social Security, if the government would cut back on other socialistic programs, general income taxes could be reduced as well. When we have whittled Government back down to the basics, we can start chipping at the national debt, and our budget would actually be balanced! I am not in favor of totally eliminating the income tax, because the government needs to get operating money from somewhere.

A final problem we may face with a poor economy is a food shortage. This problem could be combatted somewhat if everyone who has some land would grow a garden. This would cause a small-scale surplus of food at the grocery store, causing prices to drop. This would help make food more affordable for the inner city folks who don't have land to grow a garden. During the Second World War, Americans were encouraged to grow “victory gardens” to stretch the food supply; this is the same idea. Also, people with excess produce could share it with the community.

I am not condoning COMMUNISM here. Communism is different; under communism, you would grow a garden and ship all the produce to a common storehouse. Then, the contents of the communal storehouse would be distributed equally to everyone. This is a very bad idea, as evidenced by what happened at the Jamestown colony in 1607. Until Captain John Smith laid down the law, “He who does not work, shall not eat,” the colony was starving to death under the “communal” system.

I am talking about neighborliness here. If your neighbor is starving, it is your moral obligation to share with him if you have been blessed by plenty.

As a final note, it is not the Government's place to be a humanitarian aid to the nations of the world. However, if an charitable organization or individual feels that he should send aid to a needy group or nation outside of the country, he is more than welcome to do so.

In conclusion, let's rebuild America, and overhaul the government. The government needs to be whittled down to size. It needs to get its fingers out of economic meddling and costly socialistic programs. The citizens of the United States of America need to learn what it means to be self-sufficient; unfortunately I think most of us have forgotten that over the last 100 years. Even the hotly disputed issue of healthcare could be solved if the government would get its fingers out of the issue. Why can't the citizens themselves stand up to the healthcare industry and say, “We are not paying your exorbitant prices anymore”? I sincerely believe that even in healthcare, the basic economic principles would prevail, lowering the costs and ultimately improving service. We need an informed nation of citizens who are able to govern their own lives. Then and only then, will Free Enterprise in America be able to hold up its head unhindered and unashamed, proudly displaying the coveted American Dream!

~JW

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