Copyright by John T. Reed

Everybody wants economic growth. Indeed, the Democrats and Republicans have put us in a position where the alternative to extraordinary growth is financial ruin—not for our children and grandchildren but for us, too. When exactly were you planning on dying? Probably not until you are around 90 according to actuarial tables. You think we can keep running multi-trillion deficits until you’re 90? F’get about it. Without extraordinary growth, we are screwed. Our children and grandchildren are actually more likely to live in a world where America’s credit cards have been cut up because our huge debt was renounced.

But how can we get extraordinary growth without even greater deficits to finance “stimulus” packages?

Easy. Deregulate.

Ever heard of the Wirtschaftswunder? It is German for economic miracle. It is what happened in Western Germany after World War II. You would have thought their situation was pretty bad in 1945. The Allies had bombed the ever loving crap out of their country. They were world pariahs. 7.5 million, more than 10% of their 73 million citizens had been killed, most of them young men back in an era when women were for Kinder, Küche, und Kirche (children, cooking, and church). The Allies deliberately dismantled the German coal and steel industries removing the mining and manufacturing equipment. The Allies also stole all German patents and large numbers of German scientists were forcibly removed to the Soviet Union or emigrated to the U.S.

What caused the German economic miracle, which left the victorious Allies in the dust? A new currency with low inflation and deregulation.

Marshall Plan?

What about the Marshall Plan? Initially, Germany was excluded from the Marshall Plan because they were the enemy we had just defeated. The Marshall Plan was later extended to Germany because it was realized that Western Europe could not recover economically without Germany, historically the biggest European economy. Even when it was extended, the Marshall Plan was peanuts in the grand scheme of things.

Here is what Wikipedia said about Germany’s Marshall Plan:

Nonetheless, the amount of monetary aid (which was in the form of loans) received by Germany through the Marshall Plan (about $1.4 billion in total) was far overshadowed by the amount the Germans had to pay back as war reparations and by the charges the Allies made on the Germans for the ongoing cost of occupation (about $2.4 billion per year). In 1953 it was decided that Germany was to repay $1.1 billion of the aid it had received. The last repayment was made in June 1971.

England got far more Marshall Plan money yet had a lousy economy when Germany was having its Wirtschaftswunder.

In recent years, India and China have had economic booms. How? By getting rid of bureaucracy and regulation and letting competition rule.

Here is what the U.S. needs.

• End all government mandates like forcing state governments to do stuff Congress wants, vehicle CAFE mileage standards, forcing public schools to do various federal requirements, etc. Let businesses and lower levels of government do what they want. The U.S. is supposed to be a democracy with a relatively weak federal government.
• Reduce our number of civil lawsuits to the normal rate among advanced countries by making the loser pay the winner’s attorney fees and costs of litigation and other appropriate reforms.
• Repeal the various environmental laws and regulations other than cost-effective, proven prevention of air and water pollution.
• Reduce restrictions on exploration for and extraction of valuable minerals and oil to the level required to imminent direct harm to the public.
• Deregulate business activity not involving taxpayer funds either directly by spending them or indirectly by risking them.
• Stop bailing out businesses that are “too big to fail” with taxpayers’ money.
• Increase funding for civil common law and criminal law enforcement so that police and courts are more efficient and misbehavior or more often punished and/or deterred. Reduce procedural requirements that have turned litigation into an endless legal fees and costs extortion racket. Whenever a capitalist misbehaves, leftists say it shows we need more regulation. No. It shows we need more enforement of existing laws against common law fraud and existing statutes that are appropriate. We need new regulations in some cases because of changes in the market like the innovation of derivatives.
• End all wage and price controls, both ceilings like rent control and floors like minimum wage laws.
• End zoning and other land use restrictions like permit requirements. Owners of properties can recreate zoning type requirements, if they wish to lower the resale value of their properties as a result, through deed restrictions. They can also purchase easements on nearby properties if they are willing to pay the appropriate price reflecting the drop in value of the properties subject to the easements. Neither neighbors nor the government have any right to tell a person what he can build or renovate on his own land unless the property in question will physically damage a nearby property. Those interested in prevserving historical buildings for public can purchase them with their own money, using eminent domain where necessary and lawful. Otherwise, the owners of the buildings can do what they want wit them.
• All U.S. federal and local taxing authorities should be limited to a fixed percentage of people’s incomes that can be taxed. The XVI Amendment, which allowed income taxes, originally was supposed to have a 10% limit. It was dropped because Congress feared the government would immediately run the rate up to 10%. All individual income above the poverty level should be taxed at the same rate. The tax should be a flat tax. The tax return for each level should be no longer than one 8 1/2 x 11 page. The Internal Revenue Code should be limited to ten pages in length.
• End taxes on corporations. Taxing their owners already takes care of that revenue source. Taxing corporations is just a hidden sales tax on the products of the corporations products and services. Taxes should not be hidden.
• Make the annual due date for taxes the first Monday in November and make taxes payable to and be collected by the legislator who represents the district in question. For example, you would send your federal income taxes to your Congressperson the day before the election.
• Eliminate all health insurance that has deductibles less than $500. Health insurance should function like car insurance and car maintenance expenses—pay the routine stuff out of your pocket, which will hold down costs, and file a major medical insurance claim on the big stuff that would bust your budget.
• Replace all help-the-unfortunate programs and departments with a negative income tax, that is, a cash payment. That is, end welfare, food stamps, social security, etc. handouts and just give the poor enough to get by. Charity beyond that will become solely the province of those who wish to give voluntarily. This is supposed to be a democracy. That will result in our citizens giving as much as they want, and no more, to whomever they want, and no one else. The present system forces you to contribute to whomever (e.g. ACORN) the political party in power wants to you to contribute to.
• Encourage talented, healthy, ambitious people to immigrate to the U.S.—a brain drain against the rest of the world—a producer recruiting program.
• Encourage lazy, immoral, or unhealthy people to emigrate out of the U.S. to more “compassionate” countries—a parasite drain away from the U.S. Anyone who thinks lazy, immoral, or unhealthy people deserve charity can give them some of their own money, but no one else’s.
• Legalize marijuana. I have never used it and will not start, but I see no point in the current Prohibition Era which gives criminals a monopoly on a popular, profitable, alcohol-like chemical and charges me lots of taxes to stop its use.
• Reduce the percentage of the population that works for all levels of government to the 1929 level—the peak of the “Roaring Twenties.”
• End all government insurance programs that insure uninsurable risks, i.e., those where massive numbers of claims would likely be filed simultaneously, like floods, deposit insurance, crop failure insurance.
• Make a fair draft lottery the only way to join the military. End career military and their extremely generous retirement pay and benefits. Let military personnel use IRAs, HMO’s and such like the rest of us. Outsource whatever non-combat activities possible, e.g., pay, logistics, non-combat maintenance, communications, intelligence, aviation, medical care, criminal investigation, construction. Reduce the number of military persons whose job is musician to 200 worldwide.
• End special benefits like gold-plated free health care, other than secret service protection, for Congress and the president. Let them find an HMO or Blue Cross and pay for it like the rest of us.
• Prohibit any official from serving more than one term in any elected office.
• End government schools. The Founding Fathers never attended such schools. School was not mandatory in the U.S. until around 1900. Parents buy the food, clothing, and medical care for their kids without government involvement. They can and should do the same with education. One European once asked why the U.S., of all countries, had a Soviet style school system. If public schools are ended, the kids will generally go to school afterwards in the same, now privately-owned, buildings with the same parents now having more power over the schools and with better motivated, better qualified, lower paid teachers. Unions and government have destroyed American schools.
• End atomization of ownership that stifles innovation and efficient intellectual property and land use as documented in the book The Gridlock Economy.
• Adopt reforms of corporate governance, like those advocated by T. Boone Pickens and others, so top execs no longer get away with looting the corporate treasury to feather their own nests regardless of their performance.
• Eliminate all tariffs and other restrictions on imports.
• Make right to work laws federal and prohibit laws that force union membership.
• End all government subsidies for crops, energy projects, milk, and so on

These reforms would make the nation more just, more democratic, and more efficient. They would cause an explosion of productivity that would leave the rest of the world in the dust and might stave off a financial collapse that currently appears imminent and inevitable. We can no longer afford environmental kooks, union greed, disgraceful schools and tax laws, free lunches, etc., etc. Most of these changes would dramatically reduce government spending. A couple would raise it, but would be more than paid for by the savings of the others.

The Washington Consensus

The International Monetary Fund and World Bank are famous for imposing certain conditions of deadbeat countries who come to them for financial bailouts. Here is what it says:

1. impose fiscal discipline that reduces or eliminates deficits
2. lower tax rates and broaden the tax base (tax middle and lower classes)
3. interest rates and exchage rates to be set by the market, not government
4. free trade
5. free flow of capital across borders

Obama and his predecessors have now turned the U.S. into a banana republic third-world country economically. We need an IMF or World Bank bailout. We are not going to get it because we are the main funder of IMF and World Bank bailouts. And we got into this position because we behaved like we have long told third-world countries not to behave.

I appreciate informed, well-thought-out constructive criticism and suggestions. If there are any errors or omissions in my facts or logic, please tell me about them. If you are correct, I will fix the item in question. If you wish, I will give you credit. Where appropriate, I will apologize for the error. To date, I have been surprised at how few such corrections I have had to make.