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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.

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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, and still, 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.

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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, like better enforcement of laws against white-collar crime, 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 exchange 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 (using money we borowed from Japan and China) 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.