Freeing Americans to be American

No question.  The United States has dug itself into quite a hole.  The size of the hole could be expressed in any number of ways but one will suffice here.  Our national debt as of August, 2010 is about $13.4 trillion and, since there are some 310 million of us, every American man, woman, and child owes an average of over $43,000.  But, you say, not to worry.  The government has a plan to deal with the problem.  And indeed it does.  It is bound and determined to worsen it.    According to the most recent estimates from the Congressional Budget Office, our national debt will increase by another 3.6 trillion over the next four years (fiscal years 2010 through 2013).  In other words, a sixteen-year-old’s share of the national debt will have increased to nearly $55,000 by the time he graduates from college.  (never mind the personal indebtedness he acquired to pay for his education)  And that debt burden will be no mere abstraction; by 2013, the interest due on it every year will be $ 718 billion and rising.  Put another way, if we could somehow pay ourselves what we will be shelling out to our creditors, we could then triple our expenditures for veterans’ benefits, transportation, elementary and higher education, general science, technology, and NASA, combined without affecting the rest of the budget.  Imagine three NASA’s, three Pell Grant programs, a threefold increase in veteran’s benefits and in support for education, etc, etc, etc.

The above figures were taken from the government’s own estimates which understandably tend to be highly optimistic.  Were long-term interest rates to rise from today’s unusually benign levels and/or our benefactor-creditors-God bless them-to discover their dogged faith in our creditworthiness flagging, our financial outlook could become much bleaker.  Shrill warnings have been issued by independent sources that have studied the numbers.  According to the Heritage Foundation, for example, by 2020, half of all income tax revenues will go toward paying interest on our 23 trillion national debt!

It may be of some consolation that ours is by no means the first country whose government has been fiscally irresponsible, for the picture is a mixed one.  True many nations have plunged into economic ruin with dire and lasting consequences for their populace.  Witness the upheavals of France in 1789, Russia in 1917, the Weimar Republic in 1933, and Zimbabwe today.  But there have also been cases in which countries, despite their having experienced severe economic dislocation, emerged from their initial hardships as prosperous states.  Witness Japan and Germany after the Second World War, Chile after Salvador Allende, China after Mao Zedong, and Botswana after independence.

It behooves us then to account for the stark difference between these two aftermaths and apply the lessons learned.  It turns out that the most influential factor in the determination of a nation’s fate was, by far, the nature of its governmental policies.  Initially, all the places mentioned faced the same dilemma: privileged, special interest groups-nobility, clergy, mercantilists, politicians, a military caste, labor unions, what have you-had secured governmental policies highly favorable to themselves but, likewise, highly destructive to their countrymen as a whole.  In the case of the failed nations, the interest groups compulsively clung to the advantages they enjoyed until their country was finally brought to its knees.  In the case of successful nations, the populace managed to break the special interests’ death grip thus enabling the countries to dramatically recover.

The good news that can be inferred from this capsulated history is that a freed people, equipped with secure property rights and reasonably honest institutions, can be counted on to discover and employ whatever ingenuity is necessary to restart economic growth and steadily improve their situation.  Although this remarkable ability of societies to self-organize in beneficial ways is neither intuitive nor self-evident, history has confirmed its validity time and time again and, I am confident, would do so again in our case today.  Somehow a way would be found to surmount our debt problem, gainfully employ those who want to work, and attain general prosperity.  In this connection, the following letter from Thomas J. Barton of Keswick, Virginia, to the editor of Barron’s in its 23rd August, 2010 issue points the way in an admirably concise fashion:

…In Congress, we have a bunch of lawyers who are trying to solve our economic malaise with more laws and regulations.  Instead, Congress should ask how it can create an environment in which the talents and animal spirits of our citizens are released to invent new technology and start new companies to employ the unemployed.

Does Congress have the nerve to dismantle the extraneous regulations that are dragging down our economy and to let failing businesses fail so that their employees can be re-employed by more productive companies?

 My own prescription for releasing the animal spirits Mr. Barton talks of would include the following suggestions for starters:

THE ADMINISTATION:

• Subject our entire regulatory structure to a review by independent systems analysts with the intention of substituting results-driven rules as opposed to the ineffective and wasteful micromanagement we have now that attempts to specify how results are to be achieved.
• Withdraw from Iraq and Afghanistan and greatly reduce the size of our combat forces. Support the formation of an international police force to deter aggression.
• Eliminate Fannie Mae, Freddie Mac, the FHA and all other attempts to support the housing market including rent subsidies.
• Incentivize the economy by shifting taxes from income to personal consumption. Simplify the tax code by eliminating deductions, loopholes, and exclusions. Institute a reduced flat tax. Tax all consumption including housing, automobiles, and gasoline. Eliminate tax on corporations, dividends, and capital gains.
• Create a White House staff devoted to reducing the size of government and making it more cost effective. Head of staff to issue quarterly reports on its progress.
• Soak up unemployment among the youth by drafting them into an army-led corps assigned the maintenance of infrastructure, beautification projects, national park improvements, and other public works.
• Intensify research into the medical treatment of addiction.
• Subsidize basic research by funding institutions and leaving them free to disburse the funds as they see fit.
• Kill the supposedly “green energy” initiatives that, if allowed to continue, would blanket the landscape with windmills, solar panel farms, and corn for biofuels with no meaningful reduction in carbon emissions.

CONGRESS:

• Introduce mandatory term limits in both houses.
• Apply strict budgetary controls on Congressional expenses including staff size, travel expenses, etc.
• Pass an amendment that requires all laws to be accompanied by some mechanism that quantitatively measures their efficacy against predetermined standards. If any measure fails to meet its performance criteria, it must be remanded back to Congress for revision or nullification.
• Make whatever reforms are necessary to put Social Security and Medicare on a sustainable footing.
• Eliminate agricultural and other subsidies.
• Shorten the period over which compensation for unemployment is paid.
• Make thirty-second and one-minute political spots on television illegal.
• Shorten all political campaigns by reducing the time between primaries and general elections.

THE JUDICIARY:

• Eliminate class action suits.
• Speed up the judicial process.
• Abandon the war on drugs. Treat addiction as a medical problem. Eliminate laws prohibiting drug use.
• Put the selection of judges in the hands of nonpartisan groups from different walks of life.
• In civil suits, require the losing party to pay all court costs and attorney fees.

EDUCATION:

• Rescue our educational system from the teachers’ unions and staff our public schools with qualified teachers.
• Eliminate loans to college students.
• Grant free tuition to a limited number of outstanding candidates based solely on their performance on entrance tests.
• Upgrade community college education and make it more affordable by introducing video courses conducted by the best professors in the country and supported by personal tutoring by instructors with extensive practical experience in their field.
• Encourage business to support specialized courses and scholarships in local community colleges.
• Revise public school curriculum to introduce formal levels of math and science in middle school and genuine college preparatory courses in high school.
• Encourage educators and business leaders to collaborate on apprenticeship systems based on the German model.

THE PRIVATE SECTOR:

• Welcome the formation of a new, nonpartisan political party (possibly called the Rationalist Party) that, instead of espousing a particular platform, campaigns on the basis of the integrity, open-mindedness, and intelligence of its candidates. Candidates would pledge themselves to support or oppose any measure based solely on their estimate of its contribution to the public good.
• Replace lobbyists with industry-led councils set up to invite freely expressed comments from businesses and non-profits on pending legislation; organize all such comments, without restriction or editing, to conform to the proposed statutes; and present them to their legislative authors, the administration, and, through the Internet, to the public at large.
• Encourage business to share profits with its employees. The percentage of profits thus allocated should be a matter of public record.
• Encourage unions to change their attitude toward employers from adversarial to cooperative.

HEALTH CARE:

(See “Obamacare Makes Me Sick” in this edition of Writersnotebook.org)