(and the cure for the common cold)
Before weighing in with experts like Paul Krugman and Larry Kudlow over the economy let me state my credentials and background. I am not an economist. I make web pages. Lots of them including this one. But I do have a different approach to fixing this economy.
That’s because I’m neck deep in the thick of it and there’s not much opportunity trickling down for a lot people caught in the reset. Too many people have been left behind. That leaves not enough people in the work force to keep the economic pistons pumping. That’s one problem and it’s big.
Entitlement is a matter of perspective. Productivity is a matter of need. Unfortunately entitlement is now the scissor and productivity is the paper and the economic rock has dropped on both of them. When the cost of entitlement requires cutting productivity we’re in real trouble. That’s not rocket science but it’s another big problem.
Costs are not rising everywhere. Taxes, licensing and fees are up and unforgiving for the consequences of the reset that some say are due to the trinity of government revenue. Petroleum based products are up as profits seem to soar despite social or economic conditions. Health care costs are skyrocketing as the baby boomers increased their demand for it. But trade and labor costs are down on projects not subject to the Prevailing Wage Act. Just Another Big Problem.
Those paying prevailing wages are becoming more and more likely to bid only on government contracts and commercial projects dependent upon public monies. Rumor has it that labor leaders and government leaders (elected and appointed) suffer from Chronic Corruption Syndrome (CCS). There’s only one type that can afford to pay for that kind of shakedown and that’s Big Box who sponsors the bedroom suite they’re all sleeping in. Connected attorneys can make a ton of dough in these conditions and they do. All together they call themselves “stakeholders.” This is a problem that won’t go away until its fixed.
In almost reverse order of the problems listed above I offer the following suggestions.
For those in denial repeat after me: “Exploiting loopholes is corruption. Good people and good projects do not justify corruption. Any gain from loopholes is ill begotten and should be returned to its rightful owner.”
The compassionate solution is to end all loopholed compensation, entitlement and profit immediately moving forward. Take it away from the hoarders that snookered it. Give it back to the productive who will spend it in the economy creating more access to opportunity for everyone. What productive citizen should be denied a living wage?
Subject every level of government including all agencies to forensic audits aimed at halting all Dixon (IL)-like heists in progress and identifying all duplicative services and departmental slush funds. Set a deadline of July 1, 2014 for compliance. Reward whistle blowers. Strip anyone refusing to cooperate of all accrued entitlements. Add into minimum sentencing for anyone found guilty of violating public trust the loss all accrued entitlements.
Health care needs reform but who pays for it is not the problem. How much it costs is the economy killer and that includes from home budgets to corporate finance. Tort and liability costs must be reduced and incentives for awards capped. Profit gouging should be dealt with harshly in both civil and criminal courts. Access to emergency health care should be denied no one. Participation in preventative health care should be encouraged for everyone.
Public sector salaries and benefits must not out pace peer positions in the private sector. Taxes, licenses and fees become suffocating and are unforgiving of economic conditions. To avoid repeating mistakes of the past we should consider that when public servants make the public servants the seeds of revolution are made fertile.
Keynesian economics serves in times of transition. Especially when savings exceed investment. Infrastructure gets built. Jobs and opportunities are created for those caught in the reset. A productive safety net is cast. But pay for it with a patriotic version of U.S. Savings Bonds not foreign and corporate banker sources.
The American Recovery Act fell short because it lacked accountability. Local fiefdoms swooped in on the federal recovery dollars for the narrow interests of connected stakeholders. Grant fulfillment terms allowed the inclusion of full time equivalent (FTE) numbers instead of actual jobs. Lots of equivalents. Very few jobs. Flood plain land acquisition for conversion to open space is not a job creator. Keynesianism without accountability guarantees wasteful pet project spending.
Note as reminders of what not to do:
- Never again engage in war(s) and cut taxes at the same time
- Never again bail out banks that are too big to fail and then still let them foreclose on the homes of citizens. Next time try bailing out those behind on their mortgage payments with vouchers. The bankers still get their money and neighborhoods aren’t filled with homes abandoned by those who were too small to matter.
An economy is robust when there is real opportunity for everyone in it. That economy creates safe and quality housing in neighborhoods, too. The cost of entitlements is swallowing opportunity like a parched hog at a water trough. The solution is something government officials surely understand: Tax our way out of it. But don’t tax the productive one cent more to pay for it. Tax the entitled. Some might say such a policy would be a penalty not a tax. It’s a tax. And it’s constitutional. Chief Justice John Roberts said so.
Move over Krugman and Kudlow. I’ve just fixed the economy in one post on a blog. But my ego is not so big that I don’t think there are others that have figured out this mess.
What’s your fix?
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4 Comments
I began reading Krugman’s columns and blog several years ago because I couldn’t understand why inflation was not becoming a problem as so many economists said it would. Krugman’s model said inflation would not be a problem. He also said the interest on Treasury bonds would remain low, and that ARRA might help us find a shallower bottom but that it was too flawed to do the whole job. It’s a pretty good model that forecasts so well. The model is also prescriptive.
Now I’m reading his book, “End This Depression Now” and recommend it. I’m no economist and the book will not make anyone an economist. However, in my opinion it’s highly likely that the reader can come away with a basic understanding of macroeconomics, which I believe everyone should have just as I believe everyone in Illinois should have a basic understanding of Home Rule and TIF. Otherwise, how do you evaluate the worth of public policy positions and decisions and the politicians who espouse them?
The cold… You teased us with it and then you didn’t tell us the cure!! Excellent points & article!!
I find it difficult to watch and listen as supposedly dedicated public servants have no problem not offering health care options to ordinary people in the name of smaller government, when those same people have very comfortable and padded lives. I know about the patronage in government- it’s been given a new name that I don’t think serves- entitlement is not a word that fits to me. Of course, many people who join the ranks of government become power hungry and leverage as much benefits to themselves and their friends and family as possible- long been the truth. But not all public servants are like that- having known a few- many of these people are dedicated and very unselfish people who only take their salaries and work way more than 45 hours a week- they’d give you the shirts off their backs!
But you are so right, when no one can make a living wage and taxes are up and infrastructure projects are down- who wins? It’s pretty disgusting to watch cities take foreign investment money (ahem, Chicago) to cover budget shortfalls- yet, living there is more expensive than ever! How could that be, you say? Well, because so many people get into office who have their own agenda- they aren’t serving the public because they are busy serving themselves! So they’ll leverage a buyout of PUBLIC, yes, public properties and titles to banks and foreigners and screw everyone out of even more money (because remember, they’re still broke) in the name of covering the budget! No one takes a pay cut, no one gets turned away for their healthcare costs- nada- unless you are a teacher or a bus driver.
The LBOs of the 90s have taken our economy mostly overseas- that’s why no one here can get a job that pays a living wage. Yet we’re supposed to be such a wealthy country! My Mom made $8 per hour in 1976 and it covered the mortgage for our house and a slew of other things- how can we be paying folks the SAME thing almost 40 years later?
I like some of your uneducated solutions, unfortunately, as times get more and more desperate and people become forced to work harder and harder- how can anyone really notice what is happening when they are working two jobs and barely making it? It’s easy for people to think that someone who is a businessman is going to have their interests at heart when they need the businesses they work in to survive- only when said businessmen take away that business do they understand too late that money alone will not save us this time!
The fat cats need to go on a diet!
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This economic mess took a long time in the making started by Ronald Reagan’s war on labor. It won’t be fixed quickly. Trickle down economics is a bad joke as the new wealth since the 1980’s has gone to wealthy oligarchs as many Americans join the working poor. New Caterpillar workers make $11 and hour and new GM workers make only $15 per hour. That is no longer a living wage in America with the rising costs of health care and education. Caterpillar gave their CEO a 60% raise to $17 million per year. These profitable undertaxed corporations are greedy as they demand corporate welfare and reduce pay for their workers. They don’t care if they are destroying the American middle class. Our problem isn’t public sector worker compensation as much as we need to raise compensation for private sector workers. We need to fix the bankruptcy laws that changed with Reagan, making leveraged buyouts legal and allowing corporate raiders like Mitt Robme to steal pensions from workers such as the United Airlines pilots. Corporatists want to destroy the quality of life for millions of Americans by reducing services such as education and eliminating our social safety net. Unfortunately, they are winning as they control 11 of our 13 federal appelate courts, the Supreme Court, the corporate media, and many politicians from both parties, especially Republicans. Bush left us with activist judge Sam Alito on the Supreme court who supports more human rights for corporations while taking away union, worker, and women’s rights.