What you can do for your country

Economic Death Panels: Time to halt the assult on productivity and innovation

It makes more sense to me that our troubles come from low interest rates. Everyone wants to blame Big Banks. Big Banks behaved badly. Government also behaved badly. But persistent low interest rates are like leaving money in the open to attracts thieves. There is culpability in the decision even if the thieves were wrong to do so.  The Wall Street Journal today had a good piece on an economist who made some important observations on low interest rates before the depression (The Man who Predicted the Depression)

 
The Man who Predicted the Depression
Ludwig von Mises explained how government-induced credit expansions led to imbalances in the economy.

Frankly, persistent low interest rates are like life support for an ailing patient.  If we are going to have death panels, it would be nice to have them right now - so the weak industries are displaced.  I know that Obama wants to end the boom bust nature of our economy, but it is the boom bust that keeps our economy vital.  If wants to be a tree hugger, he should learn from the environment.  Forest fires are healthy for ecological balance.

On top of low interest rates, it does not help that now the strategy is to tax and burden productivity to death:

• Higher taxes on wealthy - the folks that fund new business
• Increase taxes on capital gains - the funding source for start ups
• Taxes against business innovation - i.e. Health care tax on drug companies that are too successful
• Higher wage costs via changes in minimum wage - leading entrepreneurs to hold back on hiring new talent to protect profits for growth and new taxes
• New 5.4% taxes on adjusted gross income to pay for Health care
• Regulatory uncertainty slowing investment

Easy money and these kinds of taxes discourage innovation and productivity enhancing endeavors. The only way to pay for all the people in retirement is to increase output per unit worker of those still working.  As people retire, they will keep moving investments to income producing, rather than growth oriented, investment.  This means there will be even less investment in innovation. But, innovation is the only way to do achieve the gains required to balance the economy.

Health care and Cap and Trade work to constrain the economy.   I guess the bright spots will be Bad universals healthcare will discourage immigration and reduce the number of people needing care.  Declining economies will reduce industrial output and CO2.  So if you love the environment and hate immigrants this might be your time to be happy.

I however think its a sad state of affairs when our government and our people give up on the prosperity that made us great.

Reducing the Debt

I have seen/heard several rich people suggest a willingness to pay higher taxes, suggesting that all rich people should pay more.  Its unclear that more taxes will stop excessive spending.  So, if folks like Buffet fill compelled to pay more taxes, perhaps they should just contribute to reducing the national debt.  Apparently this is easy to do by sending a check to the Treasury.  If you are interested, Make your check payable to the Bureau of the Public Debt, and in the memo section, notate that it is a Gift to reduce the Debt Held by the Public. Mail your check to:

Attn Dept G
Bureau of the Public Debt
P. O. Box 2188
Parkersburg, WV 26106-2188

More information can be found at the Treasury