Roundtable 4 : Critical Elements of an Economic Plan
This week’s Energion Roundtable question with Bob Cornwall, Arthur Sido, Allan R. Bevere, Joel Watts, and myself is:
What are the most critical elements of an economic plan for the United States, and how should they be balanced? For example, consider deficit reduction, managing the size of government, creating jobs, maintaining social services, maintaining military strength, supporting current overseas military operations, reducing spending, and increasing taxes. Which candidate has a plan closest to what you prefer?
While most people from across the political spectrum would agree that the economy is currently the most serious problem facing the country, there are significant and even fundamental disagreements over the nature of the problem, how we got here, and therefore what to do about it.
I discussed how we got here in my book, and summarize this here. Let me just state that how we got here is not as simple as “Bush’s fault.” There is blame enough to go around and the key factor that triggered the financial crisis cannot really be tied to either party, and has already been reversed in any event.
As for the nature of the problem, I outlined that in my answer to the second question. I believe that the core of the problem is that fundamentally Government is too big. We have a spending problem, not a revenue problem. This is not to say that nothing government does is of value. But, for example, with taxes so high that people are leaving the state, and with a huge and growing deficit, one has to really wonder why California felt it needed to spend $8 billion dollars on a high speed-train that will almost certainly never get built. But then this is from a state with Bureau of Electronic and Appliance Repair, Home Furnishings and Thermal Insulation.
Even when you have legitimate needs and concerns, such as with protecting the environment, Government has no sense of proportion or balance, and thus sees little difference in the legitimate concern of stopping a company from dumping raw waste into a river, and, what I would consider the misguided concern of turning off water to one of the major growing regions in California, causing an artificial drought because of the delta smelt. This latter act has costs billions, and more importantly is devastating countless human lives.
There are so many government programs, controlling so many aspects of our lives, overlapping, duplicating and even conflicting with each other that government has become an incoherent mess. This is why California will waste $8 billion on a high speed train to nowhere that will never get built. The proposed route crosses the habitat of several species consider endangered. As such years and very likely decades will be consumed as the government officials pushing for the train will be fighting against the government officials trying to stop it for a variety of reasons. It will be to California what Jarndyce v Jarndyce was to Dickens’ Bleak House.
So the first key element must be a reduction in the size of Government. While there has been much talk and much wailing and gnashing of teeth about it, with the exception of defense and an individual program here or there, overall one constant for the last 100 years has been the steady growth of government. What are lamented as major cuts are in reality only reductions in the rate of increase.
This is what is behind the firm stance not to make yet another “grand compromise” that raises taxes in exchange for cutting spending. The last several decades are full of such compromises and history is clear that once the deal is struck and the taxes are raise, the pressure is off and the cuts never come.
Second, there must be a move away from a top-down command and control that is the norm in government, to a more bottom up approach that allows for choice and competition and thus can take advantage of market forces. I lay out the rational for this in my book, but the bottom line is that the economy is simply too large and complex for the government to manage. And while often attacked and disparaged, this view comes from a basic belief that a free people if permitted will make better choices for themselves, than some distant government employee, no matter how well meaning.
Not everything lends itself to a bottom up approach, but in those areas, government agencies such as EPA, should be forced to consider the economic impact of the decisions. In the case of the EPA ,for example, it is far too often making the best decision for a fish, mouse or even a fly, without any consideration of the impact on the lives of humans. In fact, this has led some bureaucrats to act as if they are a law unto themselves, such as the EPA actions against the Sacketts where the Sacketts had to fight for years just to be able to have the right to challenge an order by the EPA to stop building their house.
Significant change is coming. On our current path, we will see a fiscal collapse in the next 3-10 years. The CBO projections for next year show unemployment rising to 9%. So, one way or the other, change is going to come. We will choose it, or like Greece, it will be forced on us.
I believe we need a government that will do far less, and what it does do it does so in a way that encourages freedom and choice; A government that seeks to foster competition, rather than erecting barriers to entry that ultimately that do little for the consumer, but do protect the well-connected few; A government that when it does need to assist, does so in a way that encourages freedom and choice instead of government control and direction, and one that when it acts considers its impact on people’s lives.
This would be a government much differs than we have now. As for which candidate has a closer plan to this, Romney at least begins to move in that direction. Obama takes us in the opposite direction. In addition, Romney’s plan at least addresses the looming fiscal crisis. Obama does not have a plan. While his intension may be good, government has already promised more than it can deliver, and there is no compassion in an empty promise.
