Ten Things to Do

The conversation in comments about the state of the economy has become rather lugubrious lately. It is not as though we are without alternatives. Here are ten things that would increase GDP and employment that don’t require cutting taxes or spending more. In no particular order

  • Eliminate agricultural subsidies
  • Limit new regulations to issues of actual health and safety
  • Limit credentialing and licensing requirements to areas where there are actual health and safety concerns
  • Rationalize intellectual property law and get the WIPO to do the same
  • End subsidies to alternative energy production
  • Eliminate roadblocks to increased energy production, to the extent consistent with public health and safety
  • Enter into more bilateral free trade agreements
  • Reduce spending on defense and security to the extent consistent with actual defense and a reasonable level of security
  • Resuscitate the DOHA multilateral trade negotiations. And, last but not least
  • Cut public healthcare spending and reduce the rate of increase in healthcare costs

There are also some steps we could take that could be construed as cutting taxes or increasing spending but don’t necessarily do so:

  • Eliminate the corporate income tax
  • Re-write the tax code to make it simpler and more efficient

IMO all of these things fall more into the category of “Don’t wanna” rather than “Can’t”. I also suspect that some readers may find this list puzzling, wondering what the relation between them and increasing GDP or employment might be. They are all moves that will make the economy more efficient or will encourage the formation of new businesses or increased rates of business invesment.

Please submit your own suggestions in comments.

19 comments… add one
  • Drew Link

    I find myself in complete and total 100% agreement with the list and the rationale.

    Unfortunately, I also find it a bit like the old Monty Python skit “How To Do It.”. It’s the very nature of politics and government to bend, fold, spindle and mutilate the list for political gain.

    This is of course why I favor very limited government and reject the notion that if we just had “smart government” or “the right people” it would all work out.

    I know it sounds pessimistic, but I believe the empirical evidence is on my side of the argument.

  • Icepick Link

    test test test

  • What no pony?

    It is a fine list from a theoretical perspective, but in reality none of that would ever be implemented.

  • Icepick Link

    It is a fine list from a theoretical perspective, but in reality none of that would ever be implemented.

    Not with the current Congress. Therefore, first on the list should be get a new Congress.

  • Steve V., basically in this post I’m responding to the suggestion that there’s nothing that can be done. I see a distinction between “won’t” and “can’t”.

  • Sam Link

    All of these are supply side reforms which I don’t have a problem with in principle. If we do have a demand problem, which I suspect we do, I don’t see these helping our short term situation much.

  • I don’t think there’s any help for the short term. I think any meager opportunity there was for that evaporated when the ARRA was structured as it was. We also have done precious little to deal with the household balance sheet problem.

    In this post I limited myself to things which didn’t require spending more money or cutting taxes. That pretty much rules out demand-side solutions.

  • Icepick Link

    Suggestion: Stop handing out student loans like candy on Halloween.

    That won’t create any immdeiate improvement, but as it is written: When in a hole, stop digging.

  • Sam Link

    That pretty much rules out demand-side solutions.
    Your occasional Scott Sumner quotes show you’ve been reading him and you still don’t believe the Fed has any power to boost aggregate demand?The Fed should ignore inflation statistics and announce an open ended QE until nominal incomes grow 5% per year.

  • Drew Link

    For those of you who don’t live in Illinois, enjoy the delicious irony of the Chicago teachers union threatening to strike unless they get a 30% pay raise over the next two years.

    Then ask if anything on the list is achievable in a Democrat political environment.

  • PD Shaw Link

    I think regulatorily speaking, there is more to be done. One is to simplify regulations into rules and reduce the discretionary authority of regulators. Whether or not the XL pipeline meets environmental standards should be close to a black and white decision, not one that depends on the political party of the POTUS and his/her campaign agenda. If not black and white, then we are causing economic waste and discouraging private investments as a result of uncertainty.

    We also need to adjust the federal/state balance on regulations; more of them should be either state or federal, not a little of both.

    The focus on safety/environmental is good, but I would sharpen the focus to the problems that aren’t addressable through litigation. That might be risks of death (as opposed to injury) or risks to “public space” as opposed to private.

    Strip agencies of mandates that they do not or cannot do. This might encourage some bad conduct, but I think it will encourage prioritization.

  • Icepick Link

    Hey, here’s an idea for something that should count as DEMAND. The government could fund a program (on the relative cheap, even by government standards) to make certain that essential control and networking elements in out computer systems are actually, you know, secure. It’s not like there isn’t a need.

  • Steve V., basically in this post I’m responding to the suggestion that there’s nothing that can be done. I see a distinction between “won’t” and “can’t”.

    Well then while we are at….

    1. Limited purpose banking, no more bank failures.
    2. A revised income tax structure such as the Hall-Rabushka tax plan.
    3. Eliminate the Department of Agriculture.
    4. Introduce means testing for Social Security and Medicare.
    5. Get out of Aghanistan and Iraq.
    6. Reduce military spending.
    7. Eliminate earmarks.
    8. Make Medicare eligibility 70.
    9. Make Social Security Eligibility 70.
    10. Cut foreign aid in half.

    Not that any of this is politically feasible. Sure would help the fiscal situation though.

  • steve Link

    I like the last two best, but dont see them having an immediate effect. As to the others, we either dont know how to cut health care costs or cannot agree on how to do it. I think it is a combination. I agree with the regulations, except for the banks. Unless, we actually align the incentives of bank management with its shareholders. I am not sure how to do that. We can do some things like Ritholtz’ suggestion of eliminating FDIC insurance for banks using derivatives, but I really think we should make banks smaller and make them partnerships so that personal assets are at stake.

    As to size of government, I would like smaller government because I will pay smaller taxes. I dont think anything on this list will done better or worse because government is smaller.

    Steve

  • jan Link

    An interesting thread!

    Most of the suggestions have merit and possibilities, especially the ones dealing with simplifying regulations (The keystone pipeline underwent years of environment scrutiny, and it’s denial was basically a political one on Obama’s part — not to churn up his base who is rarely environmentally satisfied), as well as raising the ages of SS and medicare to 70 or higher (more in keeping with the current longevity stats).

    Similar to what icepick said, we need a less contentious Congress who would develop and pass legislation for the people rather than to augment their own reelection, as well as a new POTUS.

  • The Hall-Rabushka tax plan is a good one. Pretty simple. A single rate is applied to income less investments. I also like the idea of adding a standard deduction to preserve progressivity.

  • steve Link

    Raising Medicare to 70 will likely increase overall medical spending as private insurance reimbursement rates are much higher than Medicare rates. If you up SS to 70 you will save some, but those savings will not be as large as expected as more people go onto disability.

    Steve

  • Icepick Link

    Jan, I said nothing about Congress being less contentious. I don’t give a damn if they’re contentious or not. I do care about WHAT THEY ARE DOING. This Congress isn’t going to accomplish much useful, and will more than likely do much that is destructive. One only has to look at recent performances to see that.

  • Jimbino Link

    Eliminate agricultural subsidies and all corporate welfare, including oil company and alternative energy subsidies.

    Limit new regulations to issues of actual public health and safety
    .
    Limit credentialing and licensing requirements to areas where there is a compelling public health and safety interest.

    Rationalize immigration policy, eliminating “family reunification” in favor of “merit” in granting permanent residency.
    Privatize wherever possible, including health care, education, firefighting, and prison management.

    Re-write the tax code to make it simpler and more efficient and indifferent to single/marital or breeding status.

    Eliminate the Department of Agriculture, the Dept of Education, the Dept of Energy.

    Eliminate the Park Service and the Forest Service and sell off all public lands, since our Black, Hispanic and Native American minorities never visit them anyway.

    Eliminate earmarks and grant the President a line-item veto.

    Make Medicare actuarily sound and prohibit favoring women, who work less, live longer and use twice the health care.

    Make Social Security actuarily sound, and prohibit favoring the widowed, spouses, breeders, and the disabled to the disadvantage of single, childfree men.

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