Blogs For Victory

We’ll call this the Hard Work, Savings and Careful Investment Act of 2011. Herewith my economic cure-all:

1. If a business enterprise makes a tangible product (anything; a basket of fruit, a hammer, a thermo-nuclear bomb – as long as it is a tangible product), the profits are tax free. If your business provides a service rather than a product, you get taxed.

2. Each dollar saved results in a 25 cent reduction in your tax bill. Whatever your federal tax bill is, if you save you can cut it down. You have your savings account statement as of January 1st and December 31st – for each dollar that is there on December 31st over the amount of dollars you had on January 1st, you get 25 cents off your taxes. Save $10,000.00, get $2,500.00 off your tax bill.

3. Capital gains on investments held for more than one year – tax free. On investments held 6 months to a year – 5% tax. On investments held more than a month but less than 6 – 10% tax. On investments held less than one month – 20% tax. On investments held less than one week – 40% tax. On investments held less than one day – 80% tax.

Now, we’d still need to get our government spending under control – if we don’t get ourselves at least substantially towards a balanced budget by 2015, we’re sunk…we’ll have to default. In fact, even in the best of worlds, things may get so bad that we can’t pay our government debts (if the world spirals in to another really bad financial crisis, there might not be anyone out there with money to lend, you dig?). But, outside of that, we do need policies which will spur wealth creation and thus help us greatly towards that balanced budget, as well as increasing American economic well being. We also need a sound currency – gold backed would be best, but backed by some hard asset is a necessity.

The three steps I’ve outlined above are the silver bullet – you can add to them, you can modify them a bit but the basics are a requirement: Make it attractive to start or expand enterprises which make, mine or grow things. Make it attractive for people to save money (you can add to this a tax benefit for next debt reduction, if you really want to press this issue). Make it attractive for investors to get in to things for the long haul rather than the short term killing. Presto! We now are back to a rational economy and we’ll thus get wealth creation.

Don’t get me wrong – this is the cure all, but curing the disease of a century will not happen over night. We’ll be a while digging out of the hole. Under the best of circumstances, I don’t expect America to be fully recovered until my grand-daughters are graduated from college, married and have a couple kids of their own (they are less than 5 years old, right now).

The only thing which creates any wealth, at all, is hard work. Making things, mining things and growing things. The only way to provide funds to invest in making, mining and growing things is to have a pool of savings to draw upon. The only way we can ensure that investment funds are properly allocated is to screw the speculators and reward the careful investors. Any economy which is not geared towards rewarding hard work, savings and careful investment is an irrational economy and doomed to ultimate collapse. This is simple common sense – you’ve read this, and you know it. You might quibble with this or that emphasis of mine, but I defy anyone to seriously argue that borrowing money for get-rich-quick schemes is superior to work, savings and investment.

None of this precludes any particular species of government expenditure except in that you can’t have government expenditure in favor of one business or industry over another (no subsidies for “green energy” – unless, that is, you want to subsidize all energy companies, equally; better, of course, to just stay out of it). You can lavish money on welfare, if you like (and as long as you can otherwise balance the budget), and still not screw up this plan (though, of course, if you go with this plan you’ll swiftly find the need for welfare dropping). Anyone with any sense – right, left or center – can sign on to this.

Now, this is not an easy solution – a whole bunch of special interests will have to be chucked aside and some laws and regulations which work as restraint of trade (most notably such absurdities as “Davis-Bacon”, but that is just one of a hundred) will have to be repealed. It is not an easy solution – but it is a simple solutions; and the simple solution (though always very hard) is always the correct solution. Life is only complex for those running a con – for honest men and women, its a lot more straightforward.

Now, will we ever show the courage to be sensible? Time will tell on that.