Economic Observations and Course of Action

Original content time, it’s been awhile.

I am not one for doom and gloom, generally.  A couple of decades ago, maybe longer, we got to the point where the global economy took precedence over regional economies.  If something happened in Australia the impact to global markets was minimal.  In today’s world, with global 24×7 news cycles, and instantaneous market exchanges there are significant ripple effects throughout the globe of what, in the past, might have been minor corrections.  With computer generated trades thrown on top of that, we are beginning to see self perpetuating cycles.  When I was working on my MBA, way back when, one of the things that was a basic tenant was that “markets behave rationally”.  Now, not so much.

Mark Steyn has been studying and watching the current global economic conditions.  Particularly focusing on the sovereign angles of the economies.  There are some interesting nuggets in his piece at NRO Mad Debt – Mark Steyn – National Review Online.

I am always looking for root cause.  That is just the engineer / detective side of my brain working.  While it may take a long time for someone to try and unravel the causes that created the mess that the global economy is in I would suggest that the most obvious course of inquiry is:

  1. The “entitlement mindset” of many countries, and their willingness to overspend to provide for their citizens.
  2. An unwillingness of governments to let market forces work in conjunction with social trends.  Another way to read this is a willingness and desire by groups or individuals in government to influence markets to accelerate or amplify social trends to in turn be able to showcase accomplishments at re-election time.

If I boil this down and simplify the issue, the real question becomes how does it get fixed?  There is no easy answer on this one.  The bottom line is that it may get worse before it gets better, and no matter what action is taken there will be unhappiness about it.  So let’s try and put together a simplified 12 step action plan.

  1. Leadership:  These United States and our Federal government are in a position where they can make a significant difference globally.  However, the government must have a vision and a united focus to lead this nation, and the globe, out of this quagmire.  As a nation we will always look to the Executive Branch to being that visionary pulling together the other branches and working to a common goal.  The current administration needs to take a hard look at themselves, and ask if they are the right group for this job at this time.   My suggestion would be for the current VPOTUS to resign and a new VP be appointed and confirmed to fill out his term.  I would prefer that a governor that has a track record of economic success and vision be appointed as VP.  Once confirmed the current POTUS could resign citing health or family issues allowing the new VP to step in.
  2. Spending Cuts:  This should be obvious to all.  Just like individuals, governments need to live within their means.  Budgets need to be focused in two ways:  where does my money do the most good to advance the economy, and how can I streamline my operations.  A small task force from the executive branch, and the legislative branch needs to tackle this one TODAY.  This country cannot afford to operate on continuing resolutions.  A lean budget needs to be passed and signed into law before October 1.  No new programs, and some heavy handed cutting to existing ones.
  3. Taxes:  Whether this is an increase or decrease can be argued ad infinitum.  My recommendation is to simplify the tax code.  Simplify it.  Eliminate many of the add on taxes that are floating out there that inhibit business development and growth.  Provide incentives to business.  Reduce the burden on individuals.  Simplify the calculation, and collections process.  However, it can get done.  Get it done.  Take it in steps over four years but make it happen.
  4. Tort Reform:  Much of what my program relies on is the ability of business large and small to generate sales which in turn generates jobs, increased consumer spending, and increased tax receipts.  Our society has found it entirely too easy to take advantage of litigation focused on business and large settlements.  This behavior needs to be constrained and discouraged.  And if it reduces the number of attorneys in the world, I won’t complain.
  5. Nation Building:  When specific conditions arise, there is an absolute need for a 3rd party to step in and put to right deteriorating conditions in nation states.  If we take the example of Bosnia, ethnic cleansing is one of those conditions.  However, as a global leader we need to understand the historical situation and what can be accomplished.  Have a clear set of criteria under which we will participate, a clear goal, and a specific plan to accomplish the goal and disengage as conditions warrant.
  6. Defense:  A key component of the US Constitution.  Defense spending, and the ability to project the US interests globally is critical.  Being able to deploy a force in humanitarian missions is critical.  In addition defense spending is a lynch pin to the economy, and technological advancement.  The problem have become the bloated size of the “Pentagon” and the power point jockeys there.  Over the past several years there has been a move to acquire more “off the shelf” components for some of the every day needs of our forces.  We have adopted the use of more contractors for support roles.  These two actions are a good trend, there are some things that just cannot be shortcut though.  Ships, planes, tanks, MRAPs etc are pretty specifically designed, and critical to provide our forces with an edge in battle.  In this case the military procurement process needs to be overhauled.  Support functions within the military need to be streamlined and sub-contracted if appropriate.  I am not a big fan of facility consolidation, and we may have done all we reasonably can in that respect already.  If anything, we might want to look are facility replacement.  Take some of the urban facilities and move them out into more rural areas.  Procurement reform and mission focus are the two keys in this step of the plan.
  7. Law Creation and Enforcement:  Our current set of laws have become so cumbersome that we cannot enforce them.  I suggest calling on congress to review, revise, and consolidate the current federal code.  Simplify it.  Take out the things that don’t make sense.  Put a limit on the number of changes that you can make going forward in any legislative period.  Reduce the number of law enforcement agencies at the Federal level, or reassign the operators to other bureaus and eliminate the administrative overhead.  For example, eliminate or drastically reduce the BATFE and reassign those agents to ICE.  Look at reducing DEA and assigning x% of those agents to ICE.
  8. Domestic Entitlement:  Our culture has shifted over the last 50 years.  I have commented before on the fact that as a society we have kind of forgotten what work is.  There are a lot of folks out there that work their butts off everyday, and there are a lot of folks who just show up and collect a check, and then are those that have no incentive to find gainful employment.  We need to overhaul our entitlement programs.  Phase out those programs that have outlived their usefulness, and enforce the rules around those that we retain eliminating, or at least reducing, the current levels of abuse.  In turn we should see cost savings, and some streamlining of operations.
  9. International Aid:  In our current financial situation, we need to evaluate the return in our investment.  Every one of these programs needs to be evaluated, reduced, cancelled, or postponed.  In addition we need to evaluate exactly how much involvement with the United Nations we want to have over time.
  10. Streamline Operations:  The US government is just not yet in the 21rst century from an operational standpoint.  While I am hesitant to create a new “directorate” there needs to be a Program put in place to modernize the information and bureaucratic nightmare that is our government.  This needs to be a complete rebuild of the core operational systems, and development of standard applications and policies to support the other business needs. Evaluate each of the existing Departments and consolidate or eliminate functions as appropriate.  For example; TSA, eliminate the division, privatize the operations and streamline the requirements that you place on the private companies or facilities for security operations.
  11. Energy:  The Bush administration made an effort to create a consolidated vision and policy to address the energy focus of this nation.  As a whole, we need to streamline the permitting and building process.  As a society, we need to find a way to minimize our use of petroleum products for fuel, and reserve those for other petroleum products like plastics.  That will shift us to a greater dependency on nuclear, tidal, solar, and other potential sources.  Finally, we need get away from subsidizing things like ethanol and allowing the markets to level the playing field across this entire industry, and the related transportation and manufacturing sectors.  This is not an overnight process.  This is a long term 30 – 50 – 100 year vision, program, and investment that will impact the everyday infrastructure of our nation.  Gas stations and vehicles will need to be redesigned and rebuilt.  Our electric grid needs to be modernized.  Alternate forms of “bulk” transportation need to be encouraged to prolong the life of our current roadways and reduce heavy truck traffic.
  12. Intelligence:  One word here, STREAMLINE.  We have too many redundant agencies.  Give NSA the lead, consolidate CIA and DIA into NSA.  Let each group focus on what they do best.  DHS, disband it.

Obviously this 12 step program is aggressive, and demanding.  In addition it just scratches the tip of the iceberg.  It does get us a start on correcting our course.  For the moment if we assume that our fantasy world of adjusting the leadership takes place, and that a new leadership team is only in position for 15 months it would be absolutely critical that the mission / vision and the approach be consistent between the administrations.  That can be accomplished if our divided government can ignore their personal re-election interests and buy into a program to put our nation back on its feet and pull the rest of the globe to its feet riding our coattails and following our examples.  Yes it will be painful.  Yes there will be opposition.  But, I am not hearing any other plans out there.  Certainly not from our current POTUS.

Meh, it’s all just my opinion.


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