The Keys to Economic Growth

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keys-to-economic-growth&catid=62:texas-straight-talk&Itemid=69

The Keys to Economic Growth

Recent economic data show that U.S. job growth in May was negligible, while 
the official unemployment figure-- at least the figure the Labor Department 
admits to-- rose to 9.1%.  The real unemployment figure, however, as compiled 
by economist John Williams, may well be higher than 20%.  It is clear the 
U.S. economy is in terrible shape, and that no amount of government spending 
or Federal Reserve quantitative easing can reduce unemployment, increase real 
productivity, or address our debt fiasco.U.S. jobs and productivity are 
dependent on the accumulation of private capital to finance existing 
businesses or fund new entrepreneurial activity.  Private capital-- whether 
accumulated by profitable U.S. businesses, invested by private equity and 
venture capital firms, or attracted from abroad--  is the key to economic 
growth and new jobs.  But we cannot create jobs if we demonize profits, 
punish risk-taking capitalists, and stay hostile to foreign investment.

The steps to encouraging capital investment and creating new jobs in America 
are simple, though not easy:

·         First and foremost, we must create a sound U.S. currency backed by 
gold or some other commodity respected by the market.  No nation in history 
with a rapidly depreciating currency has attracted private capital.  Unless 
and until we prohibit the Treasury and Federal Reserve from essentially 
creating money and credit from thin air, we cannot restore the U.S. economy.

·         Second, we must create a favorable regulatory environment for U.S. 
business.  This cannot be stressed enough.  When businesses don’t know what’s 
coming next from the EPA, when Obamacare spikes their healthcare costs, or 
when the Dodd-Frank bill adds almost unknowable regulatory compliance 
burdens, businesses simply will not expand and hire.  It is time to start 
shrinking the federal register.

·         Third, we must stop spending trillions of dollars overseas on 
foreign wars.  There is no point in debating a foreign policy we cannot 
afford.  It no longer matters what neoconservatives want.  Our 
interventionist foreign policy is financed on credit, and our credit limit 
has been reached. Our economy would be infinitely better off if those 
trillions of dollars had never been removed from the private economy or added 
to our debt.

·         Finally, we must completely revamp the U.S. tax system and move to 
a territorial model that does not tax foreign source income.  U.S. 
corporations are sitting on more than a trillion dollars in foreign earnings 
that cannot be repatriated to the U.S. because of taxes.  We need to stop 
taxing unpatriated funds to bring those earnings home.  Better yet, we need 
to abolish the income tax altogether.

The U.S. economy is in deep trouble.  Congress needs to act immediately to 
restore the rule of law and create an environment that rewards, rather than 
punishes, the critical components of any healthy economy: capital 
accumulation and investment.

In this struggling economy it is essential for politicians to take a step 
back and think about what government has been doing to business in this 
country.  In less than 200 years, the free market, property rights, and 
respect for the rule of law took this nation from a rough frontier to a 
global economic superpower. Today, however, our nation and our economy 
clearly are headed in the wrong direction.

Of course, America has never enjoyed absolute free-market capitalism: 
creeping government intrusion and special interest political patronage have 
existed and increased since our founding.  But America historically has 
permitted free markets to operate with less government interference than 
other nations, while showing greater respect for property rights and the rule 
of law.  Less government, respect for private property, and a relatively 
stable legal environment allowed America to become the wealthiest nation on 
earth. 

By contrast, the poorest nations almost always demonstrate hostility for free 
markets, private property, and the rule of law.  Capital formation, 
entrepreneurship, credit, and wealth accumulation are uniformly discouraged 
in poor countries.  Private contracts are not reliably enforced, and private 
property is not secure in the hands of owners.  The predictable result is 
widespread poverty and misery.  

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