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It's The Economy, Stupid!
November 4, 2008 - John Whittaker
Saturday morning, the News Gal went to Brolaine's to shop for a wedding dress.
With my lovely, smart and funny significant other, well, significantly occupied, I took the time to sit in my favorite reading chair for a while, with a West Wing marathon keeping me company, and do some background reading for my blog post today.
With it being the day of the election, I didn't want to write about politics, per se. Since New York isn't a battleground state, I can honestly say it can be difficult to become emotionally invested in a political race. I lean Democrat, but won't be crushed if John McCain wins today (and no, I don't believe in the infallibility of polls. See, McCain Campaign Dead, about 1.5 years ago, run in every major newspaper).
I do know, whoever wins the race, has to make the economy the first item on his agenda. Without getting the economy moving again, there will be no domestic agenda to pursue.
How, then, does a president get the economy moving again?
Some of the problem is just plain a lack of trust among Americans in their government. A change of leadership will, at best, only result in half the populace will have confidence in their government - such are the facts of our two-party system. Consumer confidence, then, will require more than simply electing a new president.
Somehow, a new president needs to begin to realign the interests of Wall Street and investors with those of the rest of America. A case can probably be made that de-regulation of the economy has created incentives to take on ventures that were far too risky - short-term benefits outweighed long-term economic health, and those who made money on their short-term gamble capitalized on their move, while the economy is now suffering from a gigantic case of heartburn. Subprime mortgages, which everyone knows, somewhere deep down, are risky investments for banks, were touted as supremely solid investments and a way for some investors to make quick money.
I think it's also safe to say that we all know of practices - whether it's payday lending or credit cards with dual billing cycles and exorbitant floating interest rates that prey on those who can afford such things the least. Yet, such practices are legal, and someone makes money on them. There is a definite lack of protection for financial consumers - particularly those who might not best be able to understand 30 pages of contract language.
Property taxes are too high across the country. Nobody wants to buy a home because it's better financially to rent right now. Home sales and prices have declined more in the last 12 months than any year since the Great Depression. Unemployment is projected to hit 8 percent in New York state next year, according to statistics Gov. David Paterson released this week. Infrastructure is crumbling around us - has anyone driven on Newland Avenue between Forest Avenue and South Main Street lately? As much as I'd like to, I can't fault the city, because the money for the reconstruction that needs to be done isn't there. It doesn't exist. And the problem isn't limited to Jamestown. It's happening all over the country.
What do I want to see come from Tuesday's election? Change needs to happen - on that, I'll agree with Senator Obama. I want to see an America in which infrastructure projects aren't put off because budgets are too tight while people in non-essential areas of the economy make billions of dollars (I'm looking at you, Alex Rodriguez, Tom Brady, Peyton Manning and half the CEOs on the S&P 500). I want to see government investment bring tangible results -- new bridges, new roads -- to people who aren't working, who want to grab their bootstraps and pitch in to make our country a better place.
I want to see a reindustrialization of the United States - for our companies to make something tangible, rather than outsource those jobs and products to foreign countries where labor is cheaper. Such reindustrialization is a two-way street, however. Workers need to realize they're part of this problem -- sometimes, we need to relax some of our anti-management rhetoric for the betterment of the companies we who employ us. We need new industries to generate new capital, new tax base for our municipalities and new jobs for our workers and ways to keep those new jobs based within the continental United States.
Government can't do all this. I know that. But, there was a great idea in the November issue of Harper's Magazine, in an essay by Eric Janszen, president of iTulip Inc., a former venture capitalist and CEO of technology start-ups. Janszen writes that previous bubbles have been engineered by government through tax subsidies, loan guarantees and loose regulatory policies. He says a different tactic is needed.
"…we should use the government to lay the foundations for a reindustrialization of America. We can do this in two ways. First, get government out of the way of progress by removing subsidies for uncompetitive companies. We can't expect private capital with, for example, the current proposed $95 billion tax break for the dinosaurs of the American auto industry. Second, and more important, we should remove government subsidies of FIRE industries. This means not just ending the mortgage-interest deduction but also breaking up Fannie Mae and Freddie Mac into parts and selling them on the open market."
Janzesn's ides is to free up capital with public-private partnerships to executive large-scale public works projects that are announced publicly and then bid on. Individuals could invest money in the partnerships directly, with citizens' federal taxes deferred to a limit. The resulting securities could become a solid investment for state and federal governments. Funding for infrastructure projects would help private companies develop new technologies.
It all sounds good in theory, and it is just that - a theory. But, the theory excites me. It proposes a chance to make America better, to get people involved in their futures, to get over the idea that government is responsible for the future of our country.
It's up to us to send government in the direction we want. And the time to start is today.
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