ECONOMIC SANITY

Pie in the sky

The musing of a mad man
Changing a world that can’t change

A Fairy Tail

I opened an earlier BLOG post with the statement: What do we need to turn the country around and make it what we would like to believe it is? We will continue with the subject of moving toward a more perfect democracy – or what needs to be fixed.



FREE MARKET ENTERPRISE



The recent crash in the stock market and banking industry is the final results of years of the flawed Republican Regan economic policies to deregulate markets and backing big business with tax cuts and subsidies. The idea that promoting an environment where the rich can become richer, with a results that it will trickle down to a stable economy for the rest of us, has not worked.



The government must control spending. We must have price controls; we must have clean energy; we have got to quit subsidizing businesses that are not making a profit; and we must close the loopholes that allow business to move manufacturing jobs outside the U.S. in order to profit by avoiding U.S. tax on their products.



Recently the government had to bail out a number of businesses that if allowed to fail would have would have brought about the total destruction of the U.S. economy. We need to learn from this near disaster. The word should go out to all businesses: Never Again.



If the product is good and the business practices are sound the business will survive on its own. A policy of bailing out companies in order to save their work force is encouraging the companies to run inefficiently. Taking a lesson from history, we can see government subsidized businesses in the USSR produced poor products and eventually bankrupted the Soviet state.



American manufacturing companies can not compete against third-world companies, where a workers daily salary equals the hourly salary of an American worker. This type of company is not viable in the United States. We are going to have to allow these companies to restructure or go under. The billion-plus dollars we are spending in the Middle East per-day needs to be channeled into retraining displaced workers, and tax and grant incentives for entrepreneurs to begin new businesses. Steel workers, mill workers, manufacturing workers must be helped to train and find work in other fields. The money spent to save an insolvent company should be used instead, as a safety net to assist displaced workers. There are workers needed in health care, transportation, education, construction…



Manufacturing (the Industrial Revolution) built the wealth of America. With the turn of the new century manufacturing is becoming a third world industry. We must not stagnate – we must move our workforce into the new era of technology. We must have an educated work force with specialized training, if America is going to remain a super power.





BRING BACK THE RAILROAD



I love the railroads. My granddaddy worked for the Illinois Central for sixty-five years. I remember the era of the elite passenger trains: the Humming Bird and the City of New Orleans.



The City of New Orleans in Covington, Tenn.



A few years ago, my wife and I took a trip on Amtrak. We scheduled a compartment from Seattle to Washington D. C. but ended up dumped in Chicago because our train was four hours late (no hold-ups, just not on schedule.) We missed our connections and had to rent a car to complete our trip. It was an expensive and depressing experience.



Amtrak is another company that is poorly managed but subsidized by the government. Rail traffic, however, makes sense. It should be a thriving industry instead of an inefficient government subsidized program. The problem is the infrastructure and technology has remained in the twentieth century. While the oil industry and automobile industry promote the trucking industry with lobbyist in Congress, there are no spokesmen for the rail roads.



An updated freight train should be able to haul a semi-truck load of goods a hundred miles for just a few dollars operating expense, and with a fraction of the energy consumption and pollution. One freight train should be able to replace a hundred semi-trucks.



With grants and tax incentives we need to encourage a renewed interest in railroad transportation. With a network of new tracks and new equipment we could more profitably transport goods, decrease pollution by removing thousands of semi-trucks from the highways. It could relieve the stress on air travel by offering an economical and efficient alternative. Our government would have to accept the decline of the trucking industry and all its support industries. The compensation would be new jobs and new industries to support the modernized rail system.



Right now our rail system is government controlled. Retired railroad workers receive government pensions. The government needs to get out of the railroad business (which they are not running very well) and return it to private, free market control. Privatized railroads, without government subsidies, would run more efficiently. It would initially be costly and require government seed money, but a revitalized railroad system could revitalize the country and eventually operate without subsidies. .





OIL SUX: GREEN IS NOT THE COLOR OF MONEY





The American oil industry and the sheiks of the Middle-East are raping our citizens. They have convinced us that oil consumption is necessary, while they control the supply.



We are presently at war in Iraq because that country sits on the second largest oil reserve in the world. Saddam was a bad guy, but no real threat to America. He did not have nuclear weapons and he did not have a delivery system, but he did have an undeveloped oil reserve. American companies had wanted to develop that oil reserve but were denied access because of an Allied embargo on the country.



Along comes the 2000 presidential election and the oil industry finally take over our government. Cheney was an oil man and the CEO of Halliburton. Bush W. failed as an oil man but is from an oil dynasty. Rice was a lawyer for a major oil company, etc. The dynamic duo of Bush/Cheney came into office with the intention of taking over Iraq and opening the oil fields to American Companies. It was a business move, plain and simple. They just did not understand the complexity of the Middle-East.



We have the technology for wind power; we have the technology for solar power; we have the technology to tap geothermal energy; we have the technology to tap tidal energy; what we do not have is the desire at the government level. Oil company lobbyists, and lobbyists from related industries, are insuring that America remains on the oil standard. And, as long as we remain on the oil standard, we can never truly move toward a low cost, green environmental friendly energy policy. The answer, again, is term limits.

THE FEDERAL BUDGET

The shout in Washington is to reduce revenue, increase spending and balance the budget. If you buy into that you probably plan to spend your tax return on a season pass to the Noah’s Ark Theme Park in Kentucky.



The proposed U.S. budget for 2011 request $3.83 trillion ($3,830,000,000,000.00) in expenditures with an estimated revenue of $2.57 trillion – resulting in a deficit of $1.267 trillion. This will effectively increase our National debt from $11.9 trillion to $13.8 trillion.  See: How Big Is A Trillion? in my Blog of November 22, 2010



In my next BLOG I will look at the big sucking black hole that accounts for over one quarter of our budget.