To understand how to correct the current downturn in the economy one has to have a good sense of what got us here. For the past couple of decades, corporate earnings growth has been strong. Individual disposable income, not so much. Consumers have been living on credit and their earning power has not kept pace with spending. Banks are now having to face the reality that a lot of the money they loaned out isn't coming back.
I'm in the marketing products business. I don't regard my job as selling ads and printed products. I regard my job as helping my customers increase their revenue and earnings. If my customers don't do well, I don't do well. Government needs to come around to this same realization. Individuals need to be empowered to have higher earning potential. They don't need handouts and make-work programs that are the jist of the the "stimulus" packages now being proposed. We are not going to rebuild a thriving private sector by growing government.Government needs to get out of the way. The capital gains tax needs to be eliminated. People need to have incentive to earn, save and invest. It's hard to get excited about the prospect of netting 30% on your investment and then giving a big chunk of it to the government. We need less regulation and paperwork. The income tax needs to be eliminated. How many hours a year are wasted filling out tax forms and complying with employment regulations and filings? When you pay an independent contractor, they do the work, you write them a check. Transaction complete. When you make them an employee you get a helpful guide to federal payroll regulations that proudly proclaims on the cover how simple it is. The instruction guide is 70+ pages long and much of it just refers you to other forms and manuals. As for taxes, a sales tax form takes about ten minutes for a merchant to complete and most taxing authorities offer a small rebate in return for your work. The monstrosity that is the income tax code requires a team of professionals, none of whom really understand the whole thing.
Regulation, taxation and government intervention in general is mostly well intentioned, but it has the the opposite of the desired effect. In the interest of providing security and stability we are stifling the dynamics that have made this country so successful. The Soviet Union provided security and certainty. Everyone had Jack Squat, but it was predictable. Is that where we want to go?
Risk taking is not something that needs to be eliminated. It needs to be encouraged. It has to come with potential reward and we have to accept the consequences of failure. There's no way to win if there's no way to lose. The incremental steps taken by government to reduce or eliminate risk are ruining the game. Get out of the way and let us play.