The most devastating problem in the United States has been the high unemployment rates that are prevalent, along with the economic problems currently seen. Despite the efforts of pumping hundreds of billions of dollars of stimulus monies and implementation of other economic-political measures, nothing has turned out to be effective, but instead, devastating. The economic system has gone awry. The impression that is given is that the United States is currently in the process of dismantling its own economy, either intentionally or by accident. Americans are noticeably confused or possibly mis-guided by the economic problems that we are currently under. Have Americans given up on our nation, believing that the powers that be will do whatever they feel without hearing our common voices on the economy? Americans should not think in terms of the elite controlling our nation and in turn our economic destiny. We as Americans do have solutions. The following is an attempt to provide some clarifications to those solutions that are pragmatic, under the motto: What’s good for America, it is good for all Americans!
THE MAIN SOURCES OF THE PROBLEMS
- · Economists: Most economists are ill-equipped to master the tasks that they are confronted with. For one, their economic knowledge would now be considered obsolete. The Marxist economic experiment has failed, because of the concentration of “distribution” rather than concentrating on, and the neglecting of “production.” The Keynesian economic experiment of deficit spending will no longer be effective when the economy is highly saturated. How many more freeways can be built, or repaired, when gas prices become too high and Americans can no longer afford to drive on them? The Monetarist economic experiment is no more than an incomplete monetary concept without any usefulness for today’s challenges. Other economists now seem to neglect the most important aspect of the economy—the interdependencies of the economic factors that are intertwined! Therefore, what these economists recommend as solutions, are piecemeal and incomplete resolutions without considering the consequences of suggested economic measures in other areas of the economy or other economic factors. Most economists’ mindset is to think “micro-economically” expecting to resolve “macro-economical” problems. Similarly most business-minded politicians talk about running an economy like a business; it sounds good in theory, but running an economy like a business by design has ended in disastrous results. Still more, not too many economists understand how a real life economy runs when all they have done was sit in a room behind their computers and dream out ineffective and baseless solutions. Last but not least, economists do not have a clear idea of the terminologies that they speak about! For example, politicians suggest giving “tax breaks” because it spurns the economy! The fact is tax breaks will not give enough incentives to invest in the economy. But the availability of opportunities for maximizing profit will. To maximize the incentive of the economy it would be imperative to put into effect low cost loans and mortgages in place to spur economic growth within the economy rather than giving lower tax rates. This theory suggests before paying taxes, that both big and small businesses must generate plenty of sales, and thereby hopefully make profits before low taxes or no taxes could become an issue to be collected by local, state and federal entities. In order to get to this point, low cost loans and mortgages, and the availability to the American people and businesses would be more important and effective than all tax breaks and tax exemptions passed by state assemblies and by Congress. Low cost loans and mortgages are the most effective tools that would spur and create economic demand, which in turn make low tax rates an interesting concept to be utilized—not the other way around. In this connection, we should keep in mind that low cost loans and mortgages cannot be used as an arbitrary spending tool on any goods and services because it would be self-defeating. Instead, these monies should be used for cleaning up the economic problem of foreclosed homes and other real estate investments from the market and to jump start renewable energy industries. Investing in the renewable energy would help to reduce the cost of living for the American people as well as the operating cost of businesses within a bigger picture. As mentioned, certainly, building more roads, freeways and bridges will not clean up the depressed real estate market, or the macro-economic problems in whole. We have yet to hear an economist suggesting these measures as a viable way to get out of our economic problems we encounter currently. Is it any wonder why the U.S. economy cannot rebound and grow?
- · Politicians: On politicians, one could say about these individuals is this: 1) they would do and say anything to be “elected.” 2) They would do and say anything to be “re-elected.” Understanding status-quo politics is their second nature and they will tell Americans whatever they want to hear so they may get elected or re-elected. Is it any surprise that politicians do not work for the interests of the American people? The prerequisites for being “elected” and “re-elected” are to be “anointed” by one of the two dominating parties qualifying them as the best candidate to draw the attention of “special interest groups” and their “monies” towards themselves! Isn’t it any wonder that most Congressional Representatives and Senators are millionaires? Are they working for your interest or the interest of those that are “special”? The answer is obvious.
- · Political Parties: There seems to have been created, if you want to be bold in thinking, a “semi-dictatorship” through the dominance of a two-party system in the United States. There is very little chance the needs of the American people can be taken care of, or even met. Again, the problem compounds when the candidates are “anointed” by the party apparatus and financed by “special interest groups.” Consequently, we are not getting the best, most honest and capable candidates into local, state and federal offices. Party leaders have no plans to fix the economy, nor will they have a program as a solution. If they have any plans, it would be to have their candidates elected or re-elected to serve the interests of their financiers, who would then fill party coffers of their particular political party’s treasury. Again, should you be surprised why our economy is faltering and being sold out by the two party apparatus?
- · Banks and the Financial Institutions: These institutions believe that they may take over control of businesses and the American people by squeezing every last penny out of them in the forms of fees, foreclosures, arbitrarily changing interest rates on credit cards, and other means! In the process, banks are shooting their own feet. Charging fees shall not make bank clients pay on time when the bank clients themselves have economic problems. Foreclosures shall not put extra money in these institutions pockets. What this is creating is harm to the creditworthiness of those whose homes are foreclosed or being foreclosed on. Reporting these foreclosures to credit agencies creates an even worse situation, for both the institution and the bank clients. By doing this, not only will financial institutions empty the base on which they stand, their further existence is threatened because these institutions depend on these clients for revenue. The final self-destructing act kicks in, when banks destroy the diminishing base of bank clients by imposing higher interest rates on the remaining customers who pay on time in order to compensate for losses suffered from non-paying clients. Most Americans live on some kind of fixed income. Changes to this equation would cause individual Americans increasing trouble by continuing to make payments on time. Taking all these inept, destructive steps and measures into consideration, the institutions destroy their clients’ creditworthiness and their own base of existence as a financial institution. In the end, what banks end up doing is shooting themselves in both feet, leading to their own demise. Can Americans expect any help from these inept and destructive behaviors by these financial institutions? Solutions to these financial behaviors must have accountability of their actions so as to not destroy the economy.
- · The Wall Street: Wall Street is the place of all professional, sophisticated and “psychopathic” swindlers, speculators, schemers, crooks, thieves, Ponzi schemes and deception in the world. Wall Street is the most corrupted place on earth. Wall Street is also the single biggest creator of all financial problems that America and the rest of the world currently face. Stock markets around the world are directly intertwined to Wall Street. Yet, sadly, most Americans have handed over their life-savings to this group, hoping that these “experts” would protect and increase their retirement funds and their net worth. Is there a need to say more? Both Wall Street and Security and Exchange Commission (SEC), which overseas Wall Street, are both in need of serious reform. Will we as Americans see fair and honest reforms happen? Not anytime soon.
- · The Fed: Unfortunately, the most this institution can do is to protect the “big” banks and the financial institutions, for which they were given the power to do just that. The Federal Reserve was created by the Federal Reserve Act on December 23rd, 1913. The Federal Reserve was established to furnish an elastic currency and to establish more effective supervision of banking in the United States. Has there ever been a single effective measure taken by the Federal Reserve to spur positive economic activity, growth or “supervision” of the banking system? In order to create a vibrant economy, the United States needs sound economic planning along with a strong currency! Has the Federal Reserve created a vibrant economy with a sound economic system and a strong dollar? Has the Federal Reserve contributed anything essential within our economy? On the other hand, if the Federal Reserve were to be abolished today, could its tasks not be carried out by any other financial institutions that would require the further existence of the Federal Reserve as an independent entity? Think about it.
- · Governors: Governors are currently fixated on balancing budgets without realizing that this action shall not create a single new job within their perspective state economies. Jobs are obviously badly needed, as state unemployment rates have been or averaging above 10% or higher. At this time, if governors and state legislatures were to start working on balancing budgets, it would end up destroying more jobs and compound the existing unemployment problems even more. Again such actions would create no new jobs as a result of this type of economic move. Why would balancing a budget cause problems? Any contractive economic measure would eliminate many of the existing jobs already in place. Similarly, finding state financial solutions by cutting state pension funds is shortsighted because it would not be a long-term solution either. However, the real solution for state pension shortfalls and all other economic woes is still jobs, jobs and jobs, especially within the evolving energy sector. Another solution is for governors to make the healthcare system more affordable by creating cost efficiency within the healthcare industry, but not arbitrary axing the healthcare budget. What are the governors doing or what other ideas will they comment on when it comes to fixing state financial problems? What could happen is that governors will essentially contribute to more unemployment, increase more economic difficulties and financial bottlenecks dealing with state budgets, and deficits they intend, or “hope” to get rid of! These governors do not understand one basic concept: A state economy cannot be run like a business!
- · Rich & Superrich People: The Rich are just like financial institutions on a destructive trip. How can this group of people expect to remain rich if the base that made them rich or could keep them rich is being dismantled and destroyed? Extracting money from middle-class Americans that do not have jobs to help spur economic growth with more money to spend will eventually bring The Rich the same destiny that financial institutions are currently going through. What shall create prosperity are three things: 1) a vibrant economy with a working middle-class, 2) a strong dollar, and 3) an even and fair distribution between the gaps of wealth so that all Americans will prosper.
- · Corporate America: Corporate America that is now striving towards a short-term profit-maximizing goal should note that CEOs will get away with huge incomes, other financial compensations and benefits. But these companies and their employees will not get ahead. As an example, General Motors and Chrysler were lucky to have received help from the Federal Government, but this luck does not exist for other American companies. We must re-create and bring back the United States manufacturing base back if this nation is to be made strong once again.
- · Lawyers: The huge problems the legal profession causes to the U.S. economy are more than the $95 billion in legal fees made alone. There are hundreds of billions of dollars in uncounted social costs, wasted resources, lost production, and everything else that goes along with it. The question is, do we need a legal system? Certainly we do, but not the way we have it now. The legal system needs to be drastically reformed, not only tort reform, but the entire system needs an overhaul if we are to create a vibrant economy. One solution would be to create a payment schedule with a set fee based on the value of cases being dealt with. This one time fee should apply until the case is resolved. No doubt, initially, lawyers would resist this type of reform with every possible legal maneuver that could be thought of. If this solution was to be given a chance to work, America’s economy shall prosper. Eventually, lawyers would be enjoying a prosperous economy in which the legal profession would be directed towards preventing problems in order to keep associated social cost low rather than creating an escalating and rising social cost. It must be noted that a “perfect” economy would be one of which would have “zero” legal cost along with the associated “social cost.” Since this will never happen, at least, in the U.S. economy, we must always strive to lower those two costs.
- · Outsourcing: How naive can investors be, and believe to make profits if companies are outsourcing their manufacturing base to low-labor-cost countries? Similarly, politicians believe that by outsourcing they would not have to deal with unemployment when these jobs have been outsourced. Why? Short-term profit maximization is no alternative to future losses and social costs of all types associated with outsourcing!
- · Unemployment: As big and as difficult as this hurdle of a strangling U.S. economy seems to be, it could be easily resolved. The United States could potentially create more jobs than could potentially be handled. It would put the U.S. economy back on the right track, which would prevent more case examples such as General Motors and Chrysler. Do we as Americans see anything in this economy moving in positive job growth creation? Re-read the sections above. Three solutions are needed: 1) Honest leadership from those who know what plans and solutions to utilize, 2) the availability of low-cost loans and mortgages, and 3) a well-thought-out program of economic planning and importance to growth. As has been seen, measures involved in the economic stimulus packages did not work. Similar steps of more stimuli for future use would not work either.
- · Energy: There is only one solution to our energy problems—homegrown energy technologies in solar and wind energy and the potential of new energy technologies! Petroleum whether imported or drilled from domestic sources is too precious to be burned or to be used as a source of energy. It should be used as a source for food, medicine and raw materials. As an example, most plastics need petroleum products to be made. If the world is within a “peak oil” economy, preservation of crude oil is of the essence. Crude oil is used in the manufacture of goods in many areas. The development of new and existing energy technologies must be “decentralized.” The “decentralization” of the new forms of energy technologies would benefit the United States for other important reasons as well as security reasons—in times of natural disasters and of course during times if we are attacked in a terrorist related event. Further, it would help to stop the spiral of escalating and accelerating cost inflation. New energy technologies would jumpstart the economy and create millions of new jobs and careers. Are any of these suggestions being considered?
- · Healthcare: The biggest challenge is the $3 trillion out-of-control U.S. Healthcare System. The United States healthcare system needs to be made more efficient, and of course more affordable. This fact does not change whether legal challenges to President’s Obama Affordable Care Act succeeds or fails—until the cost of healthcare is brought under control and has been made affordable for all Americans, there will be no health coverage for all Americans and our nation will continue to see the same problems prevalent within the current healthcare system. As time goes on, more Americans will lose their healthcare as costs keep rising. To reform the healthcare industry, it would be imperative to cut the recurring and repeated costs that are incorporated, and make the delivery of services possible in a much shorter period by eliminating moving from one clinic to another as an example. Further, measures should be implemented by those entities abusing the healthcare system to incur harsh and serious punishments. What the healthcare industry enjoys presently is like operating in the good old “wild west.” Reforms must be made to insure a continued good and vibrant healthcare system, while reducing the high costs associated within this industry.
- · Property Tax: This tax is the worse case scenario of all taxes—it is a “poverty-inducing and “business-destroying” tax. The reason for the “poverty-inducing” nature is that it hits senior citizens especially hard when they live on a fixed income and depend on their savings. If property taxes keep rising, the choice would be either “down-sizing” the way they live or possibly find themselves living under a bridge. Certainly, property taxes do not help younger Americans either who are just starting to build their own future. Furthermore, the dampening effects of property taxes on businesses are apparent; every increase in property taxes comes as an additional cost to the business itself. Property taxes though, are one of the main sources of revenue for state and counties. How property taxes would be replaced as a source of revenue for states and counties and by stopping the burden of these taxes with senior citizens and younger Americans starting their futures would be of obvious economic importance. The answer to this question is “profits” from publicly-owned state banks, which need to be created in order to make this economic benefit happen. See below.
- · Balancing Budget: The solution to balancing the budget would be to start a program of installing massive “decentralized” solar and wind energy projects throughout the United States. Yes this is of course is considered “green” technology, but massive new jobs and new careers would be created all over the United States. This in effect would trickle down to other sectors of the economy to spur growth. The U.S. dollar would also strengthen again due to this type of program. The one-way flow of the U.S. dollar out of the country would be stopped. Deficits shall disappear through increased tax revenues to states and the federal government. Social costs of all kinds, unemployment, foreclosures, environmental issues, healthcare, etc., in essence all areas of the economy would be reduced and the growth of economy would rebound and eventually be restored. There would be no need to implement unfair, inept and inefficient economic measures such as axing budgets, or cutting pensions and other social services.
- · Tax Incentives: It would be shallow thinking and shortsighted to believe that within our current times of economic problems, any kind of tax incentive will reverse the direction and spur the economy on its own merit. Tax incentives can only work, when demand has been created! To spur demand, it necessitates the availability of low-cost loans and mortgages to private households and businesses in order to increase revenues and induce business expansion. Is this concept happening anywhere currently in the United States? Tax incentives will help only those businesses that are prospering and currently find themselves in very large profit zones. How many small businesses are lucky enough to be in that position?
- · Unions & Associations: It seems that unions are being faulted for bargaining collectively. This is not the major obstacle, considering that every profession in the United States has some sort of union. To name a couple of them: The American Bar Association, and the American Medical Association and their state chapters are nothing but unions, and are very powerful unions. Try to reduce lawyers’ or doctors’ fees, and watch how these “unions” react. Those that should be held accountable in these unions are union leaders. These leaders make back room deals at the expense of their very own working union and dues paying members! Union leaders may get promises for better jobs, but that very seldom benefits the working and dues paying members of Unions! Of course, the AMA and ABA are no less active than the unions—they unleash their lobbying groups to protect their interests as well. What unions do accomplish with their member’s votes, the AMA and ABA simply buy politicians with campaign contributions! Which group is worse? You be the judge.
- · Economic Sanction: A sanction against any country without consequences is no better than a tiger without teeth. If we impose a sanction against any country, we should make sure that the Chinese, Russians and the EU (European Union) clearly understand if they take a single step against a placed sanction, they would be barred from doing business with United States for an indefinite period of time. Of course, before we impose any kind of sanction against any country, we should think about the consequences that would result for the United States. However, if the sanction is without serious consequences for the violators, either we should think about not imposing a sanction at all, or, if the United States decides to sanction a country we should be very firm on our position for enacting a particular sanction of choice. What we are essentially doing is handing over the market of that nation with our hands to other nations, and in turn portray ourselves as a toothless tiger. Further, the United States would look like villains to the people of a nation whose economy is being sanctioned, and their support is obviously needed. In addition, we would hurt our own economy and our companies’ competitiveness by not doing business in that nation. Nothing could please other countries more than by having our nation closed out from other nation’s markets by not being able to do business with a nation that has been sanctioned.
PREREQUISITES FOR CREATING A VIBRANT & STABLE ECONOMY
Regardless of the course of correction required, which were outlined above, for the United States to jumpstart a vibrant economy and create a strong dollar, the U.S. economy needs to take following steps:
1) Stimulate demands primarily in those manufacturing sectors that by using those products that would help in reducing the cost of living. There are endless products of these types that would help in this cause. These products must have at least two features: a) these products must have a “decentralized” application; and b) these products must have massive use by consumers. By implementing such a policy, our nation would be able to finance the entire project with savings that are created.
2) The required investment is no more than the outlay of money for financing the projects, which would be making sound profits in the process. This financing requires making low-cost loans and mortgages available to private households and small businesses to help strengthen growth and for expansion.
3) To finance these projects we need publicly-owned banks in all 50 states, which in turn would provide low-cost mortgages and loans to private households and businesses. The profits of these banks could be returned directly into the economy, and among other positive aspects would be to help replacing the loss of revenues from property taxes with these profits to local and state governments.
4) To use private funds as sources of investments to spur the manufacturing base of these products, we must tax exempt all the dividends and capital gains in those industries, which would qualify as preferred ones for exemption.
By employing these steps along with the implementation of the Concept of a Zero-Cost Economy, which is based on measures to “freeze”, “reduce” and wherever possible “eliminate” the costs of all types, especially “recurring cost” we would be heading towards a stable, sustainable and prosperous economy, in which economic security and stability is provided. For more details, please visit www.zerocosteconomy.com.