Officials in the administration this week stated that they were declaring war for the economy. If this is indeed a war, we must define who the enemy is so that individuals can determine which side of the war they are on. However, the administration in its declaration failed to clearly define who the enemy was. This leaves us to look at the evidence provided by the administration’s current strategy in fighting this war as our only means of determining who the enemy is. Exploration of this evidence provides clues as to industries and individuals the war strategy is going to target. Of course all wars also have collateral damage. The administration’s strategy must assess any potential collateral damage and devise a strategy to minimize it.
The recent economic strategy seems to target healthcare and environmental issues. If you happen to be involved in industries affected by these issues, you may find yourself the target of the administrations war for the economy. You can either surrender by getting out of the industry or develop a defensive strategy to fight the administration.
The administration seems to believe that people are filing bankruptcy, losing their homes and losing their jobs due to the lack of affordable healthcare. Their solution is to have government provided healthcare that will be provided “free of charge”. I placed this in quotes because I believe everything has a price. The administration has stated that it does not intend to suspend the current private healthcare system however, if given a choice; consumers will opt for the free product. This means that consumers of the current system will leave to take advantage of the free system and the companies currently involved in our private healthcare industry will go out of business through attrition.
The administration also seems to believe that continued economic security depends on a healthy environment. This may be true but we must ask the question is our environment truly on the verge of disaster? We have been told for years that temperatures worldwide are increasing and that if the trend of global warming is not reversed our planet is doomed. Environmentalists target industries such as big oil, big coal, and the automakers as enemies of the environment. However, this has been one of the coldest winters in recent history causing many once proponents of the theory of global warming to begin to question the theory. The bottom line is that predictions of a global catastrophe may have been premature.
As a defensive strategy individuals and businesses involved in the healthcare, energy, and auto making industries need to band together to fight the proposed onslaught by the administration. This means they should not take any more proposed bailout money or loans from the government as these may actually be Trojan horses with many strings attached. As an example, many states are planning on turning down portions of the money offered in the recent stimulus plan because is requires that they change their unemployment laws in order to comply with the new federal guidelines. After the bailout money runs out, they will still have to pay additional costs to comply with the new federal standards.
Targeted industries also need to lobby their legislators about their concerns. Lobbying the congress has taken on many negative connotations in recent years but in reality lobbying is actually a right provided by the constitution. Every citizen, and businesses are actually legal citizens, has the right to petition the government regarding their concerns. When restrictions are placed on lobbying, the government is actually placing restrictions on this constitutional right.
As for individuals that are potential targets in this war, we must first consider individuals engaged in the previously mentioned targeted industries. Corporations may legally be considered individuals but corporations are comprised of individuals who earn their livelihood by working for the corporation. These individuals become collateral damage in this war if the administration insists on targeting their employers. The administration must devise a plan to minimize the collateral damage their attacks will cause or better yet, not engage in the attacks at all.
The administration is also planning on increasing taxes as well as reducing and eliminating deductions for individuals earning more than $250,000 per year. They sell this proposal by spinning it as a tax increase on the rich. However, many small businesses today are structured on the form of a limited liability corporation (LLC). Many of these corporations make more then $250,000 per year. The administration rightly can claim that these corporations pay no taxes but the individual members of these LLC’s pay the taxes. These members will need to pay the additional taxes and most likely will do this by either laying off some of their employees or not expanding in order to keep their incomes below the $250,000 level. The collateral damage this will cause is increased unemployment and stifling the creation of new jobs, which are desperately needed to reduce unemployment.
In my opinion the administrations declaration of a war for the economy comes with unacceptable collateral damage. The current economic recession has been difficult but declaring war on it will do nothing to solve the problem. As we have seen from our exploration of the problem, fighting this recession as a war will carry unacceptable collateral damage and prolong the recession or turn it into a depression.
Recessions are common and are not wars to be fought. Recessions are when the economy takes a break to correct its wrongs so it can emerge stronger. When the government gets involved and hinders or stops the correction process, it makes the problem worse and lengthens its duration. I urge each one reading this posting to lobby their senators and congressional representatives, urging them to stop the insanity of continued bailouts and stimulus packages and instead allow the economy to correct through the free market. The government’s involvement in the process should be limited to providing temporary assistance to those adversely affected as the economy corrects itself. I believe this is the best strategy since it minimizes the government’s role to mitigating collateral damage while preserving the free market system that has been the foundation of our economy throughout our nation’s history.
No comments:
Post a Comment