Friday, February 08, 2008

It's the economy stupid (Platform building #4)

I couldn't resist that headline. For those with a weak memory, that was the mantra of those who swept Clinton-1 into office after Bush-1 led the nation in Iraq-1. When the troops all returned, the economy stumbled. Bush-1 seemed to ignore the issue and lo, the mantra.

Now with the mortgage crisis, rising credit card rates and bank fees (in the paper this week), slowing employment, etc. I'm surprised the mantra isn't gaining more ground than it did 16 years ago. As Bush-2 has taken us into Iraq-2 (which has taken much too long), the American
people have become discontent and the econonmy stands to have a lot of attention this election year.

As a part of my platform building, I too will address the economy. Notice however, that I have placed it as a fourth priority. Yes it's important, but it falls behind defense, foreign affairs and isolationism issues.

So, as a presidential candidate myself, what would I do about the economy (or more accurate, what do I think a presidential candidate should do)? I see the economy as encompassing the subjects of jobs, training, mortgages, housing, taxes and spending.

First, our economy runs on jobs. Jobs that produce something. During the recent economic boom, too many jobs were created that produced nothing. Day traders were the epitomy of the description of our boom. Also, hedge funds and the like. Not that there's anything wrong with
that, it's just that they don't produce anything. When I go to the store to buy an item, I help jobs of several people. There's the salesman in the store who convinces me htat his item is better than his competitors and helps me pick the appropriate size and style for my needs.
There may be a cashier at the store to check me out. There are several managers that also get paid based on my buying something. Then there's the guy who drove the truck to the store and deliverd the items. Back at some factory, there's the guy who made the item. And all the people
that help him.

There's also the guy who built the truck that delivered the item and the guy that built the machines that was used to make the item. Should I go on? Basically, all of these people produced something or sold something that was produced.

The lack of these type jobs has created new problems. The mortgage crisis is one such problem. People have purchased houses, done some work on them and then re-sold them. Now notice that they did some work. They did produce something (a better house). But they flipped the house
hoping to make a quick buck. One of my favorite radio personalities is Dave Ramsey and he often quotes Proverbs 28:22 which says (in my translation) "He who hastens to get rich, will not go unpunished." Many people have bought houses they can't afford, counting on the fact
they could refinance the mortgage before it adjusted. However, when houses around them lost money, they found they could no longer refinance. In many cases, these peopler were talked into the homes by unscrupulous realtors, appraisers and bankers.

How do we build an economy of jobs? Through appropriate taxation. Too many of our taxes focus on taking money from "big business". Instead, we should focus on letting "big business" do what it does best, making something. When they make something, they create jobs. People with
jobs tend to buy things. When they buy things, businesses make more things. This is a good thing.

As a part of this, we should encourage businesses to offer job training. By training their employees, business show re-investment to grow their potential business. It also shows the employee that he should not stop learning.

I have to do an aside hear about the business of education. I have a BS and an MBA degree, my wife has a BS and MA. I have two children with Master's degrees and one that will soon have a BA degree. If you count sons & daughters in law, there are 3 more BA/BS degrees. Can you tell
I think highly of education? But it should be education that PRODUCES something. There are too many "education" facilities that work hard to give you classes, but they work harder to get your money. By getting student loans for you and giving you classes that don't produce
anything, they sentence you to years of poverty paying back that student loan. I heard a lady call in to a radio show that had more than $80,000 in student loan debt to become an oboe player. She will never earn enough as an oboe player to come close to paying that back.

There's nothing wrong with education for fun or personal growth. I've taken classes like this myself. This is called a hobby. But you must be able to pay for it.

Now that I've covered jobs and training and touched on mortgages (more details on mortgages here), all that's left is a little more on housing, taxes and spending.

Housing is a good thing. Everyone should have a house. Or a condo. Or an apartment. But not everyone can afford to BUY a house. The government should help first-time buyers. (Some of my conservative friends just had a heart attack). Part of the help should be to help understand a mortgage. Understand that if you don't pay it back, you will loose. In the past, FHA helped people like this, but I'm not sure they do anymore. I would increase the responsibility of this organization and make home-owners proud to say they use FHA to help buy their home.

Taxes are a bad thing. Unfortunately, they're required. Some people are excited about the "flat tax" or the "fair tax" (which sounds like an oxymoron). I don't get excited about any kind of tax. I also think that congress has never seen a tax it didn't like. I don't think a radical change in the tax methods would help anything and would likely invite more problems. I know a CPA who used to say that he got excited every time that he heard congress talk about "tax simplification", it meant more business for him. Basically, I would work to decrease tax rates and eliminate some taxes without making radical changes.

Spending by the government is another bad thing. The government spends more than it takes in, when I've tried to do that, I've created new problems. Part of our current economic problems have been caused by government spending. Each government program should be evaluated to see if it can be cut or how much it can be cut. But not every program can be cut and some should be increased (e.g. defense). We can't spend our way to prosperity and we can't cut our way there either.

That's my overall economic view. I'd be happy to discuss this with you. Just post your comments here. I'm Randy Barnett, and I approved this message.


Neil said...

Well said, Randy. Yep, most of the "tax simplification" ideas are really Tax CPA early retirement plans.

I really do think taxes could be made much simpler, though, and that it could cut out much of the earmark business. I used to worry that it might crater the economy during a transition period, but I read a good idea in Forbes where you give people the option of the old or new method for several years.

Neil said...

P.S. So, uh, what's your latest delegate count? You'll have my vote in the Texas primary.

Randy Barnett said...

Thanks for the comments Neil. Glad to know that someone made it through as this turned out to be one of my longer posts.

As for the delegate count... I'll be watching the Texas returns as they come in.

Anonymous said...

My economic platform...

Abolish the I.R.S.

The end! That alone will do so much to save money, eliminate waste, and promote freedom.

John said...

My last comment was missing my name and link. D'oh

Randy Barnett said...

You can be anonymous anytime you like :)

re: "Abolish the I.R.S." - Well, that government body is politics at it's best (or worst). Somehow, I'm not going to hold my breath waiting on that.