Friday, September 25, 2009

A Flight of Fancy (Not Fantasy)

If we think about the economic problems that confront us, now at the beginning of the 4th quarter, 2009, we might think that we could be overwhelmed. There are several major, dramatic, colossal problems. At least a partial list includes:
-As John Lewis pointed out, soon we will see the backbone of the welfare state come rolling in to beat the living hell out of us. The potential cost of Medicare and Social Security will take up every dime that isn’t nailed down.
-Obama wants to completely destroy the medical profession and our health. The cost will be far beyond what anyone has been willing to mention in the current “debates”.
-Our trade deficit, which has pumped over $10T out of the country over the last 30 years, has brought down the value of the dollar significantly in the last few years. I don’t think that anyone is foolish enough to actually dump dollars, but the dollar-sell side of international currency markets is going to be continuously stronger as long as there is such an abundance of dollars. Don’t forget that the trade deficit is still occurring, and that the reasons for it existence are still in place.
-The national debt is growing at an unbelievable rate. We will have an amazing debt.
-The amount of money that will needed to support Obama’s programs, and the other run away “entitlements”, plus the fall of the dollar, will lead to a pressure on retail prices that we have not seen since the 70’s.
-We may have another oil price spike, or maybe a little longer one.
-Needless to say, life will be tough, or could be.

But, and this is the biggest “but” I think I could ever write, there is a solution. To many of you, this won’t be a surprise. It is an easy solution. It is no secret. It is the easiest thing in the world. All we need is freedom.

There is actually only one problem. It is the philosophy that gives us the government in place now. If we get rid of that, we are home free. All of these problems will be quickly dealt with and forgotten, except as history. We always want to remember the mistakes in history.

Why do I say that these economic problems will be swept away? After all, for example, those citizens that have become dependent on government programs cannot be just abandoned. I am not claiming that we have a “duty” here. No. But every discussion that I have seen begins with the premise that the change to freedom needs to have some elements of a transition.

Of course, some things would happen immediately, e.g. we would get rid of regulations, market limitations, certain kinds of government spending, property restrictions, ecology controls, and so on. Many government departments would just be liquidated. No unemployment insurance would be in place. The Fed would be taken out of the money manipulation business. As we work back to a gold standard, the dollar will stablize.

But think of it. We would be free to produce. Think of the level of production we could achieve if we were not encumbered. Remember the later Clinton years, when the only stimulus was the lack of new rounds of regulation, and maybe a little half-hearted deregulation (still with enormous amounts of inflation). The economy grew at a pace that “theorists” thought impossible for a “mature” economy. Without restrictions, our growth rate will astound everyone.

A good economist will tell you that the only actually limited resource is people. Guess what, all of a sudden we will find that we have a 10% to 20% increase in our working population, our productive population. All of those people, who have been involved with regulations, taxes, controls, etc., will have to find productive work. Many of these people work for private enterprise today. A significant percentage of businesses’ budgets and personnel will be available for production, not government work.

Yes, a lot of the ex-government employees will not be fit to work. Should we be concerned about them?

The federal deficit will be taken care of in two different methods. Taxes will ramp down. How fast is strictly a practical matter. With real production in our economy, tax rates will not need to be high.

What may not come to mind immediately is that the federal government has considerable assets. Actually, real assets. It has buildings. Thousands of buildings. Most of these buildings are in valuable locations. The buildings themselves may not be worth much, but the locations are. Plus, the government has lots of other stuff that can garner some cash.

Most of all, the assets of our federal government include land. West of the Mississippi, the government owns 66% of all land. Yes, lots of that is in Alaska. Even so, managed properly, the federal land could probably pay off the federal debt all by itself.

Perhaps the biggest problem will be the Medicare mess. Even if we were to start ramping that program down now, it would still be a mess for a couple decades. However, we shouldn’t discount the consequences of bring back freedom, including eliminating the Medicare bureaucracy and all of the limitations that have been placed on the practice of medicine and insurance. There may be some price pressure in the medical sector for a while, but it think that it is something that free men can handle.
So, we do not need to worry about the afterwards, not really. We just need to get rid of Obama and his mentors and followers and let freedom reign.

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