You’ve heard from John McCain. You’ve heard from Barack Obama. You’ve heard from a lot of folks who have ideas on how to fix America’s economy. So you might as well hear from me.
First, some background. Back in 1776, a Scottish economist named Adam Smith wrote a book titled “The Wealth of Nations.” In it, he posited the existence of a force he called “The Invisible Hand.” No, it was not a horror story, although it has led to many horror stories over the years.
Smith and his horde of disciples argue that in a free market, an individual pursuing his own self-interest tends to also promote the good of his community as a whole. In other words, turn the greedy and unscrupulous loose upon the earth, and sit back and reap the benefits.
This has proved an enticing idea to generations of politicians, probably because it justifies collecting their salaries for sitting back and letting Nature take its course. (In America, the President collects a base pay of $400,000 a year, the Vice President makes $208,000 and members of Congress make $170,000 – plus “perks” of various kinds).
The revered American President Ronald Wilson Reagan, who studied Economics at Eureka College (I think it’s somewhere in Illinois), embraced the Adam Smith approach. Reagan liked the idea of letting Nature take its course, especially when he felt like taking a nap during meetings. As you probably know, Reagan deregulated several major industries, and if you want to see how that worked out, check the state of the airline industry today.
But, like so many plausible sounding ideas, the notion of “The Invisible Hand” doesn’t work. Nobel Prize economist Joseph E. Stiglitz says, “The reason that the invisible hand often seems invisible is that it is often not there.”
Stiglitz insists that “government plays an important role in banking and securities regulation, and a host of other areas.”
If you want to delve deeper into this debate, you can check out the Web, as I did. I concluded Stiglitz was right and Adam Smith was wrong.
Now, for my plan to fix the economy of America. It relies on the willingness of the nation’s leaders to intervene where necessary, and to abandon the silly notion that this kind of responsible behavior is “socialism.” They would have to police America’s financial systems and put an end to the pillaging that has been unchecked for far too long. Unless they do that, nothing will work because whatever new wealth is produced will be siphoned off by a few market manipulators, never reaching the mass of the people.
With the financial markets cleaned up, the folks in the White House and Capitol Building must get together and set priorities, which they must then agree to fund. My first priority would be research. I want billions – make that trillions – for research. So what if we don’t have the money? We might as well print up some more while it still has buying power. We’ll never live to pay off the National Debt and balance the budget the way we’ve been going. With my proposal we at least have a chance of hitting the jackpot and paying off our debts.
With trillions of dollars to spend, our brightest minds (in both the public and private sectors) should be encouraged to conquer new frontiers… They should be challenged to achieve scientific breakthroughs… To find cures for cancer, diabetes, heart disease, and mental diseases, for example… To solve our energy crisis… And to discover new products, new techniques in every field, and new forms of communication and transportation… The sky would be the limit.
That’s how we can produce new, exciting jobs! That’s how we can challenge our youth! That’s how we can attract brilliant minds from other countries! And that’s how we can end this self-defeating system that has Americans competing for low-pay, low-skill jobs with billions of people all over the world.
The problem is that research takes time to yield results. And nobody can say how long it will be before the breakthroughs start coming. Can you imagine the carping and complaining that would go on in the media while we waited for results?