Less.
Consider the following cartoon. Rube Goldberg was a famous cartoonist who had a penchant for designing complicated solutions to simple problems. The cartoon below depicts a man who has invented a mechanical means of applying toothpaste to a tooth brush.
Obviously the solution is much more complicated than the problem. Just squeeze the tube! But for whatever reason, the inventor thought it would be better to invent a mechanical means to do this. How much easier just to use the toothpaste tube in the way it was designed!
The economy in the United States is based on a system of free enterprise and capitalism. People who have money will risk and invest it in businesses as capital when they have the confidence that the return they will receive on that investment will exceed what they could get elsewhere or with less risk. The government's role in this equation is simply stay out of the way and not erode confidence.
Look through history at the cycles of economic boom. Following the civil war, the US economy went through a huge boom, so that by 1890, the US had a higher manufacturing output than Britain. Men like Rockefeller (oil), Morgan (banking), Gould (railroads), and Carnegie (steel) were not constrained by federal regulations or interference, and created huge industries and jobs. Another economic boom occurred in the roaring 20's, helped by automation
introduced by moguls like Henry Ford, and further fueled by the reduction of taxes by the federal government. Look again to the period after WWII, the mid 60's, the early 70's, the Reagan era, and the tech boom. Not one of these booms was caused by the government creating jobs or raising taxes or creating more laws or regulation.
In fact, we can look at the busts in the economy, and we'll often find that they were preceded by periods of large government growth, spending or regulation. Had the Bush government not pushed so hard to open home buying up to more people, would banks have written so many bad loans?
When government action erodes the confidence of investors, investors invest less in that economy. The current continued poor economy can be accurately interpreted as a lack of confidence on the part of investors in their opportunity to earn a good return on their investment.
So what should the government do? Less. Simply stop tinkering with the free enterprise engine, and focus on actions that will build the confidence of investors.
- Show a commitment to spending less, or doing more with less.
- Find ways to make it simpler for the average business to succeed, not harder.
- Reduce the size of government until the Federal Government is no longer the nation's largest employer.
- Lower the corporate tax rates so that they aren't the 2nd or 3rd highest in the developed world
If the government's answer to our current woes is to do more, and attempt to put people back to work by creating jobs, it will further erode investor confidence, and create an environment where people become more dependent on the government. Economists are divided on whether the public works projects of the mid-30's had a lasting positive or negative impact on the economy. We can't afford that type of investment at this time anyway, so it shouldn't even be a consideration.
The answer for our country at this time is to simplify the federal government's role in business, and not to create some Rube Goldberg contraption to solve a problem that the writers of the Constitution never intended for the federal Government to solve. In this case, it's just common sense that less is more.
