stewardshipparty

Bill Clinton’s first campaign for the Presidency included a memorable slogan.  “It’s the economy, stupid.”  Mired as the country was in a number of economic problems at the time, George Bush’s accomplishments in Desert Storm didn’t really seem to matter that much.  

This is a lesson that the Democrats should take to heart, but I don’t think they will.  Problems with the uninsured will be much more manageable if more people are actually working.  The environmental issue of “Global Warning” might actually be a debatable matter if we had an economy that was working the way it is supposed to. 

Yet the Democratic Party continues to treat a whole lot of side issues as the main event.  They have all kinds of overreaching strategies for dealing with the side issues, but I have seen nothing that could be called a strategy for developing the American economy. 

I have developed an economic strategy that I think will work for our nation.  This strategy takes a different view on what exactly creates income.  Economists say that income depends on individual productivity.  Rather, I think the level of income depends upon the control or ownership that a person has over productive assets. 

This is most obvious in the case of inheritance.  In that instance, a person obtains an income.  It does not matter how productive they are.  What matters is how productive their forbears are.  Similarly, education is a key.  It opens the door to the use of certain specialized assets.  Unless those assets are available for the use of the person who obtained the education, an education will yield no income.  It is the combination of endowments provided by others that produce an income.  

This point is a key to the understanding of my economic strategy for our country.   Income is produced by the way in which a number of different elements are combined.  They should not be considered in isolation but as a part of a whole.

My economic strategy for the nation involves five different elements.  These elements are:  Import substitution, reduction and/or equalization of the social overhead cost that businesses have to pay, reduction of the economic cost of land, as the term is used by the economic profession, reduction of barriers to entry for entrepreneurs and small businesses, and the use of international partnerships to solve common, multinational problems. 

I.  Import Substitution 

Import substitution is a term that would cost any economic teacher of international economics or any free trader a serious bout of heartburn.  It has to do with using public policy to protect and encourage domestic sources of production.  Opponents of this policy would call it an American First or jingoistic view of the world.  I say to those who think that way, so be it.  I totally reject globalization as the means to just reducing, not solving the world’s problem with poverty.  We can’t solve the problem of poverty.  We can make it better, but that is one problem human effort will not solve.  I totally reject the millenial view of liberalism that they can solve all the world problems with just the application of their superior intellectual prowess. 

I also reject the idea of comparative advantage that I suppose is the intellectual underpinning for the free trade movement, if in fact that movement has any intellectual basis.  Comparative advantage is not relevant to the world economy today.  In a sense, an economy is a living thing and if you do something to it that it doen’t like, it will make you pay a price.  It might be inflation, it might be what used to be called stagflation.  It might be underemployment.  The problem with the free traders is that they think the economy will operate a certain way to the mutual benefit of our country and the rest of the world if we just drop all trade barriers.  The economy has to work that way, because it is governed by certain laws. 

My answer to that thinking is that it doesn’t have to work the way the free traders think it does.  The economy just demands that a price be paid.  And the political executives and dictators of this world do not care if the economy makes their country pay a price by acting in a way counter to their understanding of a globalized market economy.  Despite all kinds of political pressure, the Chinese have not revalued their currency as economic theory says they should .  That would increase the cost of their goods in America , and in theory, reduce their balance of payments surplus.   But they would rather pay an economic price in other ways, and keep the value of their currency lower than theory says it should be.   As this example illustrates, all that matters to those in chage is that they don’t have to pay the price.  Whether or not their people benefit from that type of economic direction is immaterial.  It is the prerogrative of the political bosses to decide who pays the price of globalization. 

My concern is that we don’t pay that price.  My first concern is that we protect the livelihoods of American workers.  We do what we can to help those less fortunate in the world but our nation and our people must come first.  That is why I say we must return to an era of economic protection and an era of economic reservation.  If need be, we must return to the days of the quota system, in order to protect the jobs of our people.

Many of the proposals that I call for as a part of my economic plan will run together.  Most of my ideas for import substitution, however, just involve treaties at this time.  I think we need to amend or de-ratify our participation in NAFTA and the WTO.  I think commercial trade treaties should be bilateral in nature and subject to term limits.  I think we also need to re-capitalize and rebuild from the ground up, if need be, certain key American industries.  While I consider that an element of import restructuring, I will deal with that topic under the barriers to entry. 

On the subject of treaties, realistically, we probably cannot obtain sufficient political capital in the electoral process to de-ratify the WTO and NAFTA, but we can try.  We can rebuild the walls to protect American businesses and workers from the internationalists and the one-worlders who care more for the world than they do for our country. 

II. Equalization of the Social Overhead Cost 

The strategy for reduction and/or equalization of the social overhead cost requires a little explanation.  Every business activity that involves an exchange of money for goods or services rendered has what might be called a cost of doing business.  It is a cost that you have to pay just to keep operating.  This is separate from the cost of keeping workers working and suppliers fulfilling contracts.   In one country, that cost of doing business could be payment of a bibe, or protection money, or it could be the payments of taxes and the cost of compliance for rules that have to be met. 

As far as I am concerned, the real import of globalization was that it enabled businesses to minimize this cost.  By going from a high tax, high compliance environment, to a low or negative tax environment, even with a high cost of bribes, businesses could substantially reduce the cost of doing business.  And a reduced business cost meant substantially increased profits.  That is particularly the case if an international firm could continue to sell its products in a high tax, high compliance cost environment.  I argue that what we saw in the abandonment of the American worker from globalized conglomerates was not a retreat from high wages.  It was a retreat from high benefits!  It was a retreat from high property taxes and the high payroll taxes that supported health care plans and retirement plans.  It was a retreat from the compliance costs of administering those plans.  Nine times out of ten, American companies that closed up shop in the U.S.  moved their plants to areas that had no health care plans or retirement plans for their workers.  If you want an enemy to blame for the loss of health care coverage, blame globalization.  

Blame liberal lawyers whose only source of wealth is what they can take from others, not what they can create on their own.  Blame those who had no understanding of what they were doing, and did not care to learn. 

The key point to understand about the globalized economy of international commerce, is that was formerly made in America, does not now pay any share of the social overhead cost it used to pay in America.  But international companies continue to sell the products that they used to make in America for the same price.   The share of the payments that used to go to pay the social overhead cost of society now just go to the companies that produce the products.  I think that is wrong.  I think that we need to redress the balance and pass legislation to ensure that overseas companies pay the same share of the social overhead cost on products sold in this country that American companies do.  This is simply the idea of tax equalization.  If we equalize tax rates between American based companies and overseas producers  for payments to the social overhead system, we will restore the competitive edge that American producers once enjoyed.  Specifically, I propose that we impose a five percent levy on the landed value of imported manufactured goods at the dockside.  The purpose of this tax is twofold.  First, it would equalize the playing field between American based companies and overseas companies.  Second, it would increase the coffers of Medicare and Social Security, with tax revenues that should have been paid into the kitty many years ago.       

III. Reducing the Cost of Land 

The next element in my economic strategy is to reduce the economic cost of land.  While I do not support the Law of Comparative Advantage,  there is one point that I do think is relevant.  That is the issue of land, in the sense that economists use the term. 

We are already trying to reduce the economic cost of land.  Fuel and petroleum products are a component of that basic factor of production. The entire world is in a rush to reduce the economic cost of producing and using fuels for transportation, heating and industry. 

I think there are a number of things we can do to reduce the real cost of this economic element.  For example, I would propose that we improve the transportation network by investing in the development of a commercial seaplane using the Osprey as a model, capable of tranporting between 80 to 120 passengers.  The goal of this innovation is to decrease the use of cement (cement production is a potent producer of CO2), provide alternatives to the highway systems of congested coastal urban areas and create an export market for American businesses. 

I would also propose that we fund engineering and environmental impact studies for a superconducting power line from power plants in upstate or western New York to New York City.  The capital costs would be high but they are on a decline and by the time we can clear all the regulatory roadblocks, this economic stimulus will be ready to go to contracting. 

As another example, I would propose funding for a prototype sewer treatment plant designed to return power to the grid.  The is a substantial body of research on this idea and I think it is time we built one or more such treatment plants to determine the most cost effective design.  The testing of these concepts will enable us to take another step toward rebuilding the infrastructure of our economy and it will also provided a much needed stimulus to the construction sector. 

These are just some of the examples of what we can do to reduce the economic cost of the factor of production in our country called land.   In terms of our two greatest economic rivals in the world today, China and India, I think it is intuitively obvious that we can reduce the cost of land in our country much more easily than they can.  Their countries are so much more densely populated than the United States is.    

IV. Barriers to Entry 

However, in order to grow and make land use more efficient, there is a need to provide businesses with the tools of growth.  One is capital.  The other, quite strangely, is permission.  In a complex, crowded, way too litigious and regulated society, I believe that permission is the greatest barrier to entry for entrepreneurs who want to start a business and for businesses that seek to enter new markets.  A barrier to entry is simply anything that keeps new firms from participating in the market. 

There has been a great deal of reporting on how entrepreneurial the web is.  Anybody can start a web based company to do almost anything. Besides a computer, a modem and a domain, you don’t really need anything to open up shop.  Almost no one has to pass judgment to let someone start an internet based business.  The fees, such as they are for such services, can be almost inconsequential. 

That is not the case for almost any other business.  If you want to go into almost any other enterprise, you have to get legal authorities to grant the authorization.  That can take lots of time and lots of money.  Recently, in my community, there was a report of a hospital chain that was proposing to open up a new, 45 bed  hospital, for the treatment of cancer patients.  The report I read noted that it had taken them two years to reach the stage in the process that they had achieved, and it further noted that they were not done.  It would be another year before their facility could be built. 

There are many rules and there are many bureaucratic roadblocks designed to keep people from achieving anything.  That is the liberal way.   They use rules to shackle a free people like the slave masters used rawhide whips to keep African American slaves in line.   We must work to identify the bureacratic roadblocks that are nothing more than a disguised restraint of trade and eliminate them.  Very often, liberal groups such as environmentalists, hamstring economic activity and delay a review and approval process just to increase costs just to make their opponents go away. But the people who follow the law have no defense against such tactics.  In order to restore economic sense, and economic growth, we must provide those who seek to grow this economy again, not only a streamlined, effficient administrative review and approval process.  We must build in to the system affirmative defenses against liberal obstruction of process. 

We must not only work to eliminate the bureaucratic barriers to entry, I think it is necessary to ease the capital barrier to entry for new business opportunity.  One can find in the annals of American business, many success stories of people who started with nothing more than a dream and by hard work, inspirational leadership and a vision rose to become financial tycoons.  All these stories start out with people who at best had only a few dollars in their pocket.  Nowadays, there are very few businesses that can be started for less than a few hundred thousand dollars.  The cost of any type of machinery, equipment for display of merchandize, goods for resale have risen to levels that people simply can’t afford. 

It is true that there is the market for venture capital and that people with a vision can obtain the capital they need to start a new business from that source.  But venture capital  is only available for the cream of the cream.  I think it is important that we extend the opportunity to create a new business beyond that narrow niche.  I consider it not only an esssential element of a new strategy for economic growth, but also a key responsibility of the Stewardship Party to make this happen.

To this end, I would propose two new initiatives that I hope the Stewardship Party will take the lead in implementing.  One would be a collegiate level venture capital contest for graduating seniors.  Business plans would go though a peer review system and the top contestant would receive venture capital funding of up to two million dollars.  The government would take a flat 30% equity position in all such cases.  I would set funding for this program at $100 million over a two or three year period, with a sunset provision at the end of that period. 

I would also propose what I call the establishment of a Federal Capital Leasing Corporation.  This government corporation would lease large pieces of capital equipment to contractors and qualified small businesses that would enable them to perform on contracts and build products for business opportunities they could not otherwise act upon.  Lease terms would provide the contractor to draft a certain percentage of operating revenues.     

V.  International Partnerships

This is an effort to promote a party that is unashamedly American First.  There is much we as a nation, and most importantly, as a nation of free individuals, can do to help those in need in a world that is not very free and not filled with the opportunities we have long enjoyed.  I think it important to stress such activities need to be the effort of free men and women, whose efforts on behalf og the good are not rendered out of compulsion.  This viewpoint follows the philosophy that government does not set people free; people set people free.  Our government’s first responsibility is to enable its people to live their lives according to the dictates of their conscience.  

To do that, our government needs to be about the business of solving some problems.  Which is not what it is doing now.  Some of the problems our government must solve are international in scope. 

In a very different take on the issue of legitimate international problems that we need to solve, I think it is necessary that we use a partnership approach to solving world issues that we need to solve.  We should not go it alone, as we have in the past, and we should not surrender our sovereignty to multilateral, one world organizations,as we are doing now.  And as the socialist Democratic Party, will be doing in the future. 

No.  I think we should form international partnerships limited to no more than seven partners.  These should be time limited and mission limited.  Hopefully, a few examples will illustrate this concept. 

 One of my favorites is a joint project between the United States, Egypt and at least one other Islamic country.   This project would construct a channel from the Mediterranean to the Qattara Depression in the deserts of western Egypt.  This project will generate power by solar hydro techniques,  produce potable water by desalinization., and reverse desertification.  Demonstration of that capability will open up new areas for technical and economic development in other coastal regions of the world suffering from desertification.  

As another example, I would propose that we form an international partnership to build what I call the International Hyperbaric Oceanic Biology Lab (IHOB).  The goal of this proposal would be to test the feasibility of
a greenhouse located 20 fathoms deep or lower.  The greenhouse would be filled with carbon dioxide flue gases.  A principal goal would be to evaluate whether or not carbon dixide could be stored in large volumes in this manner.  The second goal would be to see if the carbon dioxide could be used to grow anything.  If if it could do so and it generated excess oxygen in the process, this type of green house could be used to oxygenate the deep ocean waters.  I would propose that the United States enter into a partnership with Japan and and a maximum of three other nations to build this laboratory.  Each partner would contribute the equivalent of $50 million.   There would be restrictions written into the governing documents on sharing the technology beyond the partners.  I would expect that there would be an immediate economic stimulus from the implementation of this project and a substantial long term stimulus from the project if it was successful in producing useful amounts of biomass from flue gases. 

I will grant a point to those who say that my blog is to long and detailed.  But I believe it is important that we cease to discuss politics in generalities now and pay the price later when our elected leaders do what they decided to do all along.  It is ultimately a question of accountability.  This is a strategy for solving our economic problems.  People know what the Stewardship Party will do, and how the Stewardship Party will try to do it.  It is the responsibility of the electorate to decide if they believe it will work.     

THose are just examples of very productive enhancements we can make to our basic infrastructure.  This type of infrastructure development will reduce economic costs our society has to pay.  And just the fact that these economic costs are lowered will increase income, employment, and economic growth.

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