Cart (0)
business newsTen Things We Can Do Right Now to Make the World Better
By
Daniel Englander
Sep 15, 2011 7:30 am
We need to allow the market to make as many business choices as we can and avoid problems that arise when government goes where it does not belong.
PRINT
 |
|
These decisions center around two themes: getting government out of the way and increasing the accountability and feedback loop for more of the country.
Said a different way, we need to allow the market to make as many business choices as we can and avoid problems that arise when government goes where it does not belong.
Here goes:
1. Abolish the FDIC
The Federal Deposit Insurance Corporation, a government entity, provides guarantees to depositors who place their hard-earned money in banks. Banks pay deposit insurance, but it is far too good a deal for them. If there were no FDIC, banks would have to compete for deposit cash like other businesses compete for customers. Sounds crazy, but this competition thing has actually worked out well for the United States. Maybe banks with their convoluted, highly leveraged balance sheets would be shunned by the market. I am confident that the localized judgment of Mr. & Mrs. Average American would force better decisions on the banks than any government entity could.
2. Shut Down Fannie Mae and Freddie Mac... Today
The “GSEs” -- Government Sponsored Entities -- are currently in conservation. Despite their near-dead status, they are still propping up the housing industry. If they were shut down, the housing market would surely crash. Prices could fall as far as 50%, and quickly. But for every person that was over-extended and had to sell, there would be a buyer getting a great price that he or she could afford. Inventory would clear. People would be hurt, but the market would recover. Capitalism purges and corrects itself like this; it may not be pretty, but it works. The market should determine who gets credit, and on what terms. It would be impossible to do worse than Fannie and Freddie.
3. Shut Down the US Postal Service
Can anybody explain why the government operates a mail delivery business? Is it possible some other entity could do this, and perhaps turn a profit? Last I checked, UPS (UPS) and FedEx (FDX) were pretty darn good businesses, and they began as competitors to a government monopoly. If we shut down the post office, I have two predictions: a new business will figure out a way to deliver the mail (and make money at it), and the government will stop losing the billions it currently does providing the service.
4. Stop Subsidizing Ethanol
For reasons that escape me, this country has decided to make ethanol into a key component of fuel. Never mind that it is more expensive and its benefits are yet unclear, to say the least. And...
5. Start Promoting Natural Gas
There is an opportunity for the United States to become the largest exporter of liquefied natural gas in the world. Can anybody imagine the US as a meaningful exporter of energy? Could that have positive ramifications for the world we live in? Fortunately for us, we are blessed with an abundance of natural gas. The least we can do is level the playing field so that energy sources that make sense for our country have a chance to compete on their merits.
6. Reduce Regulations on Nuclear Energy
It currently takes almost ten years to build a nuclear plant in the US -- and that assumes everything goes right, which is unlikely given the enormous pressure resulting from environmental lobbies and government red tape. France gets over 70% of their electricity from nuclear power. That is correct -- France. This is a no brainer. Energy infrastructure is going to be a much bigger issue for the US. We need to start preparing now, and any solution has to include nuclear energy.
7. Simplify the Tax Code
Our tax code is too complicated. It has been adjusted and massaged so many times, by so many people, that it cannot possibly accomplish what it was intended to. While accountants may suffer, we would be better off with a simple flat tax -- say, 12% -- and maybe a small VAT tax on various goods and services. Keep dividend taxes at 15%, drop the capital gains tax to 15%, and watch the receipts rise. Gone would be the Alternative Minimum Tax, and I doubt anyone would miss it.
8. Allow Corporations to Repatriate Income Tax Free
American companies are doing terrific business overseas. Unfortunately, our rules make it impossible for them to bring that money back to the US. If we allowed our companies to bring money back home, we would certainly make it easier for businesses to invest. The alternative is to keep doing what we are doing, which encourages companies to sit on their hands.
9. Terminate Obama Care
There are few pieces of legislation in the history of the world as dangerous as Obama Care. Basically, the government wants to dictate the rules of engagement to the entire healthcare industry. This represents a huge portion of our economy that would be under control of the government, which has proven beyond a doubt that it's incapable of operating businesses -- just ask the automobile and airline industries. I have some ideas for what ought to replace Obama Care. Naturally, it involves allowing market forces to work. But for now Obama Care is so bad, just wiping it off the books would be a huge step in the right direction.
10. End the Ratings Agency Oligopoly
With all due respect to thoughtful firms such as Fitch and Egan Jones, the ratings business is dominated by two players: S&P (MHP) and Moody’s (MCO). These agencies have been placed in a position of importance by the government. Basically, they are the backbone of all credit creation in the US. If a company raises capital, it must be rated, and by a government blessed entity. If S&P and Moody’s have not failed miserably given the advantages they have had, I don’t know what failure is. Let’s put the rating agencies back where they belong, with other advisory type firms (think ISS) that are not force fed upon companies and investors by the government. What will happen? Ratings will be better, and capital will be allocated more freely and properly.
There are more obvious things to be done: shut down the Department of Energy, dissolve the National Labor Relations Board, and reform political lobbying come to mind. But the list above will do for now.
Do not for one second think the problem is so big that we cannot resolve it. We got ourselves into this mess, and we need to put our heads down and get ourselves out of it.
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
