How to Get Out of a Recession, Part Two

It is unfortunate but really quite true that our federal government is not good at doing much. Is there anyone out there happy with the current state of the education system? Remember when Uncle Sam stepped in to bust up Ma Bell and "fix" the phone company. Things are good now, but for years, phone companies could just take over your service. I once received a bill from MCI, yet I never signed up for MCI service. It was a mess. This is also true on the state and local level (New Orleans post Katrina, the city of Detroit, California).

I don't expect many arguments on this notion. The government is not, has not and will not be the model of efficiency and quality. The founding fathers endeavored through the Constitution to limit the powers of the government. These were men determined to establish a life without oppressive elitists meddling in their lives, it was the reason they left Great Britain.

So you are probably wondering when I explain how to get out of a recession, or maybe you are more interested in the rumor of Nancy Pelosi's hermaphrodite (freakish) nature. Stick with me, it's all coming.

So how does a government create jobs? I don't know. I suppose they create new bureaucracies and staff it with the unemployed. This bogs down an already cumbersome structure with dead weight. How many times have you done business with a government agency lately. I can remember when Kendra (my wife) and I went to get our marriage license in downtown Detroit. When we finally got to the window, the clerk treated us as if we barged into her home and pried her away from her soap operas just so we could get married. How rude of us. I can concede that people have bad days, but this is consistent behavior for government workers. Does anyone enjoy a stint at the Secretary of State's office? How about the unemployment office?

What's the point here? Do we think the same people responsible for the miserable performance of dozens of largess programs can create viable jobs and control market conditions? I for one do not have that much faith. Job creation is the realm of businesses. Business owners create jobs. Has anyone ever received a job from a poor man?

The United States currently has the second or third highest corporate tax rate on the planet. Already hamstrung by the high costs of health care and legacy costs for bountiful benefit packages we have become accustomed to, the US is not competing on a level playing field with the rest of the industrialized world. According to an analysis by Investors.com, corporate tax rates all over the world have been steadily declining, while the US rate has remained at around 40% for over a decade. The world average is 25.5%.
If this corporate tax rate were cut along with cuts for individuals and small businesses a few things would happen as a direct result. Large corporations would find themselves with millions more in cash and liquidity. Entrepreneurs would invest these funds into new plants, new equipment. Construction companies would contract for the concrete, steel I beams, electrical and plumbing work. People would earn money the old fashioned way, they would work for it. They would provide goods and/or services in response to the demands of more money in the hands of consumers.

When consumers get fired up, they buy things. This is true stimulus. The market moves unencumbered by unnatural forces. What are unnatural forces? Here's my best example. Somewhere in a Washington government building sits a 24 year old young lady who went to one of the nation's best colleges. She studied environmental sciences and business management. She decides that my family needs a hybrid vehicle so her bosses enact tax credits for people who purchase 'green' vehicles. Now, do I want or need a small, green, expensive vehicle? Absolutely not. A few months ago, when gas was around 2.40 a gallon, GM sold 17 flex fuel Sierra pick up trucks. Just 17 trucks.

The natural pick up truck market is about "big shiny trucks". Big engines. Huge towing capacities. Large payloads. You should need running boards to get into the cab. This is what pick up truck drivers are into; not the size of their carbon footprint. The young lady in DC can't change this with laws or tax codes. Let the market run free. It will run amok once and a while, but it always corrects itself.

Where was all this money before? It was in the hands of politicians. These are the men and women who put in legislation for a sixty million dollar "bridge to nowhere" in a Homeland Security bill.

Has anyone stopped to think out the long term consequences of electric / petroleum hybrids. Isn't our electrical grid already inadequate? What happens when 10 million people plug their cars in? And if your rechargeable car gets 40 miles per charge, will the company you work for offer receptacles in the parking lot for free? These are the same dopes who gave us the compact flourescent bulb. It's so environmentally friendly you have to have a HazMat license to dispose of one.

Every time in recent history when tax rates were cut, government revenues increased. I will support this in part three.