How would you fix the economy?

We're smart young nerds, so I want to hear your thoughts on it.

I'm no economic expert but I can say some simple things.

1) End bush tax cuts

2) Find a way to stop corporations from getting so many freaking breaks

3) Smart Military cuts (like ending our over reliance on expensive private contractors)

Are we allowed to include the 3rd world in this discussion?

I think including the 3rd world in this would make the discussion too fragmented and too unfocused.

It would be confusing enough if we combined European and American economies here.

I think the OP was probably meaning the American economy — right?

I don't think you're going to be able to fix the American job loss problem without addressing globalization, which entails addressing third world countries. Now, if you just want to talk about eliminating the deficit to give more certainty to the economy for investors, then yeah, that's doable without having to look at global patterns.

Identify what's broken in the economy. Or even identify what we want in the economy.

Then act.

@Karkadinn: OK, then it's fine to discuss other economies from the point-of-view of the US economy here, but I think it has to be from that narrower viewpoint to have a reasonable discussion, or it's going to just end up in a very, very predictable and shallow argument without any useful depth.

edited 9th May '11 10:59:11 AM by Morven

Cut the military budget (between 33 and 50 percent). They get way too much money and yet no tax-reduction concept ever seems to consider cutting it. Instead, it's "give more money to the military and cut everything else".

edited 9th May '11 11:28:47 AM by Buscemi

The military budget can only be appreciably cut if you reduce expectations for what the military can do.

Problem is, Americans seem to love the idea that the US military could curb-stomp anyone else's military on earth, so the idea is not popular.

Not tio mention we have a love for imagining that all the waste in the government goes to government employees.

A love so hilariously grand that when my local college economics class was given an activity on what to cut in the budget to balance it, knowing full well the bueracracy barely even gets money from the buidget ( a whopping 9% of spending is the government employees) decided to cut it wholesale and increase military spending.

We failed utterly at balancing the budget.

^^ Even bigger problem, the US military is not the majority item in the budget. You could eliminate the entire military and this country will still run deficits.

The scapegoat that military spending alone is the root of our deficit problems is quite moronic.

By “fix the economy,” what do you mean? If you mean “dig us out of the hole we're standing in,” then the recession thread might be a good place to start (skip to the bigger posts.) If you mean “do something about the government (or not,)” then I recommend the budget thread (feel free to skip through the outdated OMIGOD CRISIS MODE stuff.) Closely related to both is “optimize the current economy so it doesn't dig holes and push us into them,” which the markets thread touches on. I think the last one would probably lead to the most serious discussion.

Finally, of course, there's “describe your dream economy,” which would be a very wide topic, but probably a very silly discussion as well.

"Even bigger problem, the US military is not the majority item in the budget."

...Except that once you take discretionary spending into account, that is simply not true.

1) Finance reform, 2) Health care reform, 3) Housing reform, and 4) Educational reform. That should do it. However, these topics are so broad and complicated on their own that they deserve separate threads to discuss them. Still, I'll give the quick and dirty version here:

1) Bring all lending institution under the same set of regulations that banks operate under, and tighten the restriction on what percent of total assets can be loaned out at one time.

2) Change the incentives so that Medicare, Medicaid, and Health Insurance no longer just pay for each service delivered, but also pay for improved health outcomes as well.

3) Turns out that no everyone should borrow money to own a house. Tighten the restrictions on how much of a mortgage people can qualify for, given their assets. Also, change the bankruptcy laws so that people can restructure their mortgages more easily.

4) Instead of relying so heavily on property taxes to finance public education (which is the system in the US), combine revenue from a variety of sources, including state sales and income taxes. Also, change the standardized tests so that true performance measures can be used (things that students demonstrate or produce in class) instead of exclusive reliance on scores on paper and pencil tests. Allow states to utilize things like charter and voucher programs more easily. Base teacher pay on performance.

^^ Are you certain of that?◊

That shows we need to simply FIX those programs, not destroy them all together.

I can't stand how its like that in American politics. Its either keep or destroy, no middle ground.

Sensible answer - if we're talking US, reintroduce the Glass-Stegall Act (apologies if that's misspelled) i.e. the legislation that used to divide investment banks from savings banks. I think the UK should have similar laws. If overpaid adrenaline-junkies want to gamble lots of money on the markets they can gamble their own, and go bust when they've run out.

Silly answer - by Magic. So obvious I'm amazed it hasn't been tried already.

I could link to random pie charts that prove I'm right too, (and ones on real sites instead of Photo Bucket!) but ultimately it's kind of irrelevant. Even taking you at your word, the US still has the most military spending by an order of magnitude over any other country on the planet, and the military does take up a pretty big slice of the pie regardless of whether you consider it the biggest piece or only one of the biggest pieces. I know that you'd justify that by saying that it's necessary against the threats of China and Russia, but as I've said before, I don't think that most people are going to agree with that justification.

Edit: On a related note, while that I'm remembering it, Tom, you did show some figures a while back showing that waste in entitlement programs is a pretty high chunk of change, much more than I would've expected. I wouldn't be opposed to reform attempts that cut down on that, so long as 'reform' wasn't a code word for 'destroy.' But then, you could say the same about the military too.

edited 9th May '11 12:57:14 PM by Karkadinn

Spin my pen around a few times and give up.

^^ I personally would get rid of the welfare state but on short term I'd settle for cuts and clean up of it. Problem is the political arena has become such especially among the liberals that if I propose cutting a single dollar from the welfare state even if that single dollar was actual waste and doing nothing, I'd be slandered as "destroying the poor" and there'd be very little I could do to argue against that kind of hyperbole on 9 out of 10 news channels.

That was the thing about the recent bill in the House that was intended to make sharp cuts into the deficits. The Democrats basically said any cuts were destroying the system that we were eliminating Social Security next Thursday (nevermind if you actually read the bill it grandfathered in everyone presently over the age of 55 so nothing changes for them).

You can't win the argument in that environment as the argument boils down to "Any cuts whatsoever == Destroying the program".

@Major Tom: Medicare and Social Security remain broadly popular among the electorate. Republicans have tried to cut them many times over the years, and each time they are unsuccessful because the support for them is broadly based, and includes most Republican voters. Older people vote Republican a lot, and they are not going to support cuts in programs that are going to benefit them relatively soon, if they're not in fact already benefiting from them.

Doctrinaire conservatives hate social programs, but the vast majority of Republican voters are not doctrinaire conservatives.

Actually that bit about it being only for those under 55 is what pissed off a lot of people, because they could tell exactly what it was meant to do. Split the interests, instead of doing the right thing.

So basically the program's screwed. You can't make a practical solution by grandfathering in those who are already on to nearly immediate, and you can't make cuts to it either.

Guess letting the thing fall to bankruptcy is the only answer. (Same can be said for the debt I guess...)

Eventually they will raise the retirement age, and that will take care of social security. But that isnt on topic, people.

1. End Bush Tax cuts

1a. Raise taxes on rich Americans, those who make more then 300k per year.

1b. Increase capital gains and estate taxes.

2. Cut spending on superfluous military projects.

2a. Reduce the size of the Navy.

3. Identify privately run state responsibilities (IE. Privatized medicare, prisons, etc.) and eliminate them.

4. Institute regulations on banking practices, (IE. Credit Default Swaps, etc) prevent them from gambling with our money.

5. Reform regulatory agencies, make them self reliant, introduce legislation to allow them to bring suits against companies that do not follow suit with their policies.

6. End farm and oil subsidies. All of them.

7. Introduce a single payer system to the HCR bill.

8. Close tax loopholes for corporations and the rich.

8a. Introduce tough penalties for tax evasion and fraud.

9. Legalize marijuana and prostitution on a federal level.

9a. Regulate and tax both industries.

10. Change the funding system for schools. (IE end property tax based school system).

11. Increase corporate taxes while simultaneously offering tax breaks to companies which don't outsource.

12. Introduce legislation to protect Unions.

13. Increase the minimum wage.

edited 9th May '11 3:22:30 PM by CommandoDude