Thursday, August 2, 2012

Blog Series Part 1: America's Problems And How To Solve Them

This is the first in a series of Blogs that attempts to more correctly define longer term causes of economic, political and social problems in the USA and propose some possible solutions that, taken together, might very well be a prescription for a return to prosperity and a renewal for our country.  Obviously this is a Herculean task and demands more time and space than just a few pages!  I've tried to be concise and list ideas.

This Blog Series is intended to assist in informing and assisting other conservative-minded thinkers, opinion leaders and politicians.  As with any such communications, it is intended to start a conversation with other like-minded persons.

Thanks for having a look here and please share this information with interested friends!

The Blog series consists of four blogs:
Blog Series #1 (This Page):  A Concise Listing of Root Causes of Short- and Long-Term Problems in the Country
Blog Series #2:  Measures to Reform Politics, Reduce Corruption, Improve the Economy, Banking and Financial Reforms
Blog Series #3:  Measures to Improve Education, Reducing Government Spending and the Cost of Government
Blog Series #4:  Reduce Medical Cost Spiral, More Domestic Energy and Jobs and Improve Demand in the Currently Sluggish Economy

The first step in solving America's problems are to identify what the problems are.   The following list is my attempt to list America's most important short and long term problems (roughly in order of importance):
  • Sluggish economy and loss of demand in the economy is due to a) persistent long-term trade deficits and the resulting transfer (stealing) of jobs to Asia especially China but also to Japan, S. Korea, and others.  Also, persistent trade deficits represent a huge transfer of wealth to Asia and the oil exporting countries, b) the Fed-and Gov't-caused bubbles incl. the housing bubble overhang (bad bank loans) and a "balance sheet recession" for consumers, c) slower spending due to our aging population (demographic drag). Also, d) poor government leadership and tax policies (high marginal corporate tax rates) now hurt the possibility of job repatriation from Asia. e) Poor current presidential leadership has frightened businessmen into 'sitting on their hands'. f) expanding regulation during near-recessionary conditions is a drag on business. (See my blog: EPA's Carbon Regulation Power Grab) g) poor and/or corrupt leadership at corporations, excessive cronyism in board rooms leading to excessive compensation at executive levels.  Excessive compensation=corruption. The resulting income and wealth inequality hurts the economy and invites "populist" governments.  Think Argentina.
  • Poor national administration and lawmaking, lack of or wrong type of national leadership, persistent government and trade deficits for 30 years, corruption in politics at all levels, excessive influence peddling by special interests, eg, inappropriate deregulation of banking due to influence of banking lobby, the decline of 'rule of law', excessive government "changing of the rules" and too much interference in economy. Inappropriate Federal Reserve policy creating "bubbles."  See my blog: US Economic Policies Are Not Working and Washington Is Corrupt All The Way To The Top
  • Abandonment of gold standard in 1971 (Breakdown of Bretton Woods International Gold Exchange Agreements) allowed excessive monetary stimulus/credit creation from the Federal Reserve creating stock market, credit and housing bubbles. These bubbles also benefited wealthy Americans and exacerbated wealth inequality. Abandonment of the gold standard also has allowed persistent trade and budget deficits which, in turn, allowed a historic transfer of US wealth to Asia and Middle East. The effects of this loss of wealth is becoming increasingly apparent in the USA. Further crises and loss of wealth are inevitable with no change. 
  • Medical cost upward spiral threatens family budgets. Policy and lawmaking efforts by politicians have failed to address measures that would limit costs. Instead policy makers are determined to increase demand on a system without addressing an increase in "supply." 
  • Non-white America cultural and educational collapse--Afro- and Latino-Americans continue to perform poorly in school with extremely high dropout rates--especially African-Americans. Also, African American family units are in "tatters" in what amounts to a cultural collapse. This leads to limited job skills, limited social skills, criminality, poor work ethics, high unemployment, government dependence, medical problems, obesity, institutionalized individuals and despair. Ultimately violence will be the result of these factors. These two ethnic groups make up 25% of the US population and a failure to improve the "culture" of these two groups could drag down the entire nation. America is sinking into a "ghetto" culture of failure and government dependence. This group will fall prey to "populist" political messages bringing the wrong political leadership into power--leadership that will "pander"to this group.  Solutions must come from "within" those communities--not from federal programs. In fact, federal programs delay indefinitely the necessary cultural change.  It's possible that local and state governments have roles to play here.
  • Generally declining social and moral values, increasing ignorance--including ignorance of American traditions, economic illiteracy, ignorance of traditional values, declining education standards, poor parenting, declining work ethics in general, declining moral values in business (the housing bubble and mortgage mess was a widespread failure of ethics and morality from Main Street to Wall Street). 
  • Generational decline. From the "greatest generation," who knew hardship of depression and war, each subsequent generation is "spoiled" by success and ease. Work ethics and attitudes decline and a sense of "entitlement" come to fore. This will eventually be reversed by severe hardship once again. 
  • Government spending and increasingly insurmountable national debt due to a) rising entitlement and other government spending especially after 2004 due to a) sluggish economy and declining tax revenue, b) unfavorable demographics and entitlement programs, c) fraud in government programs and d) expensive administration costs due to public unions and poor administration/management, e) expensive military and wars.
Please proceed to the next Blog in this Mega-Series:  Blog Series #2: Solutions to Big Problems
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