No Recession and Trade Deficit
April 10th, 2024
ECONOMIC NEWS OF THE 1st QUARTER, 2024
NO RECESSION THIS YEAR OR NEXT!
TRADE DEFICITS SHOWS THE WEAKNESS OF AMERICA’S ECONOMIC ENGINE!
NO RECESSION THIS YEAR OR NEXT!
AND NO RATE CUTS THIS YEAR!!!
As I have shared over the past nine months my belief that we would not have a recession last year (2023), and this year (2024), and projecting forward probably no recession in 2025. The primary reason is based upon the fact that the federal government is pouring hundreds of billion of dollars into the economy through deficit spending. Currently fiscal policy (controlled by the President and Congress)? is running against monetary policy (controlled by the Federal Reserve). I believe that fiscal policy will win out. It was Milton Friedman in 1969, that coined the phrase “helicopter money” when he wrote a parable about dropping money from a helicopter to illustrate the effects of fiscal stimulus. Today Mr. Friedman would have used the C130 Hercules transport plane in his parable for the amount of deficit spending the federal government is now employing.
Since the start of this fiscal year (Oct. 1st, 2023) to March 31st, 2024 the federal government has increased the national debt by $1.4 trillion, this averages to $235 billion of new deficit spending every month (remember the good old days when this would have been the increase for a whole year). This level of deficit spending is nearly equal to 10% of the Gross Domestic Production (GDP) of the United States. Never in economic history has the United States fallen into a recession with this type of fiscal stimulus. There is no indication that the Congress or the President has a plan or moral courage to rein in deficit spending.?
The other side of this problem is that for the last 23 years the greatest economic force that has helped the growth of the United States economy has been deficit spending. Both political parties are at fault for not coming up with a solution sooner. President Bush’s (43) administration added $6.1 trillion to the national debt over 8 years; President Obama’s administration added another $8.3 trillion in 8 years; President Trump’s administration added nearly $8.2 trillion in just 4 years; and President Biden’s administration has added nearly $6.2 trillion in just 30 months.
During the “Extraordinary Time” of world-wide growth post-World War 2, (1951-1975) the United States was able to generated $1 in growth while issuing just 30 cents of new debt. During the next twenty-five year period (1976-2000) the United States generated $1 of growth but had to create $1.17 of new debt. This last period (2001-2023) has exposed how dependent the United States economy has become on spending of new debt to get growth out of the economy; to generate $1 of growth we now have to spend $3.36 in new debt. We can not keep on this path!!!
The other factor that makes me think that we will not be facing a recession, at least this year is that unemployment is at a historical low and will soften any downturn in the near future. Unemployment is a lagging indicator of economic growth or signaling the approach of a recession. Currently, we have had an unemployment rate of below 4% for 25 months in a row; there have been only two other times in the United States modern economic history (post WWII) that this has occurred. We can learn from these past events of what our future might be. (The average unemployment rate from January, 1948 to January, 2024 was 5.7%, so the rate below 4% is really low.) The first, was during the Korean War lasted for 35 months from January, 1951 to November, 1953. This was caused by the military buildup to fight the Korean War and the world-wide recovery of the developed nations after World War II. We entered a mild recession and return to a normal period of business cycles. The second was during the Vietnam War and lasted for 49 months (there was a single month in the middle of this period, where unemployment hit 4%) from January, 1966 to February, 1970. This was caused by the military buildup to fight the Vietnam War and the war on poverty led by the Johnson and Nixon administrations. With growing budget deficits and the fiscal stimulus it provided, and the Federal Reserve lowering or hold steady interest rates the United States entered a period of high inflation and unstable economic growth. I believe that our current Federal Reserve has learned from this period and they will not lower interest rates until they have concrete evidence that inflation is under control. With the current massive fiscal stimulus being offered by the President and Congress this is not the time to cut interest rates.
WE ARE LOSING THE TRADE WARS!
We look back to the very basic concerns of economists. They are listed below:
The last one listed is what we will look at in this newsletter; the maintaining of a long-term trade balance for the United States. It is a cornerstone measure for the long-term economic health of any nation, to be able not only to buy and sell goods internationally, but to have balance between the buying and selling of goods. The vast majority of economists would agree that a nation that has a trade surplus or deficit for 5 or 10 years is not a indicator of economic health or weakness; because the world nations’ economies have different business cycles. It’s when we see nations have either very long-term trade deficits (say 20 years) or very large trade deficits-measured by a percentage of the nation’s Gross Domestic Product (GDP) (say over 7% of GDP)-that it would seem that the nation is in real economic trouble. If we look at the United States record over the last 48 years, we see clearly there is a problem that needs to be addressed. Listed below we see the trade deficit over the last 48 years; including the trade surplus and deficit of goods and services; and how large the trade deficit was as a percentage of the nominal Gross Domestic Product (GDP) of the United States. (The value below is in billions of dollars.)
Year Total Trade Balance Goods Services %GDP
1976? (-6) (-9) +3 (-0.3)
1977 (-27) (-31) +4 (-1.3)
1978 (-30) (-34) +4 (-1.3)
1979 (-25) (-28) +3 (-1.0)
1980 (-19) (-25) +6 (-0.7)
1981 (-16) (-28) +12 (-0.5)
1982 (-24) (-36) +12 (-0.7)
1983 (-58) (-67) +9 (-1.6)
1984 (-109) (-112) +3 (-2.8)
1985 (-122) (-122) +0 (-2.9)
1986 (-139) (-145) +6 (-3.1)
1987 (-152) (-160) +8 (-3.2)
1988 (-115) (-127) +12 (-2.3)
1989 (-93) (-118) +25 (-1.7)
1990 (-81) (-111) +30 (-1.4)
1991 (-31) (-77) +46 (-0.5)
1992 (-39) (-97) +58 (-0.6)
1993 (-70) (-132) +62 (-1.1)
1994 (-98) (-166) +67 (-1.4)
1995 (-96) (-174) +78 (-1.3)
Year Total Trade Balance Goods Services %GDP
1996 (-104) (-191) +87 (-1.3)
1997 (-108) (-198) +90 (-1.3)
1998 (-166) (-248) +82 (-1.9)
1999 (-256) (-337) +81 (-2.8)
2000 (-370) (-447) +77 (-3.8)
2001 (-360) (-422) +62 (-3.6)
2002 (-421) (-475) +55 (-4.0)
2003 (-496) (-542) +45 (-4.5)
2004 (-610) (-665) +55 (-5.2)
2005 (-717) (-783) +66 (-5.7)
2006 (-764) (-837) +74 (-5.7)
2007 (-711) (-821) +110 (-5.0)
2008 (-712) (-832) +120 (-4.9)
2009 (-395) (-510) +115 (-2.7)
2010 (-503) (-649) +146 (-3.4)
2011 (-555) (-741) +186 (-3.7)
2012 (-526) (-741) +215 (-3.3)
2013 (-447) (-701) +254 (-2.7)
2014 (-484) (-750) +266 (-2.8)
2015 (-491) (-762) +271 (-2.7)
2016 (-479) (-750) +270 (-2.6)
2017 (-517) (-799) +282 (-2.6)
2018 (-578) (-878) +300 (-2.8)
2019 (-559) (-857) +298 (-2.6)
2020 (-653) (-912) +260 (-3.1)
2021 (-842) (-1,084) +242 (-3.7)
2022 (-951) (-1,183) +232 (-3.7)
2023 (-773) (-1,062) +288 (-2.8)
As you can see, over the last 48 years the United States has never had a trade surplus. If we compare that to the previous years of 1901-1975 we see a rather disturbing trend. From 1901-1975 the United States had 72 years of trade surpluses and three years of trade deficits. This comparison is charted below, which shows clearly the changes that have occurred.
Year’s % in Surplus % in Deficit
1901-1975 96% 4%
1976-2023 0% 100%
This change is one reason why the United States, which was the largest creditor nation in the world in 1978, became the largest debtor nation by 1985. (The other major reason was the large fiscal deficits of the Federal Government during the early 1980’s.) We are now the largest debtor nation in the financial history of the world. (China is currently the largest creditor nation in the world with a $4.3 trillion dollar surplus.)
We have only been able to do this because the United States dollar is considered the Reserve Currency of the world and foreign investors and nations trust the continued value of the U. S. currency.
During all of the 20th century the United States was the largest exporter of goods and services in the world. (It’s been only in the last 48 years that we have imported more than we exported.) But, in 2003 Germany passed the United States as the largest exporter in the world. This is rather troubling that a nation of 82 million people can out-export a nation of 325 million. In 2010, China passed Germany, moving the United States to third place. We were able to capture the number two spot in 2013.
Looking back over our data we see two periods in which our trade deficits declined; the first, 1987-1991 and then again in 2007-2009. These declines were for two completely different reasons. By 1985, the United States trade deficit had grown so large (it had risen to 2.9% of GDP or about $122 billion deficit) that it was troubling to the Reagan administration, thus it led to the signing of the Plaza Accord in September of that year. The aim of this agreement was to raise the value of the Japanese Yen, the German Mark, and the English Pound; this was to make United States-made goods more competitively priced on the world market. This Accord was very successful; it raised both the value of the German and Japanese currency by nearly 55% compared to the United States dollar. (England had to drop out of this agreement because of their own economic problems.) This temporarily gave United States-made goods a boost on the global market. It eventually severely damaged the German and Japanese economies (but that is another story). Since it takes over a year for any change in the value of a currency to affect the level of trade, it wasn’t until 1987-88 that we see a correction in the United States trade deficit. In 1991 we came extremely close to having a balance in trade. (The deficit was about 0.5% of GDP or about $31 billion.)?
The second trade deficit decline between 2006-09 was caused by the severity of the world-wide recession, which affected all trade between nations. In the United States we see a drop in consumers’ wealth, which then caused a decline in imported consumer goods and oil imports (because of less consumer driving and lower price of imported oil). An interesting fact that is buried in trade statistics that doesn’t get much notice is the very positive trend in the oil production area of the United State economy and how this did not help our trade deficit. In 2005, oil and petroleum-product imports rose to a record of more than 13 million barrels a day; and in 2009, (trade deficit that year in goods and services was $384 billion) nearly half of our trade deficit was caused by $20 billion a month in the importation of petroleum to the United States. Since 2005, oil production in the United States has steadily increased because of new drilling of shale oil and new technology of fracking. In November of 2018, we began for the first time since 1973 to be a net exporter of oil. The United States in 2017 became a net natural gas exporter, this was the first time this has happened since 1957; and became the largest exporter of natural gas in the world in 2023, passing both Qatar and Australia, the previous record holders. This should have improved our balance of trade by $240 billion a year; rather we began to import more and more finished goods and consumer goods. Starting in 2013 our deficit has grown from $461 billion to $773 billion in 2023. This gave the United States a temporary reprieve, but as the economy improved in the United States we went back to a growing trade deficit.
When we compare ourselves with other identifiable economically weak nations we are not doing very well. The four nations in Europe that are recognized as being laggers in terms of economic growth and strength, also known as the PIGS nations, are Portugal, Italy, Greece, and Spain. Listed below are these nations’ total trade surpluses and deficits for the past 47 years.?
? Nation ? In Surplus and % In Deficit and %?
Spain 16 years 34% 31 years 66%?
Italy 15 years 32% 32 years 68% ?
Portugal 7 years 15% 40 years 85%?
Greece 1 year 2% 46 years 98%?
United States 0 years 0% 47 years 100%?
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I believe that being last among this group of nations is not what people think of when they use the term “American Exceptionalism.” When we look at the nations that are considered currently more dynamic (or were in the recent past in economic terms) we see a much different story.?
?Nation In Surplus and % In Deficit and %?
Japan 38 years 81% 9 years 19%?
China 38 years 81% 9 years 19%?
Germany 30 years 64% 17 years 36%?
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What is amazing about the German trade situation is that Germany has had a run of 30 years in a row of trade surpluses continuing through to this year. Germany was a signory of the Plaza Accord in September, 1985, which was to help the United States with its trade deficit during the late 1970s and early 1980s by appreciating the German Mark by 55% against the United States dollar to make their goods more expensive and United States goods cheaper on the world marketplace. This and the reunification of West and East Germany in 1990 knocked the Germany economy back a step or two. With the work of Labor, Business Management, and Politicians they were able to adapt the German economy to their collective situation and have been able to run a string of trade surpluses since 1992!???
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The problem we face with our trade deficit is that in the long-term we cannot continue to be a net importer of goods. As we have seen in the 1980’s we nearly solved our trade deficit problem by appreciating the value of our closest competitors by over 50% (which they agreed to). Probably we won’t be able to do this again. Currently, our largest trading partners are the European Union, China, Canada, Mexico, and Japan; this group represents 69% of all trade with the United States (2017). Given the present relationship we have with these nations, I don’t see any of them willing to do us a favor and appreciate their currency like England, Germany, and Japan offered in 1985. We could try to increase our productivity at a faster rate than our competitors; over time this would solve the trade deficit problem. But, with a truly global marketplace our advances and adjustments are copied nearly as rapidly as we make them, never allowing us to gain any real comparative advantage. The other method is lowering the standard of living and wages earned here in the United States. This would reduce the need to import consumer goods and lower the cost of our goods produced here. Lastly, we could depreciate our own currency; this would make our goods, which we want to sell to the world, cheaper and at the same time make our competitors’ goods more expensive, whereupon we would want to buy less of them. This would eventually balance our trade, as it did in 1991, but there is a catch. If the United States decides to lower the value of the dollar by 50%; currently foreign investors have purchased $6 trillion on our national debt, and we would be expecting these investors to take a 50% loss on their investment. This could lead to international investors no longer wanting to lend us the money we need to pay our bills. We would then be forced to raise interest rates to attract investors to lend us money. By raising interest rates two things happen. First, the cost of carrying nearly $34 trillion in debt would become vastly more expensive and, secondly, bring on a recession that would rival the “Great Recession” of 2007-09!
“Trade wars are easy to win.” This statement kind of sums up the misguided approach Trump’s administration had taken when it comes to a trade policy for the United States! The Trump administration seemed to think the trade deficits are proof of unfair trade agreements and nations taking advantage of the United States. Since the publication of “Wealth of Nations” in 1776 by Adam Smith the idea of “mercantilism” (A nation’s wealth is the amount of gold and silver it owns.) has largely been left on the trash heap of bad ideas. Smith explained that it is the ability of people to produce products and trade in free markets that creates a nation’s wealth. Over the past 240 years every mainstream classical and modern economist agrees that free trade benefits all nations that engage in it. There is also a growing number of economists that agreed that within a society there will be some losers, caused by free trade.
The Trump administration had offered no evidence, proof or stated exactly what unfair action that dozens of nations have engaged in, whereby taking advantage of the United States. The idea of raising tariffs to protect domestic markets is government trying to pick winners and losers in the marketplace, and that is never a good idea. Raising tariffs and quotas on goods has never been shown to work or correct trade deficits. We can look back at the Smoot-Hawley Tariff Act of 1930, and see how this Act helped make the Great Depression worse and set back free trade for nearly 20 years. We need to realize that the greatest economic expansion, occurred in the United States between 1950 to 1980 and it was during this period that we championed the lowering of tariffs and trade barriers throughout the world. For most of those years we had trade surpluses here in the United States.
Presently neither political party seems to have an answer to this problem. In fact, since the Trump administration started talk of trade wars and how easy they are to win, our trade imbalance has worsened by nearly $450 billions a year (from 2016-2022). It’s regrettable that the Biden’s administration has kept in place the increase in tariffs that is collected. In 2018, the United States collected about $41 billions in custom revenues (mostly from tariffs) and this increased to $100 billion by 2022. This is a hidden tax against every consumer of imported goods, since the cost of the goods they buy includes this tax as part of the purchase price (Yes, we pay the tariff, not the other other country we import from.). Until we lower the cost of doing business in the United States we are not going to lower our trade deficit in the long-term. We need to lower our cost of healthcare, education, tax code, and the judicial system, or the trade deficit will continue to be a part of the economic difficulties here in the United States. If the United States ever gets to a trade deficit of between 6 and 7% of GDP, if economic history is our guide, probably the marketplace will force the United States to change. This change will be the rapid decline of the U.S. dollar, forcing us collectively to have a lower standard of living.
REFORMING NAFTA-A MISSED OPPORTUNITY
On July 1, 2020 NAFTA was replaced by the United States-Mexico-Canada Agreement (USMCA); this new law was largely seen as making few changes to the old agreement and took tiny steps backwards from free trade (according to most experts in the field of international free trade). This would have been a great opportunity for the United States to tackle its immigration issues and dealt a blow for free trade rather than retreating from it.?
?If Canada, Mexico, and the United States had modeled the new agreement to look more closely like the European Union (EU), the United States could have created not only the largest free trade region in the world, but could have solved most of the immigration and some of trade difficulties it is facing now and in the not-so-distant future.?
European Union Model is based on the principles of the “Four Freedoms” :The free movements of goods, free movement of capital, freedom to establish and provide services and the freedom of movement of people. The USMCA could have created a marketplace of over 490,000,000 people (2020 est) versus the EU’s population of 447,000,000 people.?
The United States could have had access to the highly skilled workers of both Canada and Mexico and the large pool of unemployed in Mexico to fill business needs here in the United States labor market. Also, it could have had a much easier securely established border for immigration that was 2300 kilometers further south (along the Mexico border with Guatemala and Belize) and would have been over two-thirds shorter in length from 3,145 kilometers down to less than 1,000 kilometers in length.
THE MACROECONOMIC AREAS THAT NEED TO BE CHANGED?
Listed below are those Macroeconomic sectors that I believe need to be changed to make the business sector globally competitive and restore the American growth engine to its former glory. I have tried to list the sectors that I feel need the most change first or would have the greatest impact on improving America’s competitive edge.?
OVERPRICED HEALTHCARE SYSTEM?
Listed below are the top ten countries with the highest cost of providing healthcare for their citizens by comparing the percentage of Gross Domestic Product (GDP) that goes to the healthcare sector of these countries. The United States percentage is from the Centers of Medicare and Medicaid Services (2019 cms.gov ). The other listed information is from the Organization of Economic Cooperation and Development (OECD, 2019).?
Of the 36 members of the OECD, the average cost of healthcare as a percentage of GDP (not including the United States) is 8.5%. All members of the OECD have democratically elected government, capitalistic style of economies, and a fairly large middle class. The United States healthcare system is normally below average when compared with other developed nations’ healthcare outcomes and the United States is the only developed nation that does not provide all of its citizens healthcare benefits.?
These numbers often are either so large or confusing that most people do not completely understand what the real cost to businesses are when they are trying to compete in a global marketplace. Let me try and put this in a rather simplistic comparison to make it easier to understand. Let’s take two companies, one in the United States called “Alpha Company” and the other called “Bravo Company” and located in one of our “average” competitor countries. We will say that both of these tiny companies sell about $100,000 a year. Alpha Company has to pay $17,700 each year to cover its healthcare cost, while Bravo Company located in another country pays only $8,500 per year for its healthcare cost. Alpha Company is at a competitive disadvantage against Bravo Company; Alpha Company has to cut cost (paying employees less, making less profit for the owner, or finding somewhere else to cut cost) or it can raise prices where it will lose market share to Bravo Company. Healthcare cost is a huge disadvantage for any company located in the United States.?
??COST OF SECURITY-MILITARY INDUSTRIAL COMPLEX?
Another hidden cost for all businesses in the United States is the high price of our military here versus the rest of the world. Listed below are the top ten nations that spend the most on their military; the cost is listed in the Purchasing Power Parity method (PPP), the percentage of GDP spent, and the portion of global money spent on the world military.?
billions % of GDP % of World?
Let us go back to our two businesses, Alpha Company and Bravo Company. Our two companies, one local and the other our international competitor, both have sales of $100,000 and need to provide security for their businesses. The United States Alpha Company spends $3,500 each year for security, but their international competitor needs to spend just $2,200. We need to accept that the cost of security adds no value to what we produce or services we provide. This allows Bravo Company to provide greater benefits for its employees, or more profits for their owners, or undercut the price of its competitor to grab future sales.?
?Two trivia notes about military cost: First, normally during wartime most nations attempt to pay for the war by three methods; raising taxes (revenue), cutting other government expenditures (costs), or issuing debt to pay for the war later. The United States fought two extremely long wars in Iraq and Afghanistan, from 2001 until 2020. The total direct cost of these conflicts was just over $2 trillion; all of this cost was placed on America’s credit card. Not a single tax was raised and not a single service was reduced to pay for these wars. One projection for the overall cost for the next 40 years is about $7.9 trillion. This will be a future cost for the next two generations of businesses as they try and compete in the global marketplace. The second trivia note is if we look back into history to the American Revolution, we find a rather interesting comparison. Britain was fighting not only trying to keep it colonies, but it was also fighting at times a world war against other countries (The French, Spanish, and the Dutch). So, the cost of the American Revolution 1775-1783 was put on to Britain’s credit card and by 1783 85% of the British budget each year went to pay the interest on debt for their current and past wars. One could say that we won our independence not because of any military victories (of which there were very few) but because Britain could not financially afford to keep fighting us. Are we getting to that point ourselves??
??HOW MUCH DO PRISONS COST THE UNITED STATES??
This particular topic gets extraordinarily little attention in economic literature to the public and even less attention by politicians and how much this cost makes the United States less competitive in the global marketplace. The United States incarcerates more individuals than any other country in the world (we love throwing people in jail). The United States has over 2,000,000 incarcerated persons which represents 25% of the world’s jailed, even though the United States population is less than 5% of the world population. This unbelievable number does not seem to reduce our crime rate by any significant measure, particularly when you compare it to other developed countries. France, which has almost exactly the same rate of crime, incarcerates a fraction of our total. When we compare the incarcerated per 100,000 citizens, we incarcerate 634 citizens, while France incarcerates just 87 of their citizens. That means we incarcerate 625% more citizens than they do. Besides the 2,000,000 we incarcerate, we then hire 400,000 people to watch over these 2 million. This cost is then passed on to businesses in two ways, first higher taxes to pay for a highly inefficient criminal justice system, and the loss of production of 1.5% of our adult workforce that is in jail and prisons or people employed to watch over those individuals.??
Consider our two companies, Alpha company employs 200 workers, but has 3 workers that do nothing, produce nothing, nor learn new skills, but you cannot fire them, so in reality you have only 197 actual workers. While Bravo company employs 200 workers but has all 200 workers doing their job producing products and profits for their employer. Bravo company has a competitive advantage over Alpha company. Who is going to win in the global marketplace??
We need to consider how successful our criminal justice system is; a very conservative figure is that at least 50% of individuals incarcerated in the United States will be rearrested for a new crime, some studies have this as high as 75% (this is called the recidivism rate). Let us use the lower figure of 50%. If Alpha company were producing a product to sell on the open market, how long do you think that company would be in business if 50% of its products failed? Yet this is exactly where the United States criminal justice system is today, and we hear almost nothing about this failed system and how much it is costing us as a society!?
TOO MUCH GOVERNMENT BUT NOT WHERE YOU THINK?
If we look at the population growth versus employment numbers at the local, state, and federal level we find some rather interesting data. The population of the United States in 1950 was 151,861,000; the population of the United States in 2020 was 331,465,000; this is an increase of 118% over the past 70 years. During this same time period we have seen the number of Federal employees grow from 1,921,000 to 2,875,000 (excluding the military); this is an increase of just 50%. The size of the federal government has not kept pace with even the population growth.??
The story for local and state government employment is rather different. In 1950 the number of local government employees was 3,228,000. By 2019 it had grown to 14,200,000, an increase of 340% and a much larger increase than the general population growth. While the number of state government employees has gone from 1,057,000 in 1950, to 5,500,000 employees in 2019, an even larger growth of 420% increase. The question we need to ask here is why the number of local and state employees has exploded over the last 70 years. Currently about one in every seven workers are hired by government; do we need that many??
In microeconomics the concept of “economies of scale” is well researched and generally seen as a positive practice for business. The idea is that larger firms generally can lower cost through higher volume, for three major reasons. First, economies accomplish this by use of mass-production methods. Second, higher productivity occurs with the use of specialization and full-time learning on the job. Third, economies exist in purchasing of raw materials. If we look at the American political system, it has not really changed in over 100 years. We have today a system better suited for the horse and buggy rather than the internet.??
There is no sound reason not to consolidate political boundaries to just the county level for all local services. We have seen thousands of mergers occur in business over the years, but almost no mergers of political boundaries or services. If local government growth in the number of employees were kept to just 200% growth from the 1950s, we would be talking about the reduction of nearly 6,000,000 government employees. There are 3,070 counties and parishes in the United States with over 16,800 school districts and 17,985 police agencies; think of the number of police chiefs and school superintendents alone that we could remove by consolidation. Think of the thousands of part-time and amateur politicians we could also remove. This is probably an overestimation of the number of jobs reduced, but we are talking about a real cost savings for society by converting 4% of the workforce from government jobs to jobs that create goods and services. This would reduce every business cost and increase the tax base at the same time.? The federal government needs to give financial incentives to local and state government to consulate services and to have a truly representative style of government in each county that makes the transition to a consolidated government.
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The problem with all of the areas of concern listed above is that they all deal with politicians making policy decisions that go against their own best interest. Real healthcare reform, right sizing our military, prison reform, and reducing the size of government, none of these issues are going to win them elections or increase their own power. All of these are indirect costs to business and consumers by higher taxes, out-of-pocket expenses, and the misallocation of the labor force. Each one of these areas have their own special interest groups and Rent Seekers that will oppose any change of the present situation. Either political party that attempts to change these areas will be attacked politically and will lose elections (just look how the Democratic party suffered over the issue of healthcare reform and the 2010 election). But these are the areas that are making it more expensive for businesses in the United States. If America wants to reform its economy, to be more competitive on the world marketplace America needs to look at these areas first, we need to start sooner rather than later.?
Respectively Submitted
Christian M. Staples
756 Worden Avenue
Kalamazoo, MI 49048
?04/10/2024 5816