End All Economic Nonsense

When it comes to government it's difficult to imagine anything that isn't economic nonsense. Almost by definition the government takes a dollar in taxes and returns less than a dollar in benefits, which is surely nonsensical for taxpayers.

In an attempt to be generous, however, I will only suggest ending egregious economic nonsense, arbitrarily defined as economic nonsense costing taxpayers more than $1,000,000,000,000.

First - balance the Federal budget. The annual budget deficit was almost $1 trillion in the year ending September 30, 2019, before the Coronavirus outbreak. There are many reasons why economists sometimes claim budget deficits are not problematic, but it's not so popular to explain why they are a good idea. Usually it boils down to 'we can, therefore we should' spend money. The unstated assumption is Federal spending is good for Americans. I agree it is always good for a few Americans, but see zero evidence it is good for all Americans, which should be the standard by which Federal spending is judged. Spending more money than you are currently collecting in taxes just pushes the payback onto future generations. America is a rich country and we can afford to pay as we go, balancing the Federal budget puts us on the right track.

Second - reduce the national debt, which right now stands at over $20 trillion. The last American president who made a serious effort to pay off the national debt was Calvin Coolidge in the early 1920s. One hundred years later and not a single president has bothered to even try to reduce it. The biggest problem with the national debt is political - it gives politicians cover for wasting money. There is no practical reason for having any debt at all, except if the United States is under attack from abroad, when no expense is spared in defending ourselves from aggression. A modest budget surplus every year, applied to the national debt, would be painless to taxpayers and good discipline for politicians. Let's do it.

Third - abolish the Federal Reserve. The original excuse for creating the Federal Reserve came from rich bankers, who got tired of paying for their own irrational exuberance. It was supposed to be a lender of last resort, with a dual mandate of price stability and low unemployment. Although these goals are contradictory the Fed has done poorly on both counts. From 1776 through the Fed's arrival in 1913 total inflation was 14%. Since then total inflation has been 2,504%. Meanwhile we have had the Great Depression, the Great Recession, and now the Coronavirus depression. In all three instances the Fed has only managed to partially make up for the problems it created in the first place. Money is not evil, but politicians are, and they should not be given the power to print money to spend (usually for the sole purpose of buying votes).

Fourth - reform entitlement programs. The biggest economic nonsense of all is a promise to pay people later, if they will pay their taxes today, when basic arithmetic says we will not be able to do so. 'Saving' Social Security and Medicare sounds like a good idea, but they can't be saved in their current form because politicians are hooked on lying about what it will take. It will be smarter to reform these programs today, so they can last forever. This will require either perpetually honest politicians, or privatization. I have more confidence in the latter. Some people are fearful Wall Street will just get rich from privatization, but that is highly unlikely, since competition will force efficiencies up and prices down. Administrative fees for a broad based index fund, an intelligent choice for a private pension fund like a 401(k), are as low as zero percent today. Sweden has private pension funds - there is no reason America does not.

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