The Correct Direction

I fear that Greg Mankiw does not know the condition of the human soul. His Presidential Address to the nation will never be delivered. No Generation will ever accept the debt servitude of a previous Generation. The United States will default on its accumulated debt, the Question being only When. Politicians may call it by various Names in order to hide admittance of the real intent, and there may be a number of methods to achieve that end; but the end-result will be the same. Will it destroy human civilization?–No! Will it collapse the World economy?–Possibly! But there will be Recovery. People may shift around for a few years until a new economy is formed, still, there will be a new one develop. Will there be intense hardship for People?–of course! The worst possibility though, will be that the United States will wind up a Third World nation.

I agree with Paul Krugman in his list of Republican economic theories which are illusionary. I do not believe in his liquidity trap, a fancy name for stating that it is simply Cash which has to be thrown at the Problem. I, as a matter of fact, think that there is an over-surplus of Cash in the economy, and that the Fed is doing exactly the Wrong thing. My Solution for the weak economic performance defies all current economic theories, and advocate a vastly increased amount of Tax Collections garnered. I have long called for a major overhaul of the Tax Code, and I estimate that the actual Profitability of Business enterprise must be reduced by around 8% through Taxation; this means that if the Business makes a 12% Profit, We take 8% as Tax.

I first must say that such tax pressure is not unrealistic, as Business have been making at least this level of Profitability to be paying out the Bonuses and Salaries to Management–totally over-priced when they cannot seem to pay high Dividends to Stockholders. The second major importance to be made is that the higher collected Taxes will force Management to achieve greater efficiency in business practice, and initiate tri-level development plans to maintain continuous Profitability; the later meaning they have to search for opportunity in Short-Term, Intermediate Term, and Long-Term investment to keep from being replaced. That means they will have to work harder and be more innovative. It also means that major Profits cannot be invested in Treasuries for protection against adversity, as higher taxation of enterprise Profits will demand a higher rate of Return than currently being generated by Government non-taxables. The increased Tax revenues will nullify much of Greg’s Presidential Address, and the actual Reality states that Taxes are not a nullification of innovation, but actually a Spur; everyone needing to produce higher Volumes at lower Cost to Consumers to get both Sales from which Profits are taken, and cheaper Production and Distribution Costs. lgl