One should have no illusions about the present economy. We are in deep trouble. It is not just what we are doing now, but rather the accumulation of of things done over the past five or six decades. There is no quick fix. Because effects of things done today tend not to be noticeable for a decade or more, no conceivable remedy will be apparent for such times ... and ... the failure of a remedy will also not be noticeable for the same amount of time ... and ... a thousand other causes of success or failure would be pointed to which would further serve to obfuscate any understanding of what is going on. With that in mind, we must begin with an understanding of the major components which are now wrecking us.
These are ...
1) Capitalism itself ... the basic nature of which is not properly understood
The free market is a machine. It is not immoral ... nor is it moral. It has nothing to do with morality. It is "amoral". Certainly, those individuals who operate the free market can be moral or immoral themselves but the device as a whole has no such characteristic. It is simply a mechanism for providing people with whatever they want, however they want it, whenever they want it ... provided that ... they can pay for it ... and ... it is available. Thus, if someone wants a nuclear device to blow up a city, the free market will provide it. If you want to drown your consciousness with cocaine, the free market will provide that as well. The free market will provide the means of its own destruction ... if ... that's what most people want and if ... they can outbid those who want to live.
Who stops the downward spiral into oblivion? You do ... through government. Unfortunately, that entity will interfere, corrupt and screw up the machine at every opportunity as well, either by conscious intent or by simple bungling. I should think that everyone would know the foregoing but apparently they do not, preferring to think that some malevolent (or benevolent) creature (or conspiracy) is supporting them or "destroying" them. In any case, most believe it to be out of their control. And it is out of their control ... almost. We have only the smallest influence over the outcome of events by means of our daily choices. What really prevents good solutions is a lack of understanding about what is really happening and no firm commitment to even what little understanding we actually do possess. Then, when confronted with an "expert's" analysis we are paralyzed and he gets his way ... and we are expertly directed down the wrong path (whether through ignorance or malevolence makes no difference).
The free market is about being able to do as you please. We want to restrict it to doing whatsoever you please which is consistent with the maintenance and furtherance of civilization. How one would define those terms and bring them to fruition is the bone of contention.
The solution is to adopt the form of government I have designed on this site. A completely bottom up government where the leaders of civilization serve only at the discretion of those they provisionally rule.
Isn't this what America already is?
No, it is not. What we have is an imitation of a bottom up hierarchy wherein we are given a choice between cow dung and horse manure and our choice is hailed as the "will of the people". Take a hard look at my form of government and understand the difference. If you fail there, you are removed immediately ... not in four years ... and ... our choices of personnel would be limitless rather than bounded by fame, fortune, notoriety, or acting/sports ability.
Government Monetary Policy
Up till now the economic policy of the federal government has been one of modest inflation. Certainly it has gotten out of hand now and then ... but that is the policy ... not "zero" inflation ... not hyper-inflation ... just modest inflation (like 2-4%).
There is this terrible problem with money. It is "How much do we need?". How much do we need today and tomorrow and the next day? How much money should there be per person in the United States? Should we define it as a constant, i.e. say, $20,000 per person in circulation? What then happens when we buy goods from another country and those people (who value the American dollar for its stability) put it in a mattress? Right, the $20,000 average is lessened and the result is "deflation" (less money chasing the same amount of goods so the price drops, so do your wages and a host of other problems). But, as those prices drop, American goods appear more affordable to those who kept the dollars and ... back come the dollars which serves to restore the former "trade imbalance" and falling wages.
Suppose that the government simply puts more money into circulation to keep wages and prices constant ... what happens? Well, the foreigners tend to keep their money in the mattress because it still looks like a constant store of value. But they are deceiving themselves because if they all tried to buy things American as before their dollar input would cause a rise in prices (inflation) ... followed by a rise in wages. Other foreigners would no longer see the American dollar as a great store of value and would attempt to "dump" their money wherever possible to forestall any further inflationary loss.
How about increasing the amount of money in circulation just a little more so that there is a just a "modest" inflationary rate? This will cause a rise in prices and wages over time and you will tend to spend your money (or invest it in something that has value which rises with inflation - like a house or gold) as fast as you get it ... so as not to lose any purchasing power. And ... a real quick 'fix' ... a shot of heroin (I mean ... uh, money) like the Bush $500 giveaway (gubment cheez) ... will cause you to feel all giddy (high) and go out an spend it on something right away ... giving the economy a quick appearance of health. The foreigners with their money in their mattresses keep it there because their own currency is worth much, much less than ours even with the modest inflation. They suck it up as fast as we can shill it out.
This is what your government has decided is the best course to take in the long run, i.e. forever. You are being swindled and don't even know it. The bankers know it, Greenspan knows it and so do the representatives you have chosen ... but to them "long term" is the length of their stay in congress. The professional economists are fully aware of this folly but can formulate no other policy. To do so would require them to "balance the budget" every year the means to which they haven't a clue.
Do you see why our jobs are going overseas? They are willing to do anything for less American money than we are. To reverse the trend one would have to temporarily "stimulate" (i.e. swindle) in the opposite direction ... deflation. Deflating the economy would serve to bring down prices/wages and open the foreigners mattresses thereby increasing demand for American goods and increasing American jobs. This is politically unpalatable because the positive effects won't show up right away. First, it will look bad on your paycheck. You will never see deliberate deflation ... just inflation because it looks good right away and tomorrow they can blame it on somebody or something else.
I don't really recommend deflation ... I just want an end to the swindle, i.e. a balanced budget. And I have shown elsewhere how to put the economy in the hands of the people, as well as balance the budget by dealing with percentages rather than amounts.
I'll hold my breath ;o)
Although capitalism has many honest businessmen working within its confines, they may not be in the majority (perhaps they never are). Principally, there are three types of rascals at work in a long term failing economy like that of the United States. They are ...
1) The Sharks
Sharks are those captains of industry who have no interest in the business they work for. Their interest is purely political, i.e. it is about power. Wheeling and dealing for ever greater riches and responsibilities carries them to the top of the heap. To be the big dog is the goal. Making a better product or service is not part of their universe. The opposite of the shark I suppose would be something like a whale. Some people who were once whales are now sharks ... like Steve Case or maybe even the big cahuna Mr. Bill himself.
Cocksuckers also have no interest in the business they are in, but differ from the shark in that they seek only to bask in his favor. They get their sense of self-worth by being his sycophants.
At the bottom of the food chain are the chickens who run around doing anything that seems to please the cocksuckers and which in turn gets them a paycheck. And that is their only interest ... a paycheck.
In a decaying economy the above is the norm while in a healthy economy, it is the exception and such people serve only to weed out the ineffectual competition. In our economy they are becoming the majority. When they are completely in command ... that's the end of your civilization as you know it. All progress will come to a halt.
It is important to note that no individual is any one of these all the time and any decent business person may transition into one of the above ... though it is not likely that one so transformed will ever return to what he once was. It is a one way decent.
These people are the witless whores of capitalism, planning only up to the "next deal", oblivious to the long term damage they may cause. So if they can turn a buck by tranfering your job to some backward country where sweatshops are the norm, they will do so ... and if they can strip the surface off the land to get to the raw materials under it, they will do so but they won't restore what they've destroyed ... that's not their nature.
My recommendation here is the nationalization of the foremost corporation in every major field of economic activity.
In this manner ...
Let us suppose that General Motors is selected for nationalization. The shareholders would be given the full value of their shares from a day prior to the announcement that the company was to be nationalized. This would prevent chaos in the marketplace. The company would not then be administered by politicians because this would be to replace the above economic sharks, cocksuckers and chickens with political sharks, cocksuckers and chickens and nothing would be gained. Rather, the company would be given over to employee control. That is, they would make all the business decisions in a bottom up hierarchy as I have described in Proper Government. This would result in the most responsible business possible and presumably one which is intensely competitive since the profit derived would be distributed amongst the employees rather than among shareholders.
No other companies would be nationalized in the auto industry. Those which remained privately owned would have to compete with the now nationalized, employee run company which would then act as the standard for that genre. The inability of the sharks, cocksuckers and chickens to compete would serve to gradually remove them from those privately owned companies thus insuring the health of the general economy.
We live in an unusual time. The earth is not in cultural equilibrium. While one man busies himself with computer programming, another is turning over rocks in a stream bed to get crayfish to eat ... raw ... and not by choice but of necessity. Some of us live in the 21st century while others are just coming out of the neolithic era. In time, the flow of knowledge will equalize and the sort of strife we now see will disappear. Right now we are stuck with it ... and will be for at least a few more centuries (but not millenia).
Such imbalances allow people to be willing to work for a few nickels a day doing things that we as Americans would expect to receive one to two hundred dollars per day. Hence, here is another reason for our jobs leaving the country and it is not generated by anyone's debilitating greed.
Since we cannot advance the world in as short a time as we might like, it is incumbent upon us not to prevent these lesser cultures from joining the march into an enlightened future. Rather, we must be willing to give up jobs they are willing to do while we take up those jobs next in line for us which they are not yet able to do. These are the technical jobs which require a higher grade of intelligence acquired by being born into and developing within an advanced civilization.
If we let them build the cars and make the steel, etc. ... we must do the designing, research and development of new technologies. We cannot be content to rest on our laurels and become a nation of literate "burger flippers".
Hence, my recommendation here is to advance boldly into realms "where no man has gone before". We must venture into space, to the bottoms of the oceans, into the depths of computer programming, into the inner workings of the cell to understand its functions, etc. In other words we are to become of nation of scientists and intellectuals in the most rational sense possible.
Only then do we fulfill our moral responsibility as the world's foremost nation.