We are living in a puzzle of paradox. On the one hand we are staring at the single light of an oncoming train barreling down the tracks of a collapsed economy. On the other we are giddy with optimism that President Obama’s leadership will usher in a new era of inventive solutions that will bind us together in a new future. As recent national New York Times/CBS News Poll declares, 80% of Americans believe Barack Obama will lead us to responsible prosperity and world peace. Wow. That’s hope on steroids. But just below our optimism are nagging questions.
We are all upset about bailouts without accountability. Banks who seem to have no trouble tracking every transaction on my debit card suddenly can’t tell us where they stashed or how they used $350 billion. It’s all co-mingled with all the rest of their assets in a giant money bin they tell us. Right.
Next we gulp when we’re told that the government has to spend a trillion dollars to stimulate our economy. Hey, they are going to build roads and bridges and get us back working on high paying union jobs. Yea…that’s good I guess, but how come every time I drive down the freeway by a construction zone all I see are lots of people standing around and a few people working? And why do these projects take so long to complete?
It seems to me that flushing billions down the sewer of our giant broken banks without any accountability and huge public works projects is like treating cancer with aspirin; it may be necessary, but it’s not a cure. The problems our bombed out economy is dealing with are far deeper than bank balance sheets and a new freeway interchange.
One massive game-changing problem is that globalism and technology has stopped our incomes from growing. Don’t get me wrong. Global trade and technology aren’t bad in and of themselves. But when they are primarily used as tools to increase the wealth of a few, their toxic side effects are potent. A global workforce has radically swelled and depressed wage growth in developed nations. This combined with automation and software has rendered lots of well-trained and educated people’s skills irrelevant. A recent side effect to no wage gain is the decline of consumption so our markets can no longer sustain the rapid industrialization and output growth of Asia and Eastern Europe. Of course there is a silver lining to the collapse of the old economy. We’ve been way too wasteful. We bought stuff, lots of stuff, we didn’t need, and we gravely abused our planet. It was all unsustainable. But since the old economy paid our bills, its collapse comes with a raging river of human suffering.
So here comes the cavalry. The bugle blows and Obama rides to our rescue. Well maybe. I hope so. He’s intelligent, reasonable and inspiring. But is government the right tool to fix what ails us? Our own government’s Office of Management and Budget (OMB) recently estimated that one-third of our annual $3 trillion in taxes is wasted. We receive no value for it. That’s just the way it is. A trillion gone. It’s true that some things government does best. But mostly what I want government to do is make and enforce laws that promote fairness and justice. I want them to keep the playing field as level as possible. I want them to prevent corruption. I want them to take the “special” out of special interests.
But one thing they are not good at is valued job creation. The fundamental problem of government employment and government contracting for services is non-existent accountability. When there are no consequences for under performance, underperformance is usually what we get way too much of. Helping big business is not much better. For the past 30 years they’ve been in the business of cutting jobs, not creating them. For instance, General Motors has shrunk its global workforce by 75% over the past three decades as its market share shrank.
So what’s the best thing we can do? Let’s try something completely simple and completely radical. Before I propose it let me be clear there are lots and lots of details to work out. So I need your help with creative solutions to all the ways this could fail. But just hear me out.
Our core economic challenge we have is to create reasonable paying, needed jobs. Jobs that create value. Jobs that have performance accountability. Jobs that build a sustainable future. Jobs that make our nation stronger and benefit the world. And we need to create these jobs not through a government bureaucracy but through ingenuity of millions of citizen entrepreneurs and professionals working with local, national, and global business. Here’s how.
Our federal government can issue a tax credit equal to one percent of gross sales of all businesses with a business license. So a $1 billion business would get a $10 million reduction on their taxes that they could carry forward if they had no profits. A small business with $250,000 in sales would get a $2,500 credit. However, this credit would only be valid if the money was directly invested in a new business that made money by benefiting humanity or healing the environment. New businesses would qualify by meeting well-established Socially Responsible Investing Standards (SRI). (This means no investments in cigarettes, vices, weapons or heavy polluters.) There are also many standards to judge socially responsible enterprise used in social venture capital competitions held throughout the world. A simple annual audit form would have to be submitted by the new business to qualify for further investment in future years.
Based on our total GDP this ought to create about $100 billion in private capital to go in a new company and job creation for sustainable solutions to our most urgent problems. This money would not go through the hands of bureaucrats but would be our money directly invested by us. If we maintained this for five years it would be close to $500 billion invested in our new future. My view is this would stimulate innovation, job creation, and sustainable business thinking faster and more broadly than anything else. Of course not every business would work. But the efficiency of the market place would reward good ideas and competence and bureaucratic waste would be minimized.
Oh, one last thing. We’d all be investors. You see we, the taxpayers, would own 10% of any new business funded by our tax credits. Who knows, our investment in the future may even help pay off our national debt. No, this won’t solve all our problems…but it would spur new business formation in the businesses we need for our future right now.
So, what do you think? How would you improve it? If we can create a workable program, I am off to Washington. Obama, you better buckle up.