Sunday, January 03, 2010

Lost Decade

Much comment is being generated by this article by Neil Irwin, in which he documents how the past decade has been a “lost decade” for the American economy. For the past 70 years the lowest net job creation rate for a decade was 20%. For this decade it has been 0%. Truly abysmal. But, as I’ve been going on, it seems hardly surprising. We, as a nation, decided to follow the wisdom of conservatives and dedicated our national wealth towards maintaining the status of the idle rich. There is no sound reason in economics, philosophy, ethics or religion to be so dedicated to sacrificing the welfare of the general population to provide handouts to the idle rich, yet that is beyond doubt what the past decade has been about.

The solution to the problem is really quite simple. The value of many of the services provided by government is quite large. Enormous, in fact. We need to either set the price we charge high, and spend the money collected on things of general value, or we need to set the price very high and discourage the use of these services.

We cannot afford to continue as we have been, but what we cannot afford to do, is give away our most valuable services to the wealthiest among us. The services of which I speak are, of course,

  • Incorporation
  • Copyright protection
  • Security
  • Guaranteed sole use of the radio spectrum
  • Patents and trademarks
  • etc.

Our prices are too low, we need to raise them. In fact the history of the past several decades is clear. We lowered our prices in the ‘80s and the budget went all out of balance, we raised our prices again in the ‘90s and the budget went back into balance, then we lowered them again in the 00’s and out of balance again.

Also note that raising our prices in the ‘90s did not destroy the economy, rather the nation enjoyed an economic boom, which furthermore left behind a great many extremely valuable new forms of commerce. We’ve done the experiment, the results are clear, we need to raise our prices.

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