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Categories - Shopping - Free Online Business Help - Telecommunications Services Articles: Government - Enabling Growth By Web Smith When you are raising a child, you learn that the best way to correct bad behavior is to provide alternatives that lead your child away from things that are self destructive and towards things that are beneficial to their development. Punishment is a form of oppression that children resent and don’t permanently respond to and they often tire of external rewards. The reward has to come from the inside. Depriving a child with a weight problem of food and then rewarding them with an ice cream cone when they lose a few pounds is contradictive and does not eliminate the problem. The accomplishment that a child feels through sports or some other physical activity that works off the weight is much more effective, beneficial, and permanent. We can apply this lesson to many of the things that are ailing our country today. Our government is currently intent on accomplishing needed changes through borrowing, taxing and spending when these solutions will only add to the problem or provide temporary illusions of success that will evaporate from inflation and debt servicing. Problems are eliminated with cash and the economy needs permanent cash circulating as opposed to the temporary cash that debt brings, let alone the cash that is removed through taxation.
Cap and trade is a tax. Taxes remove needed capital from the economy by limiting the population's buying power and the population generates over 70% of the economy. Consumers buy and pay for the production of every product made. With cap and trade, companies will pay for carbon credits and pass the cost on to the consumer. The cost of utilities will almost double and the price of gasoline and food will increase significantly. At the lower end of the social spectrum, more people living on welfair and the eldery existing on their social security check will have their utilities shut off and be able to buy less food while dying from the cold in the winter and the heat in the summer. The middle class will have its purchasing power reduced, companies will see their revenues decline, and more jobs will be lost as the percentage of money flowing towards the government increases instead of staying in the economy to generate commerce. It will be like dropping an atom bomb on the economy at the worst possible time and nothing will be done to clean up the environment as polluters simply pass their cost of polluting on to you.
Instead of the cap and trade that the government is struggling to impose in order to clean up the environment, it should be promoting growth industries that are focused on renewable energy. The promotion of wind and solar energy, electric and hydrogen powered cars, and other green energy industries will create jobs and stimulate many other industries creating demand in steel, communications, heavy equipment, building, and others. As opposed to more borrowing and spending, the government can promote green industries by simply issuing tax credits. As the new growth inustries begin to boom, private inverstment will be attracted providing needed growth capital. If the government really wants to promote sustainable groth in the economy, it will not borrow to replace the revenue lost from the tax credits because borrowed money has to be payed back at some point and as the loan is serviced, it will dampen growth.
The lost tax revenue could be easily replaced by eliminating unneeded government spending in areas where growth is not possibel. There is no pent up demand for broadband services in the rural telecommunications industry today. This is mostly due to the economy and partly due to the more pragmatic approach to life that rural dwellers tend to take. Broadband is available in 95% of rural areas already and people just are not buying it. There is an overabundance of stock on the shelves being maintained and paid for with no one to sell it to. The government’s attempt to create demand by borrowing money and imposing it on an industry that doesn’t need it can only be destructive. If the money does end up in the industry, it will create another bubble that will pop as soon as the money is used up. Demand in this industry will only be created by economic growth when the population once again has cash as a result of growth industries striving. This industry cannot create demand for its self.
5% of the banks made bad loans and raised the interest rates on these loans to the point where the borrowers could not pay them insuring that the loans are worthless. They compounded their problems by gambling with private contracts, derivatives, saying that the worthless assets were, somehow worth something. To further compound their problems, the banks preyed on their source of well being by offering them credit cards at 0% interest and then raising the interest rate on outstanding balances to up to 30% making sure that neither the balances or even the payments could be made. The government actually, against the will of 90% of the people, has rewarded this bad behavior by loaning the banks more money to mismanage and is now proposing to take these bad assets off of the hands of the banks. The banks have since learned that they now have no one to loan money to so they are hording the money or figuring out how to distribute it amongst their owners. In the process, the one resource that the banks can look to for recovery, the population is being burdened by more debt and destroyed by inflation. Not only did 5% of the banks misbehave, their customers misbehaved with them by taking on more than they could handle. Congress contributed to this problem by making it harder for the population to declare bankruptcy.
Again, the solution is to allow the offending population to enter bankruptcy with their ability to obtain credit limited while enjoying the fruits of growth and becoming accustomed to paying for what they consume. The banks will also benefit as more deposits are made and a more credit worthy population emerges that limits its borrowing to major purchases. It is must less expensive and more profitable for the banks to service fewer large loans than millions of smaller ones.
There is enough disagreement about global warming to generate a feeling of oppression among the population and support for global warming will decrease as utility bill doubles and the price of gas is significantly increased. There is no question that we need to stop polluting and clean up our environment. Another problem that everyone can see and no one can argue with is that we have an ocean of plastic twice the size of France floating around in the Pacific. Disgarded plastic product are also rendering the land that we use for garbage disposal useless for 100s of years. Again, the way to attack this problem is to promote growth instead of oppressing it with taxes on plastic products.
Oppression is not a way to change behavior. The situation will not improve until we lead the offenders to more mutually beneficial behavior. The government has to change its mode of operation from that of a disciplinarian to one that enables growth. It can do this simply by reducing taxes and offering tax credits to growth industries.
Web Smith is a former telecom and computer industry executive who has founded or been a founder of seven technology companies. He is currently a copywriter, business, sales and marketing consultant, and website owner. You can access some of his work here.
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