The Idiots Guide to Repairing an Economy

Too bad Thomas Friedman has stopped writing about the economy. We could use a good laugh this morning. Chilly winds are blowing across this part of France. The children have all gone. The sun is low and cool. It’s quiet here, and a bit sad.

But Friedman has moved on to giving bad advice on other subjects.

So, this morning we turn to Bob Burnett, “retired Silicon Valley executive.” Mr. Burnett is writing on a site that we believe is part of The Huffington Post. His photo shows a man who seems affable. At least, he’s smiling. The edges of his mouth curl up, revealing the incipient insanity of the self-assured. He knows what he knows; too bad that what he knows isn’t so.

We smiled too when we read his explanation for how come the US lacks jobs. He blames “conservative economic ideology” that took hold under the Reagan administration.

What? Where has this fellow been? It was under the Reagan administration that the last trace of conservative economic ideology disappeared. Reagan supposedly proved that “deficits don’t matter” and that we can always “grow our way out of debt.” The Republicans became activists – trying to rearrange the world to suit their imperial ambitions…and pandering to the voters with lower taxes and unfunded giveaway programs. “No voter left behind” was practically their motto. What’s conservative about that?

American economic history according to Burnett:

What followed was a thirty-year period where America’s working families were abandoned in favor of the rich. Inequality rose as middle class income and wealth declined. As corporate power increased, unions were systematically undermined. As CEO salaries soared, fewer families earned living wages.

Poor Burnett misses the point of the last 30 years of US economic history. He thinks middle class families declined because they were “abandoned,” as if they were pets in need of constant care and attention.

(What really happened, in less than 25 words, was that US society became debt-soaked and zombified…thanks to the joint efforts of Fate, History, Economic Cycles, the Fed, Economists and Both Political Parties. More…eventually….)

The man has no idea how an economy functions. This you can tell by reading his suggestions to the Obama administration. Everybody without a clue has recommendations. Burnett is no exception.

America has economic cancer and radical surgery is required. First, there has to be a massive redistribution of income by increasing taxes on both the wealthy and financial institutions (particularly those that were at the heart of 2008’s economic meltdown).

Second, there has to be a second stimulus package that not only supports America’s teachers and public safety workers but also strengthens the US infrastructure, in general. It’s not logical to propose that American businesses provide better jobs without also ensuring that our schools produce workers who can meet employers’ needs.

Third, the Federal government has to be involved in economic policy. The last thirty years has demonstrated that it’s insane to assume the free market will do this. What we’ve learned is that the market follows the path of least resistance and dictates economic policy solely based on greed. Creating wealth for a handful of CEOs isn’t consistent with the national interest. What are needed now are economic policies that produce decent jobs for average Americans.

The Federal government has to intervene and create the jobs that the greedy, shortsighted private sector hasn’t provided.

What a dimwit. Who does he think was making economic policy during the bubble years? What does he think the schools were doing? What does he think the regulators were up to?

Rob the rich to give to the poor? Hey, that should work!

He should run for Congress. Maybe he is running for Congress. It would prove another of our Daily Reckoning Dicta: Anyone who wants to be in Congress is not someone you’d want in Congress.


Bill Bonner

for The Daily Reckoning