ForexTV | October 7 2011 3:28 EDT
ForexTV.com (New York) by Timothy Kelly
The following is a roadmap for a new economic and social plan for the renewal of America presented to ForexTV by Dr. Howard Phillips Dutemple:
HOWARD P. DUTEMPLE September 27th, 2011
VIABLE EMPLOYMENT AND INDUSTRIALIZATION INCENTIVES
The President and the fractious Congress are piddling around with a timid mix of minor tax cuts, marginal job programs, green subsidies, extended unemployment benefits and counter-balancing tax increases, combined with tardy Keynesian pump priming. It is all too late, too little and misdirected. Partisan politics disrupt Washington and stall any constructive action. Official unemployment remains over 9 percent; if hidden unemployment is included, the true figure is over 16 percent. Worse, it is becoming a long-term, secular nightmare. One seventh of our population to all intents and purposes is outside the Economy!
Measures could be taken promptly which would have an immediate and positive effect upon the Economy and the Jobs problem. They don't require long lead times, studies, nor huge, new Government Agencies; only initiative and courage.
I. U.S. Corporations have hundreds of billions of foreign earnings held abroad. If they bring them home, the IRS takes a second, huge bite in corporate income tax. They stay abroad — invested in other economies or held in foreign banks. Only the United States has this counter-productive, double corporate tax policy!
The solution is simple; an Executive Decision, approved immediately by Congress. The funds can be brought home in the next six months, free of all taxes, investigations and penalties, provided that:
II. The Domestic Marshall Plan
We rebuilt Europe, much of Asia and Latin America in the 1946-1960 Era under the imaginative Marshall Plan and subsequent U.S. Aid Programs. Factories, railroads, ports, mines, ships, refineries, etc. were built on the rubble. We endowed our defeated enemies with the most modern, efficient industrial structure — 1950/60 models to compete with our own 1910 relics. We made the German and Japanese miracles!
If we could do it for Germany, Italy, Japan and Brazil (and even African nations) — why can't we devise and implement our own Domestic Marshall Plan? The Rust Belt of Ohio, Pennsylvania and Michigan can be rebuilt, if Hamburg, Dresden and Tokyo could be!
The repatriated Corporate Funds would be a good start for our Marshall Plan. Government financing for essential infrastructure: roads, bridges, railroads, ports, etc, would be the most efficient use of directed, pump priming. Tie it in directly with new, private industrial projects.
Optimism, belief and faith are important weapons to reverse the Recession atmosphere. Repatriation of capital and rapid, massive investments under our Domestic Marshall Plan would have immediate, positive effects.
There are requirements for the success of our Marshall Plan:
• The Unions must cooperate and not condemn the new plants to a slow death by excessive wages and entitlements. The plants must have the right to choose location and the Right to Hire;
• The myriad Government and Environmental regulations at Federal, State, Municipal and Garden Club levels must be eliminated. Cut them mercilessly. No Green vetoes.
• There should be a General Plan and Overall Policy Objective — but no details, Super Agency approvals, inspections, etc. Indicate sources of capital and encourage, but let the Entrepreneurs make decisions. No Government role in industry.
• The United States still has the ore, coal, limestone and gas to produce basic steels and downstream products. Railroads, roads, ports, power plants, vessels etc., would have to be rebuilt and/or modernized. Would the new basic industries and downstream plants be able to compete with foreign suppliers for our domestic and overseas markets? Would we be at a comparative disadvantage, condemned to lose out in what is euphemistically called the "World Free Market"? Would we face fatal dumping and other unfair competition?
To answer these questions we must join the real world of international trade. There are no true free trade principles for China, Russia, Japan, Brazil and dozens of other "controlled economies-. They use National Economic Plans, Quotas, Subsidies, Exchange Controls, etc., to protect their industries and trade. They piously invoke free trade when it benefits them. These Nations all practice a 21q Century, selective, version of Mercantilism. Only the United States plays the innocent, virtuous idiot, upholding Adam Smith and Riccardo at all costs. We trade with these "partners" with one hand tied behind our backs, to great cost. Then our plants migrate abroad, in a vicious cycle.
When such trading partners build up new industries, they protect them with a barrage of self-serving euphemisms: infant industries, laws of similars, essential industry, defense, etc. These are all de facto tariffs, embargos, or quotas on imports, i.e. restrictions of free trade. For example, since the 1950's our friendly neighbor Brazil has had an official "Lei dos Similares". It baldly states that until domestic production of certain industries is fully consumed, there can be no imports. There are several variations; President Roussef invoked one a few weeks ago.
We should treat "Free Trade" with similar benign neglect for our Domestic Marshall Plan "Infant Industries", employing all the familiar arguments regularly put forward by our faithful trading partners. Never be obvious or stonewall; invoke social welfare, bring in our unions and quote them back their own specious pleas. This of course implies that we have State Department spokespersons who have guts and who have studied economic history.
Nowhere is it stated in the Constitution that the United States must be the eternal patsy of world trade! If Entrepreneurs, Government, Unions, Regulators and Bankers cooperate, and our Trade Representatives play hardball, we could rejuvenate the Rust Belt with 2012-2016 technology. These measures are, of course, first stage palliatives, which could help to resolve, or stem, the immediate job crisis. We will continue to face the long-term, built-in roadblocks in the economy and our national psyche:
We must face up to the unpleasant fact that we are no longer Number One in the world. Recent studies show that we are fifth in productivity and twentieth in quality of education. We can no longer afford to be the savior of every broken economy or the world's policeman. We are not the fortunate elite, who can be above mundane considerations. The truth is that we will have to fight with every weapon we have to survive. We no longer have the luxury to allow other nations to outthink, outwork and out plan us. We are in a war for our economic existence and our cherished way of life. Have the guts to fight for them!
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