Massive deficit spending on a level not contemplated since World War II is not the only policy option available for addressing the recession. Some worthy ideas ripped from today’s op-ed pages:
Clive Crook for free trade in The Financial Times:
Opinion in the next Congress, with its enlarged Democratic majorities, would have shifted to a more hostile position on trade even if the economy had been healthy – which it is not. With unemployment rising, wages under pressure and no firm countervailing push from the administration, protecting jobs (or claiming to, at any rate) is likely to be a higher priority than liberal trade. The prospects for widening the opportunities for international commerce look grim.
Since this is a global recession, the danger of an upsurge in protectionist sentiment is not confined to the US. The consequences of that would be all the more threatening against a background of already shrinking output and trade flows. American leadership on the issue has never been more important.
Michael Malone for leaner regulations in The Wall Street Journal:
From the beginning of this decade, the process of new company creation has been under assault by legislators and regulators. They treat it as if it is a natural phenomenon that can be manipulated and exploited, rather than the fragile creation of several generations of hard work, risk-taking and inventiveness. In the name of “fairness,” preventing future Enrons, and increased oversight, Congress, the SEC and the Financial Accounting Standards Board (FASB) have piled burdens onto the economy that put entrepreneurship at risk.
The new laws and regulations have neither prevented frauds nor instituted fairness. But they have managed to kill the creation of new public companies in the U.S., cripple the venture capital business, and damage entrepreneurship. According to the National Venture Capital Association, in all of 2008 there have been just six companies that have gone public. Compare that with 269 IPOs in 1999, 272 in 1996, and 365 in 1986.
FedEx president Frederick Smith for competitive corporate tax rates in The Financial Times:
Our tax system is particularly onerous for asset-intensive, industrial businesses such as manufacturers and transport companies. For example, Caterpillar, Boeing, FedEx, commercial airlines and carmakers produce goods and services and provide jobs for millions. But to maintain or increase jobs and compete globally, these companies must be able earn an acceptable return on capital expenditure.
How can we make US companies more competitive and increase their ability to offer good jobs? Two things: accelerate the expensing of capital investment; and reduce the corporate income tax rate.