Ideas for real economic change

By DAVID MOON, Moon Capital Management, LLC
August 11, 2013

After reviewing the minimal available details of the middle-class jobs plan introduced by President Obama in Chattanooga, I realized that the details are irrelevant. Like most speeches by most presidents, the plan is political theatrics, not an economic presentation.

For years I've written that there are only a few things that federal governments choose to do that effect the long-term strength or weakness of an economy. Presidents get too much credit or blame for changes in GDP.

But there are things that the federal government could do to create real change in the economy. Here are some.

The US government should aggressively protect the intellectual property rights of its citizens – both inside and outside of the country. The protection of individual rights is the most important function of government.

Politicians should quit fighting about tax rates. The real problem with the tax code is the calculation of income. Tax simplification isn’t about flat tax rates, it’s about simpler code.

However, the income of all business activities should be taxed at the same rate, whether the business is a multi-billion dollar Fortune 500 company or a sole proprietorship.

The tax on long-term capital gains should be eliminated.

The President and all members of Congress should be required to prepare their own tax returns.

Standardize depreciation and amortization methods across industries.

Quadruple the budget of the Securities and Exchange Commission. Free markets require equal and open access to information. Find the people who intentionally restrict access to information and send them to jail, even if they work for big firms.

All earmarked industry-specific tax deductions and outright subsidies should be eliminated. This includes both the oil and farming industries.

All Congressmen and executive branch employees should be required to don an ill-fitting swimsuit and spend a day at Splash Country each summer. That's where America is.

We should spend as much money on the top ten percent of our middle and high school students as we do on the bottom ten percent. Those talented kids will drive the economy in the next 50 years.

The Federal Reserve should be eliminated. The country ran for 137 years before this creature from Jekyll Island was created. The free market does a reasonably effective job of determining most interest rates.

The heads of all regulatory agencies should be veterans from the industry they are regulating. And every regulatory agency should have an independent internal inspector, to watch the watchers.

The cost of all government programs should be expressed in terms of both the amount of borrowed and “earned” (tax revenue) needed to pay for it.

And finally, the President should serve a single, six-year term. We should pay him a couple of million dollars a year and make him live in whatever house he wants to buy. If somebody shoots a President, the Vice-President moves up, just like the Constitution says. If we take away Air Force One and some of the trappings of power we might get less theatrical leadership.

David Moon is president of Moon Capital Management, a Knoxville-based investment management firm. This article originally appeared in the News Sentinel (Knoxville, TN).

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