Eight steps to rebuild the US economy and beat China

The US economy is growing anemically, the unemployment rate is 10% (the highest since 1983), China’s economy is growing rapidly, and many journalists are already heralding the end of America’s time as the world’s hegemon and the beginning of the Chinese era.

But the US economy can be reinvigorated and prodded to grow rapidly, and can beat the Chinese economy, if eight reforms suggested by the Futurist (a conservative Indian-American blogger) are implemented. He suggests the following six reforms of the US government:

1) Immigration law reform. Currently, the immigration law of the United States is the opposite of what it should be. It makes it difficult for highly-educated people to immigrate to the US (let alone become its citizens), but lets in huge numbers of unskilled immigrants, via the unguarded border (illegal immigrants) and through its Ports of Entry under the current law, which prioritizes family members (including parents and siblings of US citizens) over highly-skilled professionals. Says the Futurist:

“US immigration policy, at present, is exactly the opposite of what it should be.  Presently, highly skilled immigrants who seek to follow the law are put through an excruciating process lasting 7-12 years, fraught with restrictions on the changing of employers and the spouse’s right to work.  At the same time, unskilled immigrants, many with criminal tendencies, have an incentive to enter the US illegally and consume services paid for by the US taxpayer.  US prisons are filled with a disproportionate number of unskilled illegal immigrants, while the next Andy Grove, Vinod Khosla, Elon Musk, Pierre Omidyar, and Sergey Brin are faced with a tortuous, interminable ordeal that may lead them to conclude that coming to America is not as worthwhile as it was a generation ago. 

If a corporation or a university can choose to accept only the best that it can get, why can’t America do the same?  I propose that the US allow quick and unlimited immigration for anyone with a bachelor’s degree from a recognized university in their country (a list of institutions by country which the US DHS maintains on a website).  This will create an influx of about 1,000,000 young, educated immigrants each year into the US, which is still lower than the number of unskilled immigrants, legal plus illegal, entering each year.  It takes $200,000 to educate a child from age 4 all the way through completion of a bachelor’s degree, so such an influx would effectively create a knowledge import of $200 Billion into the US each year.  Only 30% of US citizens have a bachelor’s degree, so these immigrants would increase the average educational level and median income of the country.  Simultaneously, unskilled immigration, legal and certainly illegal, should be halted/prevented until further notice. 

Every problem, from social security shortfalls to a surplus of unsold homes and cars to a lack of engineering and science talent in the US, will be solved.  Healthcare cost increases would be contained as the supply of doctors, nurses, and physiotherapists rises.  Every distortion caused by an aging population and the retirement of baby boomers will be offset.  Political, economic, and even social/familial ties with India and China will strengthen, as most of these skilled immigrants will be from these two countries.”

Australia and Canada already operate such systems, as do Ireland and the UK (towards immigrants from outside the EU). As a result, Canada and Australia are not facing invasions by illegal immigrants, are not burdened with millions of lazy, welfare-roll-taking low-skilled immigrants, and have integrated societies even though 27% of Australia’s residents were born outside Australia.

2) Tax Reform. Says the Futurist:

“Time is money, and moreso than ever in a prosperous society.  Before even discussing the reduction or increase in tax rates, there should first be a reduction in tax complexity.  If a family earning $100,000 is currently required to pay $20,000 in income taxes to the Federal Government, so be it.  But at least let the process of calculating this tax payment take 20 minutes instead of 20 hours.  For a small business, preparing their taxes can consume as much as 80 hours per year.  At present, the complexity of the tax code costs the US economy $400 to $600 billion a year in lost productivity and transactional wastage.”

The best solution wold be the Fair Tax, which would replace the Internal Revenue COde with a 136-page tax law and abolish the IRS and the federal income tax altogether.

3) Tax exemption for entrepreneurial innovators. Kind of like a prize for everyone who invents a useful device that benefits the economy.

4) Making the Sarbanes-Oxley Act voluntary. I would, however, abolish that law.

5) Reforming divorce laws. Currently, under misandrist divorce laws, if a woman divorces a man, even for no reason, she is still entitled to payments from him (alimony) until she dies, and she is also entitled to “child support payments”. He can be a good husband, and his wife will still be enetitled to these subsidies and is allowed to leave him for no reason at all, or only for the reason of boredom. The Futurist suggests, and I agree with him, that either no-fault divorce laws or alimony requirements should be abolished. The Futurist explains this issue thus:

“The present laws for the dissolution of marriage have resulted in millions of highly productive workers having a strong incentive not to perform at their full capacity.  This is a huge opportunity cost to the economy.

Two single people pay higher combined taxes than a married couple.  Beyond this, children who grow up with divorced parents tend to underachieve in many aspects of life, and become liabilities to the taxpayer.  Yet, we currently have divorce laws in America that provide perverse incentives for women to leave marriages that traditionally would have been considered acceptable, and consequently for the next generation of men to not enter marriage in the first place.  Thus, the percentage of adults in stable marriages continues to shrink.  Incentives matter, and the present incentive structure has disastrous long-term implications.”

6) Make Tax Day One Day Before Election Day. During the 2010 electoral campaign, fiscal issues were the key campaign issues. The biggest single issue was the budget deficit. All kinds of dederal spending were heavily scrutinized and debated by American voters. The Futurist suggests, and I agree, that this should become the norm, so Tax Day should be one day before Election Day. He says that:

“The fact that April 15 and the first Tuesday in November are as far apart from each other as they are has itself cost the American taxpayer trillions of dollars, only due to human psychology.  If, however, elections were held precisely when the taxpayer is most irate with the wastage of taxpayer funds, fiscal conservatism will immediately become the highest priority of any political candidate. 

The recent ‘Tea Party’ protests are a step in the right direction, but are still too unfocused.  If anyone with Tea Party connections is reading this, please consider pitching this idea as a mission to focus the efforts around.  All other objectives of tax reduction, spending restraint, and penalties for pork-barrel wastage will automatically flow as downstream outcomes of this.  This would enable ideas 2) and 3) to become realities as well.  Politicians will resist this, but when cornered into a debate, they will not be able to produce any persuasive excuse that conceals their desire to maintain the profligate status quo.”

Of course, some reforms cannot be implemented by the government. One step needs to be undertaken by corproations, and one by private citizens. For corporations, the Futurist suggests a balance between layoffs and salary reductions. For ordinary American citizens, he suggestshealthy lifestyles (diets, exercises, etc.) The unheealthy lifestyles of the majority of Americans have imposed a huge cost on the US economy (to the tune of $2 trillion per year). So, everyone should eat only healthy food (no junk food), exercise frequently, and try yoga. This would reduce the cost to the US economy by $1.5 trillion per year, including $1 trillion per annum of HC costs and $0.5 per annum trillion of consumer spending.

You can read the whole thing here: http://www.singularity2050.com/2009/06/the-united-states-of-america-has-traditionally-been-the-most-economically-innovative-nation-on-earth-and-the-best-place-for.html