The Krugman 12 Step program

Paul Krugman is out today with a piece in which he discusses whether the persistent high unemployment is structural or capable of solution. It reminded me of the start of a 12 step program. Krugman's first step in dealing with the problem of structural unemployment is to realize that there is no problem. That's right, there is nothing about the current economic conditions that lead Krugman to believe that unemployment cannot be brought down and brought down quickly. Krugman says the entire problem could be solved within a year.

I am not sure that I have ever said this before, but I agree with Krugman. There is nothing structural about the current economy that would prevent the lowering of unemployment.

Okay, that is the area of agreement. Of course, we disagree about what the proper action would be to raise the growth rate and thereby lower unemployment. Krugman still wants more massive government spending even though the last batch was more massive by far than anything in our history and it did not even come close to doing the job. I guess he will have to work on the second step of his program for a while.

For my part, I think that the way to increase growth is to give people an incentive to invest. Investment, as we all know, is the driving force behind growth. And the current government programs have provided no incentive to invest in the USA. Quite the contrary is true. Indeed, the Obama "program" has led to the first period in modern history when there is actually a net disinvestment in the US. Of course, this could all be reversed in less than a year. Imagine what would happen if the following 12 step program were followed:

1)repeal Obamacare.
2)repeal Dodd - Frank
3)stop EPA regulations targeting carbon dioxide emissions unless and until there is actual scientific proof that they are the cause of climate change.
4)curb the anti-growth policies put in place by the NLRB (like the decision to stop the new Boeing plant in South Carolina).
5)lower the corporate tax rate to 15% and get rid of the loopholes and special rules that allow companies with connections to avoid paying tax.
6)lower the capital gains rate to 10% and increase the amount that can be deducted for capital losses to $20,000 per year.
7)allow repatriation of funds held overseas by US corporations at a tax rate of 5% provided that the money is invested in new plant or equipment in the USA.
8)allow repatriation of funds held overseas by US corporations at a tax rate of 10% provided that the money is distributed in dividends.
9)open up all off shore areas in the USA to drilling for oil and natural gas.
10)promote the use of natural gas as a fuel for vehicles by requiring federal cars and trucks to run on that fuel.
11)reorganize the federal job training programs from 96 different programs down to 2 or 3 so that the money is actually spent to help train workers and not to keep bureaucrats in their jobs.
12)place limitations on product liability litigation across the country; establish a program that allows for the introduction of new products without the constant fear of crippling lawsuits.

This is just part of a comprehensive plan for growth. The point is that each of these things is easily accomplished if there is the will to do it. Changes like this will incentivize investment and remove the obstacles to growth. It ought to be good for a 2 or 3% increase in the rate of growth in the near future. That means a lot less unemployment. It also means a much lower deficit for the government. In short, it is a program that actually solves problems in the USA unlike the usual Obama plan that just makes things worse.