Aug 13, 2012, Vol. 17, No. 44 • By IRWIN M. STELZER
End crony capitalism. If some industries and research are to be subsidized, the recipients of subsidies should not be selected by the politicians and bureaucrats who brought us Solyndra. Let applicants for available funds bid for them by putting skin in the game—their own money—and whoever bids the most, is willing to take the biggest risk, gets government help. Inequality that results from hard work, superior skill, and invention of a better mousetrap has never offended Americans; inequality that results from Solyndra-style crony capitalism—you fill my campaign coffers and I will channel taxpayer money to your corporate treasury—does.
Break up the big banks. If a bank is too big to fail, it is too big. If some wild-eyed trader wants to shoot for the card that is so high and wild he’ll never need to deal another, don’t let him put the financial system or depositors’ money at risk. Let him trade and invest the way Paul Volcker wants him to—in situations where he and his counterparts can hurt only themselves, not the overall economy. Even Sandy Weill, who cobbled together Citigroup, now admits he made a mistake, and that it is impossible to manage such a diversified behemoth.
End the madness that lets bankers totter off with giant bonuses, paid on profits that later turn out not to have existed. Claw back those bonuses. Require future bonuses to be paid in shares not marketable for five years—that won’t end all of the ingenious ways the bankers and their lawyers can find to line their pockets, but it will at least reduce some of the heads-I-win, tails-you-lose decision-making by financial elites.
Make wealth and success respectable again. Reforming the banks should not be allowed to morph into the mindless attacks on business and success that have issued from the Obama administration for almost four years. With corporate governance reformed to make compensation more closely related to performance, there will be no need for successful businessmen to be ashamed of their incomes, or for a president to treat them as some sort of crooks.
Treat small businesses as the valuable wealth and job creators that they are. Exempt startups from all save the most basic health and safety regulations for two years. And from taxes.
Get health care reform right. No need for mandates that are both uneconomic and infringe on personal liberty. But “yes” to a requirement that insurers offer to cover preexisting conditions at premium rates reasonably related to the cost of such coverage. And “yes” to protecting those unable to cover their own costs of coverage, and to requiring those of sufficient means to finance more of their own health care. And “yes” to exemptions for employers and individuals who find provisions concerning abortions in violation of their religious beliefs.
Attack the deficit by combining spending cuts, tax reform, and, if needed, revenue increases that do not stifle incentives to work hard and take risks. That might mean shifting the tax burden from earnings and profits to consumption, taking care not to make such a move regressive. Or taxing wealth instead of income. Do an FDR—gather unconventional thinkers along with your more conventional ones, give them all a real hearing, and then put their ideas through the filter of your long business experience.
Move against trading “partners” who live off sales to Americans but restrict access to their own markets. And those who steal our intellectual property. The message should be, “change your ways or find some other place to peddle your goods.” And if that troubles the World Trade Organization and free trade theorists, so be it. There is a difference between a lurch to protectionism and retaliation, the latter suggested by none other than Adam Smith as a way to bring unfair traders to heel.
Save entitlements. Make sure that everyone over a certain age keeps his and her entitlements, and reform the programs so that they will avoid the bankruptcy to which they are doomed under current Obama policies.
There you have it. Simple enough for government work. And a program that voters can understand.