7 Ways to Fix the Economy
Anyone with half a brain can see that the U.S. economy is in a malaise. It’s just muddling along.
Unemployment is still high. Economic growth is low. Prices are rising for goods and services (just think
gas prices and food prices). Job creation is low (people you know that have been unemployed are still
unemployed). Small businesses are still struggling to survive given decreased demand and tight credit.
The real estate market is in the tank; house prices are still falling and foreclosures are likely to spike
this year. The banks are still in trouble, despite what the Fed says and does. Federal budget deficits
continue to be the norm, requiring additional increased in the national debt. There’s still a risk to the
U.S. economy from the economic crises in Greece, Portugal, Spain, Italy and so on. All of these factors
paint a pretty bleak picture for the health of the economy.
I wholeheartedly believe that the U.S. economy is on the brink of a double dip recession. I would even
argue that the current environment is still recessionary even if it doesn’t meet the technical definition
of a recession. I suspect if you’re one of the millions of Americans struggling right now you’d probably
agree with that. If you’re doing well, you probably haven’t been impacted too much or noticed what
everyone else is going through. Sadly, it’s a situation of those that have a job prosper while those who
don’t have a job suffer, which on a side note is a sad reflection on President Obama’s class warfare
strategy that is attempting to divide this country. While we may not be able to stop the economy from
slipping back into a recession in the short term, we can take some actions to fix the economy for the mid
and long term horizons. I think there are seven actions that need to be taken to get the economy back
#3 - Abolish minimum wage
In case you haven’t noticed, manufacturing in America is dying a slow
death. Look at the textile industry in the South, for example. Why did the textile manufacturers
close up? They couldn’t compete with manufacturers in low wage countries like Mexico and
China. We will never be able to compete with low wage countries as long as we have price
controls in place when it comes to labor. If manufacturers want to compete, we need to abolish
the minimum wage. Manufacturers can offer jobs at two dollars an hour as opposed to eight
dollars an hour. That would help to start narrowing the competitive gap between low wage
producers and those here in America. Hell, we allow waitresses to work for $2.15 an hour plus
tips. Why shouldn’t employers be allowed to offer jobs to anyone at that rate?
Of course, I’m also against collective bargaining when it comes to wages as well. Unions have
been some of the worst offenders when it comes to labor markets. Why are the U.S. auto
companies so uncompetitive against foreign manufacturers? Labor costs. So, I guess I’m not
just picking on the minimum wage but I’m focusing on artificially created wages for labor.
Now, I’ve heard this argument for a long time that an abolition of the minimum wage would
hurt the worker. Look, there was a time in life when I had to work two jobs. If that’s what it
takes for people to survive, so be it. There’s nothing wrong with hard work. And guess what,
if you don’t want to work for a low wage, you can simply say ‘No.’ Why do you think there
aren’t ushers in the movie theaters anymore? Minimum wage. Why don’t we have full service
gas stations? Minimum wage. Doormen? Minimum wage. Why are call centers in India?
Here’s the reality. The minimum wage costs the economy thousands of jobs; any good
economist will tell you that. The minimum wage prevents businesses from being competitive.
The minimum wage gives companies a reason to outsource jobs. The minimum wage causes
businesses to find ways to automate, mechanize, or otherwise eliminate positions. It’s not very
palatable, but the benefits far outweigh the negatives of this. Abolish the minimum wage, the
economy will create jobs in untold numbers, and ultimately, the market will set wages.