What should America do about its troubled economy? Sometimes the real world provides the best laboratory for political and economic experiments. Democratic capitalism vs. totalitarian communism? One quick look at East Germany and West Germany in the 1980s or North Korea and South Korea today provides easy analysis of which is the preferable way to create and organize a peaceful and prosperous society.
U.S. Treasury Secretary Timothy Geithner’s meeting with chief financial officers further suggests the White House may push for corporate tax reform. But with unemployment high, President Barack Obama’s efforts to boost growth shouldn’t stop there. More government investment in research and infrastructure is also warranted.
Cato’s Mark Calabria thinks the problem is not people but policy:
MIT Professor Simon Johnson recently argued that Bill Daley’s appointment as Obama’s Chief of Staff signals that “too big to fail”, as it relates to our largest financial institutions, is here to stay. Personally I never thought it was in doubt. With Geithner at Treasury and Dodd-Frank further codifiying “too big to fail”, its been clear for sometime that the bailout net is larger than its ever been, and is not being pulled back.
The news just gets worse and worse from my home state (via The Tax Foundation):
llinois’ legislature is currently considering an alternative to the initial tax increase proposed last week. Instead of pushing for a 75% increase in the personal income tax and a 49% increase corporate income tax, this proposal would raise the individual income tax rate to 5% and the corporate rate 9.5%. While this proposal is more modest than the first, but it still hurts the competitiveness of Illinois when it comes to maintaining and attracting new business.
Is America becoming less politically stable? A glance at some foreign newspapers would certainly give that impression. This is an important economic question. The global primacy of Treasury bonds and the dollar stems mostly from the nation’s massive economic might. But confidence in U.S. political stability also plays a role. The shooting of Arizona Congresswoman Gabrielle Giffords, though tragic, shouldn’t alter those perceptions — unless freedom of speech suffers.