Sunday, November 08, 2009

Toomey or Not Toomey

Patrick Toomey with Nachama Soloveichik. The Road to Prosperity: How to Grow Our Economy and Revive the American Drean. Hoboken, N.J.: John Wiley & Sons, Inc., 2009.

The authors ridicule what they see as a movement towards more centralized government influence over the economy. They defend the Reagan Revolution idelas of increasing the role of the private market sector in the national economy. This book advocates for reducing government regulations over economic matters.

The book claims there are key principles of a proper economy: there is a right to private property ownership, one that is threatened by overregulation such as zoning, environmental laws, etc.; markets should operate freely from government regulation except fraud and that government licensing, price settings, tariffs, minimum wage laws, etc. are disrupting the free market; taxes should be as low as possible with government spending as low as possible along with monetary stability that allows businesses to confidently plan their futures,

This book offers historic perspectives and concludes that Federal Reserve Bank actions to increase interest rates were a significant cause of the Great Depression. The book faults President Herbert Hoover for keeping wage rates high, for keeping employment rates high, and for increasing tariffs. It further condemns President Franklin Roosevelt for increasing government spending which they argue disrupted the economy and made the Depression last longer than it would otherwise would have.

The authors applaud President Ronald Reagan for lowering marginal tax rates, reducing government regulations, and expanding tariff free international trade. These actions led to lower prices.

Income taxes and marginal tax rates should be lowered to increase worker incentives to work more hours, the authors argue. They favor lowering capital taxes so more money is invested into capital. They further note tax laws are so confusing that even IRS tax experts can’t explain them. Many tax laws are distorted to favor interests with the political power to change tax laws to favor themselves.

The authors believe the Obama Administration’s stimulus plan failed to stimulate the economy. They are concerned that the growth in the debt coupled with increased spending on entitlements can’t be sustained. They fault spending on earmarks as wasteful contributiosn towards this higher debt.

The authors favor placing maximum amounts on what discretionary government spending can be. They seek more free trade. They warn Social Security is headed towards bankruptcy and that younger people should be allowed to opt for personal investment accounts, which they argue should have higher return rates over time.

The authors argue that public education has been a practical monopoly with a high rate of failing to properly educate students. They argue that increasing private school alternatives should motivate public education to improve. Charter schools, which receive public funds yet are allowed to operate with fewer government regulations, are one option. Providing tax supported vouchers to allow students who can’t afford private schools to attend private schools is another.

The authors claim that the 2008-2009 economic crash was caused by the Federal Reserve Bank’s keeping interest rates too low. On top of this, there were large amounts of loans made in the 1990s and afterwards that had high default rates. Many mistakes made during the Great Depression were repeated.


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