A Stimulus Package that would Work

Barack Obama may really be worried about another Great Depression. The economic news is grim and growing grimmer by the week. What should Obama do? Well, if he genuinely is interested in restoring prosperity to America, there is a stimulus plan that would almost certainly work and work quickly. The expenditure of hundreds of billions of dollars and the expansion of federal power could be a very good thing for the health of America, if it was targeted properly.

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The worst thing Obama could do – and the course most likely that Obama will take – is to pour money into the large institutions of society – federal agencies, state governments, quasi-governmental organizations, giant corporations, and the like. These fat, dull giants move slowly, react slowly, and gobble real wealth rather than create wealth. If there is a lesson to be learned by all Americans from the meltdown of financial markets, it is that our nation has become the victim of giantism. We rightly associate most giantism with government bureaucracies, but institutional and corporate bureaucracies are also far too isolated from real America. The ballooning corporate salaries of collapsing big businesses is emphatically not the consequence to free enterprise run amuck. It is the consequence of giantism replacing genuine competition.

Make small business thrive

If Obama wants to jump start the American economy, restore accountability to business, and create a new and hopeful model for commerce for a technologically evolving future, then he should do everything in his power to make small businesses thrive. Why not, for example, take all the money the federal government plans to use to bail out automakers and instead offer hundreds of thousands of new, expedited small business loans? Create financial incentives for people to hire themselves. The SBA , like all government agencies, has its share of corruption, but providing loans to new small business to start up makes much more sense than funneling dollars into huge, old, failed corporations. Small businesses are also the fastest job generators in the economy and the jobs created are highly productive jobs – actual goods and services are created by employees of small businesses. These businesses who have half a dozen employees or so are also very flexible and adaptable. As new markets develop and as technology advances, these nimble little businesses can react very quickly. Loans are one sort of help that an Obama Administration could give to small business, but another financial incentive would be dramatically reduced tax rates. Why not exempt the first $100,000 of small income from the self-employment tax? Why not exempt the first $1,000,000 of small business corporate income from federal income taxation? This sort of change in tax policy would not only help new small businesses succeed, but it would also allow established small businesses to consider hiring people. If Obama wants real change and true hope, then he could extend federal power into the regulatory power of state and municipal governments. A wife whose husband just lost his job might well find a “job” at home, baking cakes and pies and selling them to other small businesses or to neighbors. City and state regulations, however, require licenses, provide for zoning restrictions, and otherwise frustrate simple one person commerce. Why not use federal power to help free enterprise? Why not have the federal government exempt small businesses across America from the sort of silly state and city regulations which constitute powerful barriers to entry of new small businesses? The federal government has the power to liberate as well as to oppress. Creating very simple, very clear, and very sensible rules for Americans who want to make and to market food out of their homes would allow millions of good cooks to begin to make money from a home business.

Return our economy to ordinary Americans

Why not exempt these small businesses from many of the regulations job-destroying bureaucracies impose on businesses in America. The federal government, if it wished, could make small businesses almost completely free from the sort of government regulation which inhibits profits and strangles job growth. An American economy which began growing from the ground up would grow much faster and much more soundly than an economy dominated by drone-like bureaucracies of government and corporate employees. Most importantly, a nation of small businesses would be self-reliant and independent in a way that a nation of salaried employees can never be. Those who live their lives in the ant colonies which are many modern corporations never truly experience a sense of enterprise. Their work is often empty, joyless, and unproductive. With one big reform, President Obama could do something that would really restore hope to millions of Americans and which would get our economy humming quicker than any pork sent to huge institutions. Return our economy to ordinary Americans, and watch our country prosper and smile.

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