Mackey Comes Backey
Whole Foods co-founder and co-CEO John Mackey writes in the WSJ that the decline of economic freedom in the USA is what's causing the decline of our economy and the ensuing unemployment. He offers solutions:
Most importantly, we need to radically cut the size and cost of government. One hundred years ago the total cost of government at all levels in the U.S.--local, state and federal--was only 8% of our GDP. In 2010, it was 40%. Government is gobbling up trillions of dollars from our economy to feed itself through high taxes and unprecedented deficit spending--money that could instead be used by individuals to improve their lives and by entrepreneurs to create jobs. Government debt is growing at such a rapid rate that the Congressional Budget Office projects that in the next 70 years public money spent on interest annually will grow to almost 41.4% of GDP ($27.2 trillion) from 1.4% of GDP ($204 billion) in 2010. Today interest on our debt represents about a third of the cost of Social Security; in only 20 years it is estimated that it will exceed the cost of that program.Only if we focus on cutting costs in the four most expensive government programs--Defense, Social Security, Medicare and Medicaid, which together with interest account for about two-thirds of the overall budget--can we make a significant positive impact.
Our defense budget now accounts for 43% of all military spending in the entire world--more than the next 14 largest defense budgets combined. It is time for us to scale back our military commitments and reduce our spending to something more in line with our percentage of the world GDP, or 23%. Doing this would save more than $300 billion every year.
No nation building!
More from Mackey:
Government regulations definitely need to be reformed. According to the Small Business Administration, total regulatory costs amount to about $1.75 trillion annually, nearly twice as much as all individual income taxes collected last year. While some regulations create important safeguards for public health and the environment, far too many simply protect existing business interests and discourage entrepreneurship. Specifically, many government regulations in education, health care and energy prevent entrepreneurship and innovation from revolutionizing and re-energizing these very important parts of our economy.A simple reform that would make a monumental difference would be to require all federal regulations to have a sunset provision. All regulations should automatically expire after 10 years unless a mandatory cost-benefit analysis has been completed that proves the regulations have created significantly more societal benefit than harm. Currently thousands of new regulations are added each year and virtually none ever disappear.
According to a recent poll, more than two-thirds of Americans now believe that America is in "decline." While we are certainly going through difficult times our decline is not inevitable--it can and must be reversed.
you want an example of regulatory edits run amock
taxis un Phoenix require an inspection sticker from the Dept of Weights AND Measures to make sure their pice decals match the offical numbers as advertised by the companies which own the cars
Violaters who fail to get a sticker willl be fined $500
lujlp at November 16, 2011 8:36 AM
Any essay that discusses our current economic malaise without mentioning consumer debt and the word "deleveraging" is wrong. Employment is weak because consumer demand is weak. Consumer demand is weak because people are paying down debts instead of buying new stuff. A debt-fueled recession following a fiscal crisis is not the same as a normal recession due to the business cycle.
Government spending is a problem. But it is not the problem. The solutions Mackey suggests will not help in the short term; they have merit in the long term.
Christopher at November 16, 2011 9:06 AM
I wish he had called out the numbers for SS, Medacaid and Discretionary so that it doesn't look like DOD is the biggest deal...
FY2010 which has not changed a lot:
Medicare-Medicade 23% of Budget at $793B
SS 20% of Budget at $701B
DOD 20% of Budget at $689B
Discretionary 19% of Budget at $660B
Other Mandatory at 12% $416B
and?
Interest 6% at $197B
http://upload.wikimedia.org/wikipedia/en/7/7a/U.S._Federal_Spending_-_FY_2007.png
SwissArmyD at November 16, 2011 10:59 AM
"While some regulations create important safeguards for public health and the environment, far too many simply protect existing business interests and discourage entrepreneurship."
Fully agree, and I am pleased to see some discrimination regarding 'unnecessary' regulation.
"A simple reform that would make a monumental difference would be to require all federal regulations to have a sunset provision."
Not so sure about this one. Sunset provisions also allow for political shake-downs when a good law comes up for re-enactment. "You want to keep your tax deduction for R&D?" asks the senator of the the CEO of a hi-tech energy firm . . . "well then you better make sure I get re-elected, so I can vote for that bill, and protect your interests."
. . . every 10 years.
railmeat at November 16, 2011 11:54 AM
"A simple reform that would make a monumental difference would be to require all federal regulations to have a sunset provision. All regulations should automatically expire after 10 years unless a mandatory cost-benefit analysis has been completed that proves the regulations have created significantly more societal benefit than harm."
Love the sunset idea, if it could possibly make it through Congress, but it's far from a simple idea. In addition to the political chicanery Railmeat described in his post above, the cost-benefit analysis part sounds especially tough to implement, for the following reasons:
- Identifying an impartial auditor to conduct the cost-benefit analysis will be difficult. This is Congress we're talking about. Everything will be partisan, or be seen as partisan.
- Quantifying the costs versus benefits will be nearly impossible in a lot of cases. While estimating the cost may be fairly straightforward (although still subject to debate), calculating the benefits will be much harder, since the benefits can't always be stated in the same terms as costs. I can imagine a member of the House, pounding on the table, hollering, "What do you mean, testing for lead in used toys isn't worth the cost? Is your quest for the almighty dollar worth the life of a child? A single, precious, child?"
- Enforcing government regulations means workload and resources for the various departments of the Executive Branch. Logically, eliminating that workload should, over time, result in a reduction in resources. The departments aren't always enthusiastic about this.
Old RPM Daddy at November 16, 2011 11:57 AM
"All regulations should automatically expire after 10 years unless a mandatory cost-benefit analysis has been completed that proves the regulations have created significantly more societal benefit than harm."
Didn't you notice?
This is ANOTHER pile of regulations!
Radwaste at November 16, 2011 7:09 PM
Nation-building my ass; you want our military to have the best equipment and training, it costs. So which branch of the service, which equipment lines, which whatever does he plan on dumping so we're 'equivalent' to other nations in percentage?
And if we'd followed that advice in the past, the Soviet Union would dominate all Europe and large chunks of the rest of the world.j
Get rid of wasteful/duplicate/whatever, sure, but saying we should chop up our military to fit some percentage of world GDP is stupid.
Firehand at November 18, 2011 11:21 AM
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