An Economic Agenda for the GOP (from pro-business to pro-market)

The Republican Party today must follow a similar strategy, updated for present circumstances. It has to move from a pro-business strategy that defends the interests of existing companies to a pro-market strategy that fosters open competition and freedom of entry. While the two agendas sometimes coincide—as in the case of protecting property rights—they are often at odds. Established firms are threatened by competition and frequently use their political muscle to restrict new entries into their industry, strengthening their positions but putting their customers at a disadvantage.

A pro-market strategy aims to encourage the best conditions for doing business, for everyone. Large banks, for instance, benefit from trading derivatives (such as credit default swaps) over the counter, rather than in an organized exchange: they can charge wider spreads that way, and they can afford to post less collateral by using their credit ratings. For this reason, they oppose moving such trades to organized exchanges, where transactions would be conducted with greater transparency, liquidity, and collateralization—and so with greater financial stability. This is where a pro-market party needs the courage to take on the financial industry on behalf of everyone else.

Here's my economic agenda that will bring the USA back to the #1 economic power on Earth, no contest:

1) Phase out the economy-sapping system of taxing the process of earning money (e.g, the income tax) and replace it with a system of taxing the process of spending money (e.g., a consumption tax like FairTax). Such a change will mean American citizens and businesses will put their liquid assets into American-based banks and businesses, not participate in the underground economy or use income tax loopholes to funnel American-owned assets to offshore financial centers beyond US borders.

2) Require that trades in exotic investments like hedge funds, derivatives and credit default swaps be backed by REAL liquidity. This reduces the chance that if these investments fail they won't cause massive financial damage like what happened last year.

3) Increase the minimum margin requirements for trading in commodities and stock futures from 5% to 15%, with rates as high as 25% for strategically critical items like petroleum products, precious metals, certain industrial metals and certain foodstuffs. These higher rates will means we drive out the "make a fast buck" speculators that can drive up and down the price of a stock future or commodity very quickly like the express elevator ride on the Empire State Building, which can cause serious inflation and deflation problems.

4) Revise the Sarbanes-Oxley Act to better balance the need for initial public offerings (IPOs) and account reporting requirements. The current Sarbanes-Oxley Act has pretty stopped new IPOs for companies big enough to challenge the established players in the market (right now, nobody can fund a company that could eventually take on the likes of Google).

5) Reimpose the full-aspects of the 1933 Glass-Steagall Act to protect banks from the ups and downs of the stock market. The 1929 and 2008 crashes were made worse by the fact too much of bank assets were invested in equities, and when the stock market crashed many banks suffered serious losses or went out of business.

Some of the issues to be addressed are regulations and permitting process so expensive and onerous that the small business person is pushed out of business. Only the large corporate businesses can comply. That is what we saw in the timber and farming industries.

For instance, the small timberland owners in CA can’t afford the expert professionals (archaeology, hydrology, biology, geology etc.) and CEQA process needed to complete a timber harvest plan in order to get a permit to cut trees. That encourages sale of land to big corporations that can.

Wow!. Thanks for posting this. These are exactly my thoughts presented more succinctly and clearly than I ever could.

Some other things to support markets over monopolists:

1. All trades of all kinds have to go through registered exchanges. No more OTC. Period.

2. Only people who purchase IPO stock or the original bonds are considered to be investing. All other people are speculators and their profits should be taxed at the same rate as gambling winnings. Dividends can be taxed at a lower rate, but money made off the increase in the face value of a stock or bond is pure speculation no matter what the crony capitalist shills call it.

3. A company can not sign a contract with another company to get a better price by agreeing not to purchase from or work with a third company. I.e. You can't get a price break on Microsoft software by agreeing not to provide PC's with Linux operating systems. Such contracts may be pro-business, but they are anti-market.

4. No clauses in contracts with employees at director level or above that prevent the signees from expressing themselves about what happened when the contract is cancelled. We should all know why a CEO was fired or chose to "spend more time with his family."

5. No employee or board member is ever allowed to be compensated through stock or stock options priced lower than the price when they are hired on. If the stock is at $40/share when they hire on they shouldn't be able to make money off it because they got $10/share stock options and the share price only collapsed to $20/share.

Wow, with conservatives like you, who needs Michael Moore? See “Capitalism: A Love Story?” Come on, admit it, you have.

I have a better Five:

1) All trades of any kind go through whatever freaking mechanism the traders wish because it’s none of the state’s goddamned business.

2) ALL income, whether from wages, capital gains, gambling, or winnings on game shows is taxed at the same rate. That rate being just enough to fund courts, cops and the military...10% strikes me as about right. And oh, by the way, it’s none of the state’s goddamned business what is “investing” and what isn’t.

3) Companies can sign contracts to do whatever they damned wll please so long as they don’t inflict direct, provable harm via force to anyone...becuase...well, it’s none of the state’s goddamned business what contracts free individuals enter into.

4) Employees, CEO’s and whoever can negotiate whatever clauses they wish about who says what because it’s no one’s goddamned business why a CEO retired unless he and/or the company wish to tell us.

5) Employees and board members are compensated however their firms wish to compensate them because it’s no one’s goddamned business but theirs.

There...I think I fixed that up nicely.

Oh, by the way, for future reference (and yes, I know you’ve been here since 1999...doesn’t matter), I believe the address you are looking for is:

www.dailykos.com

Best,
Hank

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