I have been thinking about a solution to the problem the United States has found itself in over the past few years in regards to unfair trade balances with foreign state controlled economies.
The principles behind free market economics dictate that a more competitive economy will rule the day. What could the United States do to make its economy more competitive than China? In order to evaluate areas that the United States can improve, it is important to note which areas of China’s economy are slanted to make them more “competitive” in relation to other free market economies.
1) China’s economy is state controlled. Companies are told what they can and cannot do. Companies and individuals are told how they can spend their money and how and where they can invest it.
2) China’s economy is still developing and their infrastructure is not fully developed.
3) China’s military is still not superior and they lag behind in technological advances and innovation.
4) China’s political structure is unstable and will undergo future transformations.
Now, in order to improve the competitiveness of the United State’s economy, the above perceived weaknesses must be exploited.
1) Overhaul our tax system to spread out revenue generation across the entire economy, not on the backs of individual citizens. Tax Revenue will be generated by feeding off the products and services produced in our economy as whole. Eliminate business income taxes and individual income taxes. What would this do for the United State’s economy as a whole. All of the current talk about foreign wealth leaving the United States in search of alternative free havens would immediately be reversed. Companies would flock to the United States to onshore anything they could. They would have no incentive to offshore and outsource anymore. If business taxes are eliminated foreign and domestic companies could afford to do business here in the United States. What would that mean? More Jobs, More Manufacturing, a bigger GDP, more tax revenue which in turn could be used to pay off our foreign and domestic obligations.
2) Though China is continuing to grow, they are still not considered to be a world safe haven for capital investment due to a number of factors directly related to their own systematic stability. The United States needs to continue fostering domestic tranquility and help restore the trust of its people and the rest of the world by cleaning up its own house financially, morally, and intellectually.
3) Though China is making great strides in technological and military advances, they are not expected to become a superpower in the very near future. This leaves the United States as the only legitimate pillar of stability for the foreseeable future. As long as we continue to invest in our military and push the envelope to new frontiers in space and foster scientific experimentation we will be able to maintain superpower status.
4) There is a significant chance that China will undergo political changes as their people become more wealthy. They will want to have a say in how their wealth is allocated. This leaves China with a higher national risk premium. We must always maintain and improve upon our system in order to allow the people of the United States to live in the most free and prosperous nation on the face of the earth.