Seeds of Destruction: Why the Path to Economic Ruin Runs Through Washington, and How to Reclaim American Prosperity
Government policy and the Obama administration are driving the American economy straight toward catastrophe. Now, two respected economists–one a Republican, one a Democrat–explain why these policies are so dangerous and offer a bipartisan, common-sense blueprint for reversing America’s economic decline.\ Glenn Hubbard and Peter Navarro explain why sustained growth is the only long-term solution, outline the elements of a vibrant economy, and explain why current policies are failing on every...
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In this book, a top Republican and Democratic economist explain why Obama’s economic policies are failing…and offer a commonsense blueprint for re-igniting long-term growth and prosperity for all Americans. They show how to overhaul the tax system, increase business investment, slash government spending, control entitlements, and even rebuild American manufacturing. Library Journal Hubbard (dean, Columbia Business Sch.; former chair, U.S. Council of Economic Advisors) and Navarro (business, Univ. of California-Irvine) are deeply concerned about America's economy. Here they intentionally aim at positive economics (what is) and normative economics (what should be) as they translate their apprehensions into concrete policy proposals. Description of basic macroeconomic theory is followed by prescription for reversing course from "the path to economic ruin," which they unabashedly ascribe to Washington's bad economic policies. Many writers criticize the U.S. stimulus efforts and the staggering shortfalls of the entitlement programs or assign blame for the recent housing bubble, but Hubbard and Navarro propose a set of realistic solutions. The authors bring their vast academic and policy experience to bear on weighty issues such as U.S. oil dependence, health-care reform, Medicare, and housing imbalances. Their solutions have a distinctly bipartisan flavor, with smaller government and lighter taxes for tastes of the Right and interesting new oil import taxes that should appeal to the Left. VERDICT Recommended for a general audience with marginal interest in economic policy; required reading for those crafting U.S. economic policy.—Jekabs Bikis, Dallas Baptist Univ.
ForewordAbout the AuthorsIntroduction: The White House Plants Its Seeds of Destruction 1Part I Getting from Seeds of Destruction to Seeds of Prosperity 7Chapter 1 America's Four Growth Drivers Stall and Our Economy Stagnates 9The GDP Growth Drivers Equation 11GDP Growth Has Been Well Below Potential Growth 12The American Consumer's Roller Coaster 15Where Has All the Business Investment Gone? 19There's Too Much Government Spending 21Net Exports Are a Net Negative 25Conclusion 27Chapter 2 How to Lift the American Economy with the Ten Levers of Growth 29Lever One Free Markets Free of Corruption and Monopoly Best Promote Growth 29Lever Two Free and Fair Trade Helps All Countries Grow 31Lever Three Entrepreneurship is the Linchpin of Long-Term Growth 33Lever Four Without Savings, There Can Be No Investment and Growth 34Lever Five Without a Stable Banking System and Strong Financial Markets, Savings Can't Be Transformed into Investment 35Lever Six Innovation and Technological Change Matter More Than Machines and Workers 36Lever Seven "Human Capital" Matters as Much as Physical Capital 38Lever Eight Oil Price Shocks Stunt the Growth of Oil-Import-Dependent Nations 39Lever Nine A Healthy Nation Is a Productive and Prosperous Nation 40Lever Ten A Solid Manufacturing Base Makes for a Strong Economy 41Part II Fixing America's Destructive Duo: Monetary and Fiscal Policy 47Chapter 3 Why an Easy-Money Street Is a Dead End 49The Return of Fed Activism 52The Maestro or a Bubble Maker? 53President Obama Crosses the Activist Rubicon 54The Road to American Prosperity Cannot Be Paved with a Cheap Dollar 57Where Have You Gone, William McChesney Martin? 60Chapter 4 Why You Can't Stimulate Your Way to Prosperity 63From John Maynard Keynes to the Kennedy Tax Cut Revolution 66Part III Getting the "Big Three" Right: Tax, Trade, and Energy Policy 83Chapter 5 Why Raising Taxes Lowers America's Growth Rate 85Ideological Gridlock Over Broad-based Tax Reform 88From a "Class Tax" to a "Mass Tax" 91From Double Taxation to Double Whammies 93Income Tax Evolution or Consumption Tax Revolution? 95Meeting on the Middle Ground 97Chapter 6 Why the Best "Jobs Program" May Be Trade Refrom 101The 2000s: A Decade of Large and Chronic Trade Deficits 103America's Trade Deficits Cause Inflation and Loss of Political Sovereignty 104The World's Poster Child for the Modern Protectionist-Mercantilist State 104China's Great Wall of Protectionism 106China's Eighteenth Century Mercantilism 111Chapter 7 Why America's Foreign Oil Addiction Stunts Our Growth 125How Does America's Oil Import Addiction Harm Our Economy? Let Us Count the Ways 128Risky Business 130Moving Toward Forging a Political Consensus on Reducing Oil Import Dependency 132The Smart Path Embraces Both Soft-and Hard-Path Options 133The Folly of Energy Independence Redux 136Achieving a Targeted Reduction in Oil Dependence 137Why This Proposal Has Economic and Political Merit 140The Thormy Politics of Oil Import Fees 142Part IV Good Politics Usually Makes for Bad Economics 147Chapter 8 Cutting the Gordian Knot of Entitlements 149The Imperative of an Economic Rather Than Accounting Solution 151Why Social Security Is Easier to Fix Than Medicare and Medicaid 153Saving Social Security in Two Easy Pieces 154Closing the Social Security Spending Gap: What Won't Work 158Closing the Social Security Spending Gap: What Can Work 161Forging a Political Consensus 165Saving Medicare and Medicaid: Mission Impossible? 167A Flexible and Focused Way Forward 168Chapter 9 Why ObamaCare Makes Our Economy Sick 173The Big Health Care Picture 174Are We Getting What We Are Paying For? 176ObamaCare Puts the Coverage Cart Before the Cost Horse 178ObamaCare Provides a Far-Too-Sweet Entitlement 180Truth or Consequences 181ObamaCare and the Law of Unintended Consequences 183Toward a More Market-Driven Health Care System 184What Can Be Done? 191Conclusion 192Part V The American Economy at a Crossroads 197Chapter 10 How to Prevent Another Financial Crisis--- and Housing Bubble 199#1 Easy Money 201#2 Not Enough "Skin in the Game" for American Home Buyers 202#3 Not Enough "Skin in the Game" for Mortgage Lenders 203#4 Way-Too-Exotic Mortagages for Borrowers 205#5 The Mortagage-Backed Securities Meltdown 208#6 The Collateralized Debt Obligations Credit Rating Debacle 211#7 A Flawed Insurance Market: Credit Default Swaps 213#8 Inflexible Bank Capital 216#9 Too Big to Fail: Last Rites for Financial Dinosaurs 218#10 A Fragmented and Sectoral Model of Regulation 219#11 Subsidies for Nonproductive Investment, Taxes for Productive Investment, Taxes for Productive Investment 221The New Law as the End of the Beginning 222Chapter 11 How to Implement Our Seeds of Prosperity Policy Blueprint 229Our Seeds of Destruction Problem 230Our Seeds of Prosperity Solution 231Conclusion 248Index 251
\ Library JournalHubbard (dean, Columbia Business Sch.; former chair, U.S. Council of Economic Advisors) and Navarro (business, Univ. of California-Irvine) are deeply concerned about America's economy. Here they intentionally aim at positive economics (what is) and normative economics (what should be) as they translate their apprehensions into concrete policy proposals. Description of basic macroeconomic theory is followed by prescription for reversing course from "the path to economic ruin," which they unabashedly ascribe to Washington's bad economic policies. Many writers criticize the U.S. stimulus efforts and the staggering shortfalls of the entitlement programs or assign blame for the recent housing bubble, but Hubbard and Navarro propose a set of realistic solutions. The authors bring their vast academic and policy experience to bear on weighty issues such as U.S. oil dependence, health-care reform, Medicare, and housing imbalances. Their solutions have a distinctly bipartisan flavor, with smaller government and lighter taxes for tastes of the Right and interesting new oil import taxes that should appeal to the Left. VERDICT Recommended for a general audience with marginal interest in economic policy; required reading for those crafting U.S. economic policy.—Jekabs Bikis, Dallas Baptist Univ.\ \
