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Eight Ways to Supercharge the US Economy


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1) Immigration Reform

US immigration policy, at present, is exactly the opposite of what it should be. Presently, highly skilled immigrants who seek to follow the law are put through an excruciating process lasting 7-12 years, fraught with restrictions on the changing of employers and the spouse's right to work. At the same time, unskilled immigrants, many with criminal tendencies, have an incentive to enter the US illegally and consume services paid for by the US taxpayer. US prisons are filled with a disproportionate number of unskilled illegal immigrants, while the next Andy Grove, Vinod Khosla, Elon Musk, Pierre Omidyar, and Sergey Brin are faced with a tortuous, interminable ordeal that may lead them to conclude that coming to America is not as worthwhile as it was a generation ago.

If a corporation or a university can choose to accept only the best that it can get, why can't America do the same? I propose that the US allow quick and unlimited immigration for anyone with a bachelor's degree from a recognized university in their country (a list of institutions by country which the US DHS maintains on a website). This will create an influx of about 1,000,000 young, educated immigrants each year into the US, which is still lower than the number of unskilled immigrants, legal plus illegal, entering each year. It takes $200,000 to educate a child from age 4 all the way through completion of a bachelor's degree, so such an influx would effectively create a knowledge import of $200 Billion into the US each year. Only 30% of US citizens have a bachelor's degree, so these immigrants would increase the average educational level and median income of the country. Simultaneously, unskilled immigration, legal and certainly illegal, should be halted/prevented until further notice.

Every problem, from social security shortfalls to a surplus of unsold homes and cars to a lack of engineering and science talent in the US, will be solved. Healthcare cost increases would be contained as the supply of doctors, nurses, and physiotherapists rises. Every distortion caused by an aging population and the retirement of baby boomers will be offset. Political, economic, and even social/familial ties with India and China will strengthen, as most of these skilled immigrants will be from these two countries.

It is just about the most productive economic strategy that the US can employ, and would start taking effect almost immediately. The shockingly uninformed notion that such immigrants 'take jobs away' or 'depress wages' has been debunked in the detailed case, and is a belief held by reactionaries who fail to consider that the same jobs can be offshored out of the US to find their candidates if the candidate is not brought here.

2) Tax Simplification

Time is money, and moreso than ever in a prosperous society. Before even discussing the reduction or increase in tax rates, there should first be a reduction in tax complexity. If a family earning $100,000 is currently required to pay $20,000 in income taxes to the Federal Government, so be it. But at least let the process of calculating this tax payment take 20 minutes instead of 20 hours. For a small business, preparing their taxes can consume as much as 80 hours per year. At present, the complexity of the tax code costs the US economy $400 to $600 billion a year in lost productivity and transactional wastage.

Is there any possible argument against this, aside from the need to provide loopholes to favored groups, who themselves still suffer from the complexity of the tax code, outside of their custom loophole? The present morass is a massive burden that is a disgrace to the spirit of free enterprise and unworthy of America.

3) Tax Exemption for Entrepreneurial Innovators : The reason that innovation prizes like the X-Prize are so valuable is that they evoke superlative efforts out of their contestants. This is entirely the opposite of most charities, which merely give ambition-dampening handouts to those deemed to be needy. By some measures, a $10 million X-Prize creates $500 million or more of innovation value.

However, after one team out of dozens of competitors wins a particular X-Prize of $10 Million or so, they have to turn around and pay 45% of it in income taxes. So the real prize is just $5.5 Million. If the IRS were to exempt these innovation prizes from taxation, the cost to the US government would be tiny, relative to the value of innovation that the now-larger prize would inspire.

I would take this concept further, and state that anyone who founds a successful technology company should be exempt from taxes on his shares and stock options. Effectively, a tax cut for creators of jobs, technologies, and wealth, who are known as 'change agents'. Of course, proper restrictions must be made to prevent fraud, but this stimulus would create a tremendous incentive for entrepreneurial innovation, and actually lead to higher overall tax revenue from the surplus of new jobs created, as the employees of these companies are not exempt from taxes.

This is just about the highest gain targeted tax relief that could be employed, and, if combined with idea 1), would bring the most dynamic entrepreneurs to America from across the globe (at least 40% of Silicon Valley startups are founded by immigrants, even today). For an initial cost of less than 0.1% of current tax collections, we could supercharge the economy. History has shown that a society that is unfriendly to entrepreneurship is not a society worth living in, but a society where the entrepreneur is cherished is the best society of all.

4) Make Sarbanes-Oxley Voluntary : The 'SarbOx' compliance requirements make it far more tedious for a young company to go public. For a small public company, SarbOx compliance may cost $3 million per year in auditing and legal fees, which could otherwise be spent on research and development. Even 8 years after the end of the dot-com collapse, the flow of high-tech IPOs remains a trickle, while corruption has arguably not seen any general reduction.

The solution is to make SarbOx compliance voluntary. A corporation can choose to comply, and then let the market decide whether compliance to SarbOx should result in a share price premium, or discount. If a company that has chosen not to comply to SarbOx is later found to have conducted fraud, all other companies will see their decision regarding SarbOx reflected in their prices. If a company that does not spend money on SarbOx instead outcompetes its rivals due to more R&D investment, let the market reflect that as well. The entirely different situations facing blue-chip corporations relative to fresh IPOs can thus be catered to.

5) Reform Divorce Laws : The present laws for the dissolution of marriage have resulted in millions of highly productive workers having a strong incentive not to perform at their full capacity. This is a huge opportunity cost to the economy.

Two single people pay higher combined taxes than a married couple. Beyond this, children who grow up with divorced parents tend to underachieve in many aspects of life, and become liabilities to the taxpayer. Yet, we currently have divorce laws in America that provide perverse incentives for women to leave marriages that traditionally would have been considered acceptable, and consequently for the next generation of men to not enter marriage in the first place. Thus, the percentage of adults in stable marriages continues to shrink. Incentives matter, and the present incentive structure has disastrous long-term implications.

A few decades ago, a person seeking divorce was required to provide significant justification. Now, 'no-fault' divorce grants quick divorce to either party, without any burden of justification. At the same time, the concept of alimony was meant to maintain a woman who did not have any financial security of her own, and to dissuade a man from leaving his family (i.e. when he was at fault). Both of these laws independently had merit in the era that they were passed.

However, both of these combined lead to 'no-fault alimony'. A woman can decide to not work at all while the husband is out working long hours, and still leave him on a 'no-fault' basis and still get payments from him for years, possibly forever if the marriage was long enough. Let me state that again : she decides to leave without having to provide any justification, and he still has to pay her for a very long time after that. This leads to many women abusing the law for financial gain, or at the very least, threaten the husband throughout the marriage, knowing that the power of the state is behind her. Perversely, the dutiful husbands are often the ones ruined by the machinery of the state under the current laws, while the 'bad boys' get off lightly. 70-90% of divorces are initiated by the wife due to this incentive stucture, and while feminists seek to punish 'bad boys', 'players', and 'deadbeats', it is actually the faithful, responsible men who usually suffer.

Given the extreme risks to a man entering marriage in present-day America, more and more younger men are deciding that it is simply not worth the risk. As a result, many good-hearted, average women who want nothing more than to create a picture-perfect family, will find themselves competing for a much smaller pool of men who are willing to marry, and thus many of these women will not find husbands within the window of their youth. Such market forces have accelerated the meteoric rise of the pickup artist (PUA) industry complete with seminars, coaches, blogs, manuals, support networks of 'wingmen', and hidden-camera footage of successful pickups packaged and sold as instructional courses. This is leading to an America of 'more cads, less dads'. While this may be fun for practicing PUAs, it is not a sustainable societal model for any prosperous country. Furthermore, many divorced men are forced to live off just 20% of their original income after being brutalized by the machinery of the state. The natural response from such men would be to not work as hard, but such a disincentive for productive work would be ruinous. As almost all technological inventors are men, why should an inventor paying alimony bother to invent? Why not become a PUA instead, since that is a skill that no one can take away from him?

If America (and other Anglosphere countries) make it too unattractive for men to marry, Anglosphere society will deservedly die. This is where social conservatives have been an abysmal failure, shambolically unable to see the forest from the trees. Their distracted focus on combating issues that are already done deals (abortion) or that affect very few people (gay marriage), while limiting their support of marital commitment to empty sermonizing about how marriage is 'sacred', has meekly ceded the defense of the fabric they hoped to preserve. Their sermonizing, against legally sanctioned financial incentives for divorce combined with growing misandry in the media, is about as effective as a pea shooter against steel.

The solution is to have either no-fault divorce, OR alimony, but certainly not both. Either one by itself may be fair, but the two in combination certainly is not. One of the two, preferably alimony, must end. The second solution is for social conservatives to get their priorities in order, under a new generation of leadership that understands the 21st century social and legal climate.

6) Make Tax Day One Day Before Election Day : The fact that April 15 and the first Tuesday in November are as far apart from each other as they are has itself cost the American taxpayer trillions of dollars, only due to human psychology. If, however, elections were held precisely when the taxpayer is most irate with the wastage of taxpayer funds, fiscal conservatism will immediately become the highest priority of any political candidate.

The recent 'Tea Party' protests are a step in the right direction, but are still too unfocused. If anyone with Tea Party connections is reading this, please consider pitching this idea as a mission to focus the efforts around. All other objectives of tax reduction, spending restraint, and penalties for pork-barrel wastage will automatically flow as downstream outcomes of this. This would enable ideas 2) and 3) to become realities as well. Politicians will resist this, but when cornered into a debate, they will not be able to produce any persuasive excuse that conceals their desire to maintain the profligate status quo.

As you can see, many of these are policies that have existed in America in the past - when America was ascendant. Out of these six, even one or two would create a dramatic economic boom. I have no illusions that the mediocre minds in Washington would implement (indeed, re-implement) any of these ideas, or even have the courage to uproot the entrenched interests that profit from the moribund status quo.

Related : Why Government is Set to Extinguish Silicon Valley


However, US corporations are not blameless in all this. The shortsightedness of many senior executives costs their corporations far more money than an approach that sees beyond merely the next quarter or the end of the fiscal year.

1) A Measured Balance Between Layoffs and Salary Reductions : During economic contractions, headcount reductions are often necessary, and often facilitate the process of creative destruction and reinvention. However, too many corporations are taking an axe, rather than scalpel approach to cost-reduction, that has collateral expenses that they do not account for.

A layoff involves granting 2-12 weeks of severance pay to an employee. When hiring resumes 6-18 months later (the average duration of most recessions), the employer has to spend time interviewing new candidates, paying them a signing bonus, and training them for a couple of months. Even then, the new employee may or may not be a fit for the organization. The whole layoff and re-hiring process has great inefficiencies and large transactional costs, leading to crashes in consumer confidence and then lengthy 'jobless recoveries' in the economy.

There are also hidden costs, born by the former employee and broader society. Divorces rise after layoffs, and the combination of many tragedies at once can often lead to the final tragedy - suicide. The employer bears costs too, as an army of resentful ex-employees can join competitors, tarnish the company's reputation in this Web 2.0 era, or, in the most extreme cases, mentally snap and gun down a few of his former bosses (which does happen from time to time).

At the same time, the concept of temporary salary reductions receives an illogical, knee-jerk dismissal. The stupid claim that it 'discourages top performers' seems to assume that hearing about a divorce, suicide, or foreclosure in the life of your former colleague of many years, or the prospect of a shooting, is somehow not as discouraging.

The solution is very simple : drain the bath water out systematically, rather than throwing the baby out with it. Most corporations have a 5-point performance rating scale, with 5 being the top, 3 being adequate, and 2 or 1 leading to necessary termination. A corporation could simply implement a reduction of 0% for employees rated at '5', 10% for employees rated at '4', 20% for employees rated at '3', for two quarters, before taking the more drastic step of layoffs. If economic conditions stabilize, the salaries can be restored (which itself is quicker and cheaper than recruiting and hiring new employees). If conditions worsen further, only then begin with either a deeper reduction or layoffs.

No one gets divorced or suicidal from the ripple effects of a temporary 20% pay cut. A few may leave, but those are likely to be average performers, and are leaving by their choice (and hence do not get severance pay). In fact, most employees may not even know who got how much of a reduction, due to performance ratings being mostly confidential. The dignity of the employee is preserved, the transaction costs of firing and re-hiring are avoided, and the 'jolt' to the employee, and thus collateral damage in society, is lessened. Thus, the sharp plunge and jobless recovery cycle is greatly moderated, and the drop in consumer confidence that is found at the deepest part of the recession is avoided, which quickens the recovery itself.

Some corporations already do this, and have been more successful than their competitors over cumulative business cycles. But the concept of longer-term planning on this issue is still absent in most large employers, and it is shocking that the value of gradual staging and restoration is not recognized.


Last but not least, there is an elephant in the room of economic reform. It is that of the US citizen, and one major aspect of the economy that is usually at the top of any list of economic issues.

1) Americans Have to Adopt Healthier Habits: It is hard to go a single day without seeing an article about healthcare reform. However, I did not put it in my list of 6 governmental ideas, as I was never quite convinced that it is entirely the government's responsibility to keep Americans healthy, or to extend their lifespan, despite their abuse of their own health. Too much of our healthcare system is built around treatment, and too little around the prevention of illness in the first place. Personal responsibility to reduce the habits that lead to disease has to be taken by the individual, and so I am going to hold the pudgy feet of the average American to the fire.

While America is the best county in the world in most ways, in terms of dietary health, it sadly is just about the worst. What North Korea and Zimbabwe are to economics, America is to healthy cuisine. So much so, that most Americans don't eat actual food at all, but rather 'food-like substances' as Michael Pollan calls them. Dismantling and rebuilding the American diet will be about as hard as dismantling the USSR and Eastern Bloc.

Cancer, cardiovascular disease, diabetes, and Alzheimer's disease are the four leading causes of death in America. We spend, directly or indirectly, about $2 Trillion a year (15% of GDP) on these four diseases. Yet, a person can greatly reduce their chances of getting all four with some very simple adaptations. For all the anguish about life expectancy not rising quickly enough, and the need for more funding for research, the old adage of a penny of prevention outweighing a pound of cure still applies. US life expectancy would rise by 5 years if all adults did the following :

1) Do not smoke at all, and only drink a little, of either beer or red wine.

2) Do not consume sugary foods or drinks, fried foods, fast foods, or too many processed foods.

3) Make sure that 80% of what you eat is fruits and vegetables of as many different varieties as possible (fresh, not canned). Dairy consumption should be moderate. Red meat should be kept to an absolute minimum (no more than 2 times a month), and should be of the highest quality.

4) Berries, mangoes, lentils, whole beans, cauliflower, cabbage, beets, carrots, turmeric, garlic, green tea, avocados, wild greens, fresh tomatoes, salmon, olive oil, flaxseeds, walnuts, cilantro, oatmeal, yogurt, and dark chocolate should be favored ahead of all other foods, for reasons too lengthy to get into here.

5) Cut every portion size by at least 10%, ideally 20%.

6) Exercise 3 times a week, for 30 minutes each.

7) Adopt a bit of yoga and meditation into your life.

That is it. Do just this, and you will gain both quantity and quality of years. No one disputes the merit of these habits, and most discussion of them centers around why the person in question lacks and discipline or willpower to stick to these habits. The death rates of cancer, cardiovascular disease, and Alzheimer's would plunge, and healthcare costs would be cut in half (saving $1 Trillion). Furthermore, since healthier foods are cheaper than unhealthy ones, another $500 Billion will be saved in consumer spending, to be better used elsewhere.

$1.5 Trillion saved per year, as well as 5 more years of life. Yet, Americans can't seem to do it, and often become hostile when it is suggested that this program is easy. It does not make much sense to whine about the lack of a cure for cancer before a person has taken the simple steps that can reduce their chances of getting cancer by 75% or more. More education through some government initiatives is not the answer. That has already been done to the extreme. You can lead a horse to water, and even force its mouth into the water, but you cannot make it drink.

Americans have to get their own health in order first, then talk about the healthcare system meeting them halfway. Currently, the healthcare system is expected to magically undo too many self-inflicted maladies, an admission most Americans are unwilling to make.


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Herman Cain's plan to outgrow China

1. Lower the corporate tax rate from 35% to 25%.

2. Move the Capital Gains Tax Rate to 0%.

3. Suspend Taxes on Foreign Repatriated Profits.

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Drill 1000 oil wells, inform OPEC and others we will pay $50 per barrel otherwise they can eat their oil. Entrepreneurs will flourish. We will have plenty of food. Live by a NO DEFICIT budget no matter the pain. The dollar will climb, stocks will soar, jobs will come.

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Drill 1000 oil wells, inform OPEC and others we will pay $50 per barrel otherwise they can eat their oil. Entrepreneurs will flourish. We will have plenty of food. Live by a NO DEFICIT budget no matter the pain. The dollar will climb, stocks will soar, jobs will come.

I completely agree. If other countries are not abiding by the same standards as we are we need to stop regulating the industries. Yes we need to invest in the future but that doesn't mean restrict by regulations now.

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