Tuesday, July 12, 2016

An Open Letter to Donald Trump on Economic Policy

We the undersigned urge you, the presumptive Republican nominee for President, to support a rebirth of free-market capitalism in the U.S. You have said repeatedly that you want to make American great again. We agree with you. And we assert that the most effective way to start that process would be to affirm your principled support for economic liberty, for open and competitive markets and for a foreign policy that rejects both protectionism at home and interventionism abroad.
Over the last two decades especially, the U.S. economy has been saddled increasingly with burdensome government rules and regulations that stifle innovation and retard economic growth. Some of the more obvious examples are the massive command and control system put in place under the Affordable Care Act (ACA); the enactment of purposely mislabeled “free trade” agreements (such as NAFTA) that actually have harmed some U.S. businesses and destroyed jobs while subsidizing other politically connected firms; the failed so-called “War on Drugs” which wastes private and public resources and contributes to rising violent crime rates; and the expansion of inefficient and rights-violating environmental regulations that have hampered productivity and increased the overall cost of doing business; and, finally, the pursuit by the Federal Reserve of a pernicious decade- long low-interest rate monetary policy which has (again) created a massive speculative bubble in housing and on Wall Street...that is sure to end badly.
As a successful businessman you must understand that these harmful economic policies of the past must be changed by the next president and Congress if the U.S. is to continue to remain efficient and prosperous. And you also must understand that the key to any economic rebirth in the U.S. is not old-fashion Keynesian deficit spending, quantitative easing by the Fed, or the enactment of higher minimum wage laws. The key to any sustained economic recovery is the legal protection of private property rights and the adoption of free markets where entrepreneurs, alert to price and profit signals, guide scarce resources into their most productive use. Below we suggest a concise list of first-order public policy changes that could set the early agenda for your new Administration:
First, the Affordable Care Act should be repealed in its entirety and, as you have already pointed out, any prohibition on interstate competition in health insurance also should be repealed. Health care and health care insurance should be left to the market.
Second, all recent thousand-page international trade agreements should be replaced with a single, clearly worded paragraph that allows any U.S. business (or consumer) to trade with any other business (or consumer) anywhere else in the world on terms that are mutually satisfactory. Period.

Third, you or the Congress should immediately remove cannabis (marijuana) from its current Schedule One prohibition status under Federal law; cannabis and drug policy generally should be left entirely to the states. (Ideally the entire Drug War should be scrapped and the production and consumption by adults of any “drug” should be legalized.)
Fourth, the federal minimum wage should either be permanently fixed at its current rate or reduced; legally minimum wages should be left entirely to the states. (Ideally, all minimum wage laws should be repealed since they cause job destruction).
Fifth, the U.S. corporate tax rate should be reduced so that it is the lowest (not the highest) in the industrial world; ideally, it should be repealed entirely because it constitutes double taxation on shareholders of corporations who also pay income tax on their dividends.

Sixth, the Federal Reserve should be required by law to end all forms of quantitative easing and interest rate regulation now accomplished primarily through open market operations; interest rates for savers and investors should be market determined. In addition, the Federal Reserve’s budget should be determined by Congressional appropriations like that of any other federal department or agency. And finally, as a long-run solution for our recurring financial problems and economic recessions, replacing the current inflationary paper dollar with alternative monetary arrangements that provide for a sound, market-based commodity money, such as the gold standard, should be seriously considered.
There will be Democratic as well as (some) Republican opposition to these changes. Count on it. But your job will be to hold fast to basic principles and persuade the opposition that long lines at airport security and rising health care costs are based on economic ideas that are totally misguided. Socialism and progressivism and crony capitalism have failed miserably. We need common sense capitalism and you now have a clear mandate to initiate its rebirth.

Sincerely, Joseph T. Salerno, Pace University
Dominick T. Armentano, University of Hartford
William N. Butos, Trinity College
Mark Thornton, Auburn University
Henry Thompson, Auburn University
Jo Ann Cavallo, Columbia University
Christopher Westley, Florida Gulf Coast University
Murray Sabrin, Ramapo College of New Jersey
Thomas Tacker, Embry-Riddle Aeronautical University
Peter M. Kerr, Southeast Missouri State University T
homas DiLorenzo, Loyola University Maryland
Marshall DeRosa, Florida Atlantic University
Walter Block, Loyola University New Orleans
Robert Batemarco, Fordham University S
amuel Bostaph, University of Dallas
Paul A. Cleveland, Birmingham-Southern College
Peter G. Klein, Baylor University
Thomas L. Wenck, Michigan State University
John B. Egger, Towson University
Douglas Butler, Texas Christian University
Paul Prentice, Colorado Technical University
Butler Shaffer, Southwestern University Law School
Judd Patton, Bellevue University
Paul Gottfried, Elizabethtown College
Jim Cox, Georgia Perimeter College Roger Clites, Tusculum College
Bruce Koerber, Divine Economy Consulting