7 principles for a post-coronavirus economy

Henry M. Paulson

1. Our economic model should protect those most in need. We must significantly upgrade our social safety net while maintaining incentives to work. Without a job, millions of Americans lack the savings to meet next month’s rent or mortgage payment without government assistance. When workers such as those in the hospitality sector have an annual average income of only $20,000, lectures about the need to save are ineffective. We need a more robust system of supplemental income and monthly food, rent and health insurance assistance.

2. State-of-the-art infrastructure is essential to economic competitiveness. It’s time for a modern-day domestic Marshall Plan that includes massive government and private investment to rebuild and create the infrastructure of the future. This program can play an important role in spurring the recovery, creating jobs and giving the market a lift. But it must be future-oriented, not only repairing and maintaining roads and bridges but also investing and making regulatory changes to create a best-in-class national digital infrastructure.

3. Human capital is what differentiates us. To bolster the productivity and resilience of our economy, we need big, smart, forward-looking investments in education. We must commit more public dollars and resources to support institutions of higher education and to foster a workforce that has the skills to be innovators, business builders and job creators. We also need an immigration policy that attracts, educates and trains the best minds from around the world.

4. Protectionism will destroy our competitiveness. Trade fosters American competitiveness and innovation. We need to strengthen our investment in trade linkages rather than retreat into self-destructive isolationism.

5. Our environment is vital to long-term prosperity. We need to protect the clean air, water and biodiversity that are essential to our long-term economic prosperity and implement policies and investments to mitigate the economic risk of climate change. As a start, it’s time to adapt our policies and build the infrastructure to withstand the weather-driven shocks that are a short-term certainty.

6. Capital is the lifeblood of the economy. We must nurture best-in-class capital markets with a regulatory and oversight regime that ensures financial stability and consumer protection while encouraging the innovation that has made them the envy of the world. Capital markets, ranging from venture capital firms to leading global banks and asset managers, facilitate economic growth by financing businesses that create jobs and support American families.

7. Massive debt will cripple our ability to achieve long-term prosperity. The aim of the recovery must be to get more Americans working, spending and paying taxes. When the recovery is behind us, we will have to begin the long but essential process of reducing our national debt. It makes sense in the short term, while interest rates are so low and the need so great, to fund strategic investments with long-term debt. But in the end, more revenue will be necessary, and wealthier Americans will have to pay higher taxes. A major overhaul of our tax system can raise substantial revenue without hurting competitiveness. And we can reduce federal expenditures if we make reforms, such as fixing our inefficient and expensive health-care system

source: Washington Post

Comment by

Broad words of wisdom from a financial oracle, but no concrete plan. My plan:
1) eliminate the carried interest (extremely low tax rate) on hedge fund and other passive (non wage earnings).
2) eliminate all tax deductions for second residential homes.
3) eliminate the cap on social security income limits. A high earner (> $128K) needs to continue to be taxed on their income.
4) tax investment income (dividends, Capital gains) at the same rate as wages.
5) prohibit stock buy backs by corporations. This practice was illegal and considered stock manipulation up until the 1980’s. Thanks Ronnie!
6) cap CEO pay at a low multiple of the mean wage earner (20%). There is no current upper limit.
7) reinstate the SUPERFUND tax to pay for environmental cleanup.
8) eliminate the corporate welfare depletion allowance for petroleum exploration/extraction.
9) update the mining laws (vintage 1864 era) to tax mineral producers at market rates.
10) provide STEM scholarships to quality (aptitude-tested/proven) students.

Beginning in the 1980’s, the private sector began an effort that continues to this day to reduce the proportion of the cost of selling goods and services attributed to labor. This takes many forms, including limiting wage growth, outsourcing, union busting, sending jobs overseas, transferring jobs to right-to-work states, increasing the ratio of part-time to full-time employees, not translating workplace productivity gains into wage increases, shifting more health care costs to employees, ending defined benefit pensions, reducing employer contributions to defined contribution pensions and switching to once-a-year, lump sum contributions, classifying employees as independent contractors to avoid paying benefits and workingman’s compensation contributions, increasing the number of unpaid internships, hiring new workers through temp agencies, requiring employees to sign non-compete agreements, and layoffs, not only during recessions, but also after mergers and acquisitions. Non-cyclical layoffs have become a permanent feature of the new economy.
Economic marginalization of ordinary working Americans in the private sector is once again a core organizing principle of American conservatism.

“The cure for capitalism's failing would require that a government would have to rise above the interests of one class alone.”

- Robert L. Heilbroner, American economist, (1919 – 2005)