Today that same effort will require not a few billion but a few trillion. Big difference for the same result.

That is why I continue to say that the best thing the government can do is to carefully regulate business in a non punitive way. There must be caution employed by a government to insure that business is not penalized by an ever increasing desire to punish business for its greedy last 10 years.

As for a 5 percent sales tax. It will never happen, I will grant you that because this nation has no desire to pay off our debt, balance our budget or make anything less then caviar for its citizens. To do any less might mean they lose their jobs. With this I will agree with the ops initial starting perspective.

However that does not mean that we as economists and citizens who ourselves must balance our budget cannot continue to call for fiscal responsibility rather then more of the same, just driven by different basic motives.

When the US government builds a new school, Who does the work?
When the US government builds a new road, Who does the work?

The US government simply doles out the money and the private enterprises go to work making the dreams of the government a reality. Unless you know something I do not, the US government does not keep millions employed to build this infrastructure. It has always been the business of private industry to make these things a reality for a government who only………………

agrees to spend the money and asks the private firms for bids to do their bidding. Thus the infrastructure that is being bandied about is the private industry's cash cow. However I fear that we are looking at a public works job at the further expense of more companies biting the bullet to meet some hysterical demand by those who appear to be on the far left who believe the world is in utter chaos unless they have socialized works programs.

I read your reply to me last night and I was thinking about it….. I do think in the long term recycling and using biological components are great. Being somewhat a fan of science fiction I've always been intrigued by those starships that pop up every now and then which to varying degrees have biological components. Essentially if a living organism can take care of itself with food (energy), repair non-fatal problems and eliminate only necessary waste then that's what we should strive in our industry. Even if we can't make “machines” which are biological, we can create small components with their own energy sources (such as solar powered calculators). It would be great if we could policies in place that encouraged kids (and adults) to use their imaginations in creating systems (or components which could be applied to various systems).

Thanks for comments!

5 percent would garner about 250 billion dollars in paid down debt which in turn would lower the interest payments on the national debt.

Restructuring debt would be acceptable if the debt was restructured to only address interest payments. Those bonds that were sold at 6-8 percent need to be retired and restructured to the more reasonable 2.5 percent range saving an estimated 56 billion dollars per year in interest payments. These two areas alone could retire 300 billion dollars of debt per year and in 25 years the debt could be retired, but at a sustainable growth of 2.5 percent the debt would actually be reduced in about 18 years.

Given of course our nation ever figured out how to balance a budget and stick with a balanced budget.

Infrastructure? That is our industries job. We have an infrastructure that is calculated to be on the order of 350 trillion dollars. There is no way the government is going to address this. The government is about making industry and business a thriving entity that will rebuild and retool as necessary to keep up with the changing of times.

That is why the greatest thing our government can do right now is to be shrewd and astute in regulating and making the climate agreeable to business, not penalizing and antagonizing them into contracting to meet stricter guidlines.

This means that once we get enough debt that the interest payments are greater than 3% (and really that is pushing it because growth itself can barely go above 2% for long periods in advanced economies) of GDP then it is impossible for us to pay it off with slow and major reductions in standard of living. We are very close to hitting that point and will in the next year or two I would imagine. This is what the problem is for many emerging countries and Germany after WWI for instance. It is well recognized that at a point it is better to have negotiated debt reduction because there is a much greater chance of getting it paid off. The only other option that countries take (and something our academic leaders will talk about I assure you) is to create inflation to try and pay it off, but that never works.

About technology, I don't believe that the government is good at determining what technology to adopt, but I do believe the government is good at creating an environment for technological production that they aren't doing currently. This includes both educational and economic incentives, as well as increased spending for basic research and a very thorough and needed reworking of patent law and copyright law. A lot of it is also not direct government action but just leadership that creates an environment where scientists, engineers and the like reassume a stature where kids want to grow up and be in those fields into of everyone being a lawyer or in the financial industry. Also I do think that the scientific professions need to retool themselves from the inside to be attractive to a wider audience.

Also direct infrastructure improvement — especially in our power and internet grid — would be a big help. And low cost loans to install renewable energy sources may as well.

Perhaps you do understand what your asking.

I have a better solution. Why dont we as a nation PAY OUR BILLS. Instead of looking for the easy way out.

Retooling is not the responsibility of government. It is the responsibility of industry if they want to compete. The only role of government is that regulations should be in place to insure what happened under both Clinton and Bush do not happen again.

Examples. Years ago the TV was alive with “Is it live or is it Memorex?” Poloroid commercials. Today those commercials are gone as is the industries they represent. Kodak has quit making film, leaving that to Fuji. Memorex no longer makes cassette tapes etc.

The problem has not been that our industry has failed to change. The problem is that change is happening faster then our industry can change.

Please understand the entire problem before you only address a part of it. By the time Memorex gets tooled up and in full swing in producing Cassettes, the technology has changed to DVD discs. Camera' have gone from needing a tripod and a burly man to lug them around to something that fits in your phone that you put in your pocket.

Technology my friend. That which you indicated you wanted to talk about most is what is our leading enemy right now. It is why Bill Clinton basked in the glow of the Internet boom only to leave office just as it was exploding to why GWB Basked in a strong economy only to see it explode.

Technology is our friend and our enemy. The companies that look ahead, become flexible and make forward looking decisions are the ones that will thrive. Those that do not will fail.

That is your problems………Defaulting on our debt because its hard to pay your bills is no answer. Not for anyone, governments especially.

Thank you.

Green tech — and I'll expand the typical energy technology to include recycling technology — is the key to being able to keep consumption up. I am in favor of a lot of ideas that rely on biological components for next generation electronics for the simple fact that there ain't a lot of the rare earth metals that we need to make our stuff…something not commonly discussed. I agree that green/bio tech and similar things hold tremendous potential for export. I guess a word other than “manufacturing” should be used because that implies textiles, cars and the like. Sure I think we need to make more of those (well the first not cars) so we can partially meet domestic consumption, but calling for a restructuring of the economy isn't saying we're all going to be working in sweatshops.

The more I'm reading the more it is becoming clear that trade imbalances/disruption are the root cause of the vast majority of historical economic crises even though the specifics are different. Economic downturns that are primarily due to domestic over investment can cleanse themselves out easier, but policy reaction that may work for those will actually make things worse if there is a major trade imbalance. I guess the trick is trying to figure out what the difference is. They are talking about possibly every major country except China actually contracting next year (and China will contract on a real basis if you consider how much they have to expand to support their population) which was theoretically impossible based on their models of recession. That's because they relied too heavily on looking at domestic dynamics and not trade dynamics when trying to make the model…and that's exactly what governments are doing now.

The government would also probably partly default on debt (through negotiation with central banks) and the dollar would drop against other currencies as it wouldn't be supported as rigorously, but interest rates would remain low for domestic investment. Again, this is what happened to the debtor nations during the Depression. This would encourage borrowing to invest for productive purposes and allow the government to refinance domestic debt, making the long term liabilities look slightly better.

The government can offset some of the deflationary effects by doing infrastructure projects, social welfare and providing manufacturing support through direct printing, although the aim wouldn't be to counteract deflation totally (unlike the current amount of printing they are doing).

The investment into export producing industries, the relative lack of domestic buying power and the import demand destruction would all play a role in rebalancing trade. Standard of living would be reduced and gradually get better based on how successful we are in switching to new sources of energy and other forms of technological productivity increases. I won't lie, the “plan” would take many years if not over a decade to get daily standard of living back to what it is today. Also, everyone retiring within the next 10-15 years and is counting on asset values would pretty much be screwed. I'm not sure how to address that at this point, it is something that would obviously be extremely important to think about (and goes to show why basing retirement on leverage asset value isn't smart national policy).

The other alternative is the current path, which is to try and prop up asset values and keep consumption very high…continuing to have massive trade deficits as our resources would be spent on consuming instead of restructuring the economy. Click on “it is the reserve currency” link for a graph of that. Let's say we can print our way out of the current crisis and without even much inflation as it just counteracted some debt going bad. Then what? We'll have tens of trillions out in the world and will have so much debt that our economy won't be able to grow fast enough to actually pay it off…either that or the money gets invested in things and creates massive inflation. In either case, our future standard of living would decrease rapidly and we would have spent all the resources on that instead of doing antyhing about the situation. Maybe people retiring in 10 years would be OK if they got lucky, but the rest of us would have little chance.

I've tended to think that domestic production and consumption need to be re-balanced, but you're absolutely correct (and something which I haven't really concentrated on since the economic situation is global), on a larger scale there needs to be an international re-balancing. Though I don't think we need to actually reduce consumption… but that doesn't mean that I believe the rate of consumption needs to keep up with the rate of production.

On a global scale, I've said commented before on here that I think the US needs to become a leader in green technology and then export to other countries. I think China had an opportunity to build their infrastructure in a more efficient manner (green friendly) since they were a developing country. But they've lost that chance. Hopefully the US will retool and export.

I will refrain from commenting on whether I think your right or wrong. However its important that someone who calls upon world wide global change and ways of thinking be absolutely sure that they are correct in what they are proposing.

Your proposal is a contraction of consumerism while we embark upon expansion of production. Yet the variables in play make this highly undoable when your model fails to take into consideration a contraction of wages and benefits to become competitive. Or do you fully understand what you are asking?