Exclusive: Using a ‘Direct’ Approach to Improve America’s Economy

by BRUCE C. MARTIN, MPP June 25, 2008

We must repair our physical economy!

We need to follow the philosophy espoused by our first Secretary of Treasury, Alexander Hamilton, whose approach was for a directed economy. He believed that the "rock of America's political salvation" required the establishment of a system of directed capital, through which private and public modalities, as well as overall productivity, were linked. This would require agreements between government, manufacturing and labor for greater functional direction to produce more capital, leading to an ability to equalize income between economic levels.

Following such an approach would increase economic efficiency and also provide an equitable solution to our current social and economic ills. It would promote a functional, directed society and would lead to greater productivity due to a morally improved method of capital development. For the United States, the alternative is a continued dysfunctional system, with varied performance results. If policy makers are not willing to establish certain parameters of improving our economic position, the resultant income disparity will continue to widen to a point where the only possible solution will be heavy taxation to fund even basic social needs.

Even if we are good enough to find a balanced approach towards a directed economy, our country is in jeopardy. Certainly our health care system is in deep jeopardy. If we don't fix it now, with a total overhaul, healthcare costs will sink America. If we go bankrupt, Lichtenstein will be able to take us on!

From the standpoint of our physical economy, politicians must recognize the need to concentrate on domestic production instead of free trade, whose focus is only good for speculators. This requires that national leaders develop policies towards a more directed economy, with the protection of our own ability to manufacture goods, and therefore improve our standard of living and national security. As we (and other nations around the world) do so, there will be less friction and therefore less chance of war and terrorism.

The United States has historically recognized the need to promote domestic manufacturing, directly opposite the current situation of lost manufacturing capacity. Lost capacity threatens our nation's ability to switch manufacturing efforts when necessary, creating a great threat to our overall national security in the 21st century.

It should be remembered that in order to win World War II, President Roosevelt convinced manufacturing companies such as Ford and General Motors to switch their manufacturing efforts from making automobiles to making airplanes, thereby benefiting our country's war production. At the height of the war, their plants were producing as many as 100,000 planes per year. This "Arsenal for Democracy" production effort was crucial to the winning effort, and led to great prospects for the U.S. economy, and also permitted establishment of the Marshall Plan for the rebuilding of Europe's economy.

This nation is capable of achieving massive goals. The Apollo Moon Landing program is an example of what can be accomplished if our citizens are motivated. The achievements from that program alone led to countless technological developments which were absorbed into industry and greatly improved our productivity and quality of life. According to the Congressional Budget Office (March, 1994), the program returned at least $10 for every $1 invested. In essence, the program cost us nothing, and in fact created new thriving business areas such as Silicon Valley.

There are situations where market forces work appropriately in solving social problems. However, we should realize by now that the market cannot do everything all the time, and is prone to failure in handling problems related to externalities as well as "free riders." We are in a time now when our economy needs sensible direction.Private as well as government investment needs now to be directed into the infrastructure and educational requirements that have long been neglected and which have created the long-standing income disparity across this country.

Family Security Matters Contributing Editor Bruce C. Martin, MPP, is the commander for the Marina (California) Police Department Support Services Division and a professional firefighter. Feedback: editorialdirector@familysecuritymatters.org.