In my latest reading of Mitt Romney's No Apology: Believe in America, Romney focused on economics. I have two items (and the second item has sub-items).
One reason that I wanted to read this book was that Romney defends the
idea of creative destruction in it, and I was curious about how he went
about that. Creative destruction has to do with companies becoming more
efficient and productive, and jobs being lost as a result. For
example, when new technology is created, efficiency and production
increase, but the technology replaces certain workers and thus puts them
out of a job. Romney's argument is that creative destruction
may result in temporary setbacks, but increased efficiency and
productivity are good things because they result in more jobs, cheaper
goods, and a higher standard of living for Americans.
I wish that Romney had done a better job of connecting the dots----of showing how
more productivity creates jobs, which can employ those who lost their
jobs due to creative destruction. I'm somewhat of a beginner when it
comes to economics, and so, while some principles may be self-evident to
others, they need to be spelled out to me. Hugh Hazlitt at least
attempted to connect the dots in his book, Economics in One Lesson. In my post here, I summarize Hazlitt's argument:
believes that full employment can contribute to production, but he
doesn’t like efforts to stifle production in the name of 'full
employment'. As far as he’s concerned, efficiency can create jobs. If a
machine makes shirts, for example, the owner of a shirt-store may lay
off those who sewed the shirts together, since a machine now does their
work. But jobs are created to make the machines. The owner can expand
his business and hire more workers. And, as more shirts get produced,
the price of shirts comes down, and consumers can spend their money on
other things, which helps the economy. Jobs are lost due to technology,
but jobs are also regained."
I hope that it works that way.
Unfortunately, what comes to my mind is something my high school
sociology teacher said after we watched Michael Moore's Roger and Me, which was about General Motors leaving Flint Michigan and the devastation that resulted: "Good jobs were leaving, and new Taco Bells are not going to cut it!"
point that I appreciated that Romney made was that society should help
people to find employment. He mentions employment centers and language
programs for people who don't know English that well. But Romney also
states on page 130:
"...I favor programs that incentivize
employers to hire and train people who have been out of work for an
extended period of time, who have disabilities, or who have been
affected by the failure of a company or industry. As governor, I was
able to establish a program that paid employers $2,000 toward the cost
of training anyone they hired who had been out of work for more than a
As someone with Asperger's, I appreciate what
Romney says here. But I hope he's serious and proactive about
this----that, were he to enter office, he wouldn't forget about the need
for such programs and leave people on their own.
On page 149, Romney states: "For us to confidently grow our economy, we
must grow our own pool of capital and make it available at a reasonable
cost. To do that, we must preserve the value of the dollar by
defending against inflation, rein in government's excessive deficits,
simplify taxation, and reduce taxes on enterprise and investment."
Romney makes a variety of points that deserve consideration:
says that inflation discourages investment because people are reluctant
to invest when they won't get much of a return, due to the value of the
dollar going down. This brought to my mind my reading of Ron Paul's End the Fed, which made me think about the positives and negatives of a tight monetary policy. See my posts here.
promotes savings because that enables there to be money for
investment. That reminded me of Hazlitt's argument that tax cuts
encourage saving and thus allow for the banks to have more money to lend
out for businesses to be created, as well as Ron Paul's argument that
people should save and then invest rather than relying on credit.
Romney says, however, that saving does not occur enough in America, and
so there is a lot of capital in the U.S. that has been provided to us by
foreign companies. That's why Romney does not support
alienating other countries through protectionism----they're the source
for a lot of our capital----but he does want for the U.S. to stand up to
unfair and inappropriate trade practices.
states that taxes on corporations can backfire, for corporations,
rather than buckling under and paying the taxes, could end up looking
for a country where the tax burden is lower. Moreover, Romney
does not think that profits are a bad thing, for he notes that there are
companies that use their profits to build the companies, which can
result in more jobs.
----While detractors have
claimed that Romney's tax plan will raise taxes on the middle-class,
Romney in the book appears to oppose any tax plan that will do so. (Of
course, whether his plan will do so or not is another question!)
He favors eliminating the capital gains tax and taxes on dividends and
interest for the middle-class----and he states that this "wouldn't cost
the government a great deal because most of this tax today is paid by
high-income individuals" (pages 143-144). He also expresses concern
that the fair tax could result in "a windfall for the very rich and the
extra burden...would fall on the middle class", and he hopes that the
fair tax----were it to be pursued----would be structured to avoid that
problem (page 145).
----Romney states that the deficit is
problematic because it reduces the amount of capital that can be used to
start businesses, increases interest rates, and discourages foreign
investors, who look at America's national debt in deciding whether or
not to invest in the U.S. I talk some about the national debt here and here.
At the same time, Romney quotes Michael Porter's statement that
"controlling government deficits that are not being used to finance
productivity-enhancing investments in the economy is perhaps the most
direct way in which government can influence the pool of investable
capital" (Porter's words on page 148). While Romney most likely
disagrees with President Obama's stimulus, the idea behind it is that it
is a deficit that is designed to increase productivity and to invest in
----Romney says that the government employs the
services of the private sector (i.e., through defense contracts) because
the private sector is more efficient than the government. That may be
true, in a number of areas, but I think that there are some
disadvantages to such a policy. Private companies can end up getting a
lot of money from the government, as did Haliburton and Sallie Mae.
Sometimes, it's cheaper for the government to do the job itself.
Martyn Lloyd-Jones interview
3 hours ago