Thursday, September 18, 2008

Government and the Economy

What role should the government play in the economy.

The first thing they should do is protect us from fraud. I have often said it is not the governments job to protect us from ourselves. It is however their job to protect us from the fraudulent and anti-competitive actions of others. Therefore securities regulations, anti trust regulations and consumer protection laws are all good things.

Deposit insurance is a good thing. People should have one place to put there money that is 100% safe.

The Federal Reserve is also a good thing. Obviously it is also the job of the government to negotiate commercial and trade arrangements with other countries.

After that what the government can do is things like keep government spending in line with tax revenues and keep taxes low.

Reforming Social Security the right way could give the economy a fifty year boost.

They also need to concentrate on maintaining infrastructure. A little historical note. During the first half of the 1800's one of the hottest political debates was should the government be involved in internal improvements. I think history has shown that this is one area where the government can do a better job then private industry. (why this is would be too long to digress into now).

These things will insure that the base of our economy is strong.

What the government should not do is regulate the amount of risk investors can take.

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