Saturday, October 30, 2010

Open Letter to Ruth McClung AZ candidiate for Congress

Dear Ruth,
I just watched your appearance on Glenn Beck.

I'm also a former physicist, and a rational conservative. Your emphasis on rational consideration of unintended consequences got my attention. Your lack of a clear argument about the direction of the economy prompted this letter. I don't really know whether you were advised to avoid substantive discussions or not, but I hope you never take that advice.

The three streams of activity that power our capitalistic economy are innovation, investment, and employment of qualified people.

The stream of innovation starts with basic research, applied research, moving to technology, deployment, sales and profits from those sales. This stream is decades deep.

Investment starts with savings beyond the basic human needs, which means there has to be a base of prosperity. A broad middle class and a narrower but vital wealthy class are essential. Savings flow to specialist individuals, such as angel investors, venture investors, then to investment banks and brokerages, stock markets and back to savings. This is the cycle of capital formation, without which there can be no money for employment. This stream is not as deep as innovation, but it is still a decade deep.

Employment occurs at each of these levels, but blossoms out to big numbers at the end of the stream. In order to be useful, people must be educated initially and throughout their lives, not just one stint in college or high school. The identification, nurturing and maturing of individual and often unique talents is a process of at least two generations: first, to have the ability to send your kids to school, and second, to be those kids.

When all three streams, innovation, investment and employment finally run together we have a river of prosperity and economic growth. There will be big, slow moving pools, like the the big pharma companies, and small, fast eddies, like the original Twitter and NVidia. Employment of an additional 10 million people means an additional $100 billion in various tax revenues at present tax levels (talking in orders of magnitude) and an additional half trillion dollars of additional economic activity per year. The aggregation of investment in new profit-making activities will be at least an order of magnitude higher, some number in the trillions added to the value of the economy each year.

Since World War II the US has dominated the world's economy with just such measures. China is trying to do the same thing, under a handicap called "central planning". We ought to be able to compete with our freer markets - our streams run with fewer impediments.

Progressives are all about impediments. They feel the free running streams are dangerous to their goals. Their goal is a level field where the population is numb to aspiration and achievement. An elite can make all the required decisions and parse out the proceeds according to their formula of who is most worthy. They confuse this formula with fairness.

Prosperity is the ONLY WAY out of the debt we have accumulated. Some trimming can be done, but it will crimp growth. Some reversal of government size is both necessary and useful, but it cannot be enough. Firing up the engine of prosperity is the way out, the win-win solution and the thoroughly American way.

I pray you read and respond to this email, and I wish you every success. We need you!

Note: Ruth McClung is Arizona Republican candidate for Congress.

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