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Republican candidates revealed how they think during the moon debate
The discussion of Gingrich’s moon colony proposal at the January 26 Republican presidential candidate debate tells us a lot about the Republican Final Four. It reveals how they would approach their decisions as President and lets us predict the economies that they would produce. (Click here to watch this portion of the debate.)
Speaker Gingrich: The Big Idea Man
Speaker Gingrich initiated the discussion of a possible moon colony during a speech in Florida designed to appeal to NASA workers that was televised by CSPAN the day before the debate. He urged that the United States set a new national goal to put a permanent colony on the moon by the end of the decade and make that colony the 51st state. But the most creative part of his idea was his method for involving entrepreneurs in the venture.
He is aware that NASA, as is true of almost all government-run institutions, has deteriorated over time. These days, it can’t even get satellites up into space. Gingrich would largely replace NASA with contests. He said:
Gingrich is correct that the government gets more bang for its buck when it sponsors contests. And he doesn’t have to go all the way back to Lindbergh’s flight to find examples. The Defense Department’s Advanced Research Projects Agency (DARPA) has sponsored one fruitful contest after another. In contrast, the National Science Foundation (NSA) spends its research money funding projects that have been pre-approved by scientific peers, a wasteful system which reinforces the current Age of Scientific Conformity.
Gingrich has some good ideas and some bad ones. At a time of huge budget deficits and huge government debt, this is a bad idea. It and his other expensive proposals show that he is not serious about balancing the federal budget. Growing budget deficits are a Sword of Damocles hanging over the economy. Already our government owes more than all Americans earn in a year, combined. If the national debt continues to grow as a percentage of GDP, then when interest rates rise, the government will be forced to choose between defaulting on its debt or trying to inflate it away. Either choice would bring about a severe crash.
His plan to eliminate the capital gains tax altogether is another bad idea. Although business tax cuts encourage business investment, capital gains tax cuts mainly encourage speculation and the cashing in of wealth. Clinton’s capital gains tax elimination on houses in 1998, which Gingrich approved, immediately set off a speculative bubble during which many households cashed in their wealth through second and third mortgages. GW Bush’s capital gains tax cut in 2002 set off a corporate stock-buyback spree during which corporations cashed in their profits in order to produce capital gains.
And Gingrich still supports Clinton’s mistake of admitting China to the WTO and giving it favored nation trading status, a decision which is largely responsible for an entire decade of declining median income (due to the loss of good-paying manufacturing jobs). When trade is balanced, both countries benefit because jobs lost in one industry will be made up for by even better paying jobs in another. But the Chinese government uses currency manipulation and other manipulations to keep trade out of balance so that China gets jobs and we get debt.
Gingrich is full of ideas, some good, many bad. Instead of balancing the budget, he would waste money on grandiose schemes. He would eliminate the capital gains tax, even though such capital gains tax cuts do more harm than good. He promotes free trade, even when it is unbalanced. His election could bring closer the day when we have a U.S. colony on the moon, but well before that, the U.S. would likely face an economic crash.
Rep. Paul: The Government Shouldn’t Be Involved
Rep. Paul thinks that the U.S. government should not be involved in the space program, except to the extent that there is a defense need to be involved. He says:
Perhaps Paul is correct. If the U.S. government got out of the way, private industry might explore space. Science fiction writer Robert Heinlein envisioned that the moon would be colonized by the tourist industry – that there would be huge gymnasiums on the moon in which people would fly around by flapping wings on their arms in the low-gravity environment.
Paul would promote an isolationist future in which the United States turns inward. He is against the U.S. government being so big as to intervene in American markets, but does not oppose foreign government intervening in U.S. markets, including the foreign government interventions in dollar currency exchange markets which help them steal our industries.
His economic program is a throw-back to the laissez faire classical school of economics. He has a serious plan to balance the budget through massive spending cuts, but he hasn't learned anything from 20th century economics mistakes. He hasn't learned the lesson that the University of Chicago economists (led by Milton Friedman) learned from the Great Depression -- that the government should maintain a growing money supply. He would repeat President Jackson's depression, caused by returning the U.S. to a strict gold standard.
And he hasn't learned the economic lesson of the crrent economic depression. He would continue to give away American industry to foreign governments as a reward for intervening in the dollar-exchange market. He is against big government, but only if it is the U.S. government.
Gov. Romney: Space Program Should Help the Economy
Governor Romney’s response to Gingrich’s plan reflected his seriousness with budget balancing. Romney said:
Romney’s goal in running for office is to strengthen the U.S. economy and its position in the world. As president, he would rely upon academic and military experts and the business community to help him decide what to do. His space program would be a partnership.
He is serious about balancing the U.S. government budget. He would stabilize government spending at 20% of the economy, a relatively high level. His corporate income tax cut would be a modest reduction from 35% to 25%, just enough to get the U.S. down to Europe’s relatively high rate. Although, he would take on China's trade cheating, he would not address the cheating by almost all of the other emerging market governments. He wants to reverse America's economic decline and will enlist our country's business leaders in that effort.
Santorum: What is Best for Our Children?
Senator Santorum likes the way our space program helps inspire our children to achieve in science and mathematics, but, at the same time, he realizes that cutting the budget deficit is our priority. Santorum said:
Santorum makes his decisions based upon what is best for our country’s children. He wants them to have the dream of exploring space, but his top priority is to make sure that they can get jobs in a growing manufacturing sector. He plans to cut the corporate income tax from 35% to 17.5%, while eliminating it completely for American manufacturers. He also plans to cut the capital gains tax from 15% to 12.5%, which would increase capital gains tax collections due to increased cashing in of wealth.
Unfortunately, he has not yet figured out that you can't get companies to build factories in the United States, no matter how low the corporate income tax, unless those factories earn income. U.S. manufacturing investment will not resume until the United States requires balanced trade through a WTO-legal scaled tariff or some other similar measure.
If Santorum moved trade and the government budget toward balance at the same time, his plan would create a new era of economic growth. Although his heart is in the right place, he has not yet figured out that he needs to require balanced trade in order to succeed.
Their Economic Plans
Economics is actually very simple. If you want stable economic growth, all you need to do is balance budgets, balance monetary growth and balance trade. Any one of these, if kept out of balance, causes problems. Perpetually imbalanced budgets eventually force either a government default or high inflation. Imbalanced money supply produces a severe business cycle with periods of growth punctuated by severe recessions. Perpetual trade deficits cause manufacturing job loss, economic stagnation and an eventual currency collapse.
The moon debate reveals what the Republican Final Four would do to the economy if elected president:
None of these candidates are perfect. But they would all be better for the U.S. economy than President Obama, who freely lets China and the other emerging market countries steal our industries and continuously grows a Sword of Damocles of debt above America's children.
Comment by Alyssa Myers Age:11, 2/28/2012:
What are some of the ways that it would not benifit us if we colonized the moon, besides the fact that we should be working and making Earth safer instead of colonizing a new planet already?
Real Estate Taxation
Journal of Economic Literature:
Atlantic Economic Journal: