America at Risk … if only

This essay about risk-taking in America by Lee Habeeb and Mike Leven really caught me by surprise: very well crafted and a great message, too.  (thanks to Rich T for the link!)

“But to really know glass, to get a sense of its strength, you must break it,” wrote [Fortune’s Ryan] Bradley. “So someone bends and hammers and sometimes throws baseballs at the glass until it scratches or cracks or shatters.”

The glassmaker then studies the fractures, which reveal the glass’s secrets. Glass fails, Bradley wrote; the researchers then learn from the failure, and the cycle repeats. And improves. Glassmakers know that from failure comes strength. And there is no failure without risk. There is no growth — no success — either.

One response to “America at Risk … if only

  1. Hi Dr. Kane Yes very good article. Thanks. While not the total solution, of course, an important part of the solution to these issues is to increase private sector incomes and therefore private sector spending. More new businesses will succeed if there is more spending on their products and services. More private sector jobs will be created if there is more private sector spending – leading to more families and larger families.
    So the question is: How do we increase private incomes and spending? Preferably, it should come directly from the private sector. Higher business spending and investment, higher consumer spending and more net exports will all lead to higher incomes. In recent years and right now these sources of demand have not been enough to increase private incomes and therefore spending to satisfactory levels. Therefore, we should be using at least one available “tool” to increase private sector incomes – namely increasing the public sector deficit.
    When we run a higher deficit: (a) savings are taken from the private sector to “finance” the deficit (b) the private sector receives a Treasury security in return (c) the private sector ultimately is also the beneficiary of this deficit “payment” (lower taxes or higher spending). That is, if this payment is spent, aggregate demand increases, resulting in our goal of higher private incomes and spending. And, because the private sector received these additional revenues with no increase in costs, corporate profits (private savings) are increased (check the Kalecki equation for profits if this matter is not clear). This additional private savings caused by the increase in private incomes .replaces the private sector savings used to buy the Treasury bonds (no “crowding out”). So, at the end of the day, the increase in the deficit has created more private sector demand, income, spending, profits and jobs. And the private sector is wealthier – it owns the bonds. Public Sector Deficit = Private Sector Surplus is, as you know, an accounting identity in economics.
    Yet our leaders, on both sides of the aisle, are engaged in a debate as to how to best decrease private sector incomes
    (i.e., reduce the deficit) – thus aggravating the problems for entrepreneurs and family creation.
    I would like to see our thought leaders (people like yourselves) explain what seem to be basic economic principles such that we can begin to get back on the track that Mr. Habeeb and Mr. Leven would like to envision.

    I hope you find these thoughts interesting and worthwhile. You might not agree with parts of the process I described.. However, if that is the case, what linkage am I missing? Any thoughts greatly appreciated as we are all
    have the same objective – a stronger private sector which will increase our standard of living and, more importantly, reduce any wasting and suffering of our human resources.

    . .


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