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The second part of the book is the policy principles. It is the link between the analysis of the key challenges in the first part of the book and the policy reforms proposed in the third part of the book. The first policy principle is to put people first. Do not preserve the past. Give people resources and opportunities – preferably by letting them keep what they earn to the maximum extent possible. And, eliminate special privilege.
Next, be future oriented. Do not destroy future generations’ ability to pursue their happiness. Allow savings to “pay” again instead of punishing savers with near zero interest rates and inflation. And, invest in all types of capital; for example, invest in equipment for the real economy; invest in education for human capital; and invest in the environment for natural capital.
Next, better balance production and consumption in the global economy. Improve U.S. competitiveness. Incent U.S. production and savings. Put the kibosh on U.S. consumption. Favor a strong dollar. Encourage coordinated currency revaluation. And encourage trade reform.
Next, America must live within its means by eliminating waste and unnecessary expenses in health care, education, government programs, the regulatory system and the legal system.
Next, America must implement a truly free market financial system by reforming the banking system and ensuring that risk and reward are properly related over time.
Next, America must promote global ecological sustainability by navigating the paradigm shift from natural resource plenty to scarcity; radically reducing humanity’s ecological footprint; sustainably using natural resources; and addressing possible climate change and ocean acidification.
Next, America must transition to sustainable energy. Decrease energy demand through increased energy efficiency and conservation to the extent that it is cost-effective. Establish a level playing field for all energy supplies. Facilitate the development of sustainable energy supplies using research and development. Let the lack of demand for hydrocarbons take down its supply rather than government edict. Respect the laws of thermodynamics and economics, remembering that energy cannot be created out of thin air and energy is the lifeblood of the economy. Without energy, nothing works. With that understood, the importance of letting markets dictate the rate of hydrocarbon production should be understood too. This must include allowing the continued development of domestic fossil hydrocarbon supplies. Finally, keep in mind that the demand for hydrocarbons will never drop to zero because they are too useful!
America must do all these things in order to rebuild a foundation that supports its national interests. Or, it will see its influence in the world and ability to defend itself erode.
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