Synopses & Reviews
Seeds of Destruction is everything that Washington policymaking is not: sober, lucid, reasoned, timely, bipartisan, and constructive. -Douglas Holtz-Eakin, President of the American Action Forum and former Director of the Congressional Budget Office (2003-2005) Glenn Hubbard and Peter Navarro combine their unique experiences in government and politics with their crystal-clear economic insights to produce a lively and compelling account of the origins of the financial crisis and the problems now plaguing the American economy. The book convincingly explains how government policy planted the seeds of destruction and how a change in government policy can root them out and plant the seeds of prosperity. Their diagnoses and remedies should be read, studied carefully, and applied. -John B. Taylor, Mary and Robert Raymond Professor of Economics, Stanford University, and former Undersecretary of the Treasury for International Finance A thoughtful and politically provocative diagnosis of America's economic ills. -Kenneth S. Rogoff, coauthor, This Time is Different, and Thomas D. Cabot Professor of Public Policy, Harvard University This book is a 'must-read' for all persons who are concerned about our economic future. It shows the disastrous folly of our current economic policies and, more important, it lays out the proper policies to achieve a sound and prosperous economic future. -John Cogan, Professor at Stanford University and former Deputy Director of the Office of Management and Budget In this dramatic nonpartisan book, Glenn Hubbard and Peter Navarro lay out the true roots of the current troubles. They then open their hands and show 'seeds of prosperity, ' a new set of policies that can, if planted, make the economic garden grow even more dramatically than it did in the past. No pair of authors is more qualified than these to undertake this. -From the Foreword by Amity Shlaes, bestselling author of The Forgotten Man: A New History of the Great Depression Government policy and the Obama administration are driving the American economy straight toward catastrophe. Now, two respected economists-one a Republican, one a Democrat-explain why these policies are so dangerous and offer a bipartisan, common-sense blueprint for reversing America's economic decline. Glenn Hubbard and Peter Navarro explain why sustained growth is the only long-term solution, outline the elements of a vibrant economy, and explain why current policies are failing on every level. They reveal how we can finally restore the critical U.S. manufacturing base...return to our tradition of sound money ...transform tax policy into an engine of growth and innovation...save Social Security and Medicare with tough love...use market-based solutions to achieve real energy independence...reform antique financial regulations without making matters worse...and balance our burgeoning budget deficits with strong economic growth rather than through punitive taxation. Whatever your politics, if you're frightened about the future, you should be. This book shows how we can grab the steering wheel, veer away from the cliff, and build a brighter economic future for everyone. Short-term stimulus, long-term disaster Why massive federal spending and ultra-easy money policies spell long-term disaster Planting the new seeds of growth and innovation How to restore America to the path of long-term prosperity Addressing the structural imbalances destroying the U.S. economy Re-igniting the #1 driver of growth: business investment
Review
" ... Hubbard and Navarro propose a set of realistic solutions. The authors bring their vast academic and policy experience to bear on weighty issues such as U.S. oil dependence, health-care reform, Medicare, and housing imbalances. Their solutions have a distinctly bipartisan flavor ... "
-Library Journal
"This is a good and useful book."
-Financial Times
“Hubbard and Navarro provide a cogent analysis of America’s dangerous economic decline as well as a carefully thought out plan for recovery based on a manufacturing renaissance.”
–Clyde Prestowitz, Founder and President of the Economic Strategy Institute, and author of The Betrayal of American Prosperity and Three Billion New Capitalists
“A well-argued–and exceedingly timely–call to action for the White House and Congress to end partisan political bickering and move the American economy back to sound principles like free markets, entrepreneurship, and a renewed manufacturing base that will restore our nation’s greatness. Hubbard and Navarro focus a bipartisan perspective on practical policy reform.”
–Larry M. Wortzel, Ph.D., Commissioner and former Chairman of the U.S.—China Economic and Security Review Commission
“It is time for a clean sheet of paper that creates the ultimate focus on creating real jobs and driving the success of our private sector by significantly improving our global competitiveness and not further eroding it. Kudos to Glenn Hubbard and Peter Navarro for doing just that!”
–Dan DiMicco, Chairman, President, and CEO, Nucor Corporation
“Seeds of Destruction is everything that Washington policymaking is not: sober, lucid, reasoned, timely, bipartisan, and constructive. The United States is on a path to greater danger and diminished aspirations. Hubbard and Navarro illuminate the path to fulfilling this generation’s obligation to leave behind a nation with greater freedom and prosperity than it inherited.”
–Douglas Holtz-Eakin, President of the American Action Forum, and former Director of the Congressional Budget Office (2003—2005)
“Glenn Hubbard and Peter Navarro combine their unique experiences in government and politics with their crystal-clear economic insights to produce a lively and compelling account of the origins of the financial crisis and the problems now plaguing the American economy. The book convincingly explains how government policy planted the seeds of destruction and how a change in government policy can root them out and plant the seeds of prosperity. Their diagnoses and remedies should be read, studied carefully, and applied.”
–John B. Taylor, Mary and Robert Raymond Professor of Economics at Stanford University, and former Undersecretary of the Treasury for International Finance
“A thoughtful and politically provocative diagnosis of America’s economic ills.”
–Kenneth S. Rogoff, coauthor of This Time is Different, and Thomas D. Cabot Professor of Public Policy, Harvard University
“This book is a ‘must-read’ for all persons who are concerned about our economic future. It shows the disastrous folly of our current economic policies and, more important, it lays out the proper policies to achieve a sound and prosperous economic future.”
–John Cogan, Leonard and Shirley Ely Fellow, Hoover Institution, and Professor of Public Policy Program, Stanford University; former Deputy Director of the Office of Management and Budget, Reagan administration
"This is a compact blockbuster of a book that gives six reasons why the U.S. economy has sunk so far and offers ten initiatives that the authors believe will lift us back up. It spares neither political camp and it appeals to both camps to take actions that will repair the damage they have caused over the past decade."
-Edmund Phelps, McVickar Professor of Political Economy, Columbia University, and 2006 winner of the Nobel Prize in Economic Science
Synopsis
If you think the current administration is mismanaging the economy straight towards disaster, you're not alone: so do two top economists from both sides of the political aisle. In Seeds of Destruction, former Bush chief White House economist R. Glenn Hubbard and well-known CNBC commentator Peter Navarro explain why current economic policy is a catastrophic failure. Then, they offer a comprehensive, bipartisan blueprint for reversing the decline of America's currency, manufacturing base, and standard of living - setting the stage for the epic policy debates that will precede the 2010 elections. Hubbard and Navarro begin with a "checklist" of what it takes to be a prosperous, democratic nation - and show why Obama's policies (some of Bush's also) fail on every level. They explain why the activist Federal Reserve and Obama fiscal stimulus policies are doing far more harm than good... why we must restore the U.S. manufacturing base, whatever China says about it... how to transform tax policy into an engine of growth and innovation... how to apply the "tough love" needed to save Social Security, Medicare, and Medicaid... why America must resign the job of world policeman... how market-based solutions can finally deliver real energy independence... how to reform our antique financial regulatory system without imposing heavy-handed rules that cause even more trouble.
Synopsis
Economic Policies That Will Lead to Catastrophic Failure
Top Republican and Democratic economists come together to explain why Obama’s economic policies are failing…and how we can re-ignite long-term growth and prosperity for all Americans
The Obama administration’s economic policies, together with many of the latest regulatory and tax policies from Congress, are likely to lead to a catastrophic failure. This book explains why and offers a complete, common-sense blueprint for restoring America’s prosperity. Authored by two top economists—one Republican, one Democrat—Seeds of Destruction shows how we can re-ignite the core components of long-term economic growth. Glenn Hubbard and Peter Navarro offer a complete plan to restore the Federal Reserve’s independence and a sound dollar, overhaul the tax system, re-ignite business investment, slash government spending, regain control over Social Security and Medicare, and rebuild American manufacturing. Whether you’re a Republican, Democrat, or Independent, it’s time to stop fighting and come together around an economic plan that will work: the plan in this book.
Synopsis
In this book, a top Republican and Democratic economist explain why Obama’s economic policies are failing…and offer a commonsense blueprint for re-igniting long-term growth and prosperity for all Americans. They show how to overhaul the tax system, increase business investment, slash government spending, control entitlements, and even rebuild American manufacturing.
Synopsis
Government policy and the Obama administration are driving the American economy straight toward catastrophe. Now, two respected economists–one a Republican, one a Democrat–explain why these policies are so dangerous and offer a bipartisan, common-sense blueprint for reversing America’s economic decline.
Glenn Hubbard and Peter Navarro explain why sustained growth is the only long-term solution, outline the elements of a vibrant economy, and explain why current policies are failing on every level. They reveal how we can finally restore the critical U.S. manufacturing base…return to our tradition of sound money…transform tax policy into an engine of growth and innovation…save Social Security and Medicare with “tough love”…use market-based solutions to achieve real energy independence…reform antique financial regulations without making matters worse...and balance our burgeoning budget deficits with strong economic growth rather than through punitive taxation.
Whatever your politics, if you’re frightened about the future, you should be. This book shows how we can grab the steering wheel, veer away from the cliff, and build a brighter economic future for everyone.
* Short-term stimulus, long-term disaster
Why massive federal spending and ultra-easy money policies spell long-term disaster
* Planting the new seeds of growth and innovation
How to restore America to the path of long-term prosperity
* Addressing the structural imbalances destroying the U.S. economy
Re-igniting the #1 driver of growth: business investment
About the Author
Glenn Hubbard, Dean of Columbia Business School, served in the Bush White House from February 2001 until March 2003 as the Chairman of the Council of Economic Advisers and the OECD’s Economic Policy Committee. He also was the Deputy Assistant Secretary of the U.S. Treasury Department for Tax Analysis from 1991 to 1993. His commentaries appear frequently in the “Nightly Business Report,” “Marketplace,” The Wall Street Journal, and the Financial Times.
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Peter Navarro is a business professor at UC Irvine, CNBC contributor, and a widely sought-after speaker. He has appeared on Bloomberg TV and radio, CNN, NPR, and 60 Minutes. His books include Always a Winner and The Coming China Wars. His Web site is www.peternavarro.com.
Table of Contents
Foreword . . . xii
About the Authors . . . xviii
Introduction: The White House Plants Its Seeds of Destruction . . . 1
Part I Getting from Seeds of Destruction to Seeds of Prosperity . . . 7
Chapter 1 America’s Four Growth Drivers Stall and Our Economy Stagnates . . . 9
The GDP Growth Drivers Equation . . . 11
GDP Growth Has Been Well Below Potential Growth . . . 12
The American Consumer’s Roller Coaster . . . 15
Where Has All the Business Investment Gone?. . . 19
There’s Too Much Government Spending . . . 21
Net Exports Are a Net Negative . . . 25
Conclusion . . . 27
Chapter 2 How to Lift the American Economy with the Ten Levers of Growth . . . 29
Lever One: Free Markets Free of Corruption and Monopoly Best Promote Growth . . . 29
Lever Two: Free and Fair Trade Helps All Countries Grow . . . 31
Lever Three: Entrepreneurship Is the Linchpin of Long-Term Growth . . . 33
Lever Four: Without Savings, There Can Be No Investment and Growth . . . 34
Lever Five: Without a Stable Banking System and Strong Financial Markets, Savings Can’t Be Transformed into Investment . . . 35
Lever Six: Innovation and Technological Change Matter More Than Machines and Workers . . . 36
Lever Seven: “Human Capital” Matters as Much as Physical Capital . . . 38
Lever Eight: Oil Price Shocks Stunt the Growth of Oil-Import-Dependent Nations . . . 39
Lever Nine: A Healthy Nation Is a Productive and Prosperous Nation . . . 40
Lever Ten: A Solid Manufacturing Base Makes for a Strong Economy . . . 41
Part II Fixing America’s Destructive Duo: Monetary and Fiscal Policy . . . 47
Chapter 3 Why an Easy-Money Street Is a Dead End . . . 49
The Return of Fed Activism . . . 52
The Maestro or a Bubble Maker? . . . 53
President Obama Crosses the Activist Rubicon . . . 54
The Road to American Prosperity Cannot Be Paved with a Cheap Dollar . . . 57
Where Have You Gone, William McChesney Martin? . . . 60
Chapter 4 Why You Can’t Stimulate Your Way to Prosperity . . . 63
From John Maynard Keynes to the Kennedy Tax Cut Revolution . . . 66
Part III Getting the “Big Three” Right: Tax, Trade, and Energy Policy . . . 83
Chapter 5 Why Raising Taxes Lowers America’s Growth Rate . . . 85
Ideological Gridlock Over Broad-based Tax Reform . . . 88
From a “Class Tax” to a “Mass Tax” . . . 91
From Double Taxation to Double Whammies . . . 93
Income Tax Evolution or Consumption Tax Revolution? . . . 95
Meeting on the Middle Ground . . . 97
Chapter 6 Why the Best “Jobs Program” May Be Trade Reform . . . 101
The 2000s: A Decade of Large and Chronic Trade Deficits . . . 103
America’s Trade Deficits Cause Inflation and Loss of Political Sovereignty. . . 104
The World’s Poster Child for the Modern Protectionist-Mercantilist State . . . 104
China’s Great Wall of Protectionism . . . 106
China’s Eighteenth Century Mercantilism . . . 111
Chapter 7 Why America’s Foreign Oil Addiction Stunts Our Growth . . . 125
How Does America’s Oil Import Addiction Harm Our Economy? Let Us Count the Ways . . . 128
Risky Business . . . 130
Moving Toward Forging a Political Consensus on Reducing Oil Import Dependency. . . 132
The Smart Path Embraces Both Soft- and Hard-Path Options . . . 133
The Folly of Energy Independence Redux . . . 136
Achieving a Targeted Reduction in Oil Dependence . . . 137
Why This Proposal Has Economic and Political Merit . . . 140
The Thorny Politics of Oil Import Fees . . . 142
Part IV Good Politics Usually Makes for Bad Economics . . . 147
Chapter 8 Cutting the Gordian Knot of Entitlements . . . 149
The Imperative of an Economic Rather Than Accounting Solution . . . 151
Why Social Security Is Easier to Fix Than Medicare and Medicaid . . . 153
Saving Social Security in Two Easy Pieces . . . 154
Closing the Social Security Spending Gap: What Won’t Work . . . 158
Closing the Social Security Spending Gap: What Can Work . . . 161
Forging a Political Consensus . . . 165
Saving Medicare and Medicaid: Mission Impossible? . . . 167
A Flexible and Focused Way Forward . . . 168
Chapter 9 Why ObamaCare Makes Our Economy Sick . . . 173
The Big Health Care Picture . . . 174
Are We Getting What We Are Paying For? . . . 176
ObamaCare Puts the Coverage Cart Before the Cost Horse . . . 178
ObamaCare Provides a Far-Too-Sweet Entitlement . . . 180
Truth or Consequences . . . 181
ObamaCare and the Law of Unintended Consequences . . . 183
Toward a More Market-Driven Health Care System . . . 184
What Can Be Done? . . . 191
Conclusion. . . . 192
Part V The American Economy at a Crossroads . . . 197
Chapter 10 How to Prevent Another Financial Crisis–and Housing Bubble. . . 199
#1: Easy Money . . . 201
#2: Not Enough “Skin in the Game” for American Home Buyers . . . 202
#3: Not Enough “Skin in the Game” for Mortgage Lenders . . . 203
#4: Way-Too-Exotic Mortgages for Borrowers . . . 205
#5: The Mortgage-Backed Securities Meltdown . . . 208
#6: The Collateralized Debt Obligations Credit Rating Debacle . . . 211
#7: A Flawed Insurance Market: Credit Default Swaps . . . 213
#8: Inflexible Bank Capital . . . 216
#9: Too Big to Fail: Last Rites for Financial Dinosaurs . . . 218
#10: A Fragmented and Sectoral Model of Regulation . . . 219
#11: Subsidies for Nonproductive Investment, Taxes for Productive Investment . . . 221
The New Law as the End of the Beginning . . . 222
Chapter 11 How to Implement Our Seeds of Prosperity Policy Blueprint . . . 229
Our Seeds of Destruction Problem . . . 230
Our Seeds of Prosperity Solution . . . 231
Conclusion . . . 248
Index . . . 251
Additional Bonus Material for eVersion Only:
An Interview with Glenn Hubbard About His Time in the White House . . . 269