The American Spectator

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IN ADDITION, OUR ELECTED POLITICAL REPRESENTATIVES must adjust fiscal policies to hasten the transformation, not hinder it. As entire industries are turned on their heads, jobs will be lost. But at the same time, new jobs and markets will be created. These jobs will not be traditional jobs. But the gains in productivity and efficiency will boost incomes on average and create tremendous wealth.

Vice President Cheney recently attempted to explain job growth in this New Era by highlighting the 430,000 people who make their living on eBay. Senator John Edwards, the Democratic candidate for vice president, ridiculed this idea by comparing these jobs to lemonade stands and bake sales. Cheney is right, Edwards is out of touch.

p>But Edwards went further. In the vice-presidential debate on October 5th, he said that America's economic lights are "flickering" -- suggesting a brownout is about to consume our nation. But nothing could be farther from the truth. For every business that is seeing its lights dim, another is lit up like a Christmas tree. br> The technological tsunami is boosting productivity rapidly, and forcing a reorganization of our economy. The winners will be agile individuals, companies, communities, and nations that embrace these changes. The static model just won’t work anymore. Sticking our head in the sand is a losing strategy. /p>

Tax cuts, especially on investment, help. High capital gains tax rates force many investors to keep assets longer than they should. In other words, the capital gains tax is a wall between old and new investment. High dividend tax rates force companies to hold on to cash, when they should be distributing it to shareholders so that new investments can be funded. The 2003 Bush tax cut was a very important development because it freed up capital to move toward new technologies and businesses.

Government policy in the New Era should be focused on increasing the flexibility of both capital and labor. Policies which reduce the cost of moving assets and skills across geographic, technological, or industry-related barriers should be encouraged. Those that try to preserve the status quo should be buried.

The New Era is for real. Ignore it at your own risk.

topics:
Economics, Business, NATO