Seeds of destruction : why the path to economic ruin runs through Washington, and how to reclaim American prosperity

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.

Author Notes

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 .

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 .

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Library Journal Review

Hubbard (dean, Columbia Business Sch.; former chair, U.S. Council of Economic Advisors) and Navarro (business, Univ. of California-Irvine) are deeply concerned about America's economy. Here they intentionally aim at positive economics (what is) and normative economics (what should be) as they translate their apprehensions into concrete policy proposals. Description of basic macroeconomic theory is followed by prescription for reversing course from "the path to economic ruin," which they unabashedly ascribe to Washington's bad economic policies. Many writers criticize the U.S. stimulus efforts and the staggering shortfalls of the entitlement programs or assign blame for the recent housing bubble, but 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, with smaller government and lighter taxes for tastes of the Right and interesting new oil import taxes that should appeal to the Left. -VERDICT Recommended for a general audience with marginal interest in economic policy; required reading for those crafting U.S. economic policy.-Jekabs Bikis, Dallas Baptist Univ. (c) Copyright 2010. Library Journals LLC, a wholly owned subsidiary of Media Source, Inc. No redistribution permitted.

Foreword	p. xii
About the Authors	p. xviii
Introduction: The White House Plants Its Seeds of Destruction	p. 1
Part I Getting from Seeds of Destruction to Seeds of Prosperity	p. 7
Chapter 1 America's Four Growth Drivers Stall and Our Economy Stagnates	p. 9
The GDP Growth Drivers Equation	p. 11
GDP Growth Has Been Well Below Potential Growth	p. 12
The American Consumer's Roller Coaster	p. 15
Where Has All the Business Investment Gone?	p. 19
There's Too Much Government Spending	p. 21
Net Exports Are a Net Negative	p. 25
Conclusion	p. 27
Chapter 2 How to Lift the American Economy with the Ten Levers of Growth	p. 29
Lever 1 Free Markets Free of Corruption and Monopoly Best Promote Growth	p. 29
Lever 2 Free and Fair Trade Helps All Countries Grow	p. 31
Lever 3 Entrepreneurship Is the Linchpin of Long-Term Growth	p. 33
Lever 4 Without Savings, There Can Be No Investment and Growth	p. 34
Lever 5 Without a Stable Banking System and Strong Financial Markets, Savings Can't Be Transformed into Investment	p. 35
Lever 6 Innovation and Technological Change Matter More Than Machines and Workers	p. 36
Lever 7 "Human Capital" Matters as Much as Physical Capital	p. 38
Lever 8 Oil Price Shocks Stunt the Growth of Oil-Import-Dependent Nations	p. 39
Lever 9 A Healthy Nation Is a Productive and Prosperous Nation	p. 40
Lever 10 A Solid Manufacturing Base Makes for a Strong Economy	p. 41
Part II Fixing America's Destructive Duo: Monetary and Fiscal Policy	p. 47
Chapter 3 Why an Easy-Money Street Is a Dead End	p. 49
The Return of Fed Activism	p. 52
The Maestro or a Bubble Maker?	p. 53
President Obama Crosses the Activist Rubicon	p. 54
The Road to American Prosperity Cannot Be Paved with a Cheap Dollar	p. 57
Where Have You Gone, William McChesney Martin?	p. 60
Chapter 4 Why You Can't Stimulate Your Way to Prosperity	p. 63
From John Maynard Keynes to the Kennedy Tax Cut Revolution	p. 66
Part III Getting the "Big Three" Right: Tax, Trade, and Energy Policy	p. 83
Chapter 5 Why Raising Taxes Lowers America's Growth Rate	p. 85
Ideological Gridlock Over Broad-based Tax Reform	p. 88
From a "Class Tax" to a "Mass Tax"	p. 91
From Double Taxation to Double Whammies	p. 93
Income Tax Evolution or Consumption Tax Revolution?	p. 95
Meeting on the Middle Ground	p. 97
Chapter 6 Why the Best "Jobs Program" May Be Trade Reform	p. 101
The 2000s: A Decade of Large and Chronic Trade Deficits	p. 103
America's Trade Deficits Cause Inflation and Loss of Political Sovereignty	p. 104
The World's Poster Child for the Modern Protectionist-Mercantilist State	p. 104
China's Great Wall of Protectionism	p. 106
China's Eighteenth Century Mercantilism	p. 111
Chapter 7 Why America's Foreign Oil Addiction Stunts Our Growth	p. 125
How Does America's Oil Import Addiction Harm Our Economy? Let Us Count the Ways	p. 128
Risky Business	p. 130
Moving Toward Forging a Political Consensus on Reducing Oil Import Dependency	p. 132
The Smart Path Embraces Both Soft- and Hard-Path Options	p. 133
The Folly of Energy Independence Redux	p. 136
Achieving a Targeted Reduction in Oil Dependence	p. 137
Why This Proposal Has Economic and Political Merit	p. 140
The Thorny Politics of Oil Import Fees	p. 142
Part IV Good Politics Usually Makes for Bad Economics	p. 147
Chapter 8 Cutting the Gordian Knot of Entitlements	p. 149
The Imperative of an Economic Rather Than Accounting Solution	p. 151
Why Social Security Is Easier to Fix Than Medicare and Medicaid	p. 153
Saving Social Security in Two Easy Pieces	p. 154
Closing the Social Security Spending Gap: What Won't Work	p. 158
Closing the Social Security Spending Gap: What Can Work	p. 161
Forging a Political Consensus	p. 165
Saving Medicare and Medicaid: Mission Impossible?	p. 167
A Flexible and Focused Way Forward	p. 168
Chapter 9 Why ObamaCare Makes Our Economy Sick	p. 173
The Big Health Care Picture	p. 174
Are We Getting What We Are Paying For?	p. 176
ObamaCare Puts the Coverage Cart Before the Cost Horse	p. 178
ObamaCare Provides a Far-Too-Sweet Entitlement	p. 180
Truth or Consequences	p. 181
ObamaCare and the Law of Unintended Consequences	p. 183
Toward a More Market-Driven Health Care System	p. 184
What Can Be Done?	p. 191
Conclusion	p. 192
Part V The American Economy at a Crossroads	p. 197
Chapter 10 How to Prevent Another Financial Crisis-and Housing Bubble	p. 199
#1 Easy Money	p. 201
#2 Not Enough "Skin in the Game" for American Home Buyers	p. 202
#3 Not Enough "Skin in the Game" for Mortgage Lenders	p. 203
#4 Way-Too-Exotic Mortgages for Borrowers	p. 205
#5 The Mortgage-Backed Securities Meltdown	p. 208
#6 The Collateralized Debt Obligations Credit Rating Debacle	p. 211
#7 A Flawed Insurance Market: Credit Default Swaps	p. 213
#8 Inflexible Bank Capital	p. 216
#9 Too Big to Fail: Last Rites for Financial Dinosaurs	p. 218
#10 A Fragmented and Sectoral Model of Regulation	p. 219
#11 Subsidies for Nonproductive Investment, Taxes for Productive Investment	p. 221
The New Law as the End of the Beginning	p. 222
Chapter 11 How to Implement Our Seeds of Prosperity Policy Blueprint	p. 229
Our Seeds of Destruction Problem	p. 230
Our Seeds of Prosperity Solution	p. 231
Conclusion	p. 248
Index	p. 251

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