Chapter 6: Solutions
- Thomas Jefferson
It does not take a majority to prevail … but rather an irate, tireless minority, keen on setting brushfires of freedom in the minds of men
- Samuel Adams
In this section, we will analyze some of the more popular and probable solutions posed to resolve the current economic situation. In the end, we will come to one very clear conclusion.
Solution 1: Stay on the Current Path of Statist Policies and Market Manipulation
Based upon current reactions of our government, remaining on the current path by continually manipulating markets is the most likely solution. The government has chosen at an alarmingly increasing rate to issue as much debt and print as much money as it can to cover over our existing problems. The current administration believes it can make up for a soft economy through manipulation of demand using government means. The administration does not apparently consider
the impact of government debt in the long term; rather, it is leaving those problems for future administrations to deal with. This has been the path the United States has been on since WWII, and it is not likely to change now.
The government is addicted to its own power and believes it can cure all ills centrally. The government has lost faith in the market. Since the factors of the economy have been so distorted and manipulated that even the best economists cannot accurately forecast it, the result of unwinding the ball of rubber bands holding the current false economy together is unpredictable. This is why the government will not change their path. They are so far into it, with potential disaster they have created hovering so darkly in the background, they are afraid of what may happen if they stop.
Solution 2: Raise Global Minimum Wages and Control Global Money Supply
This argument contends that even though government intervention in markets and banks have not worked, and that these acts are responsible for creating the economic messes we deal with, we should continue with government interventions in the markets and banks on an even grander scale – central world control. The idea is that even though Keynesianism and Monetarism have not worked for individual governments, they would somehow work for a global world government.
The definition of insanity is often said to be doing the same thing over and over and expecting different results. Government interventions in the market have now led to economic factors that could cause the biggest potential economic collapse in history. Yet, somehow, many economists feel as though centralizing control at the world level, through the same measures of Keynesianism and Monetarism — issuance of paper fiat money and large scale government intervention in markets — that put us in this position to begin with, will somehow cure the world’s ills.
The first issue I see with this approach is that you cannot put the world under one currency, not backed by a true asset such as gold, without problems. We have to look no further than to the current problems with the Euro nations to illustrate our point.
For example, Greece is the poster child for irresponsible financial policy. The fact that Greece is in near default on their government debt, which is putting pressure on other nations and the IMF bail them out, is example enough of how regional paper fiat currencies do not work. If Greece was not part of the Euro, we would not be having the discussion about Germany bailing Greece out. It would be a tragedy for the Greek people, for sure. But it is only because Greece debt threatens the Euro currency and therefore the fate of the other Euro nations’ economic policies that aid packages are being considered for Greece.
This costs not only the local Greek citizens in terms of austerity measures, but also costs Germany and other Euro countries by issuing guarantees on debt that Greece cannot repay and most likely will default on anyway. It also puts the US and other member IMF nations on the hook for Greek financial irresponsibility.
This sounds conspicuously like the FDIC Insurance and Federal Reserve bailout programs that have led to irresponsible risk-taking by American banks. How exactly does a regional currency involving separate sovereign nations with separate economic factors and systems protect the value of the paper fiat currency and thus the economic fortunes of the member countries involved? It doesn’t and hasn’t. What it does do is marry the fates of responsible nations to irresponsible ones and forces all the citizens that use the same currency to bear the burden of the mistakes of those nations that did not follow sound fiscal and economic policies.
The only way to ensure that local problems do not end up as world problems is to force the problem nations to account for their mistakes. Bailouts and insurance do not solve problems — they extend them by protecting and even encouraging the offenders! What incentive is there for an irresponsible nation to correct its behavior when there is no penalty?
Nations that issue too much debt will find it harder and harder to find borrowers and must therefore eventually default or enact austerity measures to contract credit. Nations that over inflate their currencies will suffer higher costs on goods and imports, which will force an eventual contraction of paper money and credit. Knowing this ahead of time, how likely is it that world governments will continue down a destructive path of excessive debt or currency inflation with no bailout in sight? The free market mechanisms, by their nature, eventually enforce sound economic policies. Central government interference with markets and collusion with banking entities do not.
The second issue with this approach is the control of minimum wages. Some economists contend that raising minimum wages in cheaper exporting countries will increase demand in those countries, hopefully enough to make up for lost consumption in Western countries to prevent economic recession. As we discussed in Chapter 2, minimum wages raise costs and actually lower overall employment, as experienced in the United States, because higher labor costs lead to higher prices, which lead to lower demand at that price, and therefore lower revenues. Therefore, this does not appear to be a long-term solution as overall employment will be kept artificially low due to minimum wage laws.
The cost of the minimum wage is born by the purchaser of the good. The manufacturers add their labor costs in. Since the US is the major buyer of Chinese goods, the US subsidizes higher wage rates in China. While this may slow the level of exports to the US, it is a temporary and potentially ineffective solution. If the minimum wage in China rises fast enough, then trade balance can be restored. But it would have to be a large jump, factored in over time. In addition, we may not be able to enact this provision fast enough to cure the trade balance issues given, for example, the large disparity in wages between US and Chinese workers. And if the world did enact a global minimum wage, the control would result in artificially high Chinese unemployment. Most likely overall unemployment is too high in this system, even though the unemployment may be distributed more equally among member nations than it is now.
In the end, this is in effect a transfer of wealth from the US to China in the form of wage controls. But is this a good transfer or another ill-planned one?
Since we have no idea what true market prices should be due to market manipulation, the new price of goods, as a result of minimum wages, may have negative unknown effects that we cannot predict. Our economic models don’t currently follow any set of laws which allow the effects of such manipulations to be calculated ahead of time. Which price, therefore, would be the optimal one? The best economic planners of the past have not been able to successfully set wage or price controls that work to the benefit of the people. There is no reason to believe this one will.
In the end, the market forces should determine costs and wages. Competition is a powerful force which allows buyers to tell sellers what prices they will buy at, and to work toward consistent, productive cost reduction over time. In Chapter 3, we determined that small deflation in prices helps the poor and middle classes buy more with the same amount of currency. Therefore, using a system that gently reduces prices downward over time and using more accurate forces of unmolested, true supply and demand has a better chance of working than the artificial control of wages, costs, and currency supply that will increase costs over time.
If true market forces were allowed to work for the last seventy years, it is likely, based upon the best historical evidence, that our government would not have incurred large debts, would not have systematically reduced the value of our currencies through money note inflation, and large trade imbalances would have been much less likely to occur. When a real monetary unit, such as gold, is used, it regulates the balance of trade. When more money leaves the country than comes in, interest rates rise because money is scarce. This increased interest will attract real money back through investment in higher returns until returns are roughly equal with returns elsewhere. The market is constantly working toward real equilibrium, and the factors of the economy, when not manipulated by central planning, more accurately represent true market forces. Thus, it becomes easier for economic planners to make changes when necessary, but at the same time, reduces the need for constant economic manipulation.
And most importantly, the market system is more transparent to the individual. This reduces the ability of a central anything to obfuscate and manipulate finances to take advantage of the common classes.
These views are popular among the world economists. After all, this is the system most countries run at their federal levels.
Solution 3: Let’s Throw in Some New Regulations
Taxes
There is a reason why people in the US gripe about tax time. People hate the act of doing their tax paperwork. People don’t necessarily dislike that we have taxes (though this is highly debatable with some), but just trying to comply with them is near impossible. The tax process has become so complex that if you plan on doing anything other than a simple tax return with very few itemizations, then you might as well hire a CPA. By the time you go through the forms and calculations and try to figure out all the angles, you are exhausted and not even sure if you did it right in the end. Forget trying to plan your taxes without paying an “expert” to do it for you. CPAs love taxes because it brings them great levels of revenue for three months. But I highly doubt they love doing their own. Who does?
Tax software is another option. I admit to using popular tax software in the hope that it keeps me from missing something that I should have remembered. However, depending on which business owner you talk to, tax software is not perfect. While I believe in the last few years, based upon my experience, the tax software writers have caught up to the VOLUMINOUS IRS regulations, it was not always so.
In the end, I ended up having about 120 pages for 2009, plus all of the supporting documentation, in my tax return. I cannot imagine how long it would have taken had I just downloaded the forms from the IRS and muddled through them. I think it would have been nearly impossible.
I don’t consider myself to be that complicated of a case, either. I have a personal business, own some real estate, owe money on student loans, have children, and have a normal occupation. That is about it. What is so damned hard about that?
IRS regulations are ridiculous and reflect the overly regulatory nature of our current economy. When endless tax handouts and incentives manipulate outcomes in the economy, the result is an avalanche of rules requiring great time and expense to comply with. For all of this manipulation, do we really see a better quality of life?
If we wanted to get rid of our progressive income tax system and replace it with, say, a flat consumption tax, how much money would it save in fielding a gigantic IRS government office, paper, computer software, and CPA fees? CPAs may not like this, but I doubt anyone can effectively argue that using our current tax system is cheaper than not.
The PEOPLE would benefit from a simpler tax system. We would all be in compliance simply through our daily activities. No other paperwork need take place. It would not require an industry of IRS agents and CPAs to make this system work.
The central planners would not like this system, however, because they would not be able to subsidize where they want as effectively. They may then have to dole out tax receipts in the form of rebate payments if they wanted to stimulate a specific activity. But using tax money on wasteful projects is easier when it is known what the taxes will be and the people have little control over how much they pay.
In addition, it would be harder to apply socialism with a flat consumption tax. How would the government redistribute income from a system that allows consumers a choice of how much taxes they pay versus how much savings and investment they make? The government would still be able to provide schools, defense, and some entitlement programs. But those who wanted to reduce their tax burden by saving and investing would be better able to do so, which reduces government’s spending powers.
A flat consumption tax would benefit the people but hurt the government politicians who are used to promising benefits to their voters. If politicians are not sure what tax receipts from consumption will be, they have to be more careful in making promises to get elected. Instead of elections based on entitlement handouts, we may actually have elections focused on determining which issues are most important given our current resources. A flat consumption tax is a check from the people on government growth.
Under these circumstances, secondary goods markets would flourish. People would get true use out of goods when purchased, and when done, they would have some assurance that someone else would want their goods that have useful life left. As a whole, the nation would most likely purchase less, save more, and be more prosperous at the individual level.
And if we add gold as the primary currency to this equation, the government would not be able to inflate the currency to make up for tax receipts that do not cover exorbitant expenses. It would require the government to actually balance the budget transparently. It would be a true private market with limited government involvement and interference.
I also wonder if we had a flat consumption tax if our trade balance would be bettered by the amount of purchases we forego to save on consumption taxes and the amount of secondary “used” market purchases we make, keeping more of our income between local buyers and sellers.
Sarbanes Oxley
In addition to tax regulations, we have extensive corporate regulations. Sarbanes Oxley (SOX), of which I am intimately familiar through my profession, attempts to regulate the quality of financial reporting in Corporate America. While in many cases it does do a fairly good job of ensuring that controls exist in financial statements, it also costs a lot to implement. The average cost of SOX compliance for large companies in 2004 was estimated to be $4.6 million per company. For medium and small businesses, the cost was estimated at $2 million per business.1
Which small and medium businesses can afford to spend an extra $2 million to ensure compliance with rules they should adhere to anyway? The costs of this one piece of regulation were so onerous to some businesses that they considered and actually did move to a private company structure to avoid it. The regulation was very burdensome on the medium-sized public companies. SOX regulations have since been modified to be less onerous, but compliance is still an expensive proposition.
That sounds reasonable in the wake of Enron, MCI WorldCom, and similar accounting scandals. After all, if investors cannot rely on financial reports, how will they know which company to invest in? The regulation issue here is a familiar one: We enact a broad legislation on many companies to deal with an issue that occurs relatively infrequently. While many companies may misstate financial reporting resulting from accounting mistakes, not all misstatements on financial records are material or the result of fraud. Some of them occur because accounting regulations are complicated with guidelines that are not always clear.
I participated in the audit of many companies during the height of the SOX era. I can tell you that, in general, people were very frightened by the events of a few large companies. As a result, auditing consultants held great power and earned great revenues from the implementation of SOX laws. While this was a boon for CPAs and technology personnel, it hurt the balance sheets of companies in a wide range of various-sized industries. Did the assurance we got from the enactment of this legislation lead to a great cleanup of accounting activities at many firms?
In my experience, there was one audit where I was legitimately concerned about the financial well-being of a company. I was concerned that all risks to financial numbers were not known by the public. However, I noticed that all other companies had a few intermediate-sized problems that did not affect their overall ongoing solvency as a business. They may have been at risk of a write-down and their stock subsequently at risk of a fall in price, but this is normal in any market, including a highly regulated one.
As for the one company which I felt had material risk in its public financial statements, they are currently floundering with high debt levels and lower revenues, And their stock price has dropped below the $1 level. They are well on their way to being liquidated or selling their name to another company. Their lack of success was reflected in how they ran their business. This is part of the life and death cycle of business. It is not, in itself, a tragedy. This is the way markets are supposed to work.
Did we find errors in company statements that needed to be corrected? Absolutely. Did we prevent another major financial meltdown through a closer audit of financial records? Perhaps. My contention is that I am not sure, given the time and money spent, that SOX regulation pays for itself and really solves problems. If you take the $2-4.6 million compliance cost figure and multiply it across the publicly traded companies audited, did the overall net value equal an amount less than the cost of any lurking financial misstatements we found or prevented?
The number is impossible to compute because we cannot prove the result — that another financial meltdown would have occurred had we not regulated and audited accounting. But I suspect the return on investment of this activity is not nearly as great as some may suspect.
We can take the Lehman case as an example. Reports are surfacing that Lehman used another company, Hudson Castle, to hide its true balance sheet, in much the same way Enron did.2
In both cases, it is apparent that the external auditing firm did not act to stop such activity and that external auditors were also unable to discover the true scale of the problems. The corporate structures used are often layers deep with barely a mention in accounting footnotes. Auditors are often unable to determine the layers’ deep associations in corporate structures needed to find the hidden issues. Regulations such as SOX are not enough to discover corporate malfeasance when the vehicles that companies can use to hide fraud are not easily detectable.
There is an additional reason that these types of frauds are not discovered: money. In the case of Lehman, the finger is pointed squarely at their auditing firm, Ernst & Young, and the government agencies that regulated Lehman.
Having worked for external auditor firms, I can tell you from experience that there is strong pressure to please the client in order to keep the engagement revenue flowing. There was even an example that I witnessed personally during a corporate audit training event at company headquarters where the training material stated that if an audit manager expected a positive audit outcome even before the audit began, the staff were to satisfy that demand by any means necessary. This was edified by the corporate trainers conducting the class and accepted without contention by the auditors in the class! This is certainly not conducive to auditor independence and objective assessment of company financial controls.
There is evidence showing that central regulators in markets are complicit with fraud. In the case of Lehman, the NY Fed, under Timothy Geitner, stated they were not aware of the Repo 105 asset manipulation that artificially inflated Lehman’s balance sheet during reporting periods.3 It is nearly impossible to say that scale of Lehman asset manipulation would have passed under regulating eyes without some detection due to the massive size. How would the government not question it?
The report conducted by the examiner in the Lehman case states:
The Examiner questioned Lehman executives and other witnesses about Lehman’s financial health and reporting, a recurrent theme in their responses was that Lehman gave full and complete financial information to Government agencies, and that the Government never raised significant objections or directed that Lehman take any corrective action.
So if the information given by Lehman was correct, the government did not act to stop the accounting irregularities. In addition, during the government stress tests of the banks, the examiner notes the following with respect to Lehman.
After March 2008 when the SEC and FRBNY began onsite daily monitoring of Lehman, the SEC deferred to the FRBNY to devise more rigorous stress testing scenarios to test Lehman’s ability to withstand a run or potential run on the bank. The FRBNY developed two new stress scenarios: “Bear Stearns” and “Bear Stearns Light.” Lehman failed both tests. The FRBNY then developed a new set of assumptions for an additional round of stress tests, which Lehman also failed. However, Lehman ran stress tests of its own, modeled on similar assumptions, and passed. It does not appear that any agency required any action of Lehman in response to the results of the stress testing.
So Lehman failed two rounds of stress testing, but passed their own internal version and the government agencies did not follow up on the results of this new testing. What could have motivated a regulator to allow this?
Relationship Between Artificial Stimulus and Fraud
What about countries that do not have a well-defined SOX regulatory framework? Do we see vast numbers of non-SOX countries with accounting scandals? We do see accounting scandals occur, but there is not a demonstrated higher level of fraud in less regulated systems than more regulated systems.4 Which brings me to my next point.
Per research by economist John Kenneth Galbraith, accounting fraud is highest during good financial times.16 People feel good, and embezzlements can be more easily hidden on the books when the numbers are up. Your first inclination is to tell me, the author, that that particular piece of research does not support my position. But, alas, it does.
I contend that we have been in extraordinarily good times lately in a fiat paper money system. Indeed, one of the principal tenets of Keynesian economics is to keep the good times rolling with government spending.
With all the cash and credit created out of thin air and all of the government promotion of risk taking by financial firms, it often seems like the US stock market can do no wrong. We were up for a long bull market, minus a couple of setbacks. Times were the greatest they had ever been in our history as a nation. And at the same time, we incurred the largest and most scandalous frauds corporate America has ever known. I agree with Galbraith in that there is a connection between the apparent good times of our economy and the amount of corporate AND government fraud.
It appears that when asset classes, such as company stocks, are artificially inflated through currency manipulation, an expectation is created where if you do not provide your shareholders with double digit returns, then you are not a good investment. This encourages corporate risk taking. In addition, it allows those who want to commit fraud and offer unnatural returns a nice built-in alibi from the government. Good times, at all costs!
In a report on regulatory accounting discrepancies by country in Internal Auditor magazine, FBI Director Robert Mueller found that “The US $5 trillion in stimulus spending by governments worldwide may spur a ‘new wave’ of fraud and corruption.” 5
When governments enact stimulus spending in Keynesian fashion, corruption follows. Mueller continues:
According to estimates by Transparency International, a Berlin based anti-corruption advocacy organization, corruption can increase procurement costs by 10 percent in a stable economy, and such corruption can amount to up to 30 percent of the total cost of a contract in emergency situations.
So in addition to stimulus spending being related to corruption, corruption is fed and grown by the excessive stimulus spending.
As an example, Greece is currently looking for $45 billion in aid. A report that will be published soon shows that if Greece could cut down on bribery and corruption, then the country could save $20 billion in costs per year.6
SOX and other financial regulation didn’t catch Lehman, a massive meltdown which, according to financial pundits, threatened to bring down our banking system.
Does our current regulatory system actually mitigate our risks, or is it failing to address the real ones appropriately?
The conclusions I draw from experience and research is that:
1) Regulations burden the average person,
2) An accounting misstatement will occur in any market,
3) Accounting misstatements rise when times are good (or appear to be), and especially when artificial stimulus is applied,
4) Increased auditing and regulation does not always expose the accounting problems,
5) Even when accounting problems are noted, the problems often get “swept under the rug” as apparent conflicts of interest arise among the participants of the company, auditor, and government, and
6) Government, which should watch out for corruption, is also a busy participant in it with the people’s money.
Therefore, is regulation the answer? I don’t feel confident that substantially increasing the already burdensome regulatory framework will provide enough return to justify the cost in time and money. A better solution is to reduce the incentives and opportunities to commit fraud. If markets are allowed to naturally regulate good and bad businesses, without government insurance and bailout programs, bad companies will eventually fail. And they will fail more quickly, with less impact. When companies are artificially protected using taxpayer money and markets are artificially bolstered to hide true conditions, then it is no wonder fraud and misstatement run rampant. Any amount of new regulation is reactionary, not preventative. We know the track record of our regulations for finding the frauds before they blown up and cause massive damage to the economy.
This is not to say that we do not need regulation, only that the size and efficacy of regulation we have now is largely the result of a broken system with too many entitlements, loopholes, and incentives to defraud.
Solution 4: Consumer Spending Will Save Us
Consumers don’t have any money. Therefore, US consumers are not going to spend us out of the current recession.
Consumer bankruptcies have escalated to record levels since 1994.7 At the same time, consumer saving has declined from 4.3% of income in 1998 to 0.6% in 2007. If the rate at which consumers save has fallen so dramatically, and if a dramatic rise in consumers who admit through bankruptcy that they cannot pay their current debt occurs at the same time, as it has, then where will the consumer backed recovery come from?
Consumers aren’t buying new goods. Instead, they are using income to pay down old debts which they could not afford yesterday. Consumer debt fell during December 2009 by $8.5 billion, which is a 29% increase from the prior year.
When consumers pay their debt, they currently tend to pay revolving debt such as credit cards instead of their mortgages. According to a study by TransUnion, a credit reporting agency:
The percentage of consumers delinquent on mortgages, but current on credit cards rose to 6.6 percent in the third quarter of 2009 from 6.3 percent in the previous quarter and 4.9 percent in the same quarter a year earlier… The trend first emerged in the first quarter of 2008 when it was at 4.3 percent.8
Why do consumers make these choices on which debts to pay? Well, they need to eat. And foreclosures on homes often take many months before people are forced to move. Sean Reardon, the author of the TransUnion study and a consultant in TransUnion’s analytics and decisioning services business unit, states: ”By making a minimum payment on a credit card before a full mortgage payment it gives consumers monetary leeway to go about their daily activities, especially if they have lost a job. You cannot buy groceries with your house.”
That sounds like consumers are at least trying to reduce their credit and be responsible. But how much of that revolving credit card debt was an actual pay down, and how much was a write-off by the credit card company through default? A bleaker analysis shows that not all revolving debt reductions are payments by consumers.
Bloomberg, citing RK Hammer Investment Bankers, reports that in 2009, credit card write-offs increased 59% to $89 billion from $56 billion the previous year.9
Consumers don’t have enough money to pay their current debts. They do not have money to take on new debts to fuel consumption or to purchase new goods with cash. The US consumer is tapped out, and they will not resume growth in purchases until they both have paid off existing debt and forced creditors to take charge-offs for debt they cannot pay.
What is the Solution
What solution should we take? The answer should be clear based upon the evidence presented in the first half of this book. The era of socialistic government, central banking, easy credit, fake paper currency, and entitlement spending must come to an end. This path has been shown to be unsustainable.
We will have a major correction based upon current numbers. Any path we take is painful, but some paths will lead to better outcomes.
A) For example, if we contract the money supply slowly and consistently and also make agreements to pay down public debt at a discount while avoiding full blown debt default, the United States has a chance to recover without a panic-induced Great Depression. The United States would suffer at least a recession for the length of time it takes to un-lever the economy.
These measures would be austere, but they would correct issues with debt and currency manipulation. These measures may reduce other countries’ confidence in our debt issues, which makes additional public debt financing difficult. I believe that this penalty is healthy for the nation in the short term by forcing discipline in debt funding. And eventually, the US can earn their AAA credit rating back. But to continue on the current path risks full-blown default, hyperinflation, and then a deflationary depression. Changes MUST be made here.
B) Further, we must abolish the central bank system. If we do not end the Fed and find an alternate REAL currency solution, such as a gold-backed or other reliable commodity-backed currency, then we will just suffer from continued currency inflation any time a banker bureaucrat decides they are smarter than the market or the government needs easy money to finance their spending.
While the transition will not be easy, perhaps entailing short term use of bartering and use of alternate paper currencies such as the Aussie or Loonie, it is worthwhile. When a reliable currency system such as gold or silver is enacted, whose value lies in the holder of the currency that cannot be debased, the poor and middle classes will slowly gain purchasing power over time as modest deflation brought about by technological advancement increases purchasing power of each unit of currency.
C) Enact a tax system that is limited, hard to manipulate, and disallows favoritism between government and “elite” classes. A flat consumption tax will do this as it keeps the power of the tax in the hands of the individual. While a certain amount of consumption will always take place, each person can decide how much to save and invest versus how much to spend and pay tax on. Property and income tax systems do now allow individual choice and have been shown to be socialistic and corruptive in nature.
D) We must unravel the expansive and complex powers of government and substantially reduce the overall size of it. Many of the powers currently used are anti-constitutional. The people need to hold a new Continental Congress to determine which provisions of the laws, beyond the Constitution, to keep.
We can allow academic experts to consult in this Continental Congress, but they must not have the power to make the final vote. Let the will of the people, listening to the best minds of our nation, decide the regulatory structures to be used in the coming millennium. Otherwise, the people can never hope to free themselves from the bindings of those who wish to manipulate the system for their own ends. Limit the powers of the government and eliminate laws that circumvent the checks and balances so thoughtfully constructed by our forefathers
E) Rewrite history books to reduce unnecessary jingoism and increase objectivity. It is hard to understand why we have landed in this predicament when our school literature glosses over or ignores critical events, people, and decisions that led to the state we are in. We must cut out unnecessary obfuscation in academic texts in economics and finances so that people have the ability to understand basic, fundamental concepts such as trade balance, banking, debt, and inflation. Austrian economics should be made mandatory part of economic curriculum, and publications from Institutes such as Ludwig Von Mises should be included.
Centralized education is controlled education. Therefore, utilizing a locally-managed school system with viable home school and private school components (include all of them) that allows for both transparency and accountability with the people who are being educated. We can assist with tax funds, but requiring local built-in components not touched by outside money and not controlled by government are essential. For example, three days can be taught to a curriculum of basic skills agreed upon by each individual state. Two days can consist of whatever supplemental education each community deems necessary. Or we can use a true private local system to ensure the skills and knowledge needed by the people to live in a free society are upheld against the interests of a centrally controlled state influenced by institutional money.
Who will teach? Well, I already teach my children beyond their current curriculum at home. In addition, this gives employment opportunities to those in need of jobs who are educated and motivated. This system worked fine before education was centralized in the early 1900s. If education was decentralized, taxes would be reduced and the monies not collected in taxes could be used by each family and community to pay local teachers, overseen by local families. Testing should be developed, as it is now, to check progress against goals set by states and local communities.
Control of education should be stripped at the federal level and instead spread out among state, local, and familial interests.
The people can make their own change, as a community, as we did when we kicked out England and France and demanded our freedom as a sovereign nation. We must again do this, but this time we need to kick out our elected officials and dislodge the banking oligarchies from their perches. They only have power because we have accepted their power. They cannot survive without us, as we are their engine. We do not need them as much as they need us. Let us endeavor to keep it that way.