Seeds of Destruction: Why the Path to Economic Ruin Runs Through Washington, and How to Reclaim American Prosperity [Kindle Edition]

R. Glenn Hubbard (Author), Peter Navarro (Author)

Book Description

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.

Editorial Reviews

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

From the Back Cover

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

See all Editorial Reviews

Product Details

• File Size: 916 KB
• Print Length: 308 pages
• Page Numbers Source ISBN: 0137027737
• Simultaneous Device Usage: Up to 5 simultaneous devices, per publisher limits
• Publisher: FT Press; 1 edition (August 20, 2010)
• Sold by: Amazon Digital Services, Inc.
• Language: English
• ASIN: B003S9WA2Q
• Text-to-Speech: Enabled
• X-Ray: Not Enabled
• Lending: Not Enabled
• Amazon Best Sellers Rank: #353,528 Paid in Kindle Store (See Top 100 Paid in Kindle Store)

Most Helpful Customer Reviews

14 of 15 people found the following review helpful

4.0 out of 5 stars Finally! September 26, 2010

By Chawks VINE™ VOICE

Format:Hardcover|Amazon Vine™ Review (What's this?)

Finally, we have a book that provides a good guide for the rebuilding of the American Economy. Most books focusing on economic growth assume that economy will recover as long as we have four conditions:

Republicans stress

1. Low tax rates to stimulate investment.
2. Little or no regulation of business activity.

Democrats focus on

1. Government spending to boost consumer confidence and thereby encourage consumers to spend money.
2. Increase business regulation either to increase opportunity and fairness or to increase the power of Washington D.C.

Are either of these prescriptions accurate?

The turbulent last decade has been in a way a great laboratory to test economic theories. Early in the decade Republicans received their chance to prove that low tax rates and reduced business regulations would lead to superior economic growth. Democrats now have had two years to prove that massive government spending would increase economic growth. Sadly, it appears that neither one of these theories is the answer. Currently, unemployment levels are near twenty percent if you count those who have been unemployed for more than six months. Unemployment levels were around twenty five percent during the great depression. Clearly neither strategy has been working very well over the last decade. During the last decade we have had two major stock market crashes, two rounds of fraudulent accounting scandals, and two unsustainable economic bubbles and a negative return on the S&P 500.

The Seeds of Destruction takes a different take on economic growth. Authors Glenn Hubbard and Peter Navarro prescription aligns closely with historical evidence on how economies grow....

Hubbard and Navarro's prescription is:

1. Free markets Free of corruption and Monopoly. "A free market free of monopoly elements - Adam Smith, Wealth Of Nations" According to Adam Smith you need laws to control corruption and monopolies. Lack of trust leads to economic freeze ups because no one wants to take the risk that they might lose their entire investment. This is true in investment markets and the grocery market. Who would shop at a grocery store if there was risk that they would not deliver the groceries over to you.

2. Free and Fair Trade Helps all countries grow. Free trade between two nations will never lead to stronger economic growth for both countries unless both play by the same rules. In short, you cannot have one country protecting its market while the other does not. Nor can one country manipulate its currency while the other does not. Page 32 of this book.

3. Entrepreneurship - Historically what has led America to the top was new inventions in machinery and operations. Innovators looking for easier, safer and more efficient methods in order to reduce waste and increase profits. Joseph Schumpeter observed this in his 1942 treatise Capitalism, Socialism and Democracy.

4. Without savings there can be no investment and growth.

5. Stable banking system. The Glass Steagall Act of the 1930's was implemented to reduce banking instability that contributed to the great depression. After its passage America had one of the most stable if not the most stable banking systems in the world. Ten years after its repeal the United States has had two stock market crashes, two large scale fraudulent accounting scandals and a huge government bailout to save the banking system which is going to cost tax payers billions.

6. Technological change matters more than machines and workers.

7. Workers matter as much as physical capital. Workers create technological innovation with new designs and operational techniques. Second, studies have found that companies that treat their workers well tend to have greater labor stability, higher profits and greater innovation. See The Human Equation: Building Profits by Putting People First

8. Energy dependence stunts economic growth. Oil accounts for 40% of the United States trade deficit in goods. Second, the high price of oil is in effect a tax that is paid to overseas nations such as Iran. In addition, when the Federal Reserve lowers interest rates to stimulate the economy this action is undone by a decline in the dollar which increases the price of oil which slows the economy. So by being energy dependent, you lose some ability to control the economy to foreign nations which may not favor the U.S.

9. A healthy nation is a productive and prosperous nation. University of Chicago Professor Robert Fogel has pointed out that there is a close connection between economic growth and improvements in human physiology. Currently, the US health care system is a reactive system not a proactive system. Why not try to head off problems before they occur. See Diet and Health Live 10 Healthy Years Longer The Blue Zones: Lessons for Living Longer From the People Who've Lived the Longest

10. A solid manufacturing base makes for a strong economy. Manufacturing jobs create more growth in other economic sectors. For every dollar of manufacturing output America creates almost a dollar and a half in related services. Finally, as Andrew Grove (Intel) pointed out in a recent Business Week article (July, 1, 2010) a huge amount of technical and operational innovation is learned on the manufacturing floor. Without manufacturing, a significant amount of innovation disappears from the U.S. economy and moves the the manufacturing country. Read more ›

26 of 35 people found the following review helpful

3.0 out of 5 stars Sowing Seeds of Stagnation - a critique and explanation of Obama's Economic Policies October 20, 2010

By Angela M. Hey VINE™ VOICE

Format:Hardcover|Amazon Vine™ Review (What's this?)

Two Harvard educated economists explain why they don't like Obama's economic policies. The book also explains some basic economics. It starts by defining GDP and the levers of growth for the US Economy - free trade, entrepreneurship, savings, bank stability, innovation, human capital, independence from oil, healthy populace, manufacturing. Whereas manufacturing is a lever, I'm not convinced it's an essential lever in a knowledge-based, services-based economy. Whereas manufacturing CEOs are well-paid, the thesis that manufacturing jobs enjoy a "wage premium" may have been true in the past, but in the future knowledge-based jobs may generate higher salaries.

The book has a clear description of problems with the Fed's easy money policies and a critique of government stimulus programs. The book claims that short term stimulus programs make long term structural economic problems, but if the situation is dire, a quick fix can help people - although I agree with the authors that financing an increasing deficit is not good for the economy.

In chapter 5, the authors cry for a simplified taxation scheme and lower taxes. What the authors fail to realize is that taxes applied to the right government programs can enrich the country. They take the popular view that taxes are bad for the economy - without a serious analysis of which taxes are applied. There is a good analysis of the types of tax people might pay, but no analysis of where the government might levy taxes.

Chapter 6 discusses China, reflecting the fashionable beef of US policy makers - it has an undervalued currency and doesn't abide by World Trade Organization rules because it sells at marginal prices. It then goes on to discuss pollution and piracy - behaviors contrary to US business conduct....

The authors admonish US policy makers to find the optimal amount of oil to import, rather than aiming for zero dependence on foreign oil, which would be too costly for the economy. They propose a flexible tariff on imported oil - so weaken their free trade stance.

In looking at ways to reduce Social Security and entitlement program costs, the authors take a purely economic approach. They advocate raising the retirement age. They rightfully point out that the cost of ObamaCare is not well thought out and advocate a more market-driven health system.

This book lacks moral arguments, it is purely focused on economics. There are policies that might be right, but politically abhorrent. A moral society will care for its poor, regardless of economic arguments.

In summary, this book provides a general introduction to current government policies and suggests alternative ways to grow the economy. It is not a detailed book that discusses the details of how you stimulate economic growth through vision, charisma and moral imperatives. Given the authors' Washington experience it is also US centric. Read more ›

10 of 13 people found the following review helpful

4.0 out of 5 stars An informative, mostly non-partisan approach to describe how Washington is fouling up the economy for (almost) everyone. September 27, 2010

By Narut Ujnat VINE™ VOICE

Format:Hardcover|Amazon Vine™ Review (What's this?)

There can be no doubt that this nation is going through a period of genuflecting about how to deal with the economic crisis that began hitting our shores in 2007. Certainly, most observers would state that this economic turn-down is not merely just a recession, but perhaps something ominous and more complex than the end of the business cycle.

In this vein, I was interested in reading what arguments these two authors had in resolving the question as to whether Washington is doing the types of things to resolve this crisis in a meaningful way or not. This book takes a breif survey of the American economy through the prism of the Washington blender and argues that the resulting `mash-up' is not only disgusting looking, but even more awful to drink.

I believe the best encapsulation of this book is the argument that good politics is triumphing over sound economic principles. Beyond the blather of political party campaigns are the principles of sound economics that the authors argue this nation is distorting. To wit:
1. Insane fiscal policies which only exacerbate the monetary policies put in place - the cheap dollar that ends up begetting an even cheaper dollar and actually is a chimera for Americans in that cheap interest rates distort savings and investment cycles, cause havoc with business signals and inevitably drive up the cost of living.
2. Questioning the mantra of `free-trade' that is not so `free,' particularly pertaining to China, which the authors describe as being mercantilist in a `free trade' world.
3. Perversion of signals to Americans in terms of driving the economy, from obnoxious taxation policies, to government spending causing `crowding out' and ultimately killing business growth.... Also, how the 'entitlement dirty bomb' (my phrase, not theirs) is already here and ready to contaminate the American economy all over and burden all Americans going forward.
4. How oil and health care are adding a huge burden on future Americans, and how Washington policies are driving faulty signals to individuals when making choices causing more problems than are actually solved without Washington's political intervention - the theory of 'second choice.'

Essentially, the authors describe the environment of Washington trying to drive policies that are based on political expediency rather than sound economic policy. I believe the authors make a compelling case that seems to be based on `common sense' for anyone with an economics background,and for those without such background, a non-partisan explanation into how Washington is distorting the economy into making worse choices collectively that ultimately hurt (almost) everyone, not help.

The better parts of the book aren't just another bill of particulars about how fouled up Washington is, but rather some suggestions about how policymakers can make better choices. Many of these suggestions are rendered difficult because of political considerations, not whether the economic principles make for a better nation. Such arguments as sound monetary policy, reforming the housing markets and bank reforms are well argued. But unfortunately, it seems as these arguments are tilting at windmills unless the American people truly become aware at just how Washington truly is ruining the economic climate in a way the truly affects all Americans.

In short, I enjoyed reading this book. I have a background in economics, so much of the discussion of economic principles, signals and inefficiencies seemed like old hat to me. The good news is this book is written for the casual reader, not a Ph.D in economics. It is a short but powerful read, and I learned some new things about economic policy. Plus, the book, thankfully, is not a political rant about fault (everyone according to the authors has some blame apparently), but about providing some possible solutions to these problems.

This book deserves a wide audience, especially in Washington (and state capitals for that matter). Read more ›