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American Gridlock: Why the Right and Left Are Both Wrong - Commonsense 101 Solutions to the Economic Crises

American Gridlock: Why the Right and Left Are Both Wrong - Commonsense 101 Solutions to the Economic Crises

H. Woody Brock

ISBN: 978-1-118-23462-4

Dec 2011

304 pages

$18.99

Description

A sensible solution to getting our economy back on track

Pessimism is ubiquitous throughout the Western World as the pressing issues of massive debt, high unemployment, and anemic economic growth divide the populace into warring political camps. Right-and Left-wing ideologues talk past each other, with neither side admitting the other has any good ideas. In American Gridlock, leading economist and political theorist H. Woody Brock bridges the Left/Right divide, illuminating a clear path out of our economic quagmire.

Arguing from first principles and with rigorous logic, Brock demonstrates that the choice before us is not between free market capitalism and a government-driven economy. Rather, the solution to our problems will require enactment of constructive policies that allow "true" capitalism to flourish even as they incorporate social policies that help those who truly need it.

Brock demonstrates how deductive logic (as opposed to ideologically driven data analysis) can transform the way we think about these problems and lead us to new and different solutions that cross the ideological divide. Drawing on new theories such as game theory and the economics of uncertainty that are based upon deductive logic, Brock reveals fresh ideas for tackling issues central to the 2012 U.S, Presidential election and to the nation’s long-run future:

  • Demonstrating that the concept of a government “deficit” is highly problematic since it blinds us to the distinction between a good deficit and a bad deficit – where a deficit is good if it results from borrowing dedicated to productive investment rather than to unproductive spending.
  • Deriving the need for a U.S. Marshall Plan dedicated to very high levels of profitable infrastructure spending as the solution to today’s Lost Decade of high unemployment
  • Drawing upon a logical extension of the Law of Supply and Demand to demonstrate how the health-care spending crisis can be completely resolved by letting supply increase at a faster rate than demand
  • Utilizing the theory of bargaining inaugurated by the “Beautiful Mind” mathematician John F. Nash, Jr., to help us avoid being repeatedly duped in our negotiations with China
  • Making use of a completely new theory of market risk recently developed at Stanford University to demonstrate why dramatically limiting leverage is the key reform to preventing future Perfect Storms, whereas hoping to banish “greed” amounts to whistling Dixie
  • Deducting from first principles a solution to the contentious issue of fair shares of the economic pie, a solution that integrates the two fundamental norms of “to each according to his contribution” and “to each according to his need.”

Profound, timely and important, American Gridlock cuts through the stale biases of the Right and Left, advances new ways of thinking, and provides creative solutions to the problems that threaten American society.

Preface xiii

Chapter 1 Dialogue of the Deaf 1

What to Do About It

What Went Wrong: Origins of the Dialogue of the Deaf

The Role of Deductive versus Inductive Logic in Policy Analysis

The Illogic of Policy Analysis Today

What Must Be Done to Raise the Level of Debate

Chapter 2 Must There Be a Lost Decade? 23

A Socratic Dialogue with the President Explains Why Not

Reasons for Lackluster Growth During the Remainder of this Decade

"Good" versus "Bad" Deficits, and the Main Policy Proposal

The Identifi cation and Ranking of Public Investment Projects by Their Return

When Huge Defi cits Are Justifi ed: A Unifi cation of the Arrow-Kurz and Keynesian Theories

Chapter 3 Resolving the Entitlements Spending Crisis 75

How to Drive Health-Care Spending Down while Increasing Access

A Supply-Side Solution to the Health-Care Crisis

Three Basic Assumptions for an Optimal Health-Care System

Expert Systems and Automation

Redressing the Social Security Deficit

Chapter 4 Preventing Perfect Financial Storms 119

When Everyone Was Too Clever by Half

The Four Origins of Today's Financial Crisis

The Role of Bad Economic Theory

Emergence of a Pathological Incentive Structure

Requisite Policy Reforms

Chapter 5 Bargaining Theory 101 157

How Not to Deal with China

The Origins of Economics Imperialism

The Possibility of the Hegemony of Political Science: The Nash-Harsanyi Pluralistic Bargaining Model

How Not to Negotiate with Thugocracies—The Case Study of China

The Remarkable Power of the Bargaining Model in Political Science and Beyond

Chapter 6 Beyond Democratic Capitalism 199

An Idealized Political Economy, with Distributive Justice

True Textbook Capitalism, and the Correct Role of Government

Beyond Effi ciency: The Eight Ideals of an Optimal Social System

Distributional Equity

A Comprehensive Theory of Distributive Justice

Conclusion 231

Appendix A Supply/Demand Summary of the Patient Protection and Affordable Care Act 235

Appendix B Dynamics of Total Health-Care Expenditure 241

Notes 249

Index 267