Monday, June 1, 2009

A Better Way For General Motors

General Motors is now in bankruptcy. According to the plans that have been made for it, the government will own 60% of its shares. For the sake of rescuing ailing corporate giants, the US government is creating a massive national debt. There is, I believe a better way.

The government is using it unique ability to collect and to print money to attempt to rescue the nation from the current financial crisis. There is a better way. Unfortunately, it has not even been tried.

For years, municipal bonds have been a way to earn tax free interest. With this incentive it is possible for cities to borrow money under advantageous terms. By lowering the cost of borrowing, the taxpayers end up saving money. There are other forms of investment that could be given a similar tax exempt status.

The government can control the tax climate in which investors operate. They can discourage the purchase of cigarettes or encourage the purchase of energy efficient cars. They can also encourage Americans to invest at a time when many Americans are fearful of doing so.

There are millions of Americans who have small sums that they could invest in the stock market. Blue collar investors could bring billions of dollars into play rather than simply being fearful spectators. With the internet in a large percentage of American homes, investing is easier than it ever was before.

The government could create a class of investments that are tax free in the same manner as are municipal bonds. Alternative forms and sources of energy, public health and companies in crisis as General Motors is now could all be put into a tax exempt category. Anyone willing to take risks for a combination of altruistic and financial motives should be encouraged. To further encourage investment in a bear market, the government could agree to allow investment losses as tax deductions. Ailing banks could also sell shares with similar tax protection offered to the American people.

There are millions of people who do not currently invest in the stock market. There are people who want to beat the low interest that the banks are offering. Encouraging Americans to invest would be a powerful lift to America's national mood.Those who invest are by definition no longer spectators. They are players in the game.

America is only partially controlled by the popular vote. Shareholders and board members also control a significant part of American life. President Obama spoke a great deal of hope . Those who invest do so because they see hope. They are looking not to Washington but to their own resources. Obama spoke of change. The change in the pockets of millions of Americans could be a force for change in the economy.

Americans with vision saw how running water could be turned into electricity. Creative Americans have taken garbage and turned it into energy and fertiliser. George Washington Carver created hundreds of foods and industrial products from peanuts. American workers are a vast untapped resource for investment and change in America. Rather than weary them through taxes and the spectre of debt and inflation, American workers should be encouraged to invest in national recovery.

True leadership does not mean doing things for the people. It means eliciting solutions from the people and having them do for themselves.

I have not yet seen even the first spark of recognition of America's vast untapped power. Too many of us are spectators watching Washington and Wall Street instead of mobilising the vast power we hold.

Uncle Sam is going to be the majority stock holder in General Motors. It is not too late to reverse this folly. Instead of inflating our national debt to subsidise this experiment, the government could sell those shares with the sort of incentives that only the government could provide to American investors with the right combination of hope, patriotism and self interest. Instead of the people looking to Washington for solutions, it is time for Washington to look to the people. Sphere: Related Content

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