As most financial professionals have offered their opinion on how to improve the American economy, we thought we would join in. So here is our advice to President Trump – focus on making prices transparent.
Most of the products and services we buy are priced by companies that perform cost analysis and price their product/service accordingly. That pricing formula takes many factors into account. The end user then decides if they are willing to pay the price in an exchange. But there are many hidden factors in the pricing process that need to be eliminated if buyers are to pay the firm the actual cost of the product/service.
An example – A consumer walks into a big-box retailer and pays $5 for a widget. What is not included in that price is the cost to taxpayers of the food/rent/healthcare subsidies that the big-box retailer’s employees receive from the federal government. That is monetized in our federal debt figures and paid for at a different time than the purchase of the widget – that expense is paid whenever that consumer pays taxes to the federal government.
To create an economy that is transparent and appropriately assigns expenses to costs, it is necessary to remove the laws, regulations, and tax breaks that place a financial obligation on consumers of goods/services at any other point than the point of sale. Will this bring about inflation? Yes. But it will also make our economy more transparent and transparency is key to managing a successful economy.
President Trump needs to simplify the way in which the government collects revenues and the different manners in which private entities receive benefits that can be monetized. In short – the President needs to force business to stand on its own and avoid any relationship that makes prices opaque due to government interference.
We acknowledge that there are areas which are critical to our national well-being and defense – agriculture for one. But let’s start with the easy ones first and see how far we get. There is a long list of subsidies that could easily be eliminated. Consumers will howl at the price increases but only because they forget that the old, lower prices were being added to our national debt – a debt which, if not addressed soon, can limit our ability to manage our economy.
Take the reins off American business by all means. But also, place the burden of conducting business squarely on their shoulders and not the national debt.