by Malcolm Curtis|American International Club of Geneva E-news, No. 4 2012
Spending a trillion dollars a year on infrastructure and doubling health care services are among the radical remedies proposed by U.S. economist Woody Brock to cure America’s ailing economy.
In an entertaining and challenging presentation to the AIC’s May 25 luncheon, Brock insisted that he was not advocating spendthrift policies but ones based on a “new order of logic.”
Both sides of the political spectrum are engaged in a dialogue of the deaf, said the author of American Gridlock: Why the Right and Left are Both Wrong.
The 304-page book aims to bridge the divide with “Commonsense 101 Solutions to the Economic Crises”, including some surprising initiatives.
Among them is what Brock, in his second AIC appearance, called a Marshall plan to repair America’s “shocking infrastructure” that would create jobs through the “multiplier effect.”
He proposes spending a trillion dollars annually but he brushed aside concerns about the debt this could entail.
Investments should be made only in profitable projects, he said, instead of spending money on transfer payments and preserving government jobs.
“It’s not about the size of the deficit, it’s about the quality of the spending.”
Brock advocates offsetting such expenditures by cutting healthcare costs (relative to GDP) in two while at the same time providing universal medical coverage.
Brock said healthcare services could be doubled even as costs are slashed by training more doctors, through deregulation and by using smart machine technology for medical checkups.
For “90 percent of all visits any of you have ever paid to a doctor, your Labrador retriever could have told you what was wrong,” he said.
With a growing and aging population, the US faces bankruptcy from its overly costly healthcare system, noted Brock, who slammed “Obamacare” for adding costs while
adding no additional services.
Educated at Harvard and at Princeton University, where he earned a doctorate in mathematical economics and political philosophy, Brock heads a consulting firm that
advises financial institutions, corporations and investors.
He illustrated his views with slides and sprinkled his presentation with a mixture of homespun analogies and citations from celebrated thinkers such as Einstein and Euclid.
Brock blamed excessive leverage — the use of borrowing and derivatives in a bid to multiply financial gains — for the financial storm that hit world markets in 2008, led by the sub-prime mortgage debacle in the US.
“The answer to the global financial crisis is cut the financial leverage way back,” he said.
Brock was also critical of those who view financial hedging as a solution in tough economic periods.
“We now know mathematically from Stanford (University) there is no perfect hedge . . . There are not even that many good hedges, especially in times of crisis when you most
Brock, who was made an honorary member of the AIC, did not have time to discuss all the contents of his book, which he later signed for members and guests.
But at a time when pessimism prevails in many quarters, he said it offers positive solutions.
“Despite all the whinging and the gloom and doom in the papers that you read,” he concluded, “there really are some win-win policies out there that we can all endorse
and hopefully be all happier and end gridlock.”