I believe that historical evidence, objectively viewed, clearly illustrates that free-market capitalism best provides economic prosperity. However, in the last eight years our free market economy has been disrupted in a futile attempt to “level the playing field”. Our economic growth continues to meander along at the slowest pace since World War II. The American labor force is suffering from 40 year lows according to major indicators. Our national debt now exceeds our economic output and stands at an unimaginable $29 trillion.
Our economic situation is related to our current government’s failed Keynesian policies. Keynesian theory has held that it is spending which drives economic growth. However, Keynesian policies fail for at least four reasons.
First, in Keynesian thinking economic growth is strongly linked to government spending. However, as the economist Friedrich Hayek points out, government budget writers have insufficient information from a lack of market prices to efficiently allocate resources.
Second, government has been taxing not only work, but other so called “economic bads” such as alcohol and carbon. The problem here is that under the guise of taxation, the government has been involved in social engineering. At the very least the purpose of taxation should be to efficiently fund basic government programs, without engineering our society in so doing.
Third, and probably most importantly, eventually the government will run out of other people’s money. In order for the government to give a dollar to Everett, the government needs to take a dollar from Ashley. In so doing the government then simply issues “debt”. The problem with “debt” is that it is simply a form of future taxation. The fundamental reality is that government doesn’t produce anything, thus the fundamental problem in taking money from Ashley to give to Everett.
Fourth, and very importantly, it is production and not spending which drives economic growth. The reason for this is very simple. People cannot spend or consume without first investing time and effort to produce something to exchange for that which they are consuming.
However, there is currently reasons to be hopeful with the advent of our new administration. Keynesian economic policies are most likely going to be replaced by the economic philosophy of Milton Friedman.
In relation to the above, while ever increasing government spending and ever increasing government taxation is not a part of the much needed economic solution to our problems, reasonable consumer spending is part of the solution.
If you are a business owner who provides products or services to consumers you have reason to be optimistic about the future. However, in order to be competitive in future markets it will be important for you to be able to provide financing for your prime, as well as your sub-prime customers through such customer oriented services as accounts receivable financing.
Accounts receivable financing can enable you to enhance the cash flow position of your company while also providing an opportunity for your customers to consume your product or service without maxing out their credit card. Accounts receivable financing or accounts receivable factoring as it is sometimes called, can also address your cash flow needs because you can immediately cash-out your accounts receivable financing contract.
Access Funding Center, Inc. provides a consulting service that can explain to you how you can provide accounts receivable financing not only for your customers with high credit scores; but, also for your customers with credit scores as low as 600.
Start preparing now for the future economic boom in consumer spending by improving your cash flow position while at the same time providing accounts receivable financing for your sub-prime as well as prime credit score customers.
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