NEW YORK ( TheStreet) -- In a recent article, I highlighted a number of problems the U.S. faces as it moves into the 21st Century. Many readers were troubled that I identified problems but offered no solutions. In actual fact, I have given careful thought to what can be done about each problem, and my ideas are presented below.

Let me start with what I ended my last article with: Is the sun setting on the U.S. Empire? Probably. But there are far worse things that could happen, both for the U.S. and the World.

Energy Dependency

Per capita, the U.S. consumes almost four times as much oil as other OECD countries. What to do?
  • Impose an additional $3 tax per gallon on both gas and diesel fuel. It would generate $512 billion annually and significantly cut into U.S. gas consumption.
  • Get serious about alternate fuels. Research conducted by Shanghai Jiaotong University concluded that solar water heaters in Shanghai cost 70% less to operate than electric water heaters. The U.S. should introduce its own subsidies so solar water heaters cost 70% less to operate than electric water heaters.
  • Pass a federal law, like the one that now exists in Hawaii, so that all new homes are required to install solar water heaters.

Foreign Policy

Serious problems started in Vietnam: 55,000 Americans were lost; more than 2 million Vietnamese were killed; and the U.S. pulled out with nothing accomplished. The Cold War ended when the USSR economy collapsed. In the Middle East, the U.S. is not popular.

What to do?
  • Reinstate the draft. Right now, the military attracts children from low-income families. What happens in U.S. wars does not matter to most Americans. It is summarized in short news clips that go in one ear and out the other. With the draft, better-educated, higher-income families with political clout will start questioning where their drafted children will be sent. Remember the Vietnam War protests? A lot of it had to do with the draft. The protest that finally got the U.S. out of Vietnam was fueled by parents who started thinking about whether they wanted their children fighting in Vietnam.
  • Stop trying to affect an Israeli/Palestinian two-country solution by offering bribes to Israel. Israel is not ready to accept a Palestinian state, and consequently, it is unseemly to offer Israel 20 F-35 fighter jets as part of a diplomatic effort to revive direct peace talks between Israel and the Palestinian Authority. Such offers accomplish nothing and generate more hatred of the U.S. in the Middle East.

Immigration Policy

10 million illegal workers are not going to be sent home. What to do?
  • Make them legal, and require all American to have ID cards.
  • Stem the flow of illegal immigrants by making it a serious offense for anyone to hire a worker without an ID card. (The U.S. Chamber of Commerce along with a lot of us who employ "landscape gardeners" will not like this.)

Health Care

The U.S. spends far more than any other developed nation on health care, and its health outcomes are the worst of any developed nation. I am writing a series of articles on this subject. Major changes are needed, and they will be set forth and explained in Part 5 of the series to be published in the next 10 days.


U.S. test scores on reading, math and science are low relative to other developed nations. I don't know what to do about this. I don't think more money is the answer. Looking at Table 1, I guess the problems stem from students' lack of motivation and family support.

US Grad Rates

Debt Dependency

The U.S. unemployment rate is 9%-10%. I am more worried about U.S. unemployment than I am about U.S. debt. To increase jobs, I recommend:
  • The federal government should continue to run large deficits until there are four consecutive months of private-sector job growth of at least 200,000 each month.
  • This money printing effort should weaken the dollar internationally and start bringing manufacturing jobs back to the U.S. (For more on this, see my previous article.)


Two-thirds of Americans are overweight and one-third are obese.

73% of U.S. agricultural subsidies go to meat and dairy products, with grains getting 13%. Vegetables and fruits get less than 1% of the subsidies.

What to do? Start by ending meat, dairy and grain subsidies.

Financial Sector/Paying People Too Much

The new financial reform will not protect the world from another U.S. banking collapse. What should be done? As I have written, Federal Deposit Insurance Corp. insurance should only go to banks that:
  • Manage their own loans
  • Do not engage in trading

Paying People Too Much

No other country in the world matches the U.S. in what it pays CEOs. Here I am not talking about people with good ideas, like Steve Jobs. I am talking about the heads of large corporations: the chief "bureaucrats". Lloyd Blankfein, the CEO of Goldman Sachs ( GS), took home $43 million in 2008. What happened to U.S. banks in 2008? They collapsed! Vikram Pandit, the CEO of Citigroup ( C), took home $38 million in 2008. The amounts are obscene, and they are still in charge.

For my recommendations, see my article titled Paying People Too Much.


This was not one of my original U.S. problems, but in light of the tragedy this weekend, I have been reminded of what has happened in this country.

A personal aside: John F. Kennedy inspired me to think the world could be a better place. I spent 20 years in Washington hoping I could make a small difference in his memory. During that time, both Martin Luther King and Robert Kennedy were gunned down. After two decades in the capital, I remember sitting in a bar on M Street between 19th and 20th Streets with a couple of friends. We agreed to give up on D.C.

How much evidence do we need? Two Kennedys and Martin Luther King killed by nut cakes. I quote from Wikipedia: "There have been over 20 known attempts to kill sitting and former Presidents. Four died. They almost got Reagan. Truman was shot at as was Teddy Roosevelt and FDR."

And beyond that, the almost monthly rampages of crazies killing people in schools and shopping centers. What is the common element? Guns.

Back in the '70s, the association between violent TV and aggression in children was shown to exist: Children who viewed terrorism on TV were for more aggressive than other children. Today with the Internet, there is no limit to the violence people can see and come to believe in.

How much evidence is needed to demonstrate that allowing any American to buy a gun no longer makes sense? What did this most recent nutcake just do? With a record of serious mental problems, he was able to buy a Glock semi-automatic pistol in Tucson on Nov. 30.

The U.S. has a serious problem: Nutcakes have easy access to guns.

Now, who benefits from interpreting the Second Amendment to the U.S. Constitution literally? It states: "A well regulated militia being necessary to the security of a free State, the right of the People to keep and bear arms shall not be infringed."

Three groups benefit:
  • Arms suppliers
  • People wanting to protect themselves
  • Hunters

Forget about arms suppliers: They are mostly decent people just supplying a market.

People who want to protect themselves? Ask any policeman and they will tell you they want them "off the street."

Hunters: only 12.5 million left.

What to Do?

Do we need an amendment to the Second Amendment of the U.S. Constitution? Maybe so. At the very least, we need to ban anyone who is not a government official to have access to an automatic or semi-automatic weapons. "The right to bear arms" has to be reinterpreted to mean that no civilian has the right to own a gun that can fire more than one bullet at a time.

Why is All This Happening? - Governance

In the U.S., it does not matter much whether Bush or Obama is President or whether the U.S. Congress is primarily Republican or Democrat. Unlike China, a dictatorship where the Communist Party wants to please the people, elected U.S. officials do what special interest groups want them to do.

There were 13,644 registered lobbyists in 2008, and lobbying expenses were $3.3 billion. Political action committees spent $412 million to get people elected. 527 groups are tax-exempt organizations that engage in political activities, and they spent another $238 million.

Like U.S. educational problems, I am at a loss to know what to do about governance. Without reforms in this area...

--Written by Elliott Morss.

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Elliott Morss is an economic consultant and an individual investor in developing countries. He has taught at the University of Michigan, Harvard University, Boston University, among other schools. Morss worked at the International Monetary Fund and helped establish Development Alternatives Inc. He has co-written six books and published more than four dozen articles in professional journals.