Sunday, July 17, 2011

Calling Bluff on the Debt Ceiling "Carpocalypse"

Here in Southern California we just survived the "carpocalypse"  - when fevered pundits proclaimed that one stretch of closed LA freeway might wreak gridlock all the way to the Mexican border.  It didn't happen, because people sensibly heeded warnings. As during the so-called "Y2K Crisis," headlines blared: World Fails to End!

Nor will the United States of America collapse, if it slips into an August of No Borrowing.


Oh, the political fight in Washington, over the raising of the debt ceiling, is serious, all right. There's plenty at stake and the rare adults in that town are trying hard to negotiate solutions.  Here I plan to lay out some of the parameters - a few of which you surely haven't seen mentioned in big-media. I will also appraise some of the crazier polemical tricks.

But first, let me reiterate a key starting point: despite chicken-little proclamations pouring from all sides, America won't tumble into hell if there's no budget deal by August 2.


==Jeopardy in the Short-Term?==

The cause of "carpocalypse" level panic in D.C. is fear that the U.S. credit rating will collapse, if the debt ceiling isn't raised in time. America is said to be the only major nation that's never defaulted on its obligations, resulting in easy access to cheap bonds. And indeed, a true default on interest and principle payments could do serious harm, raising risk assessments and borrowing costs for ourselves and for our children. But that won't happen.

Even if August 2 passes without a deal, and the U.S. government abruptly stops borrowing, there will be no reason for our national credit to be damaged, more than a scintilla.

Why? Because there will still be enough money in the till, on August 3 and thereafter, to keep the armed services, FBI, FEMA and most vital services going. And after that, more than enough to pay interest due on all outstanding debts. In other words, no "default."

And if all interest is being paid, exactly what will the credit markets have to complain about? Will their calculations of self-interest really change that much, because of an official state of insolvency - clearly very brief - that won't affect their bottom line a single bit? There is a word for market participants who let symbolism trump calculated self-interest.

Chumps. Sure, speculators will send bond yields on a roller coaster for a couple of days. Then, their place will be taken by calmer, more calculating heads.  Winners.

Oh, don't get me wrong. The August 2 deadline is a serious matter!  The President will be forced to shutter half of the government. Farm subsidy payments and student loans won't go out.  Social Security checks may be cut in half, or they may not go out at all.  That's bad!  But that won't last very long, you can be sure.  No more than days - a couple of weeks, at most. And the difference will be made up, within a month.

The short term victims of this idiocy will be politician-demagogues with careers cut short by self-inflicted wounds. We won't see a collapse of the United States of America.

My real worries extend over the longer term, to the underlying problem of which this is just a hiccup symptom. The same damned curse we've suffered for 20 years. Our grinding decline into phase three of the American Civil War.


==A Primer on the Impossible Politics of Debt Reduction==

Consider the awful position the Republicans find themselves in. They cannot turn around now and simply vote to raise the debt ceiling, as they did 17 times under Ronald Reagan and seven times under George W. Bush, without a squeak, while the national debt skyrocketed under both presidents.  (The ceiling went up four times, by small amounts, under Bill Clinton.)

Never mind history. For the GOP-controlled House to do this for Obama, after all their radical rhetoric, would be political suicide.

President Obama has made it even more difficult to back out.  By seeking a Grand Deal on the deficit, he took on his own party's base to offer major cost-savings in entitlement obligations, such as Medicare and pensions. For the GOP to walk away from a table heaped with budget cuts, efficiencies and spending limits amounting to three trillion dollars over ten years - more than they ever asked for - would be public admission of hypocrisy.

(Secret factoid: the Democratic leadership sees this event as an opportunity to do some major fat-trimming that the country desperately needs, but that they could never justify to their base, under normal conditions. Each side could do this - enact some vital reforms while blaming the other side!  That is, they might, if pragmatic adults filled the room.)

Why can't the GOP accept this offer? Because Obama demands one trillion dollars in revenue to compensate and help pay for it all.  Every penny of new revenue would come from elimination of targeted pork or fatcat tax breaks - like subsidies for the corporate jets that helped the rich to escape the "TSA hell" the rest of us endure in public airports.

Polls show the public overwhelmingly supports this modest set of adjustments, especially since taxes on the rich are at their lowest rates in 50 years. But most of the radicals who recently came into the House of Representatives under the Tea Party banner have signed Grover Norquist's pledge to absolutely never, ever enhance revenue going to the federal government, under any circumstances. Even during times of war.

(How did we go from budget surpluses under Bill Clinton, rapidly paying off the debt, to arterial gushers of red ink under Bush? Could one major factor have been going to war for the first time in the nation's history without a plan for shared sacrifice, or any provision to pay for it? Norquist doesn't try to soft-pedal his aim, which is to "strangle the U.S. federal government to death"... a literal quotation.)

Such a pledge leaves no wriggle room. No space for adjusting to circumstance, to negotiate or deliberate. or to be a delegate for all of your constituents. Even the narrowest exception, one that gets three dollars in budget cuts for every dollar of loophole closing - (which old-sane conservatives like Goldwater or Buckley would deem a huge victory - is absolutely anathema to today's GOP.

Whatever you think of the doctrinal details - wherever you stand along the dismal, lobotomizing "left-right axis" - you've got to admit they are impressive. Reciting exactly the same talking points within hours, sometimes even minutes. The most ideologically pure and stunningly well-disciplined party machine America has seen in two hundred years.


==The McConnell Two-Step==

Now, there are smart people on both sides of the current debt-ceiling mess... even some of those who are out of their freakin' minds... who know they've painted themselves into a corner. As we speak, they are desperately seeking a way out. And some of the imaginative escape plans are downright stunning.

Take the proposal of Senate GOP leader Mitch McConnell to evade the political mine field by deliberately surrendering to the President the power to raise the national debt ceiling.

Say what? Your party disapproves of red-ink spending, right? (It never bothered you under GOP presidents, when the mantra was "deficits don't matter.) So... your solution is to throw away your Congressional power of say-so over borrowing and hand it over permanently to the wastrels in the Executive Branch?

How does the mind even wrap itself around that one?

Actually, the political legerdemain is pretty clever! Try to follow along.

First, you pass a bill that tosses all power to raise the debt ceiling over to your enemy President Obama. In the long term, this abrogates forever one of Congress's chief powers , to force the nation's focus on the budget (like right now!) But it gets you out of being responsible for a default.

You know Obama will raise the limit, for the sake of the country. And so, Social Security checks will flow. You won't be blamed for stopping them. Phew.

Next, you express outrage that Obama has done exactly what you tossed him the power to do! Great. And then, according to the new law, you pass a resolution through the House blocking the debt-ceiling increase!

But... won't that stop the Social Security checks?

Nope, because you feel safely certain it will fail in the Democratic-controlled Senate, or under the president's veto pen. Thus GOP Congressfolk get to have a win-win! They escape from the debt-limit crisis they triggered. No Grand Deal means the government keeps spending like mad, but without any tax adjustments on the rich. And, above all, you can tell your back-home radicals:

"I voted against any debt-limit raise!  Our fingerprints aren't on it! HE did it!"

It's a fabulous tale, worthy of science fiction. But, um, here's a question for House majority leader Eric Cantor And Senate GOP leader Mitch McConnell: Sirs, do you actually think that will work?

Sure, 'he' (Obama) will have raised the debt ceiling. But only because you voted to give him that power... forever! Will your constituents really be too stupid to notice that? Sure, past history suggests you may be right about that. But can you count on stupidity saving you... forever?"

The President should reject this idiotic ploy, in savagely contemptuous terms, even if it means that the debt-raise deadline passes by on August 2. As I said (above) our credit rating will be fine. There will be no permanently credit-damaging "default." And the nation might do well to go without federal checks for one or two weeks. It'll make us think.

He won't do that, of course.  By nature Mr. Obama is a consensus dealer and bridge-builder who tries endlessly to "reason together." He seems congenitally incapable of recognizing that we live in unreasonable times, with our bridges already set aflame by a foreign-owned propaganda machine.  Abraham Lincoln also spent six months trying to find someone in southern states to reason with, to negotiate with. It took multiple, hard shocks before Lincoln realized the harsh, exceptional realities of civil war.


==What's The Worst That Can Happen?==

In fact, we've seen all this before. Back in the 1990s, Republicans in Congress shut down the government... and paid for it politically. But they felt a grand gesture was necessary for ironic reasons. Because, for a brief time, House Speaker Newt Gingrich and President Bill Clinton actually worked together!

Upon first taking over Congress, in 1995, Gingrich made a lot of bellicose statements. But he also wanted a track record of accomplishment. And so, he sat down with Clinton to negotiate Welfare Reform, a bill that took on many complaints about a system that both right and left found unworkable and destructive.  The result was legislation that simply worked. So well that "welfare" has dropped from the lexicon of top political issues, even among polemical extremists.

And that brief interlude of sane-discussion and compromise had other products. Gingrich and Clinton worked out budget control measures that resulted, soon thereafter, in the first balanced books and black ink in the federal treasury since Eisenhower. Black ink that Clinton diligently applied to debt reduction, even later when they GOP demanded that it all be given to their top 1% sponsors. Even when he was being sprayed by the opening salvoes of Culture War.

It was a remarkably productive year or so. And Republican radicals looked upon what had been wrought by Gingrich and Clinton. And they saw that it had been achieved by pragmatic negotiation and good old American, non-dogmatic problem solving. And they saw that citizens and the nation benefited and the public thought it good.

And they swore that nothing like it would ever happen again.

Whereupon the Great Federal Government Shut-down Crisis commenced, accomplishing nothing but noise and smoke and posturing and harm to conservatism. (Read-up about the eerie parallels to today's big posturing festival over the debt ceiling.)

When that venture flubbed, the GOP decided to try something even more radical, while expecting different results. They crossed another traditional barrier by impeaching a President over matters that had nothing to do with his performance of the job we hired him for... indeed, for doing far less than eight out of the fifteen "House Managers" (prosecutors) had done to earn their own messy divorces.  Only one other president had ever been impeached, in the direct aftermath of Lincoln's assassination. But the turning of trivialities into mega drama seems to be a trait that we must live with, during this phase of our ongoing civil war.

What does this history lesson have to do with the current crisis? It shows what we could have, right now, if adults chose negotiation, yes, even across an ideological divide. And it shows the ultimate futility of partisan rage, when pragmatism is replaced by fevered dogmatism. It shows that Mr. Obama needs to study Clinton and learn to be tough.

He must call... their... bluff.


==Punishing Job Creators==

I want to conclude by getting specific. Some of the polemical nonsense being hurled about seems to come straight out of the corrupt ad agency in "Mad Men." Much of the claptrap is being answered well. But I wrote to a cousin of mine who works in the Executive Office to point out some major Murdochisms that are going unrefuted.  Here is a big 'un.

Deficit-cutting helps the economy. But any revenue increase hurts "job creators."

Here are two points that someone ought to say in reply:

a)  CUTS ALSO COST JOBS: "Every million dollars of spending that we cut means 20 or 30 real-live middle class Americans will lose a job. Obviously.

"Now, in spite of that fact, we're willing to do lots of cutting! Because we have to.  We've spent a decade plunged into land wars of attrition in Asia without doing what all our ancestors did, in time of war - making sacrifices to pay for it.  Well, the bill is due.

"But if several dozen middle class Americans must go jobless to save a million dollars... exactly how is it sacred 'job-creation' to give the same million dollars in special interest tax breaks to some billionaire corporate jet owner?  Do you really believe he'll use that million to hire 30 people?

"Sure, it's happened, now and then. But if the Bush tax cuts had translated into 30 jobs per million given to the rich, we'd have almost no unemployment right now!

"So, why should we swallow that line, this time?"

b)  MONEY VELOCITY:   "When you pay a worker to help fix a decaying bridge or weatherize an apartment building, what does that worker do with his or her weekly check?  These days, it has to go right back out again, paying a grocer, who pays a trucker, who pays a farmer, and so on. It's called Money Velocity and money that goes to the middle class has lots of velocity.

"Now Republicans say we should be stingy to the working class, but generous to the rich, so they can make jobs. But if economists know one thing, it's that the rich don't spend the way middle class folks do. They don't have to!

"Sure a few of them build factories. We'll extend tax breaks for useful capitalist enterprise, for research and investment in job-making capital equipment.

"But this is no time to go into debt preserving huge tax gifts for those who simply hold onto it all, hardly spending.  That's not velocity. It sure isn't job-creation. It's using your friends in Congress to just get richer while the middle class pays."

Okay. Yeah, I know that those concepts - like money velocity - may be dismissed by political operatives as hard for Joe Six Pack to grasp. Well, I don't agree. I think they'll nod, understand, and feel flattered at being explained stuff, like adults.


==What It Boils Down To==

I consider the "Tea Party Movement" to be one of the most brilliant sociological ploys. Perhaps unmatched since a million poor white southern farmers were talked into eagerly and courageously fighting to the death, in order to protect the feudal privileges of a tiny, slave-holding aristocracy. Yes, it is that impressive.  Get them to think they are fighting for one thing, while dying for something else.

Likewise, by holding up and waving an obsolete and irrelevant old "left-right'political-axis," today's feudal lords  have managed to stir Red America into a frenzy of unparalleled rancor toward every single group or profession that has both knowledge and professional skill -- from scientists to teachers, civil servants, academics, medical doctors, attorneys, diplomats, skilled labor... amounting to a "war on smartypants."

Why stir hatred for all of the folks in society who know a lot? Calling them "intellectual elites?"  This program clearly has one aim.

To protect one set of elites from being counterbalanced by other elites.  Pretty simple, actually.

Distract and prevent us from returning to what made the country great... pragmatic negotiation. Calm discussion. A mix of state and enterprise and individual solutions that somehow never tipped into any ideological excess...

...that is, until it was stirred by foreign-owned propaganda machines, with that one goal. To sic us at each others' throats.

==See more articles on The Economy: Past, Present and Future

248 comments:

1 – 200 of 248   Newer›   Newest»
Cubistx3 said...

Brilliantly worded and written. Helped me understand the debt crisis and what was really going. I was in the dark on a few of the things you mentioned until reading.

Never noticed the comparison between the Tea Party and the way the landowners in the south rallied everyone during the Civil War.

Great article. Thank you for helping me understand what was really going on.

David Brin said...

And thanks for the feedback....

Anonymous said...

David,

Please google "modern monetary theory."

Naum said...

/amen on this assessment of affairs…

Not that the Democratic party is a bastion of justice and good sense, but the 21st century edition of the Republican party is predominately xenophobic, nativist alarmist inflaming, fear focused, anti-science, and dogmatically fundamentalist (i.e. culture wars). And add to that, myopic free market fundamentalism that flies in the face of empirical economic history…

TheMadLibrarian said...

2 weeks ago, I was privileged to be present when Atlantis made its last trip into the heavens. Because the weather was so iffy, DH and I made arrangements to stay over in nearby Titusville, in case the launch got bumped to the following, or even the next day.

Titusville at 45,000 residents is the largest of several small bedroom and support communities who draw their livelihood directly from the space program. Specifically, many of the engineers and staff for Kennedy Space Center and Cape Canaveral live in these towns, and for every person working on the Cape, 3 people in these towns pump their gas, sell them groceries, and babysit their kids. As of the end of this month, approximately 7000 engineers and other personnel will be laid off when the Space Shuttle program winds down.

The immediate effects of this are obvious. Titusville’s mainstay is the Cape, and space-based tourism. Hotel rooms for the last Shuttle launch were going for $250 a night and up. The week following, the prices were $50-60 per night. Every other business in Titusville seems to have a For Sale sign on the lawn, or be shuttered. Our hotel manager wasn’t sure if she could keep her hotel open once the Shuttle program finished and so many people were out of work. Friday night should have been hopping in a small town, but the busiest place was the excellent restaurant where we ate dinner; everything else was dead quiet.

Titusville may limp along until SpaceX or one of the other Shuttle replacements gets going, but it’s equivalent to Silicon Valley during the 90s, or Cleveland and Pittsburgh in the 80s. The government is expecting private industry to take up the slack, and I’m not sure they are ready yet. Meanwhile, we have nothing that can adequately take the Shuttle’s place. This is one of the side effects of shortsighted government cutbacks and fumbled handoffs to commercial interests.

TheMadLibrarian

hiesties: hysterical fits over debt reduction

Tacitus2 said...

In fairness the notion that a majority of Americans would favor tax increases to alleviate the deficit needs a close look. Obama quoted a figure of 80% who felt this way. But what that actually reflects is that 80% would favor raising the taxes of someone else to accomplish this. Generally the "rich" and the "corporations".

If you ask whether they would favor raising their own taxes the numbers would look different.

And btw I have no objection to raising taxes after the fed gov has demonstrated an ability to curb spending. Many Republicans are moderate and feel the same way.

Right now the elected officials are actually doing what they were hired to do. Negotiate an answer while keeping mindful of what their constituents sent them there to do. Its heavy going and I wish them well.

MN is on the verge of a resolution of their budget issue (recall that states can't just print more Magic Unicorn Dollars), but it looks from across the border like a messy and unsatisfactory thing.

In MN matters came to a head when the brief state gov shutdown caused a major beer distributor to technically lose the legal ability to sell their wares....yep, Miller-Coors accidently overpaid a routine brand registration fee and nobody could write them a refund check for a couple of hundred bucks!

With sweltering heat and no Miller Lite the pols caved in a hurry.
Hope it works out for my Gopher homeland.

Tacitus

Anonymous said...

I stopped reading after "tax gifts."

I have a lot of respect for Brin as an author but this essay was a rambling incoherent mess.

If you mean tax increases, just say tax increases. You can't gloss over the reality of what a tax increase is by calling it revenue. Revenue has a neutral or positive connotation. It conjures the idea of a business making money by providing a much needed product or service, not the unpleasant image of government taking your money by threatening to deprive you of your liberty.

TheMadLibrarian said...

I have to correct my figures; instead of 7000 layoffs at Titusville, it was closer to 2000 layoffs. That's still a heavy hit for an area with light population largely relying on one industry that is mostly closing shop.

I am squarely in the middle class, and as you can tell by my handle, a public servant/government employee. After a MLIS, I still make less than $35K annually, and have recently been presented with a 5% paycut and increases in my medical premiums, in order to help balance the state budget. I naturally don't enjoy having a big chunk of my paycheck being taken for taxes (probably no one does), but I understand the necessity. I like the services the government provides for my benefit, like guaranteed clean water, fire protection, and roads fit to drive on. Furthermore, I doubt that private business could do the same quality for a cheaper price, or they would be doing it and making a profit. As in the space program, commercial ventures are not beginning from scratch, but building on existing support systems.

TheMadLibrarian

untlogin: "and login"

LarryHart said...

Tacitus2:

If you ask whether they would favor raising their own taxes the numbers would look different.


In general, I'm sure you are more right than not, but there are exceptions.

I'm all for rolling back the Bush tax cuts, not just for "those making over 250K", but for EVERYBODY. Yeah, my taxes will go up...modestly. It's called "shared sacrifice", and I totally buy into it.

Much of what I've been disappointed about in President Obama's performance is actually beyond his control. But I really, REALLY wish he had just let the Bush tax cuts expire, which would have happened automatically, and so without recourse to fillibusters.

How long does it take for it to become obvious that Republicans aren't interested in deficit reduction. They claim it's the number one problem facing America, and yet they won't raise tax revenue, which is the ONLY source of revenue (other than borrowing). They salivate at slashing services, but when that happens, they don't apply the savings to deficit reduction--they give it away as tax breaks.

So in what sense do they claim to work for lowering the deficit? I seriously don't understand what they're selling to their own constituents.

LarryHart said...

Dr Brin, thanks for the cogent essay. Thanks for making me less anxious about the (apparently inevitable) failure to act August 2. I'd rather not have my late father's birthday live in infamy. :)

LarryHart said...

Tacitus2:

And btw I have no objection to raising taxes after the fed gov has demonstrated an ability to curb spending. Many Republicans are moderate and feel the same way.


Sorry to sound like a broken record, because in boom times, I'd be agreeing with you from the rooftops.

But we're in a depression, and "cutting spending" of any kind is a BAD thing.

I'm sure we legitimately disagree over how much borrowing is "too much" and how much inflation is "a good thing in a depression". But the notion that we could go 30 years under the theory that "deficits don't matter", and NOW it's suddenly the time to slash spending? The argument seems designed explicitly to prolong the depression. It achieves no other end.

madtom said...

All you say about the culture wars and the political reality is true. However . . .

I see a simple solution for Obama that is a big winner politically.

Most things for which the government needs money are mandated by Congress and the Constitution even more solidly than the debt limit is. That debt limit is just another Congressional creation.

Most expenditures are required by legislation passed, and by solemn
compacts entered into, over the course of many Congresses and many Presidencies.

When Congress passes contradictory legislation, Obama, as Executive in Charge of Making It So, must choose:

"Let's see, which of these mutually contradictory Congressional directives do I want to follow - hmmm. Does the debt limit look more or less important than all these other things? Well, maybe I can observe the intent of the debt limit by cutting this [snip] and that [thwack] favorite Republican program."

It would be like having a line-item veto, made retroactive and applied to all programs requiring expenditure.

As a Constitutional scholar, he will know this better than most. He can simply order the sale of more bonds, spend the money on what he sees as the highest priorities, and see if anyone is stupid enough to take a complaint to the SCOTUS. If they do, I see little doubt about the decision, and the debt limit will be dead with a big stake through its heart.

And that's assuming that the Republicans let it go that far. They should realize that a backdown claimed to be a victory is far preferable to letting Obama do the above and get such heavy creds as a strong and courageous leader, and
strengthen the Presidency even further relative to Congress.

LarryHart said...

"Anonymous" said:

If you mean tax increases, just say tax increases. You can't gloss over the reality of what a tax increase is by calling it revenue.


And YOU can't gloss over the reality of "letting a TEMPORARY tax break expire on its own". That's what "temporary" means, right? And it was Bush who made the tax break temporary specifically so that it wouldn't affect projections of future deficits.

Thanks for playing, though.

sociotard said...

The McConnell proposal doesn't really matter. It is politically dead. All his constituents and collegues hated it.

David Brin said...

Anonymous illustrated our problem. Scientific research shows that as soon as we realize we're about to face a challenge to our preconceptions, our minds try to shut down. It is Cognitive Dissonance and I predicted (EARTH 1989) that it would get worse.

Look at what Anonymous did. He leaped to pick a single polemical phrase and (with great relief) use it out of context to "prove" to his own satisfaction that the entire missive had no content work parsing.

Likewise... a "mess" is not what I am hearing from all directions, including libertarian colleagues, who consider this to be an exceptionally carefully written and logical article.

In any event, the thing that mature people do, when faced with cognitive dissonance is to PARAPHRASE... to carefully parse out what you claim the other person is saying and seek to verify whether you got it right.

The fundamental point. All americans are raised under the core meme of Suspicion of Authority. The Neocon movement portrays only one authority center as meriting outright hatred... the government we all share and own, that defeated Hitler, built the highways that we use, educated America and took us to the moon.

Well, sure, we need a libertarian movement to keep aiming scrutiny at that potential center of tyranny! My book The Transparent Society is all about that! But to allow yourself to be talked into ONLY SEEING DANGER FROM THAT DIRECTION is to have let Rupert Murdoch make of you a fool.

Across 6,000 years, freedom was destroyed far more often by oligarchs like Murdoch than it ever was by bureaucrats. Today, with us fighting TWO wars and with taxes on the rich at the lowest level in 60 years, I ask that reasonable men consider, please, the possibility that they are being deliberately stoked into rage at just one enemy...

...while another one loots our store.

David Brin said...

Tacitus, polls around 2001 showed people wanted to leave tax rates the same and continue paying down the debt.

J said...

THANKS! I've often thought Republicans aim to become neo-Confederates, but Tea Party = Confederate Army is already sad and twisted and true. How to communicate with them?

Stefan Jones said...

Hey . . . I wonder if the Social Security databases and check-writing system are flexible enough to lower payments highly selectively.

Like, sending out checks with lower payments to recipients in congressional districts who elected "Tea Party" members.

They should be grateful for the opportunity to lead the way to thrifty, limited government.

'mandedl': You know, that song from Harpsichordist on the Roof.

David Brin said...

God bless us... an actual HONEST deficit hawk. I dislike this guy, a lot! But he's refused the Norquist insane "pledge" and his list of to-do items contains a lot we could negotiate over.

http://news.yahoo.com/coburn-proposes-9-trillion-deficit-cut-measure-192145582.html

LarryHart said...

Dr Brin said:

Tacitus, polls around 2001 showed people wanted to leave tax rates the same and continue paying down the debt.


In a vaccuum, certainly most people would prefer that their taxes not be raised. However, if it's a matter of raising taxes in order to pay for some tangible benefit, the responsible will understand that there's no free lunch.

Governments don't hold bake sales. Government revenue and taxes are one and the same. If government spends money, it MUST be either tax money or borrowed (against future taxes) money. Paying down the debt so as not to leave a burden to our children IS a tangible benefit that people would be willing to pay for out of tax revenue--especially since (as Dr Brin reminds us) it wouldn't have required a tax INCREASE back in 2001, just a lack of tax decrease.

If the Tea Partiers weren't complete hypocrites, they'd have to choose whether they are "Taxed Enough Already!" OR whether they want to lower the deficit. It's awfully hard to demand both at the same time, especially when any actual savings from spending slashes get given away as LOWER taxes rather than as deficit reduction.

Not to mention that the way out of a depression is through INCREASED spending, not austerity. A family might tighten its belt in hard times, but when my family has to do that, our grocery store, our gas station, and the local beggar all receive LESS income. Republican arguments to the effect that austerity is the way out of a depression try to pretend that tightening my belt is good for those OTHER folks I just mentioned. It isn't.

To me, it's time for the US government to charge for its services. Want us to protect your oil interests in Iraq? We charge $20 TRILLION for the use of our armed forces. Want to use the court system to enforce your copyrights or evict your deadbeat mortgage payers? A steal at $2 Billion. That sort of thing. I mean, if the government isn't supposed to tax or borrow, how IS it supposed to do all those things the corporations want it to do for them?

barrettmanor said...

My goodness! A calm, reasoned explanation. Pardon me while I faint.

...

Ah, that's better. Well put, sir.

John N. said...

This is a good article, although in my opinion it could be sprinkled with more blame towards the Democratic party and be more balanced. After all, there is plenty of blame to go around. The President should read this to learn how to be persuasive without resorting to fearmongering via threats to the checks of entitlement recipients.

anne.ominous said...

Great article! The only thing I have issue with is your characterization of the Tea Party movement as being a ruse.

If you know the actual history of it, you know that in fact it was started by people of the "middle class" who had simply had enough. While taxes for the rich might be unreasonably low, middle-class Americans have been feeling the pressure, especially in a slower economy. And they are also aware that government is just plain too big.

Now, we all know that the Tea Party thing was usurped by Republicans who have distorted the initial purpose and message. And indeed, I would characterize most current Tea Partiers pretty much as you have. But to imply that its current state is a reflection of its origins is disingenuous.

anne.ominous said...

To LarryHart:

Sorry, but history disagrees with your analysis. As does common sense. The common sense side says: you can't spend your way out of debt. The history side says: spending by government has never actually been shown to significantly lessen a recession or depression.

On the contrary. We can take good lessons from history:

The depression of the 1920s saw virtually no government intervention. Yet the economy was strongly recovering and in many ways nearly recovered in a mere 2 years.

10 years later, massive government spending did nothing to solve the Great Depression, which had effects lasting as long as 15 years.

Government spending had no noticeeable positive effect on the Stagflation of the 70s and 80s. It did not help the recession that happened at the turn of the century.

Again and again people cite this Keynesian theory of "stimulus spending", but to the best of my knowledge the history books simply do not contain any documented examples of it ever significantly helping anything. On the other hand, there is a great deal of historical evidence -- and modern economic theory -- that says it serves to help keep the economy on the skids.

David Brin said...

Sorry Anne, but if the tea party were about middle class folks getting fed up, you would think that it would concentrate on getting actual beneficial effects for middle class people.

I agree that the middle class has suffered in this century, terribly! While the 1% at the top has skyrocketed its share of national income, wealth, influence and everything else. They have utterly abandoned the airlines, leaving us in TSA Hell.

You might imagine a populist middle class grass roots revolt would take not of that, or that all its members stay glued to one cable channel that is owned and operated as a propaganda venue by billionaires, most of them foreign, half of them Saudi.

But no. There is no mention of the word "oligarchy." And the LITMUS TEST for being a tea partier is whether you defend super-low taxes for oligarchs. Dig it... not a single other thing on their agenda actually happened. But that one is defended with blood.

Please? wake up?

Jacob said...

We need to get rid of 'taxes' and replace them with '[specific] tax'(s). "I want lower Education Tax" "I want lower Roads Tax" "I want lower Defense Tax" These have more meaning because it can direct policy makers to the correct actions.

I believe we should reduce spending in specific areas when the people are demanding it. I think we need greater Transparency in order to see the costs associated with our services.

Proper planning, foresight, and flexibility can handle the dedicated spending issues.

-----------

Anyone claiming history is on their side when it comes to the Economy is suspect. Its simply too complex and without control groups for comparison. At best, you should say "I/Many believe that this [action] contributed to this [result]."

Tim H. said...

From my less than exalted perspective, federal debt doesn't seem to be the biggest problem, the analogy that comes to mind is a branch at the top of a sequoia complaining about how damned expensive the roots and trunk are to maintain, they should get by on less. They won't long enjoy the heights if the underlying structure starves.
"arimedth", math underlying "Trickle-down" economics.

learner said...

Thanks, David! Well put as ever, though I think the stock market may have more than a day or two hiccup if we shut down the government! Baby boomer 401K's are just now getting back to pre-2008 levels. Risking another crash is scary.

Your points are well made and supported. Even my conservative friends are beginning to listen perhaps there is hope...

Robert said...

Here's an interesting (and long) article on how the Empire of Murdoch is starting to crumble around him in the wake of the phone hacking scandal... and on the possibility that it may have included 9/11 victims. Seeing how Fox News and other affiliates are busy defending Murdoch and trying to downplay events, if this does snowball over into the States... then we very well could see the Conservative Media Empire fracture and turn on itself.

http://www.huffingtonpost.com/2011/07/18/murdochs-parliament-scandal-shakes-news-corp_n_901917.html

http://www.huffingtonpost.com/2011/07/18/murdochs-
parliament-scandal-shakes-news-corp_n_901917.html

Robert A. Howard, Tangents Reviews

rewinn said...
This comment has been removed by the author.
Ilithi Dragon said...

anne.ominous said...

Again and again people cite this Keynesian theory of "stimulus spending", but to the best of my knowledge the history books simply do not contain any documented examples of it ever significantly helping anything.

*cough* World War II?

The Great Depression lasted throughout the 1930s. The worst years were the first couple years after the economy crashed in '29, but the Depression lasted for over a decade. Unemployment remained high, the economy continued to flag, and it was very fragile, throughout the 1930s, right up until 1941, when we entered into WWII and the military manufacturing industry exploded under the single largest government stimulus spending program in history. After our entry into WWII, our unemployment problems went away virtually overnight. Part of that was because of the large number of young men who volunteered or were drafted into the military, reducing some of the labor pool, but the biggest factor was the sudden, massive availability of manufacturing jobs in factories building tanks, jeeps, fighters, bombers, warships, transports, cannons, rifles, pistols, bombs, rockets, shells and bullets, and all the vast assortment of equipment necessary to make war in the mid-20th Century. And then there was the industries providing the refined and raw materials to those factories. Hundreds of thousands to millions of jobs were created by the sudden, massive government spending on military industry. Those people who now had fairly well-paying jobs could then afford to buy goods and services they otherwise wouldn't have been able to afford, and millions more jobs were created in providing those services, and manufacturing the goods they consumed. And more jobs were created, and the existing jobs bolstered, by the demand and cash flow those jobs created, and so on. The economy boomed throughout the '40s, despite the largest amount of government spending (relative to GDP) in the history of our nation. After the war was over, the economy was bolstered enough to continue under its own power, and many of those factories that had been building tanks and planes and guns and bombs were easily converted into factories producing cars and trains and commercial airplanes and toasters and ovens. Yes, a lot of debt was accrued, and the cost of the war was paid in far more than just expenditures of treasure, but the stimulus that that massive government spending provided paid off, and provided massive returns in the creation of a strong, booming manufacturing economy with a strong, vibrant middle class capable of not only sustaining itself, but producing its own growth, DESPITE top-tier tax rates running at 80%-90%+ from the 1940s to the end of the 1960s (which also contributed greatly to our ability to pay down the war debt).


Keynesian Economics is a very sound, and in fact very conservative economic policy. It is the economic policy of the medieval village storing away grain and other crops in the village stores in times of bountiful harvest, putting them away not only against the winter months, but also saving in times of plenty to create a reserve to draw upon in times of famine and drought.

It is the classic conservative admonishment of children to save at least some of their allowance for a prized and highly-sought toy, or against a rainy day when their allowance might not come, instead of spending their entire allowance at the candy store each week.


Now, the idea of "spending your way out of debt" does sound counter-intuitive at first glance, and for your or me or our families, it's more than counter-intuitive, it's just not a realistic possibility (in theory, we could 'spend our way out of debt' by spending on investments that will provide solid returns, if we can wait for the returns, but that's not a realistic or practical possibility in all but the rare exceptions of cases).

Ilithi Dragon said...

(Continued...)

However, the economics of the federal government are not the same as the economics of an individual or a family. The federal government (or any legitimate government) generates revenue through taxes. Income tax, sales tax, etc. all provide more revenue when the economy is strong than when the economy is weak, which in the long-term can off-set short-term government expenditures to strengthen the economy. In other words, a short-term stimulus package that boosts the strength of the economy can actually pay for itself in increased tax revenue from the stronger economy over the long-term, especially if the stimulus is used to stave off a recession or depression, and/or is large enough to boost the economy to a point where it can not only continue at the boosted level but grow beyond the boosted level on its own.

How does this work? Velocity of money. Economics 101: It's not the amount of money in an economy that is important so much as the speed at which the money is moving through the economy that is important. In other words, it doesn't matter how much money your hoard, it doesn't do anyone a lick of good if nobody is spending money. True wealth is generated by the exchange of money to facilitate the creation and exchange of goods and services. The more times a single dollar changes hands in a day, the more work it is doing to generate wealth through the creation and exchange of goods and services. This is what Doc Brin referred to as 'money velocity.' Give a dollar to a rich man, and it will not exchange hands many times in a single day. More than likely, it will end up sitting in an off-shore bank account or stock portfolio somewhere, doing nothing. Give a dollar to a lower- or middle-class man, however, and that dollar will be spent immediately, passed on to another lower- or middle-class person in exchange for groceries or gas, who passes it on to someone else in exchange for labor providing a good or service, who passes it on to someone else in as a car payment, who passes it on to someone else in exchange for labor for making the car, who passes it on to someone else in exchange for a plane ride across country, who passes it on to someone else in exchange for the labor of flying and maintaining the plane, who passes it on to someone else in exchange for illicit sex, who passes it on to someone else in exchange for diapers or baby food, and so-on, ad infinitum.

Each time that dollar exchanges hands, it does a little bit of work in facilitating the creation of a good or service. Money itself is not true wealth, it is a tool for the creation of wealth in goods and services. The more times a dollar exchanges hands in a single day, the more true wealth (in goods and services) that it helps to create, the more wealth-generating work that it does. Greater money velocity means greater wealth generation which means a stronger economy.

rewinn said...

@annie - how many of the facts that you asserted about the 1920s need to be disproven before you agree that your analysis is flawed?

I'll disprove as many of them as you like, but only if you agree to thereafter change your mind. If no amount of contrary facts will change your mind, then God bless you.

Ilithi Dragon said...

(Continued...)

The federal government can stimulate this sort of economic activity by spending money on programs specifically targeted to inject money into the economy where it will continue at the highest velocity possible, for as long as possible. Projects to create and maintain infrastructure (roads, bridges, dams, railroads, power lines, telecommunication lines, sewer/water, etc.) are great examples, because not only do they inject large amounts of money into the economy through the creation of middle-class jobs (a middle-class job being the greatest money-velocity generator in an economy), they are also an investment in our country's future, by both maintaining the current infrastructure that our civilization depends on for our daily lives, but also building new infrastructure for us to expand into or shift into as old infrastructures become worn out or obsolete. High-tech research programs and projects, like NASA and other programs also provide high-returns, not just in job creation and infrastructure creation, but also in the encouragement and expansion of society's education. Investments in expanding and updating schools and our education system also generate high-velocity middle class jobs, and strengthen our nation's education system, and thereby strengthening our future. The list of projects goes on.

But how does this all get paid for, you ask? The federal government takes in revenue from economic activity. If the economy is poor, then tax revenues will be poor because incomes will be low, and sales will be minimal. If the economy is booming, more people make higher incomes, generating higher tax revenues for the government. More people spend more money, generating further revenue through sales and luxury taxes. The stock market booms in a strong economy, generating even more government revenue through capital gains and other such taxes. By spending money to stimulate the economy (provided the stimulus is targeted appropriately and not just thrown away in low-velocity programs like tax cuts or subsidies for wealthy individuals and corporations), the federal government will get that money back through increased tax revenues from a stronger economy.

Now, that money won't come back overnight; it's an investment, but the money will come back, and with interest if the stimulus is targeted wisely.

And when that money comes back, the wise, conservative, Keynesian takes that bountiful harvest and puts some of it towards paying down the debt created by the stimulus, some of it towards treats and toys for celebrating the bountiful harvest (reasonable, but limited easing of tax burdens, spending on non-vital/'aesthetic' projects, etc. (there's nothing wrong with buying a little candy with our allowance, as long as we don't buy too much)), and a good chunk of it gets put into reserves for another rainy day.



P.S. Sorry for the triple post, I ran over the character limit twice over.

David Brin said...

The fascinating thing is that these truisms (e.g. "keynsianism never worked") circulate among people who are increasingly and eagerly detached from expertise.

The War on Science has reached the point where just 5% of scientists call themselves republican, yet it is fine to dismiss non-Foxoid scientific views as "unscientific."

The polemical trick of saying "there are no known cases of Keynesianism working"... (And by the way it does NOT always work!...

...is a conjuring trick based on the fact that a challenge has been out for decades, defying anyone to show an example of SUPPLY SIDE Economics actually having the effects claimed for it.

There's a difference. Re Kaynsianism, there is a legitimate area of flux and uncertainty where it has had to be revised many times... as when Later Keynsians like Clinton decided we should pay down debt in good times, buying credit for when stimulus was needed in bad times.

In contrast, supply side is plumb verified completely insane-loco. It serves one purpose, to supply incantations to rationalize:

- lowering taxes on the rich in good times...
- lowering taxes on the rich in bad times...
- lowering taxes on the rich in peace time...
- lowering taxes on the rich in war time...

Funny thing... follow the rationalizations back and you get to the AEI and Heritage and Fox... all funded lavishly... by the rich.

Ilithi Dragon said...

David Brin said...

And by the way it does NOT always work!...

That's actually another point against the "Supply-Siders." No proponent of Keynesian economic policies I've ever spoken to has insisted that it absolutely works all the time. I'm sure such people probably exist, but they're in the minority, and I've certainly never seen any (though that does not necessarily say much, I am just one person).

The proponents of "Supply-Side" economics, however (at least in my own experience), almost invariably insist that it is an absolute solution that will always work in all situations, always.

That Supply-Side economics "just works" is not a matter of economic theory to its proponents, it is a matter of fundamentalist, religious faith.

Bruce Harrow said...

Who are the " foreign-owned propaganda machines"?

Robert said...

Fox News, for one. Murdoch is British. News Corp. is also part-owned by the Saudi Royals. Huh, and it's the driving force behind... the Tea Party, which is trying to force the destruction of the social safety net or the destruction of the economy by refusing to raise the debt ceiling.

Go figure.

Rob H.

Tony Fisk said...

Where do most rich get their money from?

Another term for supply-siders might be 'self-servatives'

Simple name calling it may be, but it does serve to distinguish them from more traditional conservatives, and I think it important to be able to do so.

I thought the Tea Party had the Koch Bros as patrons?

btw what is the current state of the uncut movement over there?

Ilithi Dragon said...

The Tea Party has received direct and indirect financial and other support from a myriad of wealthy individuals, foreign and domestic, who have histories demonstrating questionable ethics and morals and/or a clear interest in spurring the radicalization of American politics and the continuation of culture war to push more and more onto the plates of the wealthy, and/or have an interest in seeing our country weakened and hampered by the breakdown of our political system.

Ilithi Dragon said...

Also, for the record, Murdoch is actually Australian.

LarryHart said...

John N:

The President should read this to learn how to be persuasive without resorting to fearmongering via threats to the checks of entitlement recipients.


Wouldn't that be "The Republicans should..."

LarryHart said...

"anne.ominous" says:

The common sense side says: you can't spend your way out of debt.


I never said we can spend our way out of debt. I said we should spend our way out of depression.

The debt is a separate problem. I already said to Tacitus that if the economy were booming, I'd be all in favor of paying down the debt. I WAS in favor of it when you Republicans were saying "Reagan showed us deficits don't matter" and giving "our money" back to us as tax breaks, despite the fact that that money had already been spent on the government's credit card.

What's going on now is that despite disingenuous Tea Party rhetoric to the contrary, the debt is NOT the number one problem facing the country. Unemployment is. And the solutions to the one exacerbate the other. We can't solve both problems simultaneously. But fixing unemployment will go a long way toward (longer-term) generating revenue that can pay down the debt. OTOH, exacerbating the depression through austerity only guarantees stagnation for decades to come.

LarryHart said...

Illithi Dragon:

The more times a single dollar changes hands in a day, the more work it is doing to generate wealth through the creation and exchange of goods and services. This is what Doc Brin referred to as 'money velocity.' Give a dollar to a rich man, and it will not exchange hands many times in a single day. More than likely, it will end up sitting in an off-shore bank account or stock portfolio somewhere, doing nothing. Give a dollar to a lower- or middle-class man, however, and that dollar will be spent immediately, passed on to another lower- or middle-class person in exchange for groceries or gas, who passes it on to someone else in exchange for...


I've said this before, but it bears repeating. "Trickle down" is a misleading metaphor, because money doesn't tend to go downward but upward. A more accurate metaphor is that money is like the heat in your oven that cooks your turkey.

Adding more heat at the BOTTOM of the oven gives you more useful work as the heat rises through the turkey and cooks it. Adding more heat at the TOP of the oven does squat as that heat sits there. In either case, the heat all ends up at the top, but in the former case, it did useful work getting there, and in the latter, it bypassed doing anything useful.

This is the fallacy of the "give money to the job-creators" supply-side argument. The job-creators pay employees in order to have those employees generate wealth on their behalf. If you just GIVE them (the job-creators) more money, then they don't need to pay employees to MAKE money for them. The money injected into the TOP of the system does doodley-squat. It's money injected at the BOTTOM that "trickes up" to the wealthy corporations anyway, but does tons of useful work on the way there.

Tacitus2 said...

I make no claims at all to being an economic theorist. It is sufficient and job enough to run my own finances in a fiscally prudent fashion. But I think the discussion on the transition from Great Depression to Wartime Economy to Eisenhower era Prosperity misses several points worth pondering.

1. If I am reading some of you rightly, you are suggesting that the Roosevelt admin did not dissipate the Great Depression with WPA, NRA etc. (I will say that back in the day they had a real sense of shovel worthy, and some of the works of their hand still live on). So it should be no surprise that the modern incarnation of stimulus spending did not fix things either, and when the last cat is skinned there I think we will see that too much went to maintain public employee sinecures, hardly the most productive segment of the economy.

2. Ya suppose our post WWII boom had something to do with all those other booms? You know, the industrial plant of most of the rest of the world being blown up? Plus of course the human cost of having a high percentage of your able bodied killed off (USSR) or your empire hocked (UK). It would take a real doofus to not prosper in that climate.

3. Anyone want to argue that our current entitlement crisis (baby boomer health costs, underfunded pension plans,etc) had any parallel in the 30s to 60s?

I could, and probably will, go on at length here, but character limits loom. But I must say, as a conservative it warms the cockles of my allegedly flinty heart to see you all looking so fervently to the past for answers. As the hated Republicans try to lead.

(and like you I worry where they will lead us, but the torpidity of the Dems is appalling to me.)

Tacitus

Jim said...

That was a heck of a long post, and there is a lot wrong with it, so I'm going to break this up into a number of posts.

First, let me start with some points of relative agreement:

1. The economy won't crumble if there isn't a deal on the debt ceiling by Aug 2nd. Of course, the people demagoguing and pushing this 'Armageddon' talk have been White House officials and Democrats, not Republicans.

2. There will not be a default. Also, SS checks will not be effected, additional WH demagoguery aside, because SS taxes are still roughly equal to expenditures. So why, exactly, would SS checks stop (or be 'cut in half')?

3. Finally, yes, the real problems are for the longer term, the underlying problems.

rewinn said...

I think it's important to note that the anti-Keynesians aren't actually citing facts in the ordinary meaning of the term (e.g. "unemployment was x% in 1934"), but at most conclusory allegations ("policy K failed").

Arguing with conclusions are a fine shortcut when the supporting facts are sufficiently well established (e.g. "the world is roundish") but not in the case of the New Deal, since as a rule the conclusions are based on provably false assertions (e.g. "the New Deal started in the 1920s" which is a frequent implication of the anti-Keynesians).

@DrBrin, @illithi & company have posted responses that are wonderfully pertinent to those who will change their minds if presented with facts, but if anti-Keynesians will not accept fact-based argument, it may be a waste of time. Don't stop, please; but don't be frustrated!

===

BTW every now and then I look at kickstarter as an example of the world getting better. It's capitalism for the masses ... which should make ideologues of the left and right go "WUT?"

David Brin said...

Tacitus raises some excellent points from a classic (sane) conservative perspective that merit answering.

1. Most economists consider WPA and CCC and all that to have been big successes. They took the savage edge off the depression and the number of families living on the streets plummeted. The basic food/services economy revived and the bigger economy started perking up...

...then FDR made his Big Mistake.... he stopped too soon. He tried to balance the budget in 1936 and the economy immediately double dipped. This BTW is obviously the core aim of today's GOP, to corner Obama into budget tightening before the economy is ready to sustain it.

Everybody knows what happened next. WWII forced us into mega Keynsian mode and it absolutely overnight ended the Depression. But it is what happens next that was the huge miracle of Keynes.

You see Truman and etc were deeply worried that Depression was the natural condition and we'd fall right back into it when the boys came home, unemployed, with war production halted. But something had happened. WE PAID OUR TROOPS.

No other country gave their troops anything more than pocket/brothel cash. Our boys were actually paid a modest salary, and had nothing to spend it on. Ditto the Rosie Rivetters. So... they bought bonds and saved. And somehow, we managed to keep the bonds at par. Result?

Citizens had tons of cash in their pockets... to take their time seeking jobs, to invest in small businesses, to spend and thus keep other folks employed. Throw in the GI bill, which pulled a million men off the work force while training them, and you got the formula for a boom.

2. Our entitlement crisis isn't so bad. Because Americans put up with a later retirement age than the insane-early ages clutched by Europeans. We already shrugged when full SSI benefits were raised to 70. Already floating are similar adjustments to Medicare etc. THES ARE ON THE TABLE. and clearly our people are much more willing to accept such things. And it would not take many such tweaks to keep SSI solvent through 2080.

The problem is one thing. The deliberate campaign to destroy American political negotiation. Period. ALl of the things that even Sen Coburn (crazy as he is) has put on the table OBAMA HAS SAID HE'S WILLING TO NEGOTIATE.

The things that are on the table would end our insolvency and bring things back to 1997. But we are being prevented by insane lunatics and traitors.

===

Jim is right. My example of SSI checks was faulty. But other things like farm and university and medicare would stop. So? It would be for one week.

rewinn said...

Is the House planning to cut the James Webb Space Telescope?
===

@DrBrin - I believe the facts support your analysis, except in one respect: the Confederacy doesn't mind if it burns down the nation. They plan to be the last ones standing in the ashes.

I certainly do think the President should call their bluff but he's got to be hard to say, "Go ahead, shoot the hostages!" Nasty person that I am, I would (as President) start by pulling the FAA from the districts of the insurgents. Let Boehner and Cantor walk home if they think Gummit is too big.

===

One the positive side, there's a Petraeus joining the fight to protect our troops. That would be Holly Petraeus (wife of the general you've heard of) and the enemy she's fighting are the banksters who view our servicemembers as tasty snack items. Oddly enough, the House GOP is trying to block her agency's efforts.

Greg Barton said...

Common sense says light cannot be both a particle and a wave.

But it "is".

Tacitus2 said...

David

I differ with some of your interpretations. The FDR era WPA etc were necessary, and were succesful...but the main goal was sort of emergency life support, getting angry idle men off the streets and out doing something at least margainally useful. Recall that the spectre of Communism stalked the world, and even modern industrialized states flirted with it, and its darker isomer, in the worst times.


Think of it as taking a severely injured person with dropping blood pressure and just slamming in multiple liters of saline....it will keep them alive a while but what is really needed is blood products.

The notion that FDR should have "doubled down" I can't comment on. The notion ala Krugman that we should do it now....well, its a legitimate point of view. So why not propose it and let the voters decide? D controlled Senate has not proposed a budget in over two years, and Obama himself only tossed out a back of the napkin version that got zero support from either party. Lead, damn it! Or stop whining about where you are being led!

Sure, the GI bill helped frost the cake for economic recovery post war. But unemployment from massive reduction in defense spending could have been much worse. Rosie the Riveter quit her job and started having babies, and there was Korea that came along and kept the defense businesses solvent.

But the utter devastation of any global rival was still the bigger factor, and one much changed from the current crisis.

And dude, you really don't think that baby boomer demographics and uncontrolled health care/pension costs can be shrugged off? You are either a steely nerved stalwart or are wearing very rose colored specs.

I also have a few thoughts on why consumer spending may not be the panacea, but I do not want to overload.

Tacitus

TheMadLibrarian said...

Rewinn, more power to Ms. Petraeus! One of the recent scandals has been banks foreclosing without adequate procedure on families of service personnel on active duty. The banks who did this are quite lucky that G.I. Joe, after coming home from a tour of duty (or several) in Afghanistan, and finding his family kicked out of their home, doesn't go for the Hollywood remedy of marching into the bank's headquarters heavily armed for his mortgage "adjustment". No active armed services member should come home to that! "Payday loan" offices are also notorious for preying on service members. Most soldiers don't walk around with a wad of cash or an ATM card, so they end up going to one of these legal loan sharks between paychecks, and the vicious cycle begins.

TheMadLibrarian

neses: opposite of neffews

Jim said...

About the differences between raising the debt ceiling with Reagan, Bush I & II, and Clinton:

There is a huge difference between having a debt of ~60% of GDP with a viable expectation of having it lowered in the future, and 100+% of GDP with no end in sight. Research has shown that anything over 90% is a tipping point toward slow growth:

WSJ: Your research shows that when public debt hits about 90% of GDP, that is almost like a threshold for slow growth. There is some disagreement about where we are on that spectrum. If you take just debt held by the public, it is in the 60s. But if you look at all debt, gross debt, including debt held by government agencies like Social Security, it’s much higher. Where are we on that spectrum?

REINHART: Debt is debt. We’re very close to that 90%. Other government agencies are holding government debt and netting that out, but in the end the federal government is going to be liable. And gross debt of the federal government still doesn’t take into account the massive guarantees (by government-owned Fannie Mae and Freddie Mac). If anything, 90% is a generous measure.

What the data seem to reveal is that at lower ranges of debt, you really can’t make a link between debt and growth. But once you hit a certain threshold, you hit a wall. You can pile on the debt for a while, and you’re not seen as risky. You can accumulate a certain amount of debt without a threat to your debt sustainability. But then you reach a point where that debt sustainability is called into question. It becomes an issue.


http://blogs.wsj.com/economics/2010/02/05/qa-carmen-reinhart-on-greece-us-debt-and-other-scary-scenarios/

PS Now that I've addressed your charges of Republican hypocrisy on this point, how about saying something about Democratic hypocrisy -especially given Obama's comments in 2006 - on previous votes.

Jacob said...

There is nothing fiscally responsible about Republicans. Period. I detest their claim to the title as I'm an >actual< deficit hawk.

You raise taxes. You cut spending by going after waste and bad programs. If you aren't willing to do both, then you aren't fiscally responsible. You are just looking to get your way. You give people a choice to continue desired program at tax increase to pay for it or lose the program.

You never let Republicans set fiscal policy. It is a road that will lead to ruin.

libramoon said...

Government contracts with suppliers and agents promising payments. We get a good credit rating allowing us pay at a low interest rate, and which encourages further credit because we are known as a good risk. When politicians get all up in a curmudgeon and imply we have no obligation to pay these debts or that we will just pay what we want, oops. Now there is suspicion that we are not going to continue to be a good risk. Who would want to lend to us without a much bigger rate of return to offset the risk? Meanwhile, we have a great number of dependents whose lives are based on getting what was promised from the government. There are ways we could save, have fewer obligations, get better deals for our dollars. Certainly, that ought to be discussed, better options adopted. That has nothing to do with the debt we have already incurred, and the need to continue borrowing to meet those obligations we have already committed to.

If the money isn't there to pay all the bills, there will be prioritization which may not prioritize what we may think are the real priorities. These foolish political games have real consequences for real people.

Ordinary women budgetfor families, keep the creditors paid and the kids fed, clothed and otherwise provided for. These jerks in DC, rather then do the work they are outrageously paid for, insist on raging dramatics (what? to make themselves seem relevant?).
The country is in economic crisis so Congress wastes our time and resources on a dog and pony show. I guess if you can't give the people bread, give 'em a circus.

This whole debt/deficit thing is all smoke and mirrors. Next boom and with even the slightest sensible management we're back. With all the world changes -- physical, political, every which way, the markets and new technologies are ready to rock and roll. It is only idiocy or old power desperately striving to hang on that gives rise to this whole "share the pain" mantra, when instead we ought to be reaping the benefit.

There is no way to save ourselves out of the deficit/debt. The only way out is up. Big new industries with excitement and job growth are on their way every day. The route is not shared pain, but shared endeavor. We need to be educated and open to the new.

The only sacrifice to be shared is a manufactured fabrication of the media fog.

If anyone in DC were serious about deficit reduction and debt payment, they would insist that funding for alternative energy research, start-ups and education be in the mix.

One big way we can improve both lives and funds: prison time ought to be confined to those who have acted violently. Confine to protect others from their uncontrolled violence in a place where rehabilitative programs flourish. Nonviolent crimes actual payment -- cash, service, or other method of extraction.

Social Security is not causing any part of our economic problems, and is in fact ameliorating many of them.

Everyone says: Medicaid and Medicare are not the problem are part of the bigger problem of skyrocketing health care costs. So, what is being done or proposed to solve the actual problem?

If people want services they can get together and charge each member of the community to create a pool from which to pay contractors to provide said services -- we call it taxes.

The real fix on the revenue end would be to totally revise the tax code to a streamlined, clear, concise, user friendly set of instructions for giving our social structure its cut. Not a job that can be done in a hurry, though.

anne.ominous said...

Wake up yourself, David, and try reading what I actually wrote: that the Tea Party today is pretty much as you say, but that it is NOT the way it originally started out.

That was the entirety of my point, and you missed it completely.

Naum said...

This revisionist refrain about the New Deal being ineffective in thwarting the Great Depression (indeed, Amity Shlaes and others argue that FDR intensified and prolonged the depression) is galling… …not just by the fact that stimulus spending on a massive level during wartime repudiates anti-Keynesian arguments.

Even before the war -- in 1933, at start of FDR 1st term, unemployment was ~25%. By 1941, at start of FDR term (and almost a year prior to declaration of war and conscription of significant number of young men), it was already under 10%. Total employment spiked up from 32M in 1932, 44M in 1936, and >50M in 1941.

anne.ominous said...

rewinn:

If you want to argue "facts" about the 1920s (in particular, the brief depression of the 1920s, which is what I referred to, not the later one in 1929), then you will have to argue with noted historian Thomas E. Woods, which is where I got the information.

If you want to refute his version of the history of that event, go right ahead.

sociotard said...

Any speculation on how much the the current scandal will wound Rupert Murdoch's empire? I'm guessing 'not at all', but it is fun to watch.

anne.ominous said...

Naum:

War (WWII in particular) and "New Deal" are two entirely different things. Conflating them proves nothing.

Further, the high unemployment prior to the war was part of MY point. You're simply adding fuel to my argument. The fact that unemployment remained ridiculously high for over 10 years is a boost for MY side of that argument, not the other way around.

anne.ominous said...

David:

You fail to take into account that Keynesians at the time predicted ECONOMIC DISASTER when the troops came home because there was (their argument) no way so many newly unemployed could be absorbed into the economy.

Again, you folks are simply bolstering my argument, which was, plain and simple: Keynesian theory completely failed at predicting ANY major economic event, during the entire 20th Century and beyond.

So regardless of whether our economy has continued to chug along, Keynesian theory has consistently failed the ONLY true test of a theory: the ability to predict.

Fisher (a well-respected Keynesian) and other Keynesians were all proudly proclaiming just how FINE the economy was doing, mere days before before the big crash of 1929.

Keyensians were proudly proclaiming just how FINE the economy was doing, just prior to the stagflation of the 1970s. (By the way, stagflation -- high inflation and high unemployment -- was considered by Keynesian economic theory to be IMPOSSIBLE... until it actually happened.)

Keynesians were telling everybody that the economy was FINE... "Come on it, the water's FINE... great time for investment!" Just before the "tech bubble" in 2001. They were proclaiming just how FINE the economy was in 2006 and 2007.

If you disbelieve that, listen to an Austrian talking to some Keynesians in 2006 and 2007. He describes not only the coming failure, but exactly what was failing and why. But followers of Keynes literally laughed at him:

youtube.com/watch?v=2I0QN-FYkpw

Whether you like the guy or not, he was right. And Keynesians, have CONSISTENTLY been wrong. Not just consistently but almost invariably.

Regardless of whether you think Keynesian policy has helped or harmed the US, the fact is that as a THEORY, it completely fails.

anne.ominous said...

Pardon me: that was not an attempt to "move the goalposts". I have been participating in more than one blog and I got mixed up about which one I was in.

So, that was not actually the main point of what I stated earlier. But as far as I am concerned, you can simply ignore my earlier statements and substitute that one.

Carl M. said...

When you have a depression, you have to lower real wage rates to restore employment. Bummer. This can be done with actual wage cuts, which was the case for depressions in the 1800s, or it can be done with inflation, or it can be done with conscription.

During the Great Depression real wages went up -- for those who had jobs.

The CCC built some nice stuff. Making farmers throw away food as people were going hungry was batshit crazy. And one of these days I am going to dig up what the ICC was doing to freight rates. Were they propping them up artificially? I don't know yet. But I do recall reading that the ICC was expanded to include trucks, because trucks started eating into the railroads' business at the time. And this was before Interstate highways and semis!

Carl M. said...

As for the Laffer curve, those with the highest marginal rates are those transitioning from welfare to independence and single professionals making just under the Social Security ceiling.

If you want to milk the uber rich a bit while keeping the economy humming, drop the corporate rate down to 20% and treat capital gains on the sale of stock as ordinary income. For people starting new ventures, this is roughly a wash. For rich people parking their money, it is a tax increase. For grandma it is a tax cut. For CEOs, it is an incentive to move more business back home.

A couple other goodies: make it easier to defer taxes on stock grants and options until after they vest. But then treat as ordinary income with zero cost basis. Also, merge IRA, HSAs, etc. into a single flat tax deferral option. Let anyone save a fixed amount per year (say $30K) for any reason tax deferred. Withdrawals should then be treated as ordinary income.

This allows people to save for periods of unemployment, sabbaticals, extended sickness, college, retirement or whatever. Merge the working class and the investing class.

Ilithi Dragon said...

I'm no Keynesian scholar by any means, but I do feel obligated to point out that any failures of predictions by Keynesian economists in the 1920s has little to do with the validity of Keynesian economic theory, since the theories that formed the basis of Keynesian economics were not published until February 1936 (The General Theory of Employment, Interest and Money by John Maynard Keynes, a book written to revolutionize the understanding of economics at the time). I can't comment much on the failures or successes of Keynesian predictions after that because, as I said, I'm no scholar of Keynesian economics, but it seems to me to be disingenuous or ill informed to accuse a theory of failing to make accurate predictions before the theory was even created.

rewinn said...

anne.ominous wrote:
"If you want to refute his version of the history of that event, go right ahead"

1. First you have to give it. You have provided only his conclusions, not any facts underlying them.

2. Your argument appears to be that since (your assertion) the business cycle in the 1920s repaired itself without government intervention, but (another assertion) the Great Depression did not repair itself even with government intervention, therefore Keynesianism is wrong. Is this a correct paraphrase of your argument? If it is not, there is no point in discussing it further. However, but if it is, then the errors in fact and logic are patent.

3. In general, how many facts need I produce in refutation before you change your mind? If no number of facts would alter your beliefs, then God bless you.

rewinn said...

"...When you have a depression, you have to lower real wage rates to restore employment."

You provide no evidence to support that. If you want to make a purely theoretical argument, I have a better one: when you cut wages, you cut demand. Producers don't produce if they can't sell their stuff. Even when labor is free, you don't invest raw material in goods you can't sell. That just ordinary supply-and-demand logic.

(And of course, when wages are low, it can be rational to reduce the hours to work

Perhaps in some theoretical universe, high wages may prompt economic collapse but where in history have we seen this? History tells us that when working people have good wages, the economy as a whole prospers. The problem for the Aristocracy then becomes that a prosperous middle class starts getting uppity.

rewinn said...

@Naum - thanks for posting actual numbers. Goodness, who knew that a blog that occasionally touches on science could have a few numbers in it!

@TheMadLibrarian - you are correct but IMO understate the problem. Many of our enlisted folk are good people, but not economically sophisticated - there's a reason they went into uniform rather than Yale. Much of their training includes conditioning to obey and to believe authority, which appears in many cases to extend to the banker or whoever is telling them with great authority that this paper is the one to sign. If it hurts, suck it up instead of complaing - which is the wrong attitude for dealing with a scammer. Deployment can really take your mind off fiscal prudence, and if you're one of the 30% or more coming back from our Endless War with some form of m1ndf@ck1ng condition, you're extra unlikely to be proactive about those notices piling up. And you sure won't see a bank show compassion, although the bank manager's SUV might fly a nice yellow ribbon in your honor, so it's not all bad.
There are laws, such as the Servicemember Civil Relief Act, that are supposed to freeze the most extreme actions during deployment etc. Funny thing, such laws work only when you fill out the paperwork, and it's not the bank's job to phone you up in Kandahar and ask for it.
In this context, the resistance of corporatists (...I won't call them "conservatives"...) to even minimal protection against the financiers is not only morally wrong, it's a threat to combat readiness. It is said that the most common cause of losing security clearance is financial problems. That's likely one of the reasons the JAGs want to work with the news Consumer Protection Agency, and one of the reasons that the GOP's resistance is treason.

David Brin said...

Sorry Jim, you use the modern neocon debating method. You make assertions, and then you point to anecdotes.

I do not care a whit about "posturing votes" like Obama's in 2006. The simple fact is that when there's a GOP president and Democractic congress, congress negotiates. They cooperated and negotiated with Reagan, Bush and Bush and even Nixon (HUGE legislation passed under each.)

Except for the miracle year of 1995 (cited in my essay) when Gingrich and Clinton worked well together, the record is perfectly opposite re GOP Congresses which always treat the democratic president as if he were an illegitimate usurper and go into screeching hissy fits over things that THEY THEMSELVES proposed earlier.

Dig it. "Obamacare" was copied almost exactly from the 1994 GOP Alternative plan for health care. The same plan that GOP guv Romney pushed in Massachiussetts.

You can say "I changed my mind," fine. Do so.

But if a republican screams "Evil! Socialism!" at HIS PARTY'S OWN PLAN then he is a damned hypocrite.

Pangolin said...
This comment has been removed by the author.
Pangolin said...

The real issue that Obama, the GOP and the Democratic party are all trying to avoid is that the human race is running into physical limits to economic growth.

Per capita access to energy, land, fresh water and environmental harvests such as fish and lumber are declining. Population is growing faster than energy resources or efficiency. Environmental harvests are unsustainable and in decline on multiple fronts. Climate change effects are now destroying agricultural harvests as well.

At the same time trade markers, dollars, are concentrated in the hands of a tiny minority that are demanding historic returns on their investment. Absent those returns they leave assets idle. That's vacant commercial property, housing, farmland, and idled machine tools.

In addition we have a massive surplus in skilled labor and/or trainable labor. Only in fields where guild monopolies (medicine, law) or commercial cartels (movies, television, professional sports) are high wages being maintained.

In short, conventional economics is off it's rocker because their base assumptions do not reflect reality. The reason Obama and the GOP both sound crazy is because their political survival depends upon NOT being the messenger with the bad news.

So we wait. We wait until the populace itself realizes what's up and screams for change. D.C., in the meantime, is insane.

wv:pavacid, cause we got an ulcer

sociotard said...

Uh, Dr. Brin, I don't know about the 1994 GOP Alternative plan for health care (because I was in grade school), but you can't use the Mitt Romney example. His party hated him and called him a RINO for doing that.

Essentially, he was what you seem to be calling for: a republican willing to to hear the other side and negotiate. (which is not to say I support him for president or anything, nor do I approve of all his positions, but I do recognize that he is willing to negotiate.)

LarryHart said...

anne.ominous said:

Again, you folks are simply bolstering my argument, which was, plain and simple: Keynesian theory completely failed at predicting ANY major economic event, during the entire 20th Century and beyond.


It seemed pretty good at predicting this one. Paul Krugman was correct that the stimulus was too small and that despite continued borrowing and "printing money", inflation would not be an issue, while anti-Kensyans have been predicting hyperinflation and soaring interest rates "just around the corner" for years now.


So regardless of whether our economy has continued to chug along, Keynesian theory has consistently failed the ONLY true test of a theory: the ability to predict.


Are you sure you're not talking about Supply-Side theory?


Fisher (a well-respected Keynesian) and other Keynesians were all proudly proclaiming just how FINE the economy was doing, mere days before before the big crash of 1929.

Keyensians were proudly proclaiming just how FINE the economy was doing, just prior to the stagflation of the 1970s. (By the way, stagflation -- high inflation and high unemployment -- was considered by Keynesian economic theory to be IMPOSSIBLE... until it actually happened.)

Keynesians were telling everybody that the economy was FINE... "Come on it, the water's FINE... great time for investment!" Just before the "tech bubble" in 2001. They were proclaiming just how FINE the economy was in 2006 and 2007.


Funny, to me, that sounds like Phil Gramm saying it was just a "mental recession" and a "country of whiners", Candidate McCain insisting the "fundamentals are sound" as late as 2008, and Alan Greenspan extolling the virtues of bubble after bubble.

The AynRandroids and the Supply-Siders are the ones who have been consistently wrong, not the Kensyans.

John said...

One very important - perhaps key - point that no one seems to be particularly interested in is the simple fact that the US constitution was written with a very distinct theory of value and money, which is no longer popular. In fact, even at the time, it was being forced aside by the emergence of banks as the sole source of money. The government doesn't print much money compared to the immense amount that is simply written into existence by banks employing the fractional reserve. I had a history teacher argue that in fact the War of 1812 was more about the insistence of the US government on gold as the medium of international exchange than it was about any other issue.

Under the US constitution, the sole legal source of money is the US mint. Under the present system money is "written" into extistence very time a bank makes a loan. Constitutionally, there is no sound reason for the government not to do the very same. Why should the government "borrow" any money from a bank?

Robert said...

When you think of it, the U.S. Government did just that. We bailed out the banks. We stated that their bad loans... were valid and that the U.S. would honor them. We should have said "sorry, but you were playing with monopoly money. You have to pay it all back and we're not accepting bankruptcy from you. If you don't pay, we confiscate all of the property from all the executives who have ever worked for this bank. Thank you and have a nice day."

It would have paid off the bad loans, left the government from incurring debt, and punished those responsible.

Or maybe I'm just being cynical.

Rob H.

Jim said...

"By seeking a Grand Deal on the deficit, he took on his own party's base to offer major cost-savings in entitlement obligations, such as Medicare and pensions. "

What 'major cost-savings in entitlement obligations' did Obama offer? When would these 'major savings' materialize? You can't name a single one, because he didn't do it.

"For the GOP to walk away from a table heaped with budget cuts, efficiencies and spending limits amounting to three trillion dollars over ten years - more than they ever asked for - would be public admission of hypocrisy."

What budget cuts? Obama has named a few specific things that are off the table, like the boondoggle-of-all-boondoggles high-speed rail. He hasn't mentioned a single thing that he wants to cut.

BTW, where was all this supposed zeal for budget cuts when Obama came out with his proposed budget back in February. What did he want to cut then? This is an actual proposal of his, with actual figures for actual programs. Tell me what he wanted to cut!

"Secret factoid: the Democratic leadership sees this event as an opportunity to do some major fat-trimming that the country desperately needs, but that they could never justify to their base, under normal conditions."

Is that like Nixon's "secret plan" to end Viet Nam? No, because Nixon at least announced he had such a plan. Who among the Democratic leadership has even hinted that they want to cut some fat? This is completely pulled out of the aether ... and the aether doesn't exist.

"Why can't the GOP accept this offer? Because Obama demands one trillion dollars in revenue to compensate and help pay for it all. Every penny of new revenue would come from elimination of targeted pork or fatcat tax breaks - like subsidies for the corporate jets that helped the rich to escape the "TSA hell" the rest of us endure in public airports."

You mean the tax break that Obama signed in to law to try to stimulate the economy? How much revenue would this bring in? Less that 1% of that trillion dollars you're talking about, right? So where else is the money coming from, and why is Obama only talking about this essentially insignificant tax? Why doesn't he talk about taxes that ARE going to be significant? Why do YOU talk as if you know which taxes will be raise when AFAIK Obama hasn't detailed them?

Jim said...

The problem with x number of dollars of budget cuts to x/3 of tax increases is that the tax increases always seem to be immediate, while the budget cuts are always later, and later never seems to come. This happened with both Reagan and the first Bush. I personally would agree to such a plan if the cuts came first.

The biggest cause of the 'gushes of red ink' under Bush vs the tiny sliver of black under Clinton (and a Republican congress, let's not forget) are entitlements, not Iraq and Afghanistan. Just as the ... rivers ... of red ink under Obama are a result of entitlements and ridiculous increases in other domestic government spending, not Libya and his "surge" in Afghanistan and continuing operations in Iraq.

And anyway, Bush was elected as a "compassionate conservative", in other words a Republican who would spend your money like a Democrat. I never expected any different from him, though I HAD thought that the Republicans in Congress would rein him in to at least SOME extent, not spend even more.

Norquist is caught in the 80's, when "starve the beast" was all the rage in conservative circles. It was thought (obviously wrongly) that if you could limit federal revenue, you would automatically limit government spending. Unfortunately, Congress and recent Presidents have come to believe that they can spend whatever they want to spend regardless of revenues. At some point, like a teenager with Daddy's credit card, it is going to come to a drastic end.

Ilithi Dragon said...

Completely off-topic, but I thought our esteemed host might find this to be of mild interest:

I've been reading a sci-fi webcomic called The End (aliens abduct a bunch of random people from a sci-fi convention to preserve the species, but things go wrong), and the latest update touches on some of the concerns about our species intellectual property being used as trade goods that Dr. Brin has mentioned at length before.

http://www.endcomic.com/>http://www.endcomic.com/

Basically, laying low in a single pod ship with their human cargo after said things that go wrong, the leader of the expedition hands out some translators to a pair of humans she is taking out to help get supplies, noting that they will understand everyone else but nobody will understand them because English is an unknown language. She then adds that that may not last, because they have little else to barter with.

Jim said...

McConnell's plan is pure political BS. No content, all positioning. I understand the motivation, but it shows why term limits aren't such a bad idea.

anne.ominous said...

LarryHart:

"Predicting this one"??

Go back and watch that video again. They did not "predict" this one. They all (and I don't mean just all in the video) were saying that the economy was great, just before everything hit the fan.

You're talking about AFTER the big event. That's another matter entirely. The question is: why didn't they see it coming in the first place? That was my point.

anne.ominous said...

Ilithi Dragon:

That is a good point. Let me explain:

It is true that Keynes had not written about his theories at that time, but the basic -- though separate -- principles behind many of his theories were already well-known. Take for example using the Fed to attempt to influence the economy through interest rates and money supply. These are things that today are considered classical Keynesian concepts, even though they were around before the influence of Keynes himself.

So while you are correct technically, as a practical matter it makes no difference. If they were following principles and practices that we now consider to be classic Keynes, then "Keynesians" is as good a term for them as any.

Just as some people like to insult those of the Austrian school and Monetarists by calling them "Supply Siders", even though Monetarist and Austrian economics were around long before the "supply-side economics" term was even coined... and before Keynes, for that matter.

David Brin said...

Stunning. Obama offers $3 trillion in savings and Jim howls derision. The same $3 Trillion is signed off by the Senate GOP and I suppose now they are "real" cuts?

Note, he calls the Clinton era black ink "slivers." Huh. Not what the Congressional republicans called it, back then. They called is "gushers" of "excess taxation" and insisted on giving all the savings to the wealthy right away. It was only Clinton insisting on keeping to the original Clinton-Gingrich deal that kept the black ink flowing, in large amounts.

Till Bush got in. And it turned into srterial gushers of our children's life blood into the maw of the funders of AEI and Heritage and Fox.

And yes, the wars mattered. What? TWO TRILLION DOLLARS doesn't matter? Every other generation that went to war tightened its belt to pay for it. Every one but Bush's.

And where did the money go? Neocons sceeched over accounting errors in "Oil for Food" that TOTALED less than half a billion dollars. Bush sent twelve billion in raw CASH to Iraq that all Whoopee went missing! Where are the corruption watchdogs?

The wars had one major effect. They got us no oil, nor security, but they did allow Bush and Cheney to sign emergency over-rides to government contracting laws, so they could simply hand no-bid, no-competition hundred-billion dollar contracts to pals. We are talking HUNDREDS OF BILLIONS of dollars.

There is not possible combination of Clinton era "corruption" that if multiplied a hundred times would come close to any of that.

Ian said...

David,

I think you grossly underestimate the impact of a failure to raise the debt ceiling.

LarryHart said...

Jim:

The biggest cause of the 'gushes of red ink' under Bush vs the tiny sliver of black under Clinton (and a Republican congress, let's not forget) are entitlements, not Iraq and Afghanistan.


I thought the biggest cause of red ink under Bush was the tax cuts.



Just as the ... rivers ... of red ink under Obama are a result of entitlements and ridiculous increases in other domestic government spending,


Might Great Recession have something to do with more demand for helping the needy and umemployed, and less revenue at the same time?


And anyway, Bush was elected as a "compassionate conservative", in other words a Republican who would spend your money like a Democrat. I never expected any different from him, though I HAD thought that the Republicans in Congress would rein him in to at least SOME extent, not spend even more.


"Reagan showed us deficits don't matter." The main differences between Dems and Republicans on spending seems to be that the one pays for the spending with tax increases, and the other with borrowing increases.

Now, the "borrow-and-spend" side has decided that the debt is a big problem. So we're supposed to solve that problem by voting in more politicians from the borrow-and-spend side of the aisle?


Norquist is caught in the 80's, when "starve the beast" was all the rage in conservative circles. It was thought (obviously wrongly) that if you could limit federal revenue, you would automatically limit government spending. Unfortunately, Congress and recent Presidents have come to believe that they can spend whatever they want to spend regardless of revenues. At some point, like a teenager with Daddy's credit card, it is going to come to a drastic end.


On this, I actually agree with you.

Where we differ is when to stop the binge. Say that teenager has been umemployed while he's ringing up big credit balances on beer and pizza and video games. Now, his daddy cracks down and tells him he needs to get a job and start paying down that balance! But in order to get a job, he's going to need to buy some better clothes and (maybe) a car, or at least a monthly rail pass. Maybe take a certification class too? In order to make those (legitimate) INVESTMENTS in his career--a prerequisite for bringing in an income--he has to borrow a bit MORE first.

The way you are arguing for, Daddy should put his foot down and say "NO MORE BORROWING, PERIOD!", thus insuring that the kid will NEVER be able to pay down the credit card bills.

LarryHart said...

anne.ominous:

"Predicting this one"??

Go back and watch that video again. They did not "predict" this one. They all (and I don't mean just all in the video) were saying that the economy was great, just before everything hit the fan.


I can't watch the video at work, but really, that's beside the point. Paul Krugman was predicting exactly this scenario, or close enough for government work.

I don't know who counts as a "Keynsian" for you, but I'm not here to argue for "Keynsianism" so much as I am for Demand-Side economics.


You're talking about AFTER the big event. That's another matter entirely.


No, I'm not.


The question is: why didn't they see it coming in the first place? That was my point.


The question is why didn't Phil Gramm or Alan Greenspan see it coming? Why didn't Dick Cheney see "Deficits DO matter" coming? If progressive Keynsian economists also refused to go against the conventional wisdom of Supply-Side Randism, my guess is that they didn't think they'd be taken seriously if they said so.

Again, I'm not a representative of Keynsism per se. My thought is that if we've got an unemployment problem AND a problem of not enough money in circulation, we could fix both problems with one solution. You seem to be saying that what we have to do is what we've been doing for ten years--cut back on taxing the wealthy and the corporations, so that they'll use the extra cash to provide jobs. It hasn't worked so far? What makes you think doing MORE of it will help?

Your side also argues that unemployment benefits allow lazy people to not look for jobs. In other words, if you pay them NOT to work, they don't feel the need TO work. Why is this not also true for corporations? The reason they hire people (create jobs) is to do the work of selling or manufacturing or providing services that they can charge for so that they make money. If you just GIVE them money, you skip to the end of that process WITHOUT all the intervening work that involves creating jobs. If you expect businesses to create jobs, take them OFF of welfare.

Anonymous said...

I stubmled on a quote from Mr. Brin on Tmbler and am overjoyed to find someone with a fresh, outside-in perspective.

I'd like to see someone discuss the conflict of interest between high-profile proponents of the gold standard and efforts by the same people to subvert the US currency.

In another age it would be called sedition.

How can those dots be so hard to connect?

Solar Crusader said...

A small comment from a conservative that wants to keep a open mind. When you are talking about giving money to business and higher income people, aren't we really talking about taking less money away from them. After all it was their money before it was taxed. So cutting taxes isn't the same as giving a business free money. They earned it in the first place, didn't they?

Ilithi Dragon said...

Solar Crusader said...


A small comment from a conservative that wants to keep a open mind. When you are talking about giving money to business and higher income people, aren't we really talking about taking less money away from them. After all it was their money before it was taxed. So cutting taxes isn't the same as giving a business free money. They earned it in the first place, didn't they?


Technically, it is "theirs" if they "earned it" (though it should be questioned by what standards they "earned" it - someone who works 60-90+ hours a week without a raise for 8 years like my father "earned" their money (more than earned it, I think), but someone who took their rich daddy's inheritance and paid someone to put it in a stock market where it would make money while they did nothing, or who ruthlessly stepped on people to get to the top of a corporation and used friends, blackmail and bribery to get the board of directors to vote them exorbitant pay raises earned far less than what they are getting paid).

However, just because you "earn" a paycheck doesn't mean that you don't have debts and obligations that you owe. Rent is paid to landlords, bills are paid to utilities for electricity, water, sewer, trash, etc. We pay extra for highspeed internet, phone lines, and advanced smartphones. These are all things that we use in our daily lives that we have to pay for, because they have a cost of maintenance, and they are all things that we can't live with out, can't function in society without, or would have a very hard time doing either without.

The same is true for the infrastructure of the civilization upon which our society is built. Our society owns that infrastructure, and it is our federal, state and local governments that represent our society as a whole in the administration, maintenance and providing of that infrastructure. By using the infrastructure of our society, such as roads, bridges, dams, schools, the science and technology that we have developed, medicines, law enforcement, legal systems, etc., we are using services that society provides us, services that cost money to maintain and provide. As such, we owe our society for the services that we use. The bills for those services are called taxes.

If anyone doesn't want to have to pay those bills, they are more than welcome to move outside of our society and forgo their use. However, if they want to partake of those services that living in a society provides, then they must pay their fair share, and the wealthy (who use, benefit from, and frequently abuse society's services far more than the middle and lower classes) are in no way exempt from that.

Jacob said...

Hi Solar,

That is correct in detail. However consider the overall picture. When you shift any individual/groups burden you are increasing the burden on everyone that is not in that that subset.

This assumes that all bills are actually paid. In practice Republican policy makers are happy to run deficits because they will ultimately 'starve the beast.' Ignore for a moment how much actual debt we owe. The percent of our tax dollar that goes to interest alone on that debt is staggering.

Republican power brokers are more than happy to spend money on word use and perception to make you think the government is 'taking peoples hard earned money' when the reality is the government is doing services that it is directed to by the people. Taxes=Services. If they were advocating for a draw down of all government programs in proportion to size, I could respect it. They just go after programs that don't directly benefit them.

I accept that in a democracy I will be in the minority at times and be forced to pay for programs I don't care for. That means government will take use my money to provide the services desired by that majority. I don't like it, but my belief in democracy is greater than my selfishness.

As a true fiscally responsible individual and deficit hawk, the way to draw down programs is through Transparency. If we make people realize the actual cost of programs, policies, and initiatives we can have them advocate for their end. That is the only responsible way to lower taxes.

Ilithi Dragon said...

Well-said, Jacob. I agree, Transparency is the key to a successful, sustained democracy. It will expose those programs that are too expensive, too inefficient, too corrupted to be worth continuing, or that just don't really work, and when presented with that, most people are smart enough to make relatively intelligent decisions. Transparency will also expose those programs that DO work, that do the job they're supposed to with with enough efficiency, with a low enough cost, or well enough, with a minimum of corruption and waste, to be worth continuing. Transparency also allows us to take those dysfunctional programs, find the problem, and fix it to turn them into functional, productive programs.

David Brin said...

Solar, I respect your courtesy. And please note that I'm a registered republican, I keynoted a libertarian convention and Goldwater and Adam Smith are heroes of mine.

Nevertheless, any conservative today who is incapable of seeing that his movement has been hijacked by madmen and by oligarchs simply has his head buried in the sand.

Conservatism isn't about reasoned argument anymore, like William F. Buskley. It is about making assertions (Obama is a Kenyan), attacking itellect (ALL of our intellectual castes, from scientists to civil servants to teachers to doctors to skilled labor)...

...and then there are the nostrums. The aphorisms. Like ""It's their money."

Sorry. We all bought into being part of a nation and that nation is built upon a Lockean consensus. Look up John Locke who is the underpinning philosopher of the Pragmatic Enlightenment and the forebear of Adam Smith. READ THEM BOTH!

Locke spoke of the "social contract" between the ruler and the ruled. He hinted that the ruled could develop ever-increasing self-control and get more involved in the ruling. That is a move from the IMPLICIT social contract toward the libertarian dream of an EXPLICIT one that all adults sign.

See:
http://reformthelp.org/reformthelp/marketing/positioning/models.php

We appear to be HALFWAY along this evolution and that's great. But we are still in an IMPLICIT contract by being born Americans. That contract INCLUDES TAXATION! You are represented in Congress. You have free speech to complain. But when your nation through its institutions chooses to tax, it is your obligation to pay.

All other generations of American, for example, when we went to war, willingly paid for it!@ But not Republicans, who hurled us into a repeat of Vietnam... TWO land wars of attrition in Asia, costing two trillion dollars... while whining I WON'T PAY!

Sorry, you party has gone mad. Conservatism has been hijacked. And the proper response of a decent citizen-conservatism should not be to love leftists. But it definitely should be to GET MAD at the lunatics and foreign oligarchs and assholes who have hijacked your movement.

Jacob said...

Speaking to David Brin's last post. I want to be a Republican, but I can't. There is too huge of disconnect between the value inherit in their philosophy and their actual policy decisions.

I will not be used.

Corey said...

Ilithi Said:
"That's actually another point against the 'Supply-Siders.' No proponent of Keynesian economic policies I've ever spoken to has insisted that it absolutely works all the time. I'm sure such people probably exist, but they're in the minority, and I've certainly never seen any (though that does not necessarily say much, I am just one person).

The proponents of 'Supply-Side' economics, however (at least in my own experience), almost invariably insist that it is an absolute solution that will always work in all situations, always.

That Supply-Side economics 'just works' is not a matter of economic theory to its proponents, it is a matter of fundamentalist, religious faith."


You know, for everything good I could say about your giant analysis as a whole, that's probably the most important thing you said, right there.


This isn't some partisan situation where the evil, backward conservatives are all religious fundementalists, and the enlightened, open-minded liberals all virtuously accept science, but it is a case where the present GOP is in universal, lock-step stance demanded of all its members, that includes the denial of basic science and logic on many issues.

GOP politicians who have tried to hold their ground and accept basic, established science and fact, like Bob Inglis, have paid for it with their political careers, being voted out by the conservative base in favor of loudmouth know-nothings who champion ignorance while claiming to know more than published experts with years of education and research (usually by virtue of folksy "common sense"), on issues ranging from evolution, to climate science, to history, to economics. Anyone who doesn't accept this folksy "wisdom" over the logic and evidence of the "liberal" academics isn't a true believe, isn't part of the movement, is un-American, and doesn't love Jesus.


This is no doubt exactly why, as Brin pointed out, that a tiny few percent of US scientists are Republicans, with over twice as many GOP scientists in industry than in any other sector. It was six percent last I checked, based on this PEW research piece: http://people-press.org/2009/07/09/section-4-scientists-politics-and-religion/ ; whether it's five or six isn't of real importance though.

David Brin said...

http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html

Tony Fisk said...

Meanwhile, the rotw spreads.

As thou dost sow, so shalt thou reap...

rewinn said...

The fruitless (because factless) argument that Keynesianism always fails because it predicted massive unemployment after WW2 reminds me of the equally fruitless (because factless) argument that Y2K was a con job. Each case deals with a human-cased phenomenon, the timely prediction of which causes an alteration in actual events resulting in the purported debunking of the prediction.

Call it the "Anti-Cassandra Theory"; it explains why any gene for true and effectual prophecy of avoidable doom was bred out of the human gene pool. When a prophet persuades a ruler that an awful doom can be avoided but only at great expense, then what happens is that the ruler spends a lot of money to avoid something that doesn't happen. The ruler is vexed and beheads the prophet.

In contrast, the gene of prophecy to predict doom unless the king does exactly what he wants to do anyway (the "Cardinal Wolsey" gene) is remarkably persistent; contemporary examples abound.

Tony Fisk said...

One oft-quoted purpose of prophecy is not to predict the future so much as prevent it.

David Brin said...

Irony: the forecast that depression would re-appear after WWII was based on a LACK of faith in Keynsianism, since no one calculated in the stimulus of vast amounts of spending cash in the pockets of Americans at the end of the war.

wetcasements said...

If grandma doesn't get her SS check for a month, well, OK -- the world probably isn't going to end.

But that's a mighty cavalier attitude to have when you consider, say, two 737's colliding because Federal air-traffic controllers aren't coming to work, or, I dunno, another freaking 9/11 scale terrorist attack.

Great post overall but there's the nit I am picking.

Tim H. said...

Interesting article here:
http://articles.latimes.com/2011/jul/03/business/la-fi-hiltzik-20110703
BMW announced plans to outsource their Ontario, CA distribution center. "Beemer" owners, welcome to Burger World. This does not bode well for the economy, or the deficit.

Corey said...

@wetcasements

What's important to remember, though, is that government has already thought of all of this, and knows what to do.

The US government is capable of shutting down, almost on a moment's notice, and that, in and of itself, is amazing.

The government doesn't stop there though; they know what to keep running. Our national security and military infrastructure will remain up and running, air traffic controllers will still go to work, and even the animals at the National Zoo will continue to be fed.

The government has a perfect handle on making sure that the nation won't collapse over a few day shut down. It's still not a good thing, as we're ALREADY beginning to worry investors and 8/2 hasn't even come yet. In fact, JP Morgan released a fairly large primer to that effect a few weeks ago, warning about a shut down even without a default.


Nevertheless, the planes won't crash, the nation won't be invaded, prison inmates won't run amok, and even the zoo animals get cared for :) Why? Because for all the flack it gets, the federal government is really a beacon of efficiency and competence... at least if you exclude a lot of our military equipment.

sociotard said...

How going green may make you mean
Ethical consumers less likely to be kind and more likely to steal, study finds

Jacob said...

I am inclined not to give that research much credit. Note, I buy green so my bias is against it in the first place.

Their evaluations of kind and cheating both had to do directly with money. Green goods tend to cost more. I would reason that puts more money pressure on people with the same income. That pressure is what causes people to give less away (kindness according to the findings) and seek easy gains (cheating at a game).

I wonder what the results would be for groups that had the same available spending money after bills and food.

sociotard said...

Oh, and one more link
Internet rallies around flier accused of groping TSA agent
The flying public has chosen its new folk hero and it is Yukari Miyamae, a 61-year-old Colorado woman who was arrested for allegedly groping a female Transportation Security Administration agent at Phoenix's international airport.
Miyamae is accused of grabbing the left breast of an agent at a security checkpoint last Thursday and was facing a felony count of sexual abuse. After reviewing the case, prosecutors for the county declined to file felony charges against Miyamae, according to the Associated Press.


Note: I don't think that the woman was in the right. A groped boob for a groped boob only leaves the whole world awkward and embarrased. Also, I really don't think our host would want the sense of touch added to 'reciprocal transparency'.

Even so, a naughty part of myself laughed at this.

LarryHart said...

From Paul Krugman's blog:

The Telegraph has a leaked draft of the eurozone rescue plan for Greece. The financial engineering is Rube Goldbergish and unconvincing. But here’s what leaped out at me:

-> 9. All euro area Member States
-> will adhere strictly to the
-> agreed fiscal targets, improve
-> competitiveness and address
-> macro-economic imbalances.
-> Deficits in all countries
-> except those under a programme
-> will be brought below 3%
-> by 2013 at the latest.

OK, so we’re going to demand harsh austerity in the debt-crisis countries; and meanwhile, we’re also going to have austerity in the non-debt-crisis countries.

Plus, the ECB is raising rates.

So demand will be depressed in both crisis and non-crisis economies; this will lead to a vigorous recovery through … what?

The Serious People are determined to destroy all the advanced economies in the name of prudence.

sociotard said...

The serious people are destroying unsustainable economies in the name of "it has to happen sometime".

If a country/business/whatever always has a deficit, the debt will grwo too large to handle, and then bad things happen. Sure, you can use deficit spending to increase demand and restart a depressed economy. Then you need to pay extra in the good times. The economist people tell me that we are pulling out of the recession. We should definitely be out by 2013.

One way or another though, we have to get our debt paid, and so does Europe. Everytime I think about how much of our budget just goes to the stinking interest I get a headache.

Paul said...

David,
Re: Keynesian WWII
"WE PAID OUR TROOPS. No other country gave their troops anything more than pocket/brothel cash. Our boys were actually paid a modest salary, and had nothing to spend it on."

In Australia, the phrase was, "Overpaid, oversexed and over here" (In Britain they added "Overfed" and joked that the barrage balloons were only there to keep the island from sinking under the weight of the D-Day men and materiel.)

(Apparently the GI comeback was "Aussies. Underpaid, undersexed, and under MacArthur." (Or Brits & "under Eisenhower".))

http://www.theage.com.au/articles/2002/02/26/1014704950716.html

(Some mentions of Aussie racism at the time, and a lovely, probably wishful thinking, response.)

(clercep: The clerical perception cream.)

Paul said...

anne.ominous,
"If you want to argue "facts" about the 1920s (in particular, the brief depression of the 1920s,"

I assume you are referring to the depression of 1920/21?

"then you will have to argue with noted historian Thomas E. Woods [...] If you want to refute his version of the history of that event, go right ahead."

Have you read any of the recent critiques of Woods? Such as Daniel Kuehn's "A critique of Powell, Woods, and Murphy on the 1920–1921 depression".

Or more readably, this: http://socialdemocracy21stcentury.blogspot.com/2010/10/us-recession-of-19201921-some.html

Fun Quotes:

"Unfortunately, Austrians are deeply ignorant about the recession of 1920–1921."

"If Austrians think that the 1890s recession [doesn't] provide evidence against their theories [when there was no central bank] then it is absurd in the extreme for Austrians to invoke 1920–1921 as vindication of their theories, when America had a central bank! By your own definition, it was even less of a laissez faire system than 1890s America."

"The average duration of recessions in peacetime from 1854 to 1919 was 22 months, and the average duration of recessions from 1919 to 1945 was 18 months. In the post 1945 period this was cut to about 11 months. Thus the average duration of recessions was essentially cut in half after 1945, because of countercyclical [Keynesian] fiscal and monetary policy."

And as recessions were shortening, the expansion phase of the business cycle lasted longer: "In other words, the average length of post-1945 expansions became 43% higher compared with that of 1919 to 1945, and 85% higher than between 1854 to 1919".

tl;dr "The empirical data tells us that, if Keynesian stimulus had been applied early in 1920, there are convincing reasons for thinking that the contraction would have been far shorter than 18 months."

Corey said...
This comment has been removed by the author.
Corey said...

Sociotard, if we take the first the link you provided, and follow it to its logical conclusion, what it's basically saying is that no one should ever try to engage in moral behavior, ever, in any setting, for any reason, because it'll just cause us to engage in "moral balancing", and do bad things elsewhere. That is, unless there's some claim that this ONLY applies to environmentalists; color me more than a bit skeptical that compelling evidence would ever suggest that.

I guess, either way, the study is either deeply flawed, or I'm just personally far more moral than the vast majority of the rest of the human race (something I highly doubt), because I try to be environmentally responsible, and I don't steal or cheat out of a sense of entitlement to compensation.


Note, of course, that the findings and methodology of that study have already been challenged by three completely different universities, simultaneously.

In short, I'm not inclined to take the study very seriously.

rewinn said...

Interesting analysis of how our economy got this way, by Thom Hartmann on Alexander Hamilton's the American Way.

Corey said...

Hmm, very interesting.

I especially found the video part to be compelling.


Of course, if the assertions being made there are correct, then the US basically seems to be setting ourselves up in the most efficient way possible, since Reagan, to be used by nations like China, as their economic growth basically gets facilitated by sucking the usefulness out of our economic systems. We seem built these days to import goods and services, and export jobs and expertise. I don't think you could do a better job of making a failed state of the US if you tried.


I guess, in a sense, that means modern Republican policies are effective at creating national greatness after all; they're building CHINA into a grand nation!

Valkyrie Ice said...

Hi David.

Well said. And still, despite the clear, concise, logical and evidence based presentation, there are still those putting their hands over their eyes and ears and going "Nononononononononononononono I won't look at facts that disprove my blind beliefs and irrational hatreds!!!!!"

But, I am completely unsurprised. The pecking order has to be maintained at all costs after all, even as it's beginning to enter free fall. I hope we can avoid the same kind of massive bloodshed that we had in the last Civil War, but only time will tell.

Still, history shows that the cycle has always had the same end. The Elites always seem to be winning right up to the moment that they finally piss off enough of the masses for heads to start rolling. Regardless of what happens over the next couple of years, I doubt the republican party has many years of life left to it before it becomes suicidal to identify yourself as a republican.

David Brin said...

Corey. Every other Pax Empire forced their world to accept mercantilist trade flows, impoverishing the peripheries and creating resentment of the center and decadence in the center.

Pax Americana under Marshal etc created COUNTER-MERCANTILISM in which the American consumer uplifted first Europe and Japan, then successive zones around the world. We're now hauling China and India into the Middle Class. It is the greatest feat of all time.

And we get no credit.

Corey said...

I do see your point, Dr Brin.

I don't see anything wrong with an industrialized China/India, either, forgetting population growth over there for a moment.


Still, at what cost to our own economy is this occurring, especially in regards to China? When I was over there a few years ago, there was a building going up on every city block in Zhengzhou. It was economic growth on a scale I've never seen before. Meanwhile, we're a crippled nation with an economy that doesn't seem to DO anything that could be a basis for economic recovery; Hartmann was definitely right about that part of the linked video.


The whole situation just seems way too one-sided for my liking.

Term Limits said...

What is on top always ends up on the bottom. This is a simple law of nature. Championship teams who win multiple championships...ALL end up on the bottom of the pile eventually. Multibillion $ companies end up going bankrupt when nobody wants their product anymore. Rich sports athletes or entertainers with big mansions end up losing everything. The United States has been on top of the world for years...dropping to the ground is completely unavoidable to the laws of nature. Brace yourself for something that will make the early 1900s great depression look like a walk in the park.

Paul said...

Picture of a piloted spaceship entering the atmosphere of a life-bearing planet, as photographed by a crew member of a manned space station in orbit over that position.

http://www.nasa.gov/multimedia/imagegallery/image_feature_2014.html

RandyB said...

"Now Republicans say we should be stingy to the working class, but generous to the rich, so they can make jobs. But if economists know one thing, it's that the rich don't spend the way middle class folks do. They don't have to!

Republicans don't say that.

Just look at the tax rates. They're higher on the rich than on the middle class. The lower class doesn't pay income tax at all. (And whoever wants to point out that social security taxes are regressive, that's FDR's idea. He didn't want social security checks to be welfare.)

But ironically, this is the real failing of Bush's (and Obama's) lower tax rates. While there's disagreement on where the Laffer Curve peaks for the rich, there's no disagreement that the middle class isn't paying the optimum level of taxes.

In other words, that's not supply-side economics. That's where the real losses are.

rewinn said...
This comment has been removed by the author.
LarryHart said...

Corey:

Of course, if the assertions being made there are correct, then the US basically seems to be setting ourselves up in the most efficient way possible, since Reagan, to be used by nations like China, as their economic growth basically gets facilitated by sucking the usefulness out of our economic systems.


Dr Brin has used a phrase ("hypergamous surrender reflex") to describe Ayn Rand's views on female sexuality. I think it applies metaphorically to Republican policy. Eseentially "Figure out who represents the most power, and then demonstrate your slavish devotion to THEIR ends."

rewinn said...

@Corey/@DrBrin - it may be useful to distinguish between the NATION that is the United States, and the aristocratic houses that plunder it.

@RandyB (EDITTED: sorry Corey, I originally put your name there - my bad!)
Your conclusion does not follow from the fact you present. Stated income tax rates are only one factor in a complicated world. In practice, Warren Buffet pays a lower tax rate than his secretary.
Many large and insanely profitable corporations pay zero income tax.
The Republican Party may be, as you suggest, not "saying" they wish to plunder the working class for the benefit of the wealthy, but that is the practical impact of their work.
Perhaps they are just incompetent at achieving their stated goal of a healthy America, but incompetence at such a level is hard to credit.

RandyB said...

rewinn,

Sure, the world is complicated, but I was answering to a simple premise that Republicans say we should be stingy to the working class.

Aside from being well paid, Buffett's secretary is presumably getting a higher percentage of income as ordinary salary while Buffett's income is mostly at the capital gains rate, and some other parts may be from tax free bonds.

Most profitable corporations do pay income taxes. Those that pay nothing are either not profitable, or they're S-corporations (which transfer all profits to their owners, and thus, their owners will pay the taxes as individuals), or they're taking advantage of deductions that politicians of both parties put into the tax code.

Just a guess, but a good one, I'd say it is the Democrats standing in the way of simplifying the tax code. As it is now, they get to tell the public that they want to tax the rich, and then they get the rich to fork over campaign contributions to add more deductions.

And if you want to stop exempting government bonds from income taxes (probably an excellent idea), good luck getting the cities and school districts to go along with you on that.

Anonymous said...

From news article on attacks in Norway:

Bersaas said, "It seems kind of unreal, especially in Norway. This is not something that could happen here, this is something you hear about happening in the U.S."

Americans once thought they were safe, too. Is anyone safe anymore?

sociotard said...

Honestly, if I lived in Norway I would link real hard about pulling out all troops from Afghanistan.

RandyB said...

sociotard,

In other words, you'd be showing them that killing children works.

I'd go the other way. Whatever the terrorists want, I would do the exact opposite.

The terrorists need to see that killing children is always wrong.

sociotard said...

Yes killing children is wrong. Staying in Afghanistan is pointless. Were I Norwegian, I would say "Get out of Afghanistan because our nation has nothing to gain from it, and if the crazies ignore us and attack som other country, that's just gravy."

RandyB said...

What you seem to be saying is that you already thought Norway should leave Afghanistan, and you're just using this bombing as an opportunity to push your ideological dreams.

David Brin said...

Randy B that is just silly. SUre, if the uber rich own everything and get most of the income, they can then sneer "we pay most of the taxes!" So? It is proof that things are getting out of kilter, tilting us back toward the "natural" human social pattern of a steep pyramid, ruled by oligarchs.

Do you want that? Adam Smith called oligarchy THE enemy of freedom and free enterprise. He barely mentions the enemy screeched-at by the right - government bureaucrats, who are proclaimed as vile in order to distract us.

The golden age of US capitalism? When companies started right and left and when the social stratas were relatively flat? the 1950s & 1960s? Had HUG top tax rates.

Whatever works. We owe everything to a civilization that nurtured and subsidized us and made our enterprise and wealth possible. These SOBs have nothing to teach me about patriotism

David Brin said...

Term limits. You sound like those people who say that Hellenic culture crashed just because the Spartans conquered Athens. Yes, that was a calamity for democracy. But all other aspects of Hellenistic culture flourished and boomed all around the meditteranean.

We don't need the US to be top dog but we need its over all enlightenment culture to dominate for another generation. Until all women are free.

RandyB said...

David,

Things getting out of kilter is not proof that the rich are *the* problem.

Sometimes they are, of course, but I don't think we agree on how. In any case, raising tax rates is not going to affect them. If there is an oligarchy, it's because they've mastered the bureaucracy.

If they can shut down kids' lemonade stands then they can shut down small businesses without the headlines.

sociotard said...

What you seem to be saying is that you already thought Norway should leave Afghanistan, and you're just using this bombing as an opportunity to push your ideological dreams.

I think every country should pull troops out of every other country. It's tricky to bring it up after a bombing like this because people (not you) assume I'm using concepts like 'blame' or 'fault'. The people who died, especially the kids, did not deserve what happened.

But yes, I believe in peace. I believe in abandoning military adventurism and imperialism. I will call for those ideals to be pursued.

But really what has Norway gotten out of its involvement in Afghanistan? Anything? Anything at all?

They don't have the gratitude of the United States. Most of my countrymen don't know that Norway provides assistance. They haven't stopped terrorists from attacking their country, that is for sure.

So what have they gained? Why should they stay the course.

RandyB said...

sociotard,

Well, for one thing, this now appears to be a different set of terrorists. The Norwegian bomber was probably a right-wing extremist. Not really much of a difference, given that most European right-wingers also want us out of Afghanistan, Libya, Iraq, etc.

But you're mistaken about something else, too: It's not imperialism. The majority of Afghans hate the Taliban, and they do want us to defeat them.

Paul said...

RandyB,
"Whatever the terrorists want, I would do the exact opposite."

You're assuming that the terrorists want us out of Afghanistan. What if the motive is to draw us back in? If so, then pulling out is doing the opposite.

Note that the timing of the attack is just as Obama is talking about pulling out. And if the US draws down, so will NATO. So why attack now? If you've already won, save your resources for taking over Afghan government again (and Iraq, and Libya, etc.)

The US response to 9/11 helped bankrupt the US (and later the West in general) and killed thousands of American soldiers. What it didn't do was get the US out of the region.

So some people wondered if that was AQ's plan. To lure the US into a Vietnam-style quagmire in Afghanistan. If so, it worked.

Where it failed, was their assumption that the rest of the Middle East would react by becoming more radicalised. Instead, seeing a weakened, clumsy, embarrassed US may have made Muslims more comfortable with democratic reform. "Oh right, the US haven't been trying to keep us down, they're just too stupid to help us up."

"The terrorists need to see that killing children is always wrong."

"Which you demonstrate by aerial bombing villages?" If left wing US/Euro activists can spout lines like that, how easy must it be for Islamic extremists? We've long since lost the moral high ground, and it doesn't matter if you think that's unfair, it just is.

"The terrorists need to see"... no, the terrorists aren't your audience. It's the reformers across the Muslim world. And playing the victim may be much more useful in the long run than "Hulk Mad, Hulk Smash".

Paul said...

"The suspected gunman has been arrested
Norway's national broadcaster NRK has named the suspect as Anders Behring Breivik
There is speculation the male suspect is a right-wing extremist"


Ah, so much for my long winded nonsense. Domestic issue. Move along, nothin' to see here.

David Brin said...

“In any case, raising tax rates is not going to affect them. If there is an oligarchy, it's because they've mastered the bureaucracy.”

Bah. So you give up? Dig it. The oligarchs have “captured” (thats te term) bureaucracies in the past and the people stopped them. You want top reduce regulation and bureaucracy, do you turn to the Republican party? Do you know any history>

The biggest deregulations in US history, from dissolving the Bank of the US in the 1830s to dissolving the fully captured ICC and CAB under Carter, were always done by the Democrats!

Despite all their talk talk... the Republicans only ever deregulate one industry... finance... over and over again, finding new ways to open it up for rape and pillage. The way we were raped under the S&L scandal in the 1980s and super gang raped in the first decade of the 21st century.

Gawd I am sick of people going with the ignorant appearances instead of actual facts. If the oligarchs have captured the bureaucracy, should you march like a robot to the Fox-party line manufactured by foreign and Saudi... oligarchs?

===

BTW... sure the majority of Afghanis want us to defeat the Taliban. Does that mean we should have let ourselves be deliberately lured into the “land where empires go to die?”

We’re supposed to be playing the geopolitical game with SMARTS, not testicles. letting ourselves get mired into TWO decade-long bankrupting land wars of attrition in Asia, when we swore we’d never do THAT again... um... even if Bush was sincere (he wasn’t) that was tantamount to treason.

Anonymous said...

I'm speaking for the dead. The American Battle Monuments Commission, established by the Congress in 1923, is an agency of the Executive Branch of the Federal Government. The Commission administers, operates, and maintains 24 permanent American burial grounds on foreign soil. Presently there are 124,909 U.S. war dead interred at these cemeteries, 30,921 of World War I, 93,238 of World War II and 750 of the Mexican War. Additionally 6,177 American veterans and others are interred in the Mexico City and Corozal American Cemeteries.
we have to pay the bill.

RandyB said...

David,

I didn't say I'm giving up. I'm simply not buying that the Dems care about the things they say they care about. You're talking about a party that acts like it wants to raise income tax rates on an uber-rich that doesn't make its big money through regular salaries.

Ted Kennedy inherited millions during a time when inheritence taxes were through the roof, and yet the estate paid very little. I can't think you really believe those lawyers and life insurance companies are supporting the Dems entirely out of principle. Even the saintly Warrent Buffett made a lot of money from those insurance companies. The estate tax has been very good for them over the years.

Although I wouldn't want us to abandon Afghanistan, I was responding to Sociotard's "imperialism" comment. And I'm not saying we should remain when it's no longer in our interests.

David Brin said...

Randy's poke at Ted Kennedy's riches is an example of what neocons are reduced to, nowadays. Assertions and anecdotes. Never hard facts.

So some democrats are rich? BFD! Warren Buffett, the darling of those who mythologize the humble, hardworking billionaire, is a democrat. With Bill Gates he took out an ad begging "Raise Our Taxes!"

They know they'd be nothing without the COMMUNITY of the United States, that created the safety and markets and trained workers and everything else they leveraged to get rich.

Yes, capitalism is good! When it is creative battle from a level playing field that maximizes the number of competitors, as Adam Smith asked. It is very different to call "capitalism" the thing Adam Smith hated above all... oligarchy.

The thing that Fox-addicts are taught to defend to their last breath.

Again. Facts. Name a metric of national health that statistically and unambiguously improved under neocon rule, or one time that supply side predictions came true. You cannot. Their record of insanity is perfect. So, bring on the distractions, assertions and anecdotes.

RandyB said...

Sorry David, but that wasn't a poke at Ted Kennedy's riches. I was only pointing out that his father had legally arranged things to avoid the inheritence tax. That's what happens when we have a complicated system.

Where did you get the idea that Warren Buffett is planning to pay more taxes himself? As Rewinn said, Buffett pays a lower tax rate than his secretary. That means most of his income wasn't salary. He's a good man but you might notice that his taxes aren't going up significantly. He's giving most of his money away, which means it won't face the estate tax at all. In other words, the people claiming to want to raise taxes on the rich are not planning to participate all that much.

This isn't Fox News:
http://www.theatlantic.com/business/archive/2010/12/lobbying-on-the-estate-tax-who-wins/67402/

The oligarchs (I like the word) made money from the estate tax, and they don't have to take as much of that as salary, which means income tax rates won't matter so much.

Supply side didn't help much overall because we never had it. Economists can rightly argue about where the Laffer Curve should be drawn, but none of them (neither right nor left) believe that the middle class was overtaxed before Bush lowered the rates. So, while the rich did pay a little more in taxes than they'd have otherwise paid, the middle class paid less.

That's not to say it was a bad thing to lower rates on the middle class, but that part of it wasn't supply side economics.

Tim H. said...

Hah, any wealthy person with a work ethic knows they can make a good living dealing with a prosperous working class, after all, their parents and grandparents did with tax rates as high as 91%. (Helped a bit that our global competition was largely flattened.) Contemporary GOP tax policy seems designed for coupon-clippers.
"subdo", activities at The Church of the Subgenius.

Tony Fisk said...

So Warren B is 'giving most of his money away'? Evading taxes by contributing directly to the things that would be paid for by taxes in the first place?

Robert said...

@Paul: The fool speaks up before having all the knowledge and reveals his ignorance. The wise man remains silent and thus hides the fact he's ignorant. The only difference is one spoke up and the other remained silent.

Of course, a fool is only truly a fool if he or she does not admit to being wrong after evidence proves his beliefs to be mistaken. Thus your only mistake was speaking up before knowing all the facts... and thus are not a fool.

Rob H.

RandyB said...

@Tim H.,

Nobody of consequence paid a 91% rate on all the money they made. Carnegie and Rockefeller didn't.

I suppose (though I doubt it) that individual actors like Al Jolson might have come closer but I don't think that's the oligarch class that David is talking about.


@Tony Fisk,

I'm not aware of Buffett replacing welfare, Medicaid, the FBI, or defense.

Clearly, I agree that it's best for Warren Buffett to make decisions about what causes his money should go to. But from the standpoint of opposing "oligarchy," the control of that money still remained with him through most of his years -- and most of it untaxed.

From the view of evading taxes, he's doing it. Some of his causes may coincide with what the government wants. Some won't.

David Brin said...

Randy, Ted Kennedy's dad was a notorious manipulator in an era when we were finally climbing out of the LAST Gilded Age into a period that many Americans mythologize as one of equality and opportunity. In fairness, old Joe K did stand up for the working man... as long as the working man didn't turn and question Joe Kennedy's moblike tactics.

"Where did you get the idea that Warren Buffett is planning to pay more taxes himself..." There you go again, twisting my words in order to create a strawman you can knock down.

I said that Buffett and Gates favored a CHANGE IN TAX POLICY that would result in their taxes going up. They are not alone. They aren't idiots. They'll pay what the law demands ... while being generous through charity.

Nearly all of the silicon valley billionaires have signed aboard, too. The guys who are poster boys for self-made men who got wealth by generating new products and services and investments and jobs. Nearly all of them are GRATEFUL for the civilization that subsidized them and created vast infrastructure and skilled workforce and protects them with law and invests in research.

The dark side of their class - the Murdoch, Kochs, Waltons etc... have another, older vision. A return to the pyramid of permanent inherited privilege that our revolution fought against and that Adam Smith called THE great enemy of enterprise.

Until you are willing to recognize this phenomenon as THE enemy of freedom for 6,000 years, all you are is an ostrich.

"He's giving most of his money away, which means it won't face the estate tax at all. In other words, the people claiming to want to raise taxes on the rich are not planning to participate all that much."

You have got to be kidding, right? You're messing with us? Do you think about what you say, Randy?

Dig this... I don't care where the money goes, so long as it does not make an oligarchy that will enslave my kids, the way oligarchs did in EVERY human culture except ours. The PURPOSE of the estate tax is not to pull in govt revenue. It is to propel plutocrats into creating foundations that do wonderful things in the world and so their twit children - WHO NEVER BUILT THE FACTORIES OR INNOVATED OR DELIVERED GOODS OR SERVICES - don't become a new inherited aristocracy.

Geez, do you know anything about history whatsoever/

Randy B said...

David,

Using the estate tax to prevent inherited oligarchy sounds noble but I don't see it having that much effect when the people writing those laws still want their own form of oligarchy.

Joe Kennedy's mob-like tactics aren't what saved his heirs from the estate tax. There were legal avenues to tax avoidance just as there are today. The law firm and insurance company lobbyists who want that estate tax aren't going away. And their reason for wanting the estate tax aren't the same as yours.

You're certainly correct that Warren Buffett isn't transferring everything to his heirs but they're not exactly left in the poor-house. It's a bit late for that, seeing as how one of his sons is on the board of Berkshire Hathaway.

As I said, I don't see Buffett's taxes going up that much in his lifetime, no matter what income taxes he may be proposing. His taxable income doesn't matter to him.

On the Koch brothers, they're libertarians, if somewhat on the left-side of it. As such, they handed the ACLU $20 million to fight against the PATRIOT Act. They want to reduce defense spending. Perhaps a few nights in jail under a Democrat-administration might do them some good!

Robert said...

I'm going to speak metaphorically here. The economy is a series of streams and rivers that lead to the ocean. The poor are the brooks and streams that you can easy step over and that may have a fish or two in them but nothing significant. The benefit of these streams is that there are a lot of them and that when their water flows together, you get... small rivers and ponds.

Ponds are small business. These are the mom-and-pop operations that run convenience stores, the small gas stations that cater to rural people, the cleaning services, the independent plumbers and electricians that keep the country running. They bring in sources of revenue but they spend it as well and thus become a part of the economic system. Their money does not remain stagnant.

Sometimes the money ends there. But often these ponds have streams and small rivers that extend from them. These small rivers are the middle class. They connect things and help the water that is money to flow to a greater extent. And they lead to lakes, which are the middle-sized businesses. These are the businesses that hire up to a hundred people or so. They're the machinist shops and the decent-sized restaurants and the like. They generate a larger amount of money, and they in turn help supply both small business and large business.

The larger rivers are big business. They have a large amount of water flow, and this water ends up leading to ocean known as the rich. But then the water just flows among the rich. It doesn't do anything.

This is where taxes come in. Taxes are evaporation, which reduce the total level of wealth and allow it to shift and in the form of rain (benefits such as Social Security and social services) return to the poor so that they can have more water to flow through the system.

Tax cuts to the extent Republicans want cut off evaporation and reduce rainfall. Without rainfall, the small streams and brooks dry up. Without the water to feed them, the smaller ponds dry up. Then the larger lakes start to fade... and the rivers become sluggish.

In short, Republicans are trying through eliminating taxes on the rich to allow all of the money to pool into the oceans of the rich... and leave everyone else destitute. The resulting drought harms far more than it benefits the rich.

Rob H., in a metaphoric mood

Robert said...

Small note: businesses have had a year of tremendous profits. They are sitting on significant cash reserves. If they used those cash reserves, they could hire every single unemployed person and still have a huge cash reserve remaining. All of those people would then have money that would go into the economy, paying off bills, stopping foreclosures, and so forth.

What are the businesses doing with their huge cash reserves? Buying up their high-priced stocks. They are doing this because Wall Street wants them to do this to keep the price of their stocks up. In short, they are Buying High and Selling Low. Or to put it more simply: they are wasting all of that money. None of it is going into the economy.

And Republicans want to cut taxes for corporations because they are the "job creators." If they were the "job creators" they'd be hiring. They're not. And they can hold onto that money because? Taxes are so low. It is less expensive for them to hold onto a huge cash reserve and to buy their own stocks than to hire someone new. And they are refusing to hire unemployed people, going after the currently-employed, because they don't want to spend a lot of money on training. To keep their cash reserves as high as possible.

Mind you, as I said before, none of this stimulates the real economy. It helps stimulate Wall Street, but what benefit does a company buying their own stocks do for someone who doesn't own any shares and is working hard to make ends meet?

Something to think about. And while taxing them may not be the solution, perhaps we should create new tax breaks that give incentives to businesses to hire and train employees. Counter this tax break with tax increases on corporations as a whole so that it is in the best interest of a business to hire and train employees, rather than sitting on profits and wasting it on fruitless money sinks.

Rob H.

David Brin said...

"You're certainly correct that Warren Buffett isn't transferring everything to his heirs but they're not exactly left in the poor-house. "

Jesus, Randy, will you ever notice your bait and switch logic pattern? Criminey! I do not mind at all the sone of a billionaire being merely "rich". Cripes, if he has ten or fifty million, then he can invest it and maybe he has dad's talent and he simulates good businesses and builds a fortune of his own.


Anyway, a rich guy who helped us all win-win by delivering goods and services DESERVES the satisfaction of knowing his kids will never be poor and will always be comfy and will have a nice starting stake to use to start their own adventure.
That is way different than billionaire brats thinking they own the world, including us.

What? You think I'm a socialist? Yay Adam Amith!

But you ignore the repeated point. 99% of human cultures crushed by oligarchy. Adam Smith called it THE enemy. Speak to that.

Pah... you never address the issues raised. All you do is find anecdotes to nitpick. I raised a dozen truly important matters... (get a grip David; he's welcome here. Just re-adjust your expectations; calm down...)

;-)

Rob H I like the water cycle metaphor.

Randy B said...

David,

Okay, it's a fair point but I don't see it working out the way you foresee. The Kochs give plenty of money away, too. I'll concede to knowing little about the Waltons.

BTW: I don't agree with your interpretation of Adam Smith either. The "corporations" he was talking about were state-sanctioned monopolies. Capitalist corporations as we know them didn't start to exist until long after the Wealth of Nations was written.

If you want to say the oligarchs are trying to lock out competitors, I'll agree they must be defeated. I just haven't seen it coming from the same direction that you do.

I can see a hint of what you're talking about in the excessive regulation such as that which shut down kids' lemonade stands. The lemonade stands are the visible, and shameful, stamp of government. Most of those laws were probably put in place by larger businesses to create barriers to competition. (We only hear about the lemonade stands.) I'm with you on that. But the Koch brothers are probably with you there, too.

Rob said...

Randy, that's just not enough counterpoint, and you're still dodging the point David is making.

Oligarchs during Smith's time were royal houses, doling out those company charters. Oligarchs today are titular and actual leaders and owners of massive consolidated corporations, almost none of which have any kind of representative democracy in their charters.

I've seen the lemonade stand example brought out before. I have never seen verifiable reports of instances of it actually enforced.

LarryHart said...

Dr Brin said:

Rob H I like the water cycle metaphor.


Yeah, it works kinda like my own "heat in the oven" metaphor and with the added benefit that the water really does "trickle down" the way people tend to imagine. The difference from the Supply-Side "trickle down" metaphor is that the water/money is trickling down TO THE RICH, rather than the other way around.

Now, what Supply-Side Republicans are claiming is that the oceans are the "water creators", and that if you pour huge amounts of water INTO THE OCEAN, it will somehow slosh over to invigorate the streams and ponds. Whereas Keynsian Demand-Side economics says that if you stimulate (pour water into) the streams and ponds, it will do useful work on the way BACK to the oceans.

Stefan Jones said...

An interesting, feisty, blog post that parallel's DB's:

"It's so gratifying to leave you wallowing in the mess you've made."

"Nevertheless I do have a rather pragmatic reason for wanting this to occur - the disaster that it brings on the nation (and the rest of the world) will be so damaging that no one would take hard-line conservatism seriously ever again. The disaster would be so horrible that Obama would be re-elected by a landslide and the Republicans would be utterly humiliated in Congressional elections. More than that, hard-line conservatism throughout the world would be discredited in the same way as communism was discredited after the collapse of communism."

As for me . . . after getting a late start career-building, I'm a (barely) millionaire with a satisfying salary who doesn't want to lose my shirt in a stock market crash. I'd lose far, far more from the economic instability and high interest after a default than from tax increases.

Yes. RAISE. MY. TAXES. Not is isolation from budget cuts, including reasonable entitlement reform. But . . . raise my taxes. There is no way around it, not outside of libertarian jerk-off fantasies.

My God, isn't time for Grover Norquist to be found naked and hungover by the Sunday morning cleaning crew of a petting zoo?

Randy B said...

Rob,

I'm not trying to dodge.

In Smith's time, the royal charters were monopolies. That's not true today.

I think you underestimate the degree of "democracy" in corporations. Individual stockholders are usually small and insignificant, but it's not so small when it comes to the funds. They are looking out for their investment, and they have some say in how the company is run.

Here's one lemonade stand shut down but it's not the only one I've seen:
http://www.srpressgazette.com/news/life-13537-living-make.html

I'm looking at it as an allegory about more serious but still small businesses. I brought it up in an effort to find common ground.

David Brin said...

Okay, here's the dare.

The fraction of our national wealth and our national income that is monopolized by the top 1% -- and especially the top 1% of 1% -- has been skyrocketing away from the very low ratios of the 1950s and 1960s to levels not seen since the days of aristocracy.

All right, you just fear bureaucrats. bureaucrats bureaucrats bureaucrats bureaucrats bureaucrats bureaucrats bureaucrats bureaucrats
nothing but bureaucrats.

The rich can't become dangerous oligarchs, you assure us. The only threat and oppressors are the skilled employees of your own government. Even though 99% of human cultures were crushed by oligarchs.

Fine. Just tell me. IS THERE SOME RATIO OF NATIONAL WEALTH AND INCOME THAT WOULD START TO WORRY YOU?

Name it, Randy. Because all the momentum is heading us back to ratios that existed under feudalism.

But all you can see is bureaucrats bureaucrats bureaucrats bureaucrats bureaucrats bureaucrats bureaucrats bureaucrats bureaucrats bureaucrats bureaucrats bureaucrats bureaucrats bureaucrats..

...all the way down...

Oh, but Randy believes there is "democracy" in corporations.

Okay. I get it now. Easter Bunny. Santa Claus. Lay off him, guys.

Pangolin said...

"Yes. RAISE. MY. TAXES. Not is isolation from budget cuts, including reasonable entitlement reform."_Stefan

I always wonder why some people can't get through a paragraph without losing grip on reality.

"reasonable entitlement reform"

If that means cutting the average $1,177 monthly Social Security payout you can watch the economy tank further. Whole states of the U.S. survive on Social Security checks.

If that perhaps means remapping the U.S. medical care delivery system so that it's in line with any of the EU nations that manage with half our per-capita expenditure you're overestimating the sanity level in D.C.

What it usually means is telling people that they can't retire till they're 70 never mind that there are no jobs for 25 year-olds. Or "I got mine jack" with a side order of "don't die messily in the streets where I have to watch."

But "reasonable entitlement reform" sounds so much better than "work makes you free." Even if you mean the same thing by it; killing off the dead weight.

Suicide booths anybody?

Ilithi Dragon said...

Just for the record, and a little historical perspective:

In revolutionary France, the top 10% wealthiest individuals (nobles and clergy) controlled some 60%-66% of the total income.
http://econ.ucdenver.edu/beckman/research/readings/frenchincome1780.pdf

In 2010, the top 20% wealthiest in America raked in a few tenths of a percent shy of 50% of the total income in the country.
http://en.wikipedia.org/wiki/Income_inequality_in_the_United_States


But the income variation doesn't tell the whole picture, because it's far, far worse than the picture the income data alone paints. Because the top 10% wealthiest in this country control a whopping 80% of all wealth and assets in this country.
http://en.wikipedia.org/wiki/Wealth_inequality_in_the_United_States#cite_note-2

And the top 1%, as of 2007, controlled just shy of 35% of all wealth and assets. That is over a THIRD of our nation's wealth and assets, controlled by ONE PERCENT of the population. And that one percent has only gotten wealthier since the recession, while most of the rest of us have gotten poorer.

Pangolin said...

Anybody who believes in "democracy in corporate stockholders" needs to talk to those people who held Enron shares in January 2001. A year later those shares were worth pennies on the dollar while the executives walked away with hundreds of millions.

The actual value of wealth held by the top 1% is far higher than the face value because they effectively control the valuation of assets held by the bottom 95%.

wv: frece, what happens to participants in a "free" market.

RandyB said...

David,

Rob used the word "democracy." Note the quote marks. I've explained what I think about the value of the shareholders' powers.

I don't think I said the rich can't become dangerous oligarchs.

"Fine. Just tell me. IS THERE SOME RATIO OF NATIONAL WEALTH AND INCOME THAT WOULD START TO WORRY YOU?"

Of course. It worries me right now. *A lot.* I just see the cause as being different than what you see.

I gather that you think the oligarchs decided to depress the value of labor, and that they've managed to control the flow of the economy.

But the way I see it, the economy is changing faster than workers can find new ways to fit in. It's not unlike the way 90% of employment used to be in agriculture, and today it's more like 3%. People needed to find other things to do. Well, the same thing is happening now as technology changes. That top 1% found the right niche. Lots of people found a good niche. Many are still unsure where to fit in. They'll take a while longer to catch up.

I know it sounds like I'm talking about unemployment but this was going on for decades. As the economy evolves more rapidly, it's only natural that some people will be out front, and some will be in the back.

Those out front are creating much more of that national wealth. Those in the back are producing less. The guys in the back are not there because some oligarchs shoved them there.

If anything, the oligarchs are ignoring them. It is a serious problem.

Robert said...

Thank you, Dr. Brin. I rather enjoyed the water cycle metaphor as well. Unfortunately, it's lacking. I knew that when I wrote it up, and my friends mentioned it when I told them but I can't quite put my finger on where it founders.

Part of it lies with taxes as evaporation. Another part I think lies with the fact I left out the Suppliers. Lumber yards. Natural Gas and Petroleum companies. Mines and mining. Farms (though that one could be close to the top with the poor and rural areas). Parts manufacturers. These are integral to the economy as a whole, but I'm not exactly sure where in the cycle they should be placed, especially as they vary in size.

And there's something else missing. I'm just not sure what.

Feel free to iron out the bugs in it and use it yourself (I cede any and all "right" to the metaphoric concept and declare it open source). It is something that most people can comprehend seeing that they teach about the water cycle in elementary school. And it also does delightfully turn the whole "trickle down" bit on its head and point out HOW trickle down works - from the poor to the rich.

Rob H.

Jacob said...

I may be incorrect, but I think the riches 1% got that way by manipulating the imperfections of capitalism.

Largely, business owners siphon small amounts of profit away while providing a valuable service. This is something that I support. Now to the part I don't. Modern economic practice includes evaluating price point curves to determine how to maximize profit. Often times price is only loosely connected with cost to produce and appropriate compensation for the risk of investment. In theory, the more disconnected that becomes the greater the advantages of competitors. The market should correct. Unfortunately it doesn't do this well.

Competition should reduce 'excessive' profits. Now, enter the people (%1ers) with large ownership shares in companies that have excessive profits. They are able to accumulate excessive wealth that is disconnected with the actual labor involved or risk invested.

Allow me to be clear. Strong compensation for specialized labor (e.g. CEOs) is appropriate. Strong profits that scale with risk are appropriate. I don't think its productive to try to determine what is fair compensation for labor/risk. But I do think we should be watching for excessive amounts. Lets say earning a Million dollars based on 100 Dollars invested (Ratio) in a low risk environment like credit. I assert that would be determined excessive by a majority of Americans. Businesses / markets / investments are complicated so one size fits all ratios are a bad idea.

I wish that capitalism corrected for such things, but it doesn't in our current implantation of it. We should address this failing with government regulation by people that are firmly Pro Adam Smith. Sometimes the solution will not be to affect that business at all. Rather, it will be breaking through barriers of entry for competition.

Rob said...

Randy, ye cats, man, you're proving my point! That's a report from a Florida newspaper citing a rumor that a lemonade stand in Georgia was shut down by police, and promising readers that the city has no interest in such petty tyrannies!

Try again. With a primary source and some attention to the national political climate.

It's one of the things that frustrates me about the Right these days. They're quick to decry *government* bureaucracy, but when it's Verizon/T-Mobile/AT&T, there's a blind eye. (I've been entrapped into paying about $300 more on my phone contracts from one of those companies, because of a breath of fine print.)

When it's one-of-two-choices of health insurers in my area, both wasting as badly or worse than anything Medicare has ever been accused of, or quibbling over $45 in benefits while spending well over $45 to process the application for the benefits, there's a blind eye.

I've been employed by largish common-stock companies who granted options. In exchange for $3 of dividends (if I bought the options), I gained the right to cast 100 votes out of several tens of millions, most owned by myopic funds, while retaining the risk of arbitrary termination ("right to work", that is) or reassignment at the whims of OLIGARCHS whose focus was on the perceived value of those shares, and you want to call that what I mean by "democracy"?

Oh, please. If you cast about *at random* for a rephrase of what I mean, you'd be closer.

Paul said...

Rob H.,
"perhaps we should create new tax breaks that give incentives to businesses to hire and train employees. Counter this tax break with tax increases on corporations as a whole so that it is in the best interest of a business to hire and train employees,"

In principle, yes. But remember, if it works, and the economy recovers, you have to reverse it or you'll have massive wage inflation, shortening the growth phase of the business cycle.

Fine, you say, we'll end it when the crisis is over... But we won't. What congresscritter is going to allow his opponents to run a "John Smith voted to destroy the Creating Jobs For America Act!!!!!one!" election attack ads?

The current system doesn't allow for counter-cycle policies. Hell, it barely allows pro-cycle policies.

David Brin said...

Writhe and wriglle and squirm and writhe. Oligarchy ruined 99% of human cultures and Adam Smith said so IN GENERAL... but Randy simply cannot bring it to mind that all generations are filled with human CHEATERS. It is what we do, when we get a chance.

Sure, many of us don't like this about ourselves and try to minimize it. We also rationalize that what we do is blameless...

Like Randy squirms to rationalize that the growing danger of oligarchy IS N'T THE OLIGARCHS' FAULT IN ANY WAY. Nor should anything be done to prevent it.

Nor will he look at reasons WHY the American social order was so flat in the 1950s... while we had vibrant capitalism.

Writhe and squirm. Do what the oligarchs who control Fox instruct. Block the things that brought us a flat society and yet vibrant competition, earlier.

Again I ask NAME THE LEVEL OF DISPARITY that would worry you enough to consider doing what our fathers in the Greatest Generation did, to solve this problem.

duncan cairncross said...

Hi Guys,
There seems to be a high level of despondency in the US so here is a comment from a NZ political article
for your amusement

"How come Bill English can successfully present three budgets; but all the clever people in America's federal and state governments are thrashing about helplessly, up to their armpits in excreta?

What's going to happen when "headhunters" arrive and offer our Minister of Finance a highly-paid consultancy position in Washington DC? Here's my plan. We pass a law making Bill a sacred national treasure, a taonga, the export of which is strictly prohibited. And then we offer them Don Brash instead."

-Don Brash is financial type who now runs our most right wing party (ACT)

Pangolin said...

But the way I see it, the economy is changing faster than workers can find new ways to fit in. It's not unlike the way 90% of employment used to be in agriculture, and today it's more like 3%. People needed to find other things to do.

I'm curious as to what you think several tens of millions of excess U.S. laborers are supposed to be doing to "earn" a living. Please note that food and energy costs are eating an ever larger part of the household budget of your average consumer. Also note that automation and robotics are taking over tasks in everything from surgery to customer service. Finally take into account that america has garage's, basements and storage units are jam packed with consumer products which are available to further reduce demand.

The "free market" gets to string those people along for only so long before they start trying out other ideas.

breakoutbras said...

Sorry about the long delay in responding. It's a little late to finish with the rest of the original post, so I'll just respond to some of the posts to me.

David Brin accused me of using "the modern neocon debating method. You make assertions, and then you point to anecdotes."

Sorry, but I'm not sure what you're talking about. YOU have made assertions (like Obama supposedly offering 3 trillion dollars in cuts), but when I asked for some facts to back up that assertion, specific cuts to specific programs ... nothing.

Here is an inconvenient fact to rebut another of YOUR assertions. You said that Clinton had "large amounts" of "black ink" flowing. However, the national debt went UP EVERY YEAR of Clinton's presidency.

http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo4.htm

The debt did go down as a percentage of GDP, but that is not the same as being "in the black". Also, a chunk of the reduction in red ink was illusory due to the dot.com bubble.

You don't care about 'posturing votes' when it is Democrats voting, but apparently do care when Republicans do the same.

Republicans don't cooperate with Democratic Presidents? Who was cut out of all negotiations the first two years of Obama's Presidency? Who was not allowed to see the Obamacare bill until less than 72 hours before it was voted on (Who could forget, "We have to pass the bill so that you can find out what's in it")? Which President responded with, "I won" when pressed about his lack of care for Republican concerns and voters?

Who has been negotiating with Obama for the last month on the debt deal? Which party controls the SINGLE branch of government that has actually put forth a plan to deal with the debt issue? Which party controls the only legislative branch that has put forth a budge?

Stop drinking the Kool-Aid.

As for something that a RINO proposed two decades ago, I could care less. Nixon put in price and wage controls two decades before that, does this mean that if Democrats were to do the same this year they are actually just enacting "Republican" policies?

Hell no. Anyway (to use one of YOUR rhetorical devices), Republicans were probably just offering up any piece of crap health bill to "posture" in response to Clinton's Health Care bill. Goose, meet gander.

Ilithi Dragon said...

Breakout, didn't Boehner just pull out of talks with Obama Friday, discussing a deficit reduction deal Obama himself was putting forward that pissed off many in his own party for how far it went, that would have reduced the deficit by over three trillion dollars? I'm pretty sure it's all over the news... iirc, Boehner backed out because, after agreeing to 800 billion in revenue increases, he couldn't stomach another 400 billion in increases through loophole closes, etc.

And this is just the latest rejection that Boehner has made after having talks with the President for weeks.

Now, not every single plan put forward has been strictly Obama's; from what I understand they have mostly been put together by Congress, and the President's got a solid track record of letting congress do it's job in the putting together of the specifics bills, etc. However, this latest plan that Boehner rejected was primarily Obama, and he caught a LOT of flak from his Democratic colleagues because it went far beyond what most of them were willing to do, on pretty much every point. Even beyond what the "Gang of Six" put together in their proposal.

And the Republicans rejected it. Again. Because it did not give them exactly every single thing they asked for, on a silver platter, with whipped cream and cherries. And even if Obama did do that for them (and he very nearly did with this latest deal that Boehner rejected on Friday), they probably still couldn't pass up the opportunity to smear it in his face.


But I shouldn't have to be telling you about this, because the Republicans rejecting every reduction plan the Democrats have put forward has been all over the news for the last couple weeks or more now. So I don't know how you could get the idea that the Dems or the Pres. haven't put forward any reduction plans like our esteemed host mentioned, unless you only get your news from FOX, the Wallstreet Journal, and other Murdoch-owned news publications.

breakoutbras said...

LarryHart-

"I thought the biggest cause of red ink under Bush was the tax cuts."

After looking at some revenue figures, I think that you're right.

"Might Great Recession have something to do with more demand for helping the needy and umemployed, and less revenue at the same time?"

To some extent, sure, but things like two years of unemployment tend to keep people unemployed longer. I think there's a bit of vicious cycle going on...

"Now, the "borrow-and-spend" side has decided that the debt is a big problem. So we're supposed to solve that problem by voting in more politicians from the borrow-and-spend side of the aisle?"

When you have a choice between someone who actually sees the problem but has been unreliable in the past (to put it mildly), vs someone who proclaims that there is no problem ... I choose the unreliable person every time.

PS Talking about downgrading the US's credit rating, it's already happening. Of course, it's due to our lack of a plan to address our spendthrift ways, not due to any concern over a debt ceiling:

http://www.reuters.com/article/2011/07/18/rating-bonds-eganjones-idUSN1E76H0ZH20110718

Keep in mind that all the budget numbers being bandied about right now are built on a lot of rosy assumptions about future GDP growth and favorable interest rates. How much more interest will the US have to come up with if rates rise just a few points? T-bond interest rates have been in double digits within my lifetime (under Carter and early in Reagan's term).

Jim said...

Apparently I was on my wife's account (Breakoutbras) earlier and didn't notice.

Ilithi -

"Boehner backed out because, after agreeing to 800 billion in revenue increases, he couldn't stomach another 400 billion in increases through loophole closes, etc. "

I suppose that's one way of putting it. Another would be that after agreeing in principle to a number, Obama came back with a much bigger number. Boehner is STILL negotiating to get something worked out, he is just doing it with Democrats who will hopefully not pull the same stunts.

"And this is just the latest rejection that Boehner has made after having talks with the President for weeks. "

Yes, after apparently coming close to an agreement after weeks of talks, OBAMA took a hammer to it. Yet somehow it is Boehner's fault.

Listen, to some extent this is "he said, she said", because this has all been going on behind closed doors. The Republicans have put forward an actual plan to deal with the situation, and are working on another stopgap this weekend since the Democrats in the Senate refused to pass a similar version.

Obama and the Senate Democrats STILL have refused to put forward any of their own specific proposals. Why is that? Why can't they state publicly what they propose instead? What do they have to hide?

Leading from behind, an Obama trademark.

duncan cairncross said...

This is weird,
I read "Jim's" comments and I find difficulty in connecting them to the anything in the real world.

Jim - do you mean what you say? are you self delusional or just trying to pull the wool over everybody else s eyes?

patienceltd said...

I can't dismiss the consequences of a default as casually as Dr. Brin. Firstly, market stability is a function of psychology far more than it is of fundamentals - look at the stock market dips on the Greek debt crisis.
Secondly, the payment of unemployment benefits, food stamps and other support is all that stands between our comfortable armchair discussions at 30% national un/underemployment, and the breadlines and social chaos of the Great Depression. People starve far faster than governments can act - we're surviving on the momentum of past "socialist" or Keynesian decisions, not current reasoning.

Finally, let me throw a few other sources into the mix:

http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105 (complementary to the discussion so far)

http://en.wikipedia.org/wiki/United_States_federal_budget

http://www.philadelphiafed.org/research-and-data/economists/fujita/economic-effects-of-unemployment-insurance.pdf

http://www.ips-dc.org/reports/071001-jobcreation.pdf (Including the wars in Asia, defense spending stands at 6 - 8 % of GDP; neither sustainable, necessary, nor productive in terms of future investment. Start diverting this toward space infrastructure and you could create real jobs and a future worth living in.)

And from a time when government was a little more responsible and less partisan, still very much worth reading:
http://www.h-net.org/~hst306/documents/indust.html

All this aside, and back to the original point of the blog post, none of these facts penetrate either the partisan fog or a media establishment that insists on treating the debate like a football game. Ordinary citizens don't have influence or voice, and we need to start fixing the underlying problems with our "representative" democracy.

Tacitus2 said...

I usually steer clear of threads where the discourse has gotten this ugly. I have admonished some here in the past and feel little need to do so again. But there comes a point where you are no longer courteosly discussing an issue, but are belittling those who feel differently. You know who you are.

I can't really give Obama the benefit of the doubt here, I provisionally supported him until he made a total hash of healthcare reform. Since that at least seemed to be an issue he cared about one would have expected it would command his full attention. But he squandered his legislative mandate and his good will trotting out a plan that had, in my moderately informed opinion, no chance of controlling health care costs which are one of the core elements of our entitlement problem.

Hell, even token things like minor malpractice liabilty reform and additional funding for primary care training went mysteriously out the window in final drafts. And the much needed surtax on high benefit plans? Anathema to unions and so adios.

Giving no more credit to the R leadership than is their due (not too much) I can say that Obama either does not understand the economy or does, but is hoping to implant a legal structure that will default the decision making when the going gets tough to various gauzy, poorly defined future committees and panels.

I can appreciate many opinions. Even the redistributive sentiments I see surfacing here. But what the current president is doing is not leadership.

As I said before. Lead, damn it. Or stop whining about where you are being led.

Tacitus

Jumper said...

Good column and good dialog in the comments.

No conclusions today; just a thought: What is the quality of U.S.- made clothing of the sort given to our military, compared with standard Walmart clothing quality? And do consumers realize it?
http://blog.militaryuniformgouge.com/2009/04/03/air-force-uniforms-how-materials-are-selected.aspx

Consumer ignorance explains a lot of things, I would bet.

Jumper said...

Tacitus, I'm reminded of Mel Gibson to Robert the Bruce in Braveheart...

On another note, I'm weary of some who argue against any specific tax by arguing against all taxation. Because so often they themselves don't seem to realize that's what their argument amounts to. "Unjust to take..." etc.

I wish they'd come out as pure anarchists or else revise their logic. Using the term loosely.

Jacob said...

Hi breakoutbras/jim,

I am an independent.

Your inconvenient fact about the debt going up under Clinton is true, but crap. The trend was great. Any non-partisan actual fiscal responsibility advocate was trilled by what was happening. You should try to avoid seizing small details when the message has value. I want the next 5 Presidents with his fiscal responsibility.

Only the most enlightened people are not guilty of ignoring some of the mistakes of their team/party. It should be expected due to human nature/bias. You aren't helping by making assertions that also apply to republicans.

I believe Republicans cut the negotiations. I don't think that Democrats are master manipulators capable of controlling perception. The job they do of it is too poor. It is possible that they play the game on a complex level by making themselves look incompetent as a ruse to cover their actual genius. But frankly, I find that hard too believe.

Please note that I hated the health insurance reform bill. The 72 hour thing is misleading. It wasn't like they introduced a bill that was 90% new on that short of timescale. Rather the final revision was completed then. The concepts had been in play for some time. There is some truth to your point, but banding it about without a closer look makes people draw the wrong conclusion.

Both parties have put forth multiple plans on the debt issue. To think otherwise is to be overly fond of media sources that don't consider it a real plan if it doesn't conform to their desires.

I find it interesting that you suggest that Republicans put up piece of crap legislation in order to gain political position. Do they they also do that now? Do you really want your party to behave as such? The overton window is a destructive force. One of Obama's greatest failings is trying to negotiate with people who practice its use. The other is not being an advocate for change unless those policies are not very disruptive.

In my lifetime, Carter onward, Democrats are not the party of borrow and spend. That would be the republicans. They do it because lower taxes make them look good and they are happy with the idea that ultimately it will starve the beast. It is however completely fiscally irresponsible. So let me be clear, that is pure propaganda. The difference between the parties is how much government they actually want. Democrats want government to do more while Republicans less. An honest believer in (small c) conservative philosophy would be working on plans involving localizing government (States 'Rights') in order to ensure that 'blue states' get what they are looking for in the form of universal healthcare. Likewise 'red states' would get the same in the form of lower taxes. But you have to a plan for transitioning federal activities to regional and state structures. Slashing before planning what follows is bad policy.

Corey said...

You know, I'm finding it hard to believe that we're trying to pin the impasse with our debt on the Democrats, given the history of the Republicans.

Have we really forgotten that, only a small bit ago, the GOP was trying to hold the fiscal debate hostage over entirely non-fiscal items? They were refusing to sign a deal until having concessions made on public broadcasting (the CPB consumes just a hair over 0.0001% of the federal budget), and ABORTION, of all things.

Then, when Boehner finally did sign a deal with Obama, all the Tea Party politicians in Congress got up in arms about him signing any form of deal that amounted to any amount of compromise at all.


If our memories are really that short, then clearly the GOP is doing a much better job than their opponents at manipulating perceptions.

This is, of course, the same party that is trying to crucify Obama over a health care plan that they, themselves were the actual architects of, in 1993/1994.


If there's a failure to Obama's leadership, it's merely in the utter failure of realization on his part that the GOP is not, and never will be, interested in any form of compromise or negotiation.

Jim said...

Jacob-

"Your inconvenient fact about the debt going up under Clinton is true, but crap. The trend was great. Any non-partisan actual fiscal responsibility advocate was trilled by what was happening. You should try to avoid seizing small details when the message has value."

The problem is that the trend NEVER continues. You are taking the top of an expansion (which was itself overstated because of the bubble that was about to burst), and extrapolating it forward as if it would never end. That is also what the politicians of BOTH parties did at the time (look at the assumptions in Bush's budgets), which lead to massive overspending when the bubble collapsed and the economy went into recession.

"Only the most enlightened people are not guilty of ignoring some of the mistakes of their team/party. It should be expected due to human nature/bias. You aren't helping by making assertions that also apply to republicans."

I certainly give Republicans more benefit of the doubt than I do Democrats, but I have made a number of statements on this thread alone which show that I am not merely cheerleading the Republicans.

"I don't think that Democrats are master manipulators capable of controlling perception. The job they do of it is too poor. It is possible that they play the game on a complex level by making themselves look incompetent as a ruse to cover their actual genius. But frankly, I find that hard too believe."

The Dems ARE incompetent to anyone paying attention, but with the Democrat-friendly media it makes it much easier to manipulate and control impressions of those who do NOT pay as much attention as perhaps they should. As an aside, IMHO this is part of why Democrats are so incompetent - they are so seldom challenged. They are like the valedictorian of a sub-sub par high school who can't break 1000 on the SAT.

"The 72 hour thing is misleading. It wasn't like they introduced a bill that was 90% new on that short of timescale."

How many pages was the bill? How many "issues" were only discovered until AFTER it was passed? How many more are still hidden because it has not fully taken effect?

On another tack, DB has made a number of statements about Republican's lack of negotiation. Why could they not see the actual bill before 72 hours before the vote? They were not allowed to be involved in its writing.

"Both parties have put forth multiple plans on the debt issue. To think otherwise is to be overly fond of media sources that don't consider it a real plan if it doesn't conform to their desires."

Point me to the Democrats' proposal then. It MUST be on the internet somewhere, right? It doesn't cost anything. The only concrete Democratic proposal I've seen dealing with the budget and/or debt issue is Obama's February budget, which couldn't garner a single vote in the (Democratic majority) Senate.

"I find it interesting that you suggest that Republicans put up piece of crap legislation in order to gain political position. Do they they also do that now? Do you really want your party to behave as such?"

Yes they do, as do the Democrats. It's ugly, but it's politics. Was that specific proposal just posturing? I honestly don't know and don't much care at this late date. I was simply using it to illustrate a problem with an argument DB made.

"The overton window is a destructive force. One of Obama's greatest failings is trying to negotiate with people who practice its use."

I don't think that (Overton window) means what you think it means.

I don't have any serious disagreements with your last paragraph.

RandyB said...

David,

Maybe you hadn't read my post. I already told you quite clearly that the disparity worries me now. I quoted your dare, and then responded.

In the '50s we had workers producing things. The Greatest Generation still did things that couldn't be automated or outsourced. Today, not so many. It'll only get worse after more decades of progress, and automation doing more of what human labor still does now.

When 99% of GDP is produced by 50% of the people, I suppose those at the top will seem like oligarchs whether they are or not.

My preferred solution is to bring up those at the bottom, and not accuse the rich of abstract crimes. You had referred to some of them as "a rich guy who helped us all win-win by delivering goods and services..."

RandyB said...

Rob,

I only showed you that it happened. Try this one:
http://beta.coastalcourier.com/section/139/article/34001/

At least that one has a happy ending.

With the money you pay for phone service, one would think you could afford a subscription to the Google search engine.

All I can say is, this isn't the days of the Bell monopoly.

Health insurance is a different argument. I don't agree with either Democrats or Republicans on that one, but I'd rather not get wrapped up in it now.

Jacob said...

The Trend hasn't continued in my lifetime because we are electing modern Republicans. Give me a set of them that holds true to their values while trying to incorperate outside ideas. Please.

Talking about the bubble doesn't seem valid to me. The budget was appropriate to the economy at that time. When the economy adjusts (including revenue) so should the government. Besides as a counter point, we saw great economic years under Bush Jr while the deficit increased. I realize you likely agree that Bush was terrible about the deficit.

I understand that you aren't merely cheerling them. But if you cheer them at all, I have to wonder why. By what conservative value has the modern Republican party supported you or its ideals? I'm challenging you on their terms not democratic.

The media is not a friend of the Democrats. I do not accept that assertion. I think its just repeated some commonly to get pepole to shortcut to disagreement/ignore other opinions. MSNBC is more about exasperation of what Republicans do than praise of Democrats. At least the last time I watched it, 5 or so years ago. It is fair to say they are hostile towards modern Republicans. NPR does not promote leftish polices. The only bias I have noticed is a tendancy to talk about African American culture/issues.

There is some bias which is human nature and expected from everyone, but not engineered support. Unlike the conservative media engines. I would be ok with them if they were exploring actual conservative philosophy rather than using possible associations to accomplish a specific agenda.

If Democrats are incompetent (which I'm willing to agree in part), it isn't because they are lazy fatcats. It is because they don't organize together all that well. Its because they believe in compromise as sign of enlightenment. Rather, they should be looking at the positive aspects of competing plans and trying to incorporate them. Pick any issue and I'll give an example of incorporation without compromise.

Here is one Democratic plan. I'm not really going to look for more because it is a waste of my time. I don't have much faith in their ability to produce a good one. But speaking generally, doesn't it seem absurd to you that they wouldn't make several? I get that you don't like them, but in all most all cases plans are presented and then discarded on both sides of the issue.
http://budget.senate.gov/democratic/index.cfm/files/serve?File_id=488d628b-42e1-4ce8-a775-cec86ea5f049

If issues were discovered after the fact on the Health Insurance plan, they can be changed. The democrats don't want the plan to fail. There is often truth to Republican objections. That truth needs to be illustrated and problem solved. Amendments towards efficiency and effectivness will be better received than slash/cut ones. That is the responsibility of the conservative party. Unfortunately all we have is the capitol 'C' Conservative party which is >using< actual conservatives to accomplish their agendas.

Efforts were made to include Republicans. Way too many efforts in my opinion. Modern Republicans are unable to be seen working with Democrats. Trying to work with them is a mistake because of the Overton window. Doing the same thing over and over and expecting a different result is stupidity. You can't even be sure of what they accually want because the idea is to reach past it so that compromise lands on their actual target.

Jacob said...

Take two...


You don't illustrate a problem with an argument if you say it might not have been serious. The uncertainty invalidates the counter. If it were certain (hypothetical), it would only mean two things. One is that Republicans policy makers cannot be trusted to put out quality plans. Two that Democrats were fools for going ahead with a bad plan.

To me the Overton Window is the idea that you should manipulate the result of a compromise by presenting a position that is past your actual one. It encourages you not to speak to the truth of your goals. You also avoid conceeding the truth in the other side. It is often effective in practice, but only because the other side doesn't have perspective (a weakness). I detest bad faith negotiation because I actively try to incorporate all ideas presented.

rewinn said...

@breakoutbras - Are you seriously claiming that GOP was shut out of the health care debate?
If so, please give me a number: how many citations to GOP participation in hearings, debates, proposals and so forth would it take for you to change your claim.?
Give me a number. If your claim is founded in facts, then it is susceptible to factual proof and disproof.

===
About @RandyB's claims that the Republicans are not attacking the working class because there are some rich Democrats who (by virtue of being rich) are unlikely to be serious about increasing their own taxes - can we agree that this argument fails because there is a BIG difference between:
A) using the existing rules of the game to become very rich, and
B) advocating that the rules be changed in ways that will make it harder to become or stay very very rich?

There may be academic or religious theories that deny we can have both Case A and Case B at the same time, but we can empirically verify that it happens. Let me know how many examples you want.

The most likely explanation as to why the theories fail to explain reality is that love of money is not everything. There is, for example, love of country. There is also, if you are fortunate, love of family and sometimes even love of humanity.

Robert said...

Concerning wage inflation with my job enhancement policy, there is a simple solution to this: build into the bill itself the cut-off.

If Unemployment is below 5 percent, then the Corporate Tax vanishes as does the Tax Writeoff for hiring and training new employees. Once unemployment goes above 5 percent, it reactivates. All at once you have a pressure valve in place. When unemployment starts to rise, a tax break to encourage new hiring, balanced with a tax hike on corporations to pay for the tax break (and in essence encourage hiring as new hiring would counter the tax hike) would be in place.

And best of all, Republicans can't gripe that it "taxes job creators" because it gives a tax break to job creators... while Democrats can't complain that it is another tax break on the rich because a tax hike is in place to pay for the tax break.

Rob H.

Jacob said...

Hi Rob,

I like what you are saying. I wanted to give you the counter argument so you can plan for it.

"I will not vote for a tax increase" relating to the general one.

"Government shouldn't be in the business of picking Winners and Losers." relating to setting conditions by which some businesses (those hiring) get advantages over others.

"Government shouldn't be trying to interfere with the free market."

I disagree with these counters, but they are just part of the standard idea package imprinted on people. It's frustrating to encounter them.

LarryHart said...

Apparently, not much has changed in 40 years. I'm reading a collection of old Kurt Vonnegut essays circa 1973, and he has much to say about the Republican convention of '72 in Miami--how the GOP represents the "Winners" who know that the planet's resources are dwindling and that sympathy for "Losers" is dangerous to the survival of the "Winners".

This bit of an interview for Playboy jumped right out at me, though...

Playboy:
The Vietnam War has cost us even more than the space program. What do you think it's done to us?

Kurt Vonnegut:
It's broken our hearts...and it's taken away the illusion that we have some control over our own Government. I think we HAVE lost control of our Government. Vietnam made it clear that the ordinary citizen had no way to approach the Government, not even by civil disobedience or by mass demonstration. The Government wasn't going to respond no matter what the citizen did. That was a withering lesson.

LarryHart said...

breakoutbras:

Republicans don't cooperate with Democratic Presidents? Who was cut out of all negotiations the first two years of Obama's Presidency?


That would be his own party, while the President met with Republican leaders to get some "bipartisan" agreement. The Republicans offered something like 160 amendments to Health Care reform, which were included, and then they voted it down anyway.

You're presuming (not irrationally) that we don't remember this because Americans have the attention span of a flea.

President Obama has done nothing BUT reach out to Republicans, and I only thank God that they were too insane to take "Yes, I'll give you everything you want in your wildest wet dreams" for an answer. This president would have undercut Social Security and Medicare--something neither Bush nor Reagan could have dreamed of--and yet he's some kind of socialist menace?

I don't think there will be a default because your side's corporate masters (who must have a heck of a case of buyers remorse about now) won't allow it, or the President will invoke some sort of emergency powers and pay our debts anyway. But if the economy DOES collapse, I'll starve with a smile on my face knowing it hurts your side more than it can possibly hurt me any more.

LarryHart said...

Tacitus2:

But there comes a point where you are no longer courteosly discussing an issue, but are belittling those who feel differently. You know who you are.


Well, I know I can be prone to ranting, even when I'm trying to stay calm. Today, I only came "here" to post about Vonnegut, and ended up hysterical at Jim.

Such is life in blogworld, I guess.
My kid might someday be comfortable "here", but I still feel like I don't know the rules of decorum.

Point being, I do get your point.

And yet, as a Liberal, I feel that I have to push back against the notions that conservatives are allowed to do "whatever it takes" (either in the cause of winning, or in the nobler-sounding cause of fighting against those they perceive as harmful to society), but Liberals are somehow at fault when we:

POINT OUT that conservatives are being less than honest in their tactics

or

We OURSELVES do "whatever it takes" in the cause of fighting perceived threats to society.

Me personally, I'd prefer comity all around. But your side is engaging in hostage-taking right now over the debt ceiling, and you're blaming MY side for not proposing alternatives? No, I'm not going to cop to that one as bad on me. Sorry.

David Brin said...

Jacob, you need to think VERY carefully about the hypnotic nostrums of "laissez-faire" economics... by people who claim to be followers of Adam Smith, but who have never read a word that he wrote.

The concept of the "invisible hand" is a powerful one... in that it preaches that the mass wisdom of markets can be wiser than individual "allocators." It is an old fight.

For example, the Soviet (communist) Nomenklatura thought it logical that specifically-ordered allocation of resources would create the dams and roads and factories more efficiently than bourgeois capitalists could. But this was not Marxism! The classic Marxists in 1917 wanted Lenin to free up the bourgeois capitalists to build the means of production as Marx described their job to be! Lenin had to shoot a bunch of them before they revised official Marxist doctrine to push state allocation!

You think that's ironic? You ain't seen nothing. The big "defenders" of market blind wisdom tend to be oligarchs who make up a caste of conniving players - golf buddies who swap insider tips and appoint each other onto boards and then vote each other staggering wages... a clade that is far SMALLER than the soviet bureaucracy!

Now think about that. The favorite economist of the right - F. Hayek of the Austrian School, actually wasn't as crazy as the right is today. Sure, he had some grudges against Keynes that were proved to be very overstated and his predictive track record is worse than Keynes.

Still, Hayek said that the key thing libertarians should care about is increasing the total number of knowing and skilled players in the game.

Today's libertarian obsession -hatred of govt bureaucrats, always and only bureaucratsbureaucratsbureaucratsbureaucratsbureaucrats hate em and only them forever... that obsession is clearly what the oligarchs WANT! It has only a little to do with the TRUE libertarian goal...

... maximizing the number of knowing players.

You'll notice that by that measure, my campaign for universal transparency is THE THING that true libertarians should get behind. Not their current slavish devotion to helping oligarchs rid us of bureaucrats bureaucrats bureaucrats bureaucrats bureaucrats hate em hate em and only bureaucrats

Enough... come back after you have read this:
http://davidbrin.blogspot.com/2006/06/allocation-vs-markets-ancient-struggle.html

http://davidbrin.blogspot.com/2006/06/
then
allocation-vs-markets-ancient-struggle.html


Seriously.... you do not understand this allocation stuff till you have read that posting!

Rob said...

Randy, that's the same incident.

And did you notice that these girls now have corporate sponsors?

--

Of course these aren't the days of the (relatively harmless) Bell monopoly, but I think I'll spare anyone a detailed rant about how every descendant company from that behaves and strives to become that monopoly again, using captured regulations written back in '96. (Hint: no telecom promises were realized by that law. All they did was buy each other up.)

Paul said...

Rob H,
Yes, that is a solution to the wage inflation issue. Of course, as Jacob implies, you can't get there from here.

(Indeed, I think it should be the basis for the whole damn tax system. An agency that has a range of taxes/borrowing they can adjust each year, without needing specific changes in legislation. Like the Federal Reserve with interest. But created solely to counter-cycle, so hopefully less likely to get captured by the neo-Lib pro-cyclists.)

David Brin said...

Met the author of this:

http://www.amazon.com/Family-Secrets-Americas-Invisible-Government/dp/1608190064/

http://www.amazon.com/Family-Secrets-
then
Americas-Invisible-Government/dp/1608190064/

I am inclined to agree with the premise. Not because I can be pinned to any position along the left-right axis... in some ways I am libertarian and in some even conservative... but because the Bushites so clearly hijacked our country and did Pax Americana unbelievable harm.

It would be one thing if the neocons could point to ONE unambiguous statistical metric of national health that improved under their rule.

Their inability to do so... running to point at anecdotes as distractions... would have undermined their credibility and would have, in normal times.

Ilithi Dragon said...

Yeah, it's not a fact-based belief, but religious fundamentalism. That's why they can't change their mind, why you can toss thirty links proving they're wrong in their face, and they still reject it. It's why they pick at anecdotal nits, throwing up red herring after red herring. Their belief is not based on fact, it is based on a religious fundamentalism, and anything that challenges that belief must be wrong. It's that same, age-old enemy of reason and progress and self-empowerment that has plagued humanity probably since before the dawn of civilization, and that has been used by people to gain power and influence over the masses, and is probably one of the most potent tools for the oppression and enslavement of humanity. The fundamental belief that the world has to work the way they think it works, regardless of how it actually works.

You're not going to get a straight answer to any fact-based question, except maybe a rare piece of data that might support a position, and even then it will be treated as the Holy of Holies that Proves All. Even if it doesn't, really. They latch onto the anecdotal nitpicks that mean nothing because all they can do is throw out red herrings. To do otherwise would be to admit that their fundamentalist belief might be wrong, and they can't do that, not without a serious questioning of their entire world view. Their entire world view doesn't necessarily hinge on any one point being how the universe actually is/actually works, but in order for them to change their mind on any one point, they have to change how they think, which would lead to a collapse of their entire world view.

Ian said...

"Government shouldn't be in the business of picking Winners and Losers." relating to setting conditions by which some businesses (those hiring) get advantages over others.

"Government shouldn't be trying to interfere with the free market."

How is giving special tax privileges to certain industries or companies NOT picking winners and interfering with the free market?

Ian said...

"To some extent, sure, but things like two years of unemployment tend to keep people unemployed longer. I think there's a bit of vicious cycle going on..."

This is an ideologically based statement with no basis in fact.

Australia has open-ended unemployment benefits and an unemployment rate not much more than half America's.

Marino said...

Re: Norway massacre

The real scary thing is that the guy wrote exactly the same things some of my US internet friends love to believe: Eurabia, "cultural Marxism" as "the enemy within", down with multiculturalism... some newspapers even wrote that he wanted to start a Tea Party movement in Norway.
Dr. Brin, currently there are been no one thousand McVeighs, but at least the mindset has been exported here.
An Italian guy from the tiny far-right Fiamma Tricolore group hailed Brevik as an "hero". God bless our hate crime laws...

LarryHart said...

Dr Brin said:

The concept of the "invisible hand" is a powerful one... in that it preaches that the mass wisdom of markets can be wiser than individual "allocators." It is an old fight.


It's also deliberately misquoted by the libertarian side. Thom Hartmann pointed out that the capitalized words below (emphasis mine) are almost never included when Smith is quoted.


BY PREFERRING THE SUPPORT OF DOMESTIC TO THAT OF FOREIGN INDUSTRY, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.

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Tim H. said...

An entertaining essay on the debt ceiling impasse:
http://www.stonekettle.com/2011/07/playing-chicken-with-disaster.html

LarryHart said...

Paul Krugman as usual makes the point this morning:


Clive Crook Is Drowning America

OK, not really. But his piece this morning, "Washington is drowning America", illustrates perfectly how self-proclaimed centrists have aided and abetted our descent into paralysis.

Crook accurately describes the destructive behavior of the GOP and how it’s making the country ungovernable. But does he then condemn the perpetrators? Not exactly. Instead, he calls a plague on both houses:

-> If positions were reversed,
-> Democrats would feel just as
-> entitled to disable, by any
-> means necessary, their enemies’
-> legislative accomplishments.

Would they? Did they in fact behave like that when Republicans held the White House? No, they didn’t; Crook equates real GOP behavior with an imagined Democratic future.

And look at what this does to incentives: no matter how badly Republicans behave, they don’t draw condemnation from the Very Serious People. All you get is tut-tutting about how politics is awful, and if only we had a third party to install Mike Bloomberg as president all would be well.

Pundits who won’t call out extremism without pretending that it’s symmetric aren’t a big part of our problem, but they are a part of our problem.

TheMadLibrarian said...

Just for comparison purposes, who is the loudest, most powerful and extreme left-winger any of you can remember? I'm trying to think of someone on the left that's even as visible as Michelle Bachmann, and failing miserably. I don't count the people on 'Whale Wars'.

TheMadLibrarian

travent: aerated suitcases

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