Don’t make the economy worse
Other helpful advice from Eugene Robinson:
“Don’t touch the hot stove.”
“Drive with your eyes open.”
“Don’t stick your dangle in the whirlpool jets.”
“Beer before liquor makes you sicker.”
“Don’t jump!” and
“Breathe.”
By Eugene Robinson, Published: June 27
There is no good reason for negotiations on the budget and the debt ceiling to be deadlocked, because the solution is obvious:
Fantastic! Don’t worry everybody. Eugene Robinson has all the answers. Senator! Don’t bother drafting that legislation. Come listen to Eugene
First, do no harm.
Christ. That’s it? Why not “give peace a chance” or “celebrate diversity” or “God is my copilot” or any one of thousands of bumper sticker platitudes that have absolutely no meaning? Eugene
The Hippocratic injunction
It’s bumper sticker sloganeering. Call it the Hippocratic injunction if you think big words make this inanity any less trite, but we all see in you the moderately intelligent and massively insecure teenager slaving over SAT vocabulary flash cards.
should be something befuddled economists and warring politicians can agree on.
Eugene Robinson has staked out a bold position here. Next week he’ll unveil his new platform against raping children and drowning puppies. Courageous.
With the nation struggling to recover from a devastating recession, unemployment stuck at crisis levels, financial markets spooked by the possibility of European defaults and consumers disinclined to consume, it makes no earthly sense
As opposed to the wildly popular Martian sense.
to suck money out of the economy.
Y’know, unless inflation is starting to pick up. Which—very predictably—it is. (http://www.ft.com/cms/s/0/2a09506a-a0b7-11e0-b14e-00144feabdc0.html?ftcamp=rss#axzz1QaE1PT5z )
(Someone call Paul Krugman so that he can Officer Barbrady this. Move along, nothing to see here.)
Democrats are right that this is a terrible moment for spending cuts.
Government spending my spur GDP (it is, after all, an additive component of GDP), but it does nothing to increase the consumption and investment portions of GDP that drive the substantive economic growth that most Americans recognize. Indeed, most government spending is a massive vehicle for redistribution. Rich to poor. Young to old. Rural to urban. Soybean to corn. Coke fans to Pepsi lovers. Cats to dogs, etc. That vehicle requires vast resources that would be better spent creating and honing products that actually grow the economy.
Think, for a moment, of the man-hours and brain power that go into servicing the government’s redistribution vehicle: bureaucrats, lawyers, accountants, scientists, physicians, engineers, etc. Hundreds of thousands of people—in both the public sector and private—devote their lives and considerable knowledge to making the cogs in the government apparatus work poorly. Now imagine re-allocating even half those people and their aptitudes to projects developing a space elevator or a flying car or a cure for viruses or any one of ten billion things that will refresh and revitalize our economy. The market can allocate these people and their talents more efficiently than government—if we let it. That’s how you get economic growth.
Republicans are right that this is an awful moment for tax increases.
Well that’s true, but it also applies to any moment.
The only reasonable thing to do is kick the can down the road — but in a purposeful, intelligent way.
Your Honor, let the record show that on this date, June 27, 2011, that a liberal first openly and without duress advocated kicking the can down the road in clear violation of Article I of the Can-Kicking Summit of 1977.
As a practical matter, this means Republicans must swallow an increase in the debt ceiling, and Democrats must accept painful spending curbs that kick in when the economy is off its sickbed.
Never let a crisis go to waste, right? We Republicans have been taking notes. We’ll pass, thank you.
It means conservatives have to be patient in bringing expenditures down and progressives have to be patient in returning tax rates — even for the wealthy — to what many of us consider appropriate levels.
Observe how tenuously he avoids using the words “raise taxes.” He’s careful to say “returning” instead of “increasing,” and won’t even say that tax rates will go “up.” He just cites rank populism. It’s a stunning display of politically couched language in an article whose main goal is to revel in the iconoclasm of praising the universally reviled policy of deferral and postponement.
Larry Kudlow was right, though. Repealing the Bush tax cuts is an obsession of these people.
All this is clear —
even as much else about the economy and its prognosis becomes increasingly murky.
What’s clear is that our tax revenues will revert to ~18% of GDP regardless of what tax policy is implemented. [Caveat: within reason. Obviously revenues will fall to near-zero at a tax rate of 0%.] Spending? Not so much.
Indeed, it is reasonable to ask whether the “dismal science” of economics even works anymore as a reliable tool for analysis and prediction.
If only they were so critical and skeptical of the veracity of sciences that their policy positions hinge upon. Indeed, it is reasonable to ask whether the “dour science” of climatology ever worked as a reliable tool for analysis and prediction. Is that reasonable, Eugene
While some economists remain staunch, unwavering disciples of John Maynard Keynes or Milton Friedman,
Wretched ideologues! Get with the times! All the cool kids are economic nihilists these days.
others have begun couching their words. It’s almost as if the laws governing the universe of money have changed.
If the fundamental laws governing money have changed, then why wouldn’t raising taxes spur economic growth. Sure, there’s no reason to think it would, but we just threw the laws out the window, babydoll. Don’t even get me started on demand elasticity. Everything you think you know is wrong. Economic anarchy! Shit just got real.
Two years ago at a seminar, I heard a distinguished economic forecaster confidently explain how the recovery would proceed. While some usually reliable indicators were anomalous and contradictory, he said, the one thing he knew from the historical record was that sharp, deep recessions are followed by steep, roaring recoveries.
This guy clearly isn’t very good at his job. There are dozens of examples to the contrary, not the least of which is the Great Depression.
By the second quarter of 2010, he said, growth would be as high as 4 percent and unemployment would be tumbling. Happy days would be here again.
Keep in mind, these are the same people who think Pawlenty is batshit crazy for suggesting that the economy can grow at 5% under ideal circumstances.
I won’t embarrass the man by naming him, since he wasn’t much farther off base than many of his peers. No economic orthodoxy has come through the past few years unscathed.
I’ve got a little experiment. Take a snow globe. Pretty, right? Let’s just say inside is a factory with an American flag flying high on one of it’s smokestacks. Little workers going inside to make miniature snow-globes with even smaller versions of little snow-globe producing factories inside of them. Now give it a little shake. Fear not, tiny workers, the snow is going to settle pretty quickly. This is a normal recession.
Now take that very same snow globe and shake the shit out of it. Don’t throw it against a wall or anything. After all, it is a snow globe, but really get violent with that thing. This is a severe recession. Now, just when it looks like the snow is about to start settling, turn the thing upside-down, strap it onto a paint mixer and set it to high. This is the effect of the policies of the Obama administration’s economic policy.
At least former Federal Reserve Chairman Alan Greenspan — once a firm, unquestioning believer in deregulation —
The only man for whom the “Miss me yet?” mantra applies more than George W. Bush.
had the honesty to admit that the 2008 financial meltdown exposed a “flaw” in his ideology and left him “in a state of shocked disbelief.”
Y’know, until everyone else realized that the 2008 financial meltdown was caused entirely by regulation, not a lack of it.
That’s where the whole economics profession should be.
Nothing has fundamentally changed about economics. Regulation and taxation still stifle innovation and suppress economic growth. Government redistribution is still petty and wasteful. Creditors still don’t like debtors who can’t pay their bills.
But even if economists don’t know where the nation and the world are heading, there’s plenty of data to tell us where we are right now.
Great! I love data!
Unemployment was at 9.1 percent in May, up from 9 percent in April. Housing starts were up slightly after having declined sharply the previous month. Retail sales were down a fraction after being up a fraction. Taking a longer view, the economy has clearly improved over the past year — but the improvement is slow, wobbly and fragile.
In other words: the economy is generally shitty.
Given this state of affairs,
I.e.: general shittiness.
it’s hard to imagine how taking money out of consumers’ hands — either through cuts in government spending or tax increases —
Cuts in government spending don’t take money out of consumers’ hands; they take money out of government’s hands. Similarly tax decreases also do not put money into consumer hands; they simply impede the governmental money-grab.
could possibly make things better. It’s easy to see how such measures could make things worse.
How about more tax cuts. That would make things better. Pair it with some spending cuts and we’re all good.
Oh wait. I forgot that no economic orthodoxy has survived so we’re all playing fast and loose with Robinson’s tripe.
Likewise, it’s hard to believe that running trillion-dollar deficits every year is sound policy.
This one goes on the “even a blind squirrel occasionally finds a nut” wall.
Economists who confidently tell us that it’s no problem that the national debt is approaching 100 percent of gross domestic product
…which foolish “economists” are these? (As always, Paul Krugman doesn’t count.)
sound as if they’re whistling past the graveyard. I believe it would be a long, long time before the financial markets began to see the United States as a great big Greece
Elements of the financial market already see our position as being worse than Greece
but at some point that day would come.
Excellent. We’ve reached a consensus: The current budgetary trajectory is unsustainable.
And how could Congress turn a long-range crisis into an immediate disaster?
By raising taxes and increasing spending.
By stubbornly refusing to raise the debt ceiling, which would be the economic equivalent of a toddler’s temper tantrum.
Of course the only adult thing to do would be the one solution that pisses everyone off based on some misguided attempt at cohesion. That’s maturity?
I’m more of a fan of the “we win, you lose” style of politics. (Which, you’ll recall, was only briefly in vogue when Democrats were in charge of the Executive and both houses of Congress.)
It’s clear what needs to be done. President Obama and congressional leaders should agree on a series of firm deficit caps that would reduce the debt over time. This must be accompanied by a reasonable increase in the debt ceiling.
That’s like saying that the solution to prison overcrowding is to have less crime. Platitudes and vagaries generally aren’t how serious adults conduct business. So we impose a deficit cap. Now how do we get there? What programs to we cut? Do we raise taxes?
Then we will spend years engaged in a difficult but necessary fight over what kind of government we want and how much we’re willing to pay for it.
That’s going to happen regardless.
At present, we’re operating a heavily armed, heavily indebted health insurance company — a giant, profligate Aetna or Prudential, with nuclear weapons.
Boy if that doesn’t inspire you to want to pay more taxes, nothing will.
That’s not going to win the 21st century.
Neither is pussyfooting around a solution because someone’s afraid to get their hands dirty in the substance of cutting government spending. A good framework for government is, for all Americans, our birthright. A good government, however, is something that we will only get when we deserve it.
No comments:
Post a Comment