Tuesday, July 19, 2011

Are the roots of the Republican Party strictly economic?

Rudy Giuliani is telling Republicans who have criticized New York for legalizing same-sex "marriage" to stay away from the marriage issue and stick to economics, like good Republicans always have.
 “Stay out of it,” Giuliani said. “And I think we'd be a much more successful political party if we stuck to our economic, conservative roots and our idea of a strong, assertive America that is not embarrassed to be the leader of the world.”
The Republican Party? You mean the party founded in Ripon, Wisconsin in 1854 in order to oppose the expansion of slavery, the greatest social issue of the time? That Republican party? Staying away from social issues because it has always stuck to economic issues?

Rudy needs to review his own party's history--and then think about not saying stupid things like this from now on.

45 comments:

Lee said...

I think Rudy didn't go quite far enough. It is by a man's non-negotiables that he is defined, same for a political party. Republicans will pretty much negotiate anything and everything away, except for special favors for big business.

I used to argue this wasn't the case. Finally got tired of having my nose rubbed in it by, well, the Republicans themselves.

KyCobb said...

Lee,

What do you expect from people who idolize a Russian atheist who thinks charity is immoral and pure selfishness is the greatest good?

Lee said...

I was unaware that the entire Republican Party was in thrall to Ayn Rand. Someone please alert Ron Paul, he'll be thrilled.

Rand was a mess. But her economics were fairly sound, IMO. I don't think she would be very well liked in Republican circles. The GOP loves to talk the talk of economic freedom, but when push comes to shove, they are simply in favor of perhaps a slightly milder flavor of crony capitalism than the President's.

Government has a legitimate role in the economy, but it's more analogous to that of a referee than of an actual player. Our government likes to take sides. That's the "crony" part of crony capitalism.

E.g., there have been over four thousand automakers over the past hundred-plus years, the vast majority of whom have gone out of business because they lost out in the competitive scheme of things. When I was a child, for example, Studebaker fell, even though it was one of the War Dept.'s favorite contractors in WWII. My own beloved Checker Marathon rolled off the production line in 1982, the last year of production, because the enterprise was no longer competitive even as taxicab makers.

I doubt that the old scions of failed automotive businesses would be tickled to pieces that the government took sides on behalf of GM and Chrysler, and I'm sure would have liked a piece of what they got -- namely, a guaranteed piece of the action no matter how soundly their efforts have been repudiated by the consumers.

Capitalism works not just because of what succeeds, but because of what is allowed to fail. Unproductive enterprises are not subsidized or bailed out, but are allowed to go gently into that good night. Instead, we shovel billions of ill-fated taxpayer money into these bloated and unfit behemoths. Expecting, what? That GM will somehow magically transform itself into Honda?

Singring said...

Lee, if conservative fiscal policy were simply centered on getting rid of pointless subsidies, I would be a proud conservative! But who is keeping subsidies for big oil in place? Who is insisting on tax cuts for corporations that already pay zero effective tax? Who is gutting oversight like that provided by the EPA, that highlights the hidden costs associated with products, which - if not paid for ba those who cause them - represent huge hidden subsidies for polluting industries.

I am not in favour of government bailouts of private industry - but capitalism doesn't stop there, does it?

Pure capitalism makes no provisions for any costs that are not reflected in the price of a product. It makes no provisions for the poor, the uneducated, the afflicted, the disadvantaged.

Do you think Jesus was a capitalist?

Lee said...

> ...if conservative fiscal policy were simply centered on getting rid of pointless subsidies, I would be a proud conservative!

You don't specify what constitutes a "pointless" subsidy in your eyes. I'm pretty sure that any subsidies that do occur have a point attached to them, and that the point is political gain rather than economic. That's what happens when politicians run the economy: economic decisions become political.

> But who is keeping subsidies for big oil in place?

Whoever it is apparently holds sway with both parties, since the Democrats have had their opportunities to get rid of them, and haven't.

The idea that business is pro-free-enterprise is an enduring myth. The economy is the site of a constant war between established business and potential business. Established businesses want special favors and special rules and special subsidies... for themselves. For their competitors and particularly the upstart companies without the capital to lobby for their own favors and exemptions, they want restrictions and unaffordable regulations. That's how the game is played in a system of crony capitalism. Think, for example, of the GM/Chrysler bailout as payback to the unions for their support.

> Who is insisting on tax cuts for corporations that already pay zero effective tax?

I'm against the whole concept of corporate taxes since all taxes are ultimately paid by people. To pay them, corporations have to charge more for their products or pay their people less. Or, as you've pointed out, acquire a special exemption from their government benefactors.

> Who is gutting oversight like that provided by the EPA, that highlights the hidden costs associated with products, which - if not paid for ba those who cause them - represent huge hidden subsidies for polluting industries.

There are other forces that keep agencies like the EPA in check. All regulatory agencies eventually become the benefactors of the industries they are supposed to be regulating. Well-established companies don't mind the regulations because they disproportionately harm the smaller upstart businesses, i.e., potential competitors, who don't have the capital and infrastructure to comply or fight. And ultimately, when the regulations become strict enough, the corporations send their manufacturing offshore to China or Sri Lanka, where the EPA has no jurisdiction. Of course, none of this helps the unemployed American worker.

> I am not in favour of government bailouts of private industry - but capitalism doesn't stop there, does it?

I would say socialism starts there.

> Pure capitalism makes no provisions for any costs that are not reflected in the price of a product. It makes no provisions for the poor, the uneducated, the afflicted, the disadvantaged.

One way to help is to have a growing economy to produce the wealth that others are so eager to redistribute. Helping hands are predicated on having some extra wealth lying around. Capitalism takes care of that important role -- it is the golden goose, and receives about the same amount of respect from those who want to cut it open and get all of those golden eggs at once.

> Do you think Jesus was a capitalist?

I would willingly and gladly live in a socialist country if Jesus was in charge of it.

Singring said...

'The idea that business is pro-free-enterprise is an enduring myth.'

Then capitalism is also a myth, no? Because the moment you have business, it will attempt to thwart the system, rather than let it run its course.

So it seems that Capitalism is a system destined to fail, just like Communism.

'Well-established companies don't mind the regulations because they disproportionately harm the smaller upstart businesses, i.e., potential competitors, who don't have the capital and infrastructure to comply or fight.'

I'm sure Exxon, BP et al. would say otherwise. But let's consider this for a moment, because we seem to be singing from the same hymn sheet: like many socialists, I argue for an aggressively progressive taxation system - the bigger the profits, the more taxes you pay. This should help to balance some of the disproportionality in resources of small and large corporations.

But to be honest, I don't really buy that upstarts are disproportionately disadvantaged - for one thing, they can set up their business to comply with EPA standards from the outset, whereas large coporations will face huge investments if they are forced to restructure their business and facilities according to those regulations. That's precisely why business is so vehemently struggling to stop cap & trade and other environmental/economic initiatives. They are petrified of having to restructure. Small upstarts who are already in compliance because they are producing 'green' products anyway would get a huge boost.

Finally - and this is where 'good subsidies' come into play - the government (if it is run by smart, educated and informed people, not always a given) can support industries where it knows regulations are putting a disproportionate strain on startups. This is for example what the German government did by subsidizing people who wanted to buy solar cells, thereby countering the vehement efforts of the big energy companies to suffocate that developing industry.

So again - I don't buy this one-sided picture.

'And ultimately, when the regulations become strict enough, the corporations send their manufacturing offshore to China or Sri Lanka, where the EPA has no jurisdiction.'

...and end up paying little or no taxes in the US even though they stilla are headquartered there. If we tax these kinds of corporations accordingly - i.e. based on the costs they are causing that are not reflected in their product prices - then we can counteract *some* of that. Of course, as long as price is the most important sales factor and there is such an inequality in the standard of living in the world, this will persist as a problem for any economy.

But I am curious now - do you think free, unfettered capitalism would stop companies from going overseas? Based on what rationale?

Singring said...

'Helping hands are predicated on having some extra wealth lying around.'

The personal wealth of the 50 richest Americans is roughly 700 billion dollars:

http://www.forbes.com/lists/2007/54/richlist07_The-400-Richest-Americans_FinalWorth.html

Medicare expenditures in 2010 were about 520 billion dollars.

http://blackburn.house.gov/UploadedFiles/Trustees_Report.pdf

In other words, fifty (!!!) Americans have enough money to comfortably pay for the medicare bills of almost 50 million Americans, even assuming nobody was paying into the fund at all.. And there's thousands more wealthy Americans who make more than 1 million a year and could chip in.

Why don't they?

There's all this obscene wealth in private hands and yet the US has some of the worst health statistics in the Western world.

And here you are, telling me that what will solve the problem is to put more money in private hands, give more tax breaks to the rich, give more profits to companies already raking in billions because *somehow* and *sometime* they will out of the sheer goodness of their heart, start opening clinics and giving away money to homeless folks in Chicago and Philadelphia and Dallas.

Does this really strike you as a credible proposition on how best to help the poor and disadvantaged?

'I would willingly and gladly live in a socialist country if Jesus was in charge of it.'

So Jesus was a socialist?

KyCobb said...

Lee,

"I was unaware that the entire Republican Party was in thrall to Ayn Rand. Someone please alert Ron Paul, he'll be thrilled."

Paul Ryan is an ardent Randian, and GOP presidential candidates had to pledge fealty to his budget plan to end Medicare to keep their campaigns viable. Ryan is also likely to be on the GOP short list of VP nominees, and a front runner for the 2016 or 2020 GOP presidential nomination.

The Tea Party notion that the government should have simply stood by and watched vast swaths of the US economy collapse is pure insanity. The collapse of the housing market was bad enough; if the Bush and Obama administrations had stood by and done nothing we would have had a Great Depression. If the US financial and auto industries had simply ceased to exist, where do you suppose the money would have come from to rebuild? I know, the magic wand of the free market fairy.

Lee said...

> Then capitalism is also a myth, no? Because the moment you have business, it will attempt to thwart the system, rather than let it run its course.

Both capitalism and communism are imperfect. The difference is that when capitalism is compromised it works less effectively, whereas compromising communism is the only way to get it to work at all.

> But to be honest, I don't really buy that upstarts are disproportionately disadvantaged

So you are denying that a big corporation has more financial resources than an upstart.

> for one thing, they can set up their business to comply with EPA standards from the outset

You're presuming that complying with the standards is not a added cost, and that they can spring into existence already able to avail themselves of all the special rules and favors written into the system that protect established business.

> whereas large coporations will face huge investments if they are forced to restructure their business and facilities according to those regulations.

Both of them face huge investments. The question is which one is better suited to dealing with the costs.

> That's precisely why business is so vehemently struggling to stop cap & trade and other environmental/economic initiatives. They are petrified of having to restructure.

They may also be petrified that there is simply no way to follow those policies and make a profit.

> Small upstarts who are already in compliance because they are producing 'green' products anyway would get a huge boost.

You have presented no data, so I would have no idea how many upstart companies exist that have easily achieved these standards. Also don't know how many upstart companies might have existed but found meeting the standards too expensive.

After all, if "going green" were the most economical way to go, companies wouldn't have to be forced to comply.

Lee said...

> Finally - and this is where 'good subsidies' come into play - the government (if it is run by smart, educated and informed people, not always a given)...

This presumes we that even smart, educated and informed people can know in advance what the "good subsidies" are. It also presumes that, if they did know, they could be trusted to act in good economic faith and not for the political gain of the moment.

But that's sort of the leftist view in a nutshell, isn't it? There is no problem of knowledge or shortage of good will that could a stop a cadre of enlightened individuals -- i.e., the leftists themselves -- from running the world in a much better manner. It's their vision, and many people have died for it.

> Of course, as long as price is the most important sales factor and there is such an inequality in the standard of living in the world, this will persist as a problem for any economy.

I don't see a way to avoid price-shopping as long as people have a choice. And so far, no system has abolished inequality, though some have made a great show of going through the motions.

> But I am curious now - do you think free, unfettered capitalism would stop companies from going overseas? Based on what rationale?

I would say, first of all, there is no such thing as unfettered capitalism in the way that I think you mean it. Even in an ideal system, there would have to be some fetters attached. Contracts would need to be enforceable. They would need to abide by property laws, accept due process, be subject to lawsuits (e.g., for third-party effects you discussed).

But I think the decision to go overseas is a complicated one. Obviously, there is some advantage to keeping one's plant in the U.S., where there is a common language, an understanding of the way the laws and customs work here, proximity to the marketplace, etc. I think these advantages are important, and so therefore the disadvantages have to become so egregious that any advantages are overcome. We could talk about what those disadvantages are, but they all come down to balancing costs and quality.

We could probably not stop all of the outsourcing, but could at least mitigate it by making the U.S. more business-friendly again.

Lee said...

> The Tea Party notion that the government should have simply stood by and watched vast swaths of the US economy collapse is pure insanity.

Not everyone agrees that allowing many of these firms to go under would have been such an unmitigated catastrophe.

My definition of economic insanity would be to continue rewarding with taxpayer's money the companies that brought us to the brink, in the hopes that they will quit doing the venal and stupid things that brought us here. If you want less of a bad behavior, you don't reward it.

Funny that the insolvent financial institutions never asked the taxpayers if they would like to share in their speculative profits. Nope. The taxpayers are only conscripted to underwrite their losses.

At the very least, Fanny Mae and Freddie Mac should be dead. But somehow they continue to prosper.

> If the US financial and auto industries had simply ceased to exist, where do you suppose the money would have come from to rebuild? I know, the magic wand of the free market fairy.

You are assuming that we're somehow saving money by spending money. Sorry, but no. Subsidizing a dead, bankrupt, and thoroughly repudiated producer is to rob the economy of the things that the money would have done if it hadn't become a subsidy. It is costing money to prop up failed businesses, not saving it.

And there is no such thing as "too big to fail." But some companies are too big to prop up.

If you think GM and Chrysler offer great value compared to the competition, help yourself, but don't make the rest of us join in.

Singring said...

'The difference is that when capitalism is compromised it works less effectively,...'

Less effectively from who's perspective, Lee? You pointed out that once big corporations emerge they will thwart the actions of others. So the big corporations do just fine under 'compromised' capitalism. But who is the loser then?

'So you are denying that a big corporation has more financial resources than an upstart.'

No. I am denying that that alone determines who prospers within a given set of regulations.

'You're presuming that complying with the standards is not a added cost...'

Not at all. I am simply saying that a company can plan for these costs when starting up - a big corporation that is suddenly faced with a novel set of regulations and has to fundamentally restructure its business because of it can be at a much greater disadvantage. I'm not saying either situation applies excludively - but the situation is more balanced than you make it out to be.

'...themselves of all the special rules and favors written into the system that protect established business.'

I'm certainly not in favour of special rules and favours for established business. I'm a socialist and an environm,entalist, Lee. To put it frankly, I want to put the screws on big businesses. What have Republicans recently done to abolish these 'favours'? I just watched a documentary called 'Gasland' that illustrates how Dick Cheney was able to exempt oil and gas companies from all environmental regulations. I'm not claiming that the Democrats are doing a better job - but how exactly would complete, unbridled capitalism solve these problems?

'They may also be petrified that there is simply no way to follow those policies and make a profit.'

I thought it was the Capitalism that was all in favour of eliminating businesses that cannot operate under a profit. All cap & trade is trying to do is to pass on at least a small percentage of the cost of environental damage to corporations - in other words reducing the huge tacit environemtal subsidies companies have been getting since the industrial revolution, thus making it that the price of production reflects the actual price including environmental damage.

'You have presented no data, so I would have no idea how many upstart companies exist that have easily achieved these standards.'

Then why did you claim that regulations disproprtionately affect small businesses? I have no idea either, by the way - all I know is that in countries like Germany or UK where we have pretty strict environmental regulations (not neraly strict enough though) businesses are doing just fine.

'After all, if "going green" were the most economical way to go, companies wouldn't have to be forced to comply.'

Why did companies have to be forced to implement health and safety regulations, Lee? Why did they have to be forced to stop employing children? Why did we have to force car manufacturers to conduct crash-tests and install seatbelts (remember when Ford calculated that it would be cheaper for them to pay off a few hundred burn victims rather than make theri gas-tank crash-safe?)? Why did they have to be forced to stop producing asbestos? Of course companies will try to ignore any damage to humans or the environment when they can get away with it. But these damages still create costs to the environment that often far, far outweight the costs the companies actually have to produce their products. All of this amounts to massive subsidies we as a society give these corporations. If you are opposed to subsidies, then you are in favour of these kinds of regulations. Its as simple as that.

Do you want to live in a society in which a corporation can pollute a lake and not have to pay for those damages?

KyCobb said...

Lee,

"Subsidizing a dead, bankrupt, and thoroughly repudiated producer is to rob the economy of the things that the money would have done if it hadn't become a subsidy. It is costing money to prop up failed businesses, not saving it."

Keeping GM and Chrysler from folding didn't take money from the economy, it injected billions of dollars into the economy. Not only thousands of GM and Chrysler employees kept getting good paychecks to spend, but lots of companies which provide supplies for GM and Chrysler stayed in business and kept paying their employees as well. And apparently someone thinks GM and Chrysler provide good value, because they are both generating billions of dollars in revenue and making profits.

Lee said...

That's nice. GM has received over $50 billion in taxpayer money and they're posting a profit of, what? $800 million?

Maybe it's even real, and not a shell game. Like it was, e.g., when Ed Whittaker announced they had paid back the TARP money years ahead of schedule, when all the did was pay it back with other moneys they'd received from the government.

Like I said, you like GM products, you buy GM products. Don't make me buy them for you.

Meanwhile, that $50 billion came from somewhere. Wherever that was, that was what it cost the economy. Unfortunately, established businesses have lobbyists; potential business does not.

Singring said...
This comment has been removed by the author.
KyCobb said...

Lee,

"Meanwhile, that $50 billion came from somewhere. Wherever that was, that was what it cost the economy. Unfortunately, established businesses have lobbyists; potential business does not."

Well, no it didn't. The government didn't raise taxes $50 billion dollars. It sold treasury bonds, a lot of which were bought by foreigners, because US Treasury Bonds are the safest investments on earth, or the US government itself. When an economy is in recession, it needs more money put in people's hands to spend, which generates job creating economic activity. Allowing the US financial and auto industries to fail wouldn't have generated funds for other businesses; it would have sucked hundreds, perhaps trillions of more dollars out of the economy as vast numbers of more people became unemployed, depressing economic activity even more. Your prescription for the economy would have had the exact opposite affect than you intend.

Lee said...

That's exactly right. I think they took the wrong road. How's that working out, by the way? Two more trillion in debt, and 9+ percent unemployment.

KyCobb said...

Lee,

The recovery is stalling out because, given the severity of the contraction, the stimulus wasn't large enough. States are running out of stimulus money, and state spending and employment has been contracting, reducing the level of demand in the economy. One of our major economic engines, new housing construction, doesn't seem likely to recover very quickly, and I don't know what anyone could do to fix that short of bulldozing a bunch of excess houses.

Lee said...

Excuse me, $4 trillion.

> Allowing the US financial and auto industries to fail wouldn't have generated funds for other businesses; it would have sucked hundreds, perhaps trillions of more dollars out of the economy as vast numbers of more people became unemployed...

Well, vast numbers of people did become unemployed. In fact, Obama was arguing we needed the so-called stimulus to prevent unemployment from hitting 9%. So we took the stimulus, and unemployment his 9.5%. So much for the economic knowledge behind those projections.

What has been, and is still, sucking trillions of dollars out of the economy is, reduced to one word, uncertainty.

Uncertainty is what you get when the President lurches from issue to issue, giving a verbal lambasting to one industry after another; shutting down energy production; promising to increase the liabilities of employers; maxing out the national credit card and flirting heavily with a downgrade of bond rating; promising increased regulation and taxes.

When the economic rules that have been followed for hundreds of years all of a sudden are not followed, people are hesitant to keep playing that game, knowing that it's a different game now and not quite knowing how to respond. Businesses that fail are supposed to go under, not be rewarded. Secured debt is supposed to be paid off first, not stolen from the holders and handed to the unions. You can see it in consumer confidence polls. You can see it in the low-volume stock market. People have lost their faith in the economy, and uncertain of their ability to comprehend what it takes to make more money, are trying to protect what they have.

This was the most anemic economic "recovery" on record, and now we're poised for another recession. Even the Obama White House seems aware of this and is beginning to panic.

Lee said...

> The recovery is stalling out because, given the severity of the contraction, the stimulus wasn't large enough.

I see you've been reading Krugman.

> One of our major economic engines, new housing construction, doesn't seem likely to recover very quickly, and I don't know what anyone could do to fix that short of bulldozing a bunch of excess houses.

Maybe we'll know better next time than to give a couple of pet private banks a charter not to just lend money, but to serve also as an adjunct department of welfare. On second thought... nah.

KyCobb said...

Lee,

I see you've been reading Tea leaves. Taxes go up and down; they are at the lowest levels in decades right now. New regulations to address problems were promulgated before the President took office and they will be afterward. There is so much confidence in the full faith and credit of the US that ten year treasury bonds sell for less than 3% interest, and the only thing threatening that is the intransigence of the Congressional GOP. People aren't going to invest to build more products and provide more services if there is no demand, and demand is depressed by high unemployment and stagnant wages. If more people have more money to spend, then more people will be hired to meet that demand, then they have money to spend, and we have a virtuous cycle of economic growth. The Tea Party prescription isn't going to inspire confidence, it will just depress demand even further.

Lee said...

> There is so much confidence in the full faith and credit of the US that ten year treasury bonds sell for less than 3% interest, and the only thing threatening that is the intransigence of the Congressional GOP.

You and the liberals are living in a dream world. It's coming to a close real soon. My only regret is you're taking the rest of us with you.

If you don't think we've borrowed enough money yet, when does it ever become enough? or too much? Right now, we're at about $14 trillion. The net worth of the entire U.S. is only somewhere around $60 trillion.

When do we stop? What is the end game? Do we simply keep borrowing until we go broke trying to pay it off? Do we just repudiate the debt? At some point? Any speculations on what that would do to our economy?

> People aren't going to invest to build more products and provide more services if there is no demand, and demand is depressed by high unemployment and stagnant wages.

Nice theory. How has that worked out so far?

If your canoe is heading for the falls, and some Tea Partier starts agitating to do something about it, what do you do? Stop the madness? Or complain that those Tea Partiers are sure a buzz kill? I guess everyone will feel better, all the way up to the edge.

Singring said...

Lee - Democrats were willing to cut 4 trillion in spending but it wa the Republicans that walked away from teh table because they refuse to sign anything that includes tax increases.

Its like a grown up trying to argue about sensible policies with a spoiled little brat. One side is willing to compromise, the other is so dogmatically entrenched in their delusional world of trickle-down fiscal politics they are basically making the USA ungovernable. It s a pathetic display.

'Nice theory. How has that worked out so far?'

How's cutting taxes worked out so far? As I mentioned, only fifty people in the US could foot the entire Medicare bill for a year - yet you want to convince us that they just aren't rich enough. They need even more so it can start trickling down.

Lee said...

Any cuts the Dems propose are speculative and in the future tense. They are fine with cutting the budget. They just aren't fine with cutting the budget, like, now.

KyCobb said...

Lee,

I guess in 1944 you would have called off WWII as being too expensive because by that point we were in a lot more debt relative to GDP than we are now. Of course, the $ amount of debt then would seem a mere pittance now, because our economy has grown so much, which answers your concern about debt; we grow the economy. Austerity measures during an economic downturn are self defeating because they depress economic growth; we can reduce debt relative to GDP during good times like the 1990s

Lee said...

> Its like a grown up trying to argue about sensible policies with a spoiled little brat. One side is willing to compromise, the other is so dogmatically entrenched in their delusional world of trickle-down fiscal politics they are basically making the USA ungovernable. It s a pathetic display.

Yes, I agree. The President has been intransigent.

Lee said...

Ky, there was at least a few bright spots about contemplating the WWII debt.

One was that much of the financial liability was gone once WWII ended. E.g., the need for bombs, bullets, fuel, a large standing military, etc. was greatly diminished. But the sorts of things driving the budget up now do not have a time limit on them. We cannot expect social security, Medicare, etc. to go away like the war did. We can simply expect the liabilities to continue growing as more and more as politicians continue to promise the moon. There is never an endgame in sight.

> we can reduce debt relative to GDP during good times like the 1990s

Can't do that without economic growth.

KyCobb said...

Lee,

"Can't do that without economic growth."

Exactly, and government austerity measures depress economic growth, as we are seeing.

Lee said...

I find it Orwellian that anyone could characterize overspending in the trillions as "government austerity measures."

One Brow said...

Lee said...
I find it Orwellian that anyone could characterize overspending in the trillions as "government austerity measures."

The increase in federal spending was offset by cuts in state and local spending. Overall, government spending was flat.

Lee said...

Sounds plausible, OneBrow. Revenues are down because the economy is down and housing assessments are down. And states and local governments don't have a printing press that spits dollar bills. In short, they are constrained by reality in a way the federal government is not. Yet.

One Brow said...

Lee,

Of course, while the federal government could just s[pit out money, it does not, and so operates under those constraints by choice.

KyCobb said...

Lee,

I find it Orwellian that anyone thinks you can grow the economy by shrinking it hundreds of billions of dollars.

Lee said...

> Of course, while the federal government could just s[pit out money, it does not, and so operates under those constraints by choice.

The point is, the federal government has many options for spending money that it doesn't have which are denied to the states.

> I find it Orwellian that anyone thinks you can grow the economy by shrinking it hundreds of billions of dollars.

There's your problem right there, Ky. Nobody wants to shrink the economy. We need to shrink the government.

KyCobb said...

Lee,

We don't need to shrink the government. You want to shrink the government. Nations can have large public sectors and healthy, growing economies, as is amptly demonstrated by nations such as Sweden and Germany.

Lee said...

Respectfully disagree, sir. You need to pay closer attention to what's going on in the EEU. The whole colossal house of cards known as socialism is about to collapse of its own weight. The odd thing now is that Sweden and Germany are actually moving in the right direction -- toward a less government-intrusive model.

Earlier, I asked you, what's the endgame? I'm still curious to know what you think it is. I know what I think it is. Even Obama admitted at some point that the growth in spending and borrowing is "unsustainable" -- his word. I just happen to agree.

Obviously, you are not alarmed by our national debt. Given that our entire national net worth is in the neighborhood of $55 trillion (and falling), and our national debt is about $13 trillion (and rising), at what point do you think we should we become alarmed?

Obviously, at some point, people with money will want to quit lending it to us. What then? Even in the short term, if our bonds are downgraded, interest rates will go up, making debt effectively even more expensive. Will that reintroduce a bracing bout of sanity? Or will we, like Greece, be like a gutted shark, snapping at our own entrails?

Would it bother you if the U.S. collapsed completely? Is that the goal? This is a serious question. The left is terrific at rattling off the litany of American sins. Do we deserve to die for our sins? Is that what the left is trying to accomplish? Bye-bye economy, bye-bye Constitution, bye-bye civil order? We either become a nasty third-world dictatorship a la Russia, or a loose , vulnerable, and bickering series of redneck states more like the Balkans than a modern nation -- is that what you guys want?

If that is not what you want, then I would ask, what good are all of America's entitlement programs if America is not longer around?

In the meantime, keep your eyes on Greece, Portugal, Spain, and Italy. They're our canaries. Greece is effectively being bailed out, at least for the time being, by Germany. Who will bail us out when our time comes?

Singring said...

'The odd thing now is that Sweden and Germany are actually moving in the right direction -- toward a less government-intrusive model.'

Yes, Germany currently has a conservative government and is moving slightly to the right - but even if the German government decided to swing to the right, we would still be to the left of the US. We have public healthcare, strong unions and union participation laws, state funded higher education, stringer regulations on business as in the US, estate tax...the list goes on and on. And as we speak, the left (i.e. the Social democrats, the greens and the socialist party) are gaining ground virtually everywhere. Just a couple months ago, the greens WON the lection in my home state of Baden W├╝rttemberg - ahead of both of the big 'centre' parties of the conservatives and the socilial democrats - a state that had been dominated by the conservatives for over 50 years prior to that. The liberal party (i.e. the party that is for lower taxes, privatization etc. - basically the German version of the Republicans sans the religious baggage) are teetering on the brink of nonexistence.

The German media is filled with editorials and articles in complete amazement at the goings on in Washington and the irresponsible and delusional politics the Republicans ar pursuing. One recent editorial in my local paper called it 'insanity'.

So for you to somehow suggest that Germany or Scandinavia is moving toward a system like the one you would like to see (i.e. no holds barred, laissez-faire capitalism) is simply absurd.

'Even Obama admitted at some point that the growth in spending and borrowing is "unsustainable" -- his word. I just happen to agree.'

I also agree, Lee. We ALL agree that reducing spending is a generally a good idea. Its just a matter of *when* and *how* to do it. In the face of a recession, government should not cut trillions out of its spending - it has to boost the economy, as Paul Krugman and other sane economists have pointed out.

The time to cut spending is when your economy is strong and running smoothly - hardly the current case in the US.

But the main point is this: A good budget is pone that combines spending cuts with *revenue increases* - i.e. with raising taxes. Yet you and other on teh right insist - in the face of all evidence and reason - that tax increases are always wrong. It is pure economic dogmatism.

When a small number of the richest individuals (less than 1%) own more than the rest of the country put together, you know that something isn't right on the revenue side. And yet you insist that these rich people need yet more money so (someday, somehow) they can shower it over us in their Galtian generosity.

KyCobb said...

Lee,

You just displayed all the rambling paranoia I expect to see on Free Republic. Of course I don't want the United States to collapse. I shouldn't even have to say that, and we are nowhere near any such thing happening. The US has the lowest tax burden in decades, and one of the lowest in the world, so once the economy has recovered the "debt crisis" can easily be resolved by allowing the Bush tax cuts to expire. We are at the opposite spectrum from small, poor countries like the PIIGS, and enacting severe austerity measures which will reduce the incomes of ordinary Americans even more will damage, not help, the economy. One of our big problems is rising income inequality, as the wages of ordinary Americans have stagnated and the incomes of the elites have soared, making our consumer driven economy less and less sustainable. Tea Party austerity merely serves to cut the resources of ordinary Americans even further, deepening, not improving, our economic problems. If I was as inclined to paranoia as you, I would say it appears that the Tea Party's goal is to make the US like Haiti in which the majority live in poverty while the rich party in fortress-like enclaves.

Lee said...

> You just displayed all the rambling paranoia I expect to see on Free Republic.

Well, you're right about one thing: I'm scared for my country.

> Of course I don't want the United States to collapse.

If you did, how much different would your favored policies be?

> I shouldn't even have to say that, and we are nowhere near any such thing happening.

What would be the first indicator of a problem? The downgrading of our national credit rating? That's happening as we speak.

> The US has the lowest tax burden in decades, and one of the lowest in the world...

..and is spending more money than ever before. We have increased the national debt from about two-thirds to about 100% of our GNP, with no end in sight. I'm beginning to believe that the purpose of the out-of-control spending is to raise the taxes, not that you want to raise the taxes to take care of the spending.

I think it's simple: Obama and the Democrats began his term wanting to transform the U.S. in to a European-style socialist country. But this is still a center-right country, so that had to go unstated. So the profligate spending has been pushed in order to serve as an excuse to raise taxes to European levels. I think the idea is, get Americans hooked on the social programs, and the entire country has just shifted to the left by about thirty degrees.

> ...so once the economy has recovered the "debt crisis" can easily be resolved by allowing the Bush tax cuts to expire.

You're out of your mind if you think allowing those tax cuts to expire is going to take care of this debt.

> We are at the opposite spectrum from small, poor countries like the PIIGS, and enacting severe austerity measures which will reduce the incomes of ordinary Americans even more will damage, not help, the economy.

Austerity measures? How about just returning us back to, say, 2008, when the government was still obscenely bloated but managed only to run deficits of about $200 billion?

> One of our big problems is rising income inequality...

So the agenda here is not economic growth, but is social justice. Seems to me that's part of a trend that started when Fannie and Freddie were transformed into instruments of social justice. How did that work out?

> ...as the wages of ordinary Americans have stagnated and the incomes of the elites have soared, making our consumer driven economy less and less sustainable.

So the solution is to take more money away from ordinary Americans in the form of tax increases? He said, rubbing his eyes in disbelief.

> Tea Party austerity merely serves to cut the resources of ordinary Americans even further, deepening, not improving, our economic problems.

The purpose is to cut the resources of the government, from whom all blessings do not flow.

> If I was as inclined to paranoia as you, I would say it appears that the Tea Party's goal is to make the US like Haiti in which the majority live in poverty while the rich party in fortress-like enclaves.

Haiti has a free economy, a constitutional government, the rule of law, and a business-friendly government? Who knew?

One Brow said...

Austerity measures? How about just returning us back to, say, 2008, when the government was still obscenely bloated but managed only to run deficits of about $200 billion?

In an economy that had not yet downturned (I got my current job in September 2008, and I remember very well how lucky I felt when the collapse happened shortly afterward). The budget of 2008, in the economy of 2010, has several hundred million more of a deficit.

Singring said...

'I think it's simple: Obama and the Democrats began his term wanting to transform the U.S. in to a European-style socialist country. But this is still a center-right country, so that had to go unstated. So the profligate spending has been pushed in order to serve as an excuse to raise taxes to European levels. I think the idea is, get Americans hooked on the social programs, and the entire country has just shifted to the left by about thirty degrees.'

Next up: Lee is going to tell us Milton Friedman was a closet communist apparatchik.

Lee said...

You think Milton Friedman would have liked the current policies?

Singring said...

Careful, Lee - there's socialists all around you (tw out of three Americans, apparently, according to the new CNN poll):

'Taxes on wealthy people should be kept low because
they invest their money in the private sector and that
helps the economy and creates jobs'

Agree: 34%

'Taxes on wealthy people should be kept high so the
government can use their money for programs to
help lower-income people'

Agree: 62%

No opinion: 5%

Question:
Please tell me whether you think each
of the following should or should not be included in that deficit reduction proposal:

Increases in taxes on businesses and higher-income Americans

Agree: 63 %

http://i2.cdn.turner.com/cnn/2011/images/08/09/poll.aug10.pdf

Lee said...

> Careful, Lee - there's socialists all around you (tw out of three Americans, apparently, according to the new CNN poll)...

Wait a second. You said, earlier:

> Next up: Lee is going to tell us Milton Friedman was a closet communist apparatchik.

Wondering how that applies to anything I had said, I asked,

> You think Milton Friedman would have liked the current policies?

And your reply is, a CBS poll publishes some statements about socialist attitudes in America?

What happened to Milton Friedman and why I ought to think him a communist?

As for the poll, your devotion to majoritarian rule is touching. Are you now arguing that majority opinion is always right about every policy issue?

About 70% of Americans have trouble with Darwinism. Because of this, should we quit teaching it in our schools?

Lee said...

But just in case polls do make right, here's the latest Gallup Poll on Obama -- 39% approval rating, 54% disapproval rating.

http://www.gallup.com/CustomPages/Daily.aspx?site=WWW&space=WWWHPRIBBON

So perhaps Americans do like the idea of socialism. It's the results of socialism they don't particularly care for.