The above chart (which embiggins by imclickens) demonstrates the lie in The Rominee's argument about job creation, one that ought to be obvious to anyone who gives it a moment's thought. One that I've pointed out here many times, to which my libertarian readers have never provided disproof: businesses won't hire people, no matter the so-called incentives, unless there's a demand for their product. You don't create jobs by lowering taxes and getting rid of regulations: you create jobs by creating jobs! And for a government, that means investing money in needed projects. Building roads and bridges, repairing dams, giving states help hiring teachers and cops, and, yes, investing in new technologies. And then, also obvious as a dog on a roof, there'll be more people with money to buy other stuff, and businesses who make that stuff will start hiring. It's not high-order economic theory. It's accessible by anyone capable of marking a ballot.
And then, by golly, at some point you gotta pay for that government spending; which means increasing revenue. Because cutting spending alone not only won't do it without dissolving government, it has the perverse effect of increasing unemployment.
Sadly, the taking of a moment's thought is exactly what Rs want the public to avoid, which is why they constantly bombard their huddling sheep with distractions and lies (check it out!), and by creating an image of President Obama that bears no resemblance to reality, any more than their economic proposals do.
Public thought -- even a moment's worth, if it's based on reality -- is anathema to R strategists. So they keep pumping the handle of tax cuts and deregulation, loudly, hoping against hope that the noise will, once again, drown out the simple truth. And, given the power of concentrated lying against disorganized honesty, it probably will.
Your guy got the b a i l outs, stim-you-lie, and cash fer clinkers he wanted as well as extending the b u s h tax cuts for everybody and the economy is still dragging. And your calling for further stimuli?
ReplyDeleteDid you look at any of the data on how ineffective the stimulus programs really are? Construction projects end up not hiring new workers, but only giving existing workers more hours, thus minimal effect on unemployment. Of course, as B H O learned, "shovel ready" isn't really shovel ready.....it takes months for the architects/engineers to do their thing, then there's the bidding process (with a first round for only minority and women owned companies which limits bidders and drives up prices >>10%), then there's time required to deliver a P.O., set-up, delays in procuring materials, unexpected hiccups in the projects, etc ad infinitum.
George Soros said, “I believe that the failure is more profound than generally recognized. It goes back to the foundations of economic theory. Economics tried to model itself on Newtonian physics. It sought to establish universally and timelessly valid laws governing reality. But economics is a social science and there is a fundamental difference between the natural and social sciences. However, social sciences are not always based on pure fact. A social science is open to interpretation or failure because it has a human element; an engaged decision maker.”
Business owners, investors, and consumers intuitively know that the economy is not stable and with all this "fundamental transformation" business, humans are waiting on the sidelines to see what the country looks like when/if the dust settles before they spend/invest their hard earned dollars.
Further Keynesianism or Tax Cuts aren't the "magic bullet". "Fundamental Transformation" is stifling consumer and investor confidence.
Regards,
PT
So that's your (it's the right time to use the word, as opposed to "your calling for further stimuli") response? Declarations without data? Quotes without context? Claiming "intuitive" knowledge as response to contrary data? Ignoring the central point?
ReplyDeleteUnconvincing.
What you are saying would seem painfully obvious and yet apparently it isn't. When considering the R's mantra regarding the economy it seems hard to believe that they could all be that corrupt and/or stupid.
ReplyDeleteBased on my own experience it seems to boil down to our amazing ability to rationalize our behavior and I mean any behavior. So their own best interest is to do the things that put money and power into their pockets and to pad their futures.
On a side note. Here is hoping that the failed recall of Walker in Wisconsin is not a sign of things to come this November. Perhaps someone is spiking our water.
I disagree, PT, with your premise that consumers are "waiting on the sidelines" before spending. It might be true of big business (they can afford to wait), but not of average earners. To spend one must have disposable income. According to the NY Times, consumer spending is 70% of economic growth.
ReplyDeleteHow can tax cuts not help? If the 'average' earner is paying about 30% in taxes, it doesn't leave much $ leftover to invest, save or spend. I'm not talking about those who make $50,000- $499,000. These are the people who use their disposable income (not vast reserves of wealth) to buy houses, cars, appliances,health insurance,college tuition, AND save for retirement. Are you saying that cutting the taxes of this group would not boost the economy? I think it would. On the other hand would the spending or lifestyle of the very wealthy change with higher tax rates?
Side note: why do you mention minority and women-owned companies as driving up prices? What is that based on? In case you were unaware, women comprise just over half of the people in the world; they are not a minority.
DD
Dr. S:
ReplyDeleteDeclaration was based on data from Bruce Bartlett's latest book. no expectations of convincing you of anything.
DD:
I concede my point about consumers waiting to spend. What I meant, but did not convey well, was that those hoping to start small businesses are likely waiting on the sidelines for some stability before dumping their life savings into a new venture. I wouldn't invest my $ in a biz today unless it was a very unique idea. Would you?
FYI, the effective tax rate of the middle quintile is about 13%. Would cutting taxes for them stimulate the economy: sure. But what happens to our democracy when an even larger % of the electorate is receiving services but isn't contributing to the treasury? Is it practical to have >50% pay no income tax?
In an ideal world, it would be best to tax capital gains highly & "not take from the mouth of labor (labor being those who work for their wage, regardless of income level) that which it as earned". Unfortunately, the US competes with the Corp & Cap Gains tax rates of other countries, so that idea is not practical. I would suggest, based on various readings, a VAT or Consumption tax on non-necessities of life instead. That would progressively tax the wealthy without totally destroying the incentive to continue investing.
Addressing your side note: I'm not going to include details over the Internet, but the MBE/WBE program is not a wise use of taxpayer dollars for MULTIPLE reasons that would take some time to explain in person. A private business would never limit itself in selecting contractors/suppliers and neither shoud the .gov
PT
All you need to do to convince me of something, PT, is to provide facts. For example, you could provide links to the data to which you refer regarding the stimulus and jobs. I don't doubt that it's not all been effective. But I do know most economists agree it saved and added jobs. (CBO says 3.3 million). (Extensive review of several studies, including contrary ones.)
ReplyDeleteHad it been more, as at least two Nobel Laureate economists, Stiglitz and Krugman argued at the time, as well as most of Obama's non-political advisers, it would have done more. But he knew it was the best he could get.
In tomorrow's post, by the way, there's a link to a Bartlett quote which I'd already tagged as a link you ought to follow.
I'm not in favor of more tax cuts, obviously, and think it was a mistake to include them in the stimulus. (Again, it was a sop to the Rs, wrongly thinking it'd get a few to vote for it.) And your argument about people staying on the sidelines is in keeping with the point of the post, which you didn't address: cutting taxes and regulations won't stimulate jobs.
So you might say we're actually agreeing on something; maybe that's why you freaked out.
More data.
ReplyDelete