Thursday, July 28, 2011

Eating our seed corn

What is the number one thing the government can do for the economy? Invest in public goods for decades. That the message of the book Success in Agricultural Transformation, coming out at the end of August. It turns out that 100% of the time sustained public investment has been necessary to create a modern economy—across all countries, across all of history, from the English industrial revolution on.

What is the government now proposing to do? Cut public investment. As Ezra Klein documents this disaster for our future is what Obama is proposing, and the RepubliCON are proposing to hurt us far worse. This is how the USA declines. Sad day.

Monday, July 25, 2011

No, they're not equally at fault, it's the Republi-CONs

Krugman has a delicious story from Abraham Lincoln on blaming the other side when it's your fault. The punch line: "You will not abide the election of a Republican president! In that supposed event, you say, you will destroy the Union; and then, you say, the great crime of having destroyed it will be upon us! That is cool. A highwayman holds a pistol to my ear, and mutters through his teeth, 'Stand and deliver, or I shall kill you, and then you will be a murderer!'"

Ironically, the first Republican president was not just the "Great Emancipator", but also the "Great Investor," believing in the massive public works that the current Republi—CONs refuse to enact.

Friday, July 22, 2011

No Intellectual Integrity for the Republi-CON, yet again

Ezra Klein lays out the the fact the tax breaks and expenditures amount to the same thing. So the current Republi-CON fixation on not even closing loopholes in the tax code actually makes no sense. Of course that's not the only thing that makes not sense.

The short version: "Former Federal Reserve chairman Alan Greenspan says that tax expenditures are “misclassified” because they are identical to outlays. Gregory Mankiw, who led President George W. Bush’s Council of Economic Advisers, calls expenditures 'stealth spending implemented through the tax code.' You can’t find a serious economist on God’s green Earth who thinks the economy differentiates between cutting a government program that subsidizes health insurance and cutting an equally large tax break that subsidizes the purchase of health insurance. The crude budget calculus that counts every dollar in spending cuts as a win for Republicans and every dollar in revenue increases as a win for Democrats is simply wrong..."

Sunday, July 17, 2011

Growth in Family income, before and after Reagan

This wonderful graphic says it all about the impact of Republi—CON policies, from Reagan on. Note that the overall growth even for the rich is less! Thanks to Peter Enneson for alerting me to this. [Click on graphic for larger size.]

Saturday, July 16, 2011

Obama answers liberal critics

Here is an interesting analysis of Obama's attempt to answer liberal critics.

I see his point, but I think it's wrong. If he were hammering constantly on the false analysis and damaging prescriptions of the Republi-CONs, I think he'd not have lost so much in the midterms. And he'd be in a stronger position in 2012.

What do I know about politics? I don't, but Lee Kuan Yew, one of the most successful politicians of the past century, says: always argue your case, as forcefully as you can. I think he's right. What do you all think?

Friday, July 15, 2011

Why can't journalists ask Why?

Following from Matt Yglasias is an interesting analysis of how we got here, starting with a situation where "supply side" had some plausibility, to a situation where it has none.

This pinpoints a great source of my frustration with journalists today: they won't seem to be able to ask "Why?" If they ever asked the Republi-CON sloganeers and blowhards "Why did the economy collapse under W. Bush?" And "Why would be expect any different result from your policy prescriptions?" All they could do is sputter or chance the subject. Here is Yglesias:

"What you have here is a political movement that no longer understands its own theory. Flash back to the 1970s. You have high unemployment. But you also have high inflation. Because inflation is already high, you can’t boost growth by boosting aggregate demand. You need reforms that operate “on the supply side” and lower marginal tax rates count. Now we can debate ’till the cows come home whether or not Ronald Reagan’s 1981 budget actually had important supply side benefits, but the basic story makes sense. But by 1996, what is the problem that Bob Dole is trying to solve with this tax cut? He’s grappling with the political problem of “a steady stream of solid economic news—low unemployment, mild inflation and rising wages.” We need supply-side reform because . . . why? Ever since then, conservatives haven’t really answered “why” questions about their economic prescriptions. Instead they prescribe a cure for stagflation regardless of the situation. And over time, this scenario has become more and more toxic, such that today they’ve decided that we are experiencing high inflation even though we’re not."

Tuesday, July 12, 2011

The Triumph of Anti-Intellectualism

For those of you of more conservative ideological cast and lemming-like, "true-believer" instincts (dubious in this crowd !!), you should be concerned right about now about the studious disregard of the Republican leadership for job-creation efforts. I'll bet that's what you thought you were voting for when you chose your local tea Party candidate. Instead, you have been a pawn in a shell game since your leadership has virtually ignored the job-creation agenda. Instead, Mr. Boehner and Mitch McConnell have Hoovered-in on massive spending cuts - and refused to acknowledge that one of the prime contributors to the current deficit problem is the Bush tax cuts and their continuation. (Oh, yes, elective wars and their expenses which were always "off-budget" have certainly helped). Possibly you had forgotten that just by eliminating the Bush-tax cut extensions for the top 2%, an estimated $690 B. over a 10 year horizon was "lost"(

We will set aside the superb irony of those ideologues - whose conspicuous commitment to the Bush tax cuts did not support their supply-side theories - and led instead to an average 600,000 monthly job loss in the last three months of the Bush administration. But what we cannot set aside is Obama's response to the Bush recession; he has chosen to give away the "New Deal" store and to drape himself in judicial robes as he cuts the child in half. He chooses to portray himself as the "mature", avuncular father dealing with squabbling children. Convenient! He himself never paid the blood sweat and tears that helped to create a solid middle class in this country; in the main he was the beneficiary of progressive Democratic Party-led policies. But God forbid that he actually use the bully-pulpit, by using his enormous teaching skills, to point out that the Republican agenda is designed to shred the safety net for the poorest among us while making these folks feel morally superior while doing it.!! It is beyond pathetic.

Monday, July 11, 2011

Why does Obama listen to Geitner rather than Krugman and Stieglitz?

This is a question I've been asking since the beginning of the Obama administration, and has always been a limitation on my general admiration of him. Krugman in his latest makes all too clear that he and those who think like him have been consistently in conformity with reality in their predictions. The Republi-CON opposition has been totally out of touch with reality (except for the reality of getting more money from their rich pay masters,) and the Obama administration has been far too timid in their economic proposals and actions, compared to the challenge the country faces.

Sunday, July 3, 2011

Is Obama a Republican?

A truly depressing post from Paul Krugman, pointed out that in his latest address Obama repeats the republican myths. Here's Obama:

"Government has to start living within its means, just like families do. We have to cut the spending we can’t afford so we can put the economy on sounder footing, and give our businesses the confidence they need to grow and create jobs."

And Krugman's comment:

"Yep, the false government-family equivalence, the myth of expansionary austerity, and the confidence fairy, all in just two sentences."

I think I've figured out a way to explain why the government-family equivalence is wrong: The government is a bank. Just as banks lend out much more money than is on their books, so too the relation between government income and spending is not the same as in a family. By deficit spending in some cases—like bank lending, when you look at at—can help grow the economy.

Krugman has extensive columns, linked in his post, on "the myth of expansionary austerity" and "the confidence fairy."