Stuff Happens

I have no idea what the solution is to our current financial and economic problems. However, I don’t think that tax cuts for the wealthy are the solution, and I don’t think that giving money to the people who screwed up in the first place is the solution. I do think that lowering the pay of CEO’s while raising the pay of workers who are lower down on the pay scale would help. What most people need more than anything else are good paying jobs. Anything that the government can do to help with that seems to me to be the best solution. The government should stop favoring the rich and screwing the poor.

From Bad Faith Economics by Paul Krugman:

Next, write off anyone who asserts that it’s always better to cut taxes than to increase government spending because taxpayers, not bureaucrats, are the best judges of how to spend their money.

Here’s how to think about this argument: it implies that we should shut down the air traffic control system. After all, that system is paid for with fees on air tickets — and surely it would be better to let the flying public keep its money rather than hand it over to government bureaucrats. If that would mean lots of midair collisions, hey, stuff happens.

I like this comment from Dave to Bad Faith Economics by Paul Krugman:

Look, I know I didn't win the Nobel Prize, but it seems to me that two points have never been satisfactorily addressed by Krugman and his fellow travelers:

(1) Too much debt and spending is what created this mess. Now we're supposed to do the same, only more, to get us OUT of the mess? What happens when the stimulus is gone? Maybe we'll have sparkling infrastructure, but will we have a sustainable economy? I think the last thing we need is more stimulation. Do we give alcoholics even more alcohol to cure them?

(2) Since we, as a nation, don't have $1 trillion laying around, we either need to borrow or print, right? Re: borrowing, see my first point. Plus, how do we know the rest of the world will even lend us another $1 trillion or more? And, if we end up printing, well, how's that going to work? If printing was a solution, every country in Africa would be a wealthy paradise.

I think Americans are beginning to realize that they are a lot poorer than previously believed. This stimulus won't change that. At best, it will just delay the inevitable and make it worse when it arrives.

Update:
Wouldn’t we be in better shape if less things were broken? Wall Street and the banking system are broken, but our news media and our government are also broken. Wouldn’t it be better if the government was able to provide safety nets for those who need one? Wouldn’t a better welfare system actually be something that is useful to many people right now? (Thank you, Bill Clinton.)

Trickle Up Economics

From Newsflash! Giving tax breaks to the rich doesn't create jobs, it looks like recession time, and more tales of dumb executives by Dean Baker:

Given the economy's dismal performance during the Bush presidency, a candidate who is running on the Bush economic program would have reason to be defensive, but not Sen. McCain. McCain is turning reality on its head, filling the airwaves with commercials saying that Obama's plan to raise taxes on the rich will kill jobs.

It is truly unbelievable that we are having this argument. We only have to go back to the Clinton years to see how the economy performs when tax rates on the rich are at the level proposed by Sen. Obama.

During the eight years of the Clinton administration, the private sector added 15.8 million jobs. By contrast, in the seven years and six months of the Bush administration, when rich people paid the Bush-McCain tax rates, the private sector added just 3.5 million jobs, and it is now losing jobs at the rate of almost 100,000 a month as President Bush prepares for retirement.

Read the rest here.