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Friday, July 20, 2012 | 2 a.m.
The mainstream media is inundated by discussion of both Keynesian and supply-side — trickle down — economics.
Keynesian economics proclaims that deficit spending (government expenditures that exceed revenues) will spark the economy. Supply-siders maintain that reducing taxes and easing regulations will stimulate economic activity and thus lead to a boom. This, they believe, will end up increasing federal tax revenue caused by an increase in economy-wide incomes.
Neither of these economic theories have been successful during this current economic downturn. And there is no guarantee that either of these methods will work any time soon, even though both may well have unintended consequences, such as major long-term debt and unemployment.
The debt is out of control because both of these methods combined add to the federal deficit. It would be unrealistic to increase taxes above their current levels when there is general hardship throughout the land, and people need the cash in their pockets to survive. On the other hand, taxing the “rich” — those earning over $250,000 — will only provide marginal revenue and dampen the incentive for job creators in this group.
So for the present, we remain mired in economic malaise, while Keynesians and supply siders both argue their cases in the public square.
Ultimately, it is a return to noninterventionist policies based on individual economic freedom and the market that will be needed to turn the economy around.
In the last 3-1/2 years we have spend wildly - $5 trillion of national debt wasted.
Now we know that the recession was over June of 2009 - six months after Obama took office AND before the special Stimulus started spreading money around.
Yet for all of this money since June of 2009 the grow has only averaged 1.9%
Obama claimed spend the money and unemployment would be 6% now but it is at 8.2% and worst the underemployed is 23%
But we know public union workers got paid off, that crony capitalism occur in the solar, wind, and battery business, campaign contributors got jobs.
Where are the jobs??
---
I agree with the letter writer up to a point. Keynesians, and Paul Krugman their loudest living proponent, would have all of us believe if more spending doesn't work, you have to spend even more. With this theory, cities, states, and even governments, like Europe, eventually topple from insolvency and bankruptcy. Once that happens [insolvency], even the turn around of businesses, markets, and economic cycles don't matter.
CarmineD
We had an experiment with supply side economics in the 1980s that was a colossal failure. Eventually tax revenues increased but not enough to offset increased spending. The net result at the end of the Reagan administration was a National Debt 2.5 times what it was at the beginning.
Who are all these so called "job creators" and where are the jobs they created?
Oops, the evidence doesn't seem to support that theory.
I'll take the economic growth of the 80's coming out of the Carter debacle over anything that is happening today. As would most intelligent persons.
And yes, Tip Oneil reneged on the spending cut side (surprise, surprise).
By Cognastics "Who are all these so called "job creators" and where are the jobs they created? Oops, the evidence doesn't seem to support that theory."
Well the "who" job creator the last three year was Obama-seem you should ask Obama where to jobs are.
Pimco put out a report last week in which they see anemic growth for as far as the eye can see. Why??? Restrictive lending practices, no savings, and wage growth that has barely kept up with inflation. Our economy is consumption based. The more we have to spend the stronger is the growth.
This economy will be in the mud until businesses start paying people and medical and education costs start to moderate.
Medical is one of the major causes of people going bust and the trillion in outstanding school loans will adversely affect wealth creation by the young.
The domestic savings rate has been near zero for decades and those that have saved and invested have been hit with one severe financial dislocation after another since the 1987 stock market crash.
This has resulted in nearly all the financial assets of the nation in the hands of a few million people. Those few can not generate the necessary consumption for vibrant growth.
Americans are essentially bust and lining up for welfare to the tune of tens of thousands a day.
Free market capitalism is KAPUT. On to the next big economic invention.
http://www.politifact.com/florida/statem...
Mr Heeman...The healthcare statement is bull. Domestic savings has been nil for 30 years plus. Wage growth plus robust savings leads to growth and prosperity. We have neither. Businesses have socked money away largely due to activities in areas of the world that have strong growth. They will hang on to the money because they know the domestic consumption problems will persist for decades.
The vast majority have very little money. That is the single biggest issue in a consumption driven economy.
http://moneyland.time.com/2011/06/01/nea...
What is going on currently is a culmination of 40 years of globalization. The creation of a quadrillion worth of financial assets and derivatives. Nearly $250 trillion in financials and $700 trillion in derivatives.
Whether the world economy can balance itself while sitting on that much paper remains to be seen.
But, but, but, but...we can't not allow our first balck president to not be reeleected before he's finished destroying the economy. How would that look to the rest of the world?
All very good posts and all have decent reasoning behind them. But to all if the corporations are sitting on trillions of dollars, and won't invest in anything then it seems to me that they aren't because of the current administrations ideas. That being said like it or not a change must happen in November or we are doomed to what we have now. Pretty obvious to me.
Job creation? Will not happen as long as Obama is in office. The rich people control this country. Always have and always will. They don't like Obama's perception of governments place in the overall scheme of things. If Obama is ousted this fall the rich will get to work and start the start ups. Obama has refused to cooperate with the rich people and that will be his downfall. If he does get elected we all better learn to sacrifice even more than we have.
I don't think this can be seriously discussed in the Opinions site.
There are better places to discuss economics in a serious way and without propaganda.
Hmmmmm, it appears that Rocky, Carmine, Future, rusty, and several other right-wingers are going to be greatly disappointed come November 6th when their "main guy," Willard Romney is soundly beaten in his attempt to win the White House.....
More and more Americans are starting to understand the main issues in this election and more and more of those Americans are deciding that "Mitt the out-sourcer" is not what this country wants or needs...
I see that "Mitt the out-sourcer" is out sourcing himself to Israel this week in an attempt to make himself out to be a man with "foreign policy experience."
That's interesting....
Mitt has said very little about foreign policy thus far which is actually very smart on his part....
It's best not to talk about something that you know NOTHING about!
Of course, the "clueless guy from Texas" also knew next to nothing about foreign policy when he ran for the White House in 2000...
That worked out just fine for us, didn't it?
Two wars that we could not afford and a greatly increased national debt....not to mention the death of over 4000 of our best young warriors...
Thanks George....You and your side-kick in crime, Dick Cheney, really did an outstanding job.
Did you see where Cheney just recently made a visit to Washington to push for NO cuts in the defense budget? He says we shouldn't cut the defense budget, but instead, we should be preparing for our next war...
Yep! That's what we need.....another war to fight!
I'm sure China has a few bucks that they will loan us which will help us fight one or more of our enemies in some far off corner of the world...
If we have no real, legitimate enemies, maybe we can bring back Bush & Cheney to create an enemy or two...
They have experience in that area....
Rocky said to "peacelily"
"Or, is there just too much truth for you to handle?"
Wow! I didn't realize that Rocky was related to Jack Nicholson....
That's interesting!
A great part of the problem is WHAT we're spending it on. We spend little on the essential functions of the U.S. federal government and endless amounts on other nations' priorities and non-citizen concerns within the U.S. We even can't get around to refining things that are essential--fraud, waste and abuse within our state and federal welfare programs--benefit fraud, waste and abuse. The feds, and certainly no one in the state, looks at applicants defrauding us with fake birth certificates and/or ID theft AND parents claiming handicaps for normal kids. We fail to spend in a cost-effective manner: secure the border AND expel illegals that are bankrupting our schools, courts, law enforcement, UMC / health care.... We'd save trillions, literally, by expelling 15 million illegals and their anchor babies.
Roslenda...
The illegal immigrant problem is a serious problem but its far down on the list of things that's bankrupting this country.
Take for example, the two unneeded wars that we fought (and in some respects are still fighting) and how much those two conflicts costs us in terms of not only money but man power...
We lost over 4000 of our best warriors in those two wars.....how is it possible to put a price tag on that?
In my mind, we're spending way too much on defense. We spend twice as much on defense each year as China, Russia, France and UK spends combined....
The military-industrial complex is the "tail wagging the dog." We could cut our defense budget by 15-20% and not put this country's security/safety in any type of jeopardy.
Corporate taxes are the lowest they have been since the 1950's and the tax breaks that Congress gave to America's rich, starting in 2002-2003, has forced us to borrow over a trillion dollars in order to just pay our bills....
Yes, there's waste, fraud, and poor management at all levels of government but neither party is willing to make the tough choices that are necessary in order to deal with the problem....
I don't agree with your statement saying:
"We'd save trillions, literally, by expelling 15 million illegals and their anchor babies."
Do you have a link or two to validate that statement?
Bob Jack.....
NO, a thousand times no.
Trickle down does not work.
We've already been down that dirty republican
road.
We're not going back there.
No way, no how.
WE'RE NOT STUPID!
FOUR MORE YEARS FOR PRESIDENT OBAMA!!!
It is hard to believe that any person in the Opinions site doesn't understand the definition of propaganda. A dictionary can bring enlightenment.
The article was about a need for a fix. This necessitates an understanding of economic systems, which is broader and requires looking at the many subcategories involved and analyzing how they would serve our nation.
Are there any professional economists here?
What kind of economics is being referred to as a potential substitute for what we have now?
What are the alternative systems we can consider, since neither mentioned satisfies everyone?
Are we talking about supply side; classic, post, or neoKeynesian? Which?
What kind of an economic system do we really have in the US?
Is there any NEW economic model that offers an alternative to those previously mentioned? What are they?
Can anyone name, describe and discuss a new model, or a new economic theory different from what we are accustomed to, without bringing in partisan propaganda?
Or is this only about exercising a partisan gripe session, which does nothing to address a "fix" of the two old schools fluctuating in our economic system and bringing dissatisfaction to opposite sides?
If not, can we please divide the country into 2 or 3 separate countries with different economic & political systems, that allows everyone to decide which system they prefer to live in?
Then maybe we can have some peace and each country can focus on what they consider the 'common good' according to their particular system.
Of course, after one decides which country they want to live in, changing their mind would require a process of legal immigration from one country to another.
Mr. Heeman:
I enjoyed reading your comments on the CBO, its scoring of Obamacare and the rose colored scenarios of the left.
CBO won't go beyond the 10 year predictions and forecasts for obvious reasons.
On Obamacare, CBO for the decade went from $950 B, to 1.2 T to 1.7 T. So the liberals tell us the CBO is coming out with new numbers on the week of July 23. At least they got that right from the CBO site. Do they really think the costs will go down? Duh? What a group. Take away their rose colored glasses, there's more red gov't ink, and they still think it's black.
CarmineD
As peacelily has made abundantly clear, the economic situation in a country so diverse as ours can not be substantially analyzed, backdropped or made whole through soundbites.
Her suggestion that we might be better off to divide the nation into several chunks with various approaches seems quite intriguing to me for several reasons.
If this forum is at all representative of the levels of gratitude for life, of respect for human potential and of recognition of opportunity available, then what becomes obvious is the chasm between those whose lives are rich and those who have become driven by lust for power and thirst for gratification.
I would certainly choose to avail myself of the option to pursue a better world where decency and civility characterize our country - a land where we value the human spirit enough that we choose to exalt rather than execute the potentials in our neighbors; a place where education and human development are higher priorities than profiting from ignorance or enslavement by media, manacles or mechanization; and a home where individual rights enable freedom and justice for all.
I think peacelily is onto something here. And I agree that it's likely not to be accomplished either in this tiny space of 3000 words or on this forum. Look at the range of responses; you can see the divisions, the chains and the obstacles as clearly as the visionionaries, the chances and the oracles.
Thank you for showing your colors, your perspectives and your possibilities. We need a better world, and we are best chance we have to reach it when we walk together towards our new home.
Bagger Rocky certainly does love to post links to such non-partisan sources as Breitbart and Heritage. I mean seriously...you just can't make these people up. Yes, let's present everyone with a truckload of falsehoods, halftruths and misleading propaganda, and then challenge them to refute it. Then raise your hands in victory. Also must throw in references to Socialism, marxism, and Saul Alinsky. LOL. It's like a broken record that plays over, and over and over and over. Bagger logic is truly a frightening thing to behold. Come on Rocky hit us again with something...maybe this time you can link to Farrah at WND or maybe Mark Levin?
Bob and Carmine: The economic theories that work(ed) don't work any more because we've gone to extremes. Stimulus could work if there was some wiggle room in our economy, but there isn't. We've taxed and taxed so that Americans live in lower life styles while we boost European life styles, African life styles, Mexican...... We keep sending much too much of our wealth overseas--via wars, military installations everywhere (despite technology advances that we can get there pronto), economic aide, medical aide, food aid, training aide, trade imbalances.... Just how much can we pull out of the economy year after year and not impact business, industry, economic fluidity? Not as much as we've been pulling out. How to fix? Stop it and do some serious things to regain what we've given away.
Mr. Heeman:
Note.. if you quote conservatives, you're too partisan. If you quote the CBO, it's not non-partisan enough. If you quote dems like Cory Booker and Clinton, it's an anomaly. Can't win with the liberals. First, they laugh. Then they scoff. Finally they agree. It takes them awhile to see the light. Usually, after they feel the heat.
CarmineD
El Lobo: WRONG again. Do the math. While the wars were and are serious drains to the economy, ILLEGAL immigration by itself is bankrupting the entire nation. Each illegal kid costs American taxpayers in excess of $200,000 just for K-12. Add in vaccines, emergency health care, food stamps, law enforcement, their share of illegal incarceration.... AND add in the constant drain on our non-profit food banks, thrift stores, school supply aide. 15 Million illegals plus as many illegal anchor babies CLAIMING to be citizens....
The American economy cannot support what we've got now and you think ignoring an escalating problem (escalating even if borders are secure right now) is gonna help?
Neither those who support Keynesian or supply-side theories take into account that our economy is not a "closed system."
We have a huge "money leak" in the form of our balance of trade deficit. A significant portion of every dollar spend as either stimulus or tax break winds up leaving our economy, greatly reducing the multiplier effect that both class of theories depend on.
Fix that leak and then we can see what theory really works.